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Pax Europaea : The EU as Pacifier in the Frozen Conflict Areas

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In this short paper I will try to analyse the unique opportunity the EU has in pacifying one of the still unresolved conflicting neighbouring areas that pose a threat to the stability and high level of cooperation that European countries have achieved in the last half of century. I am referring to the frozen conflicts around the Black Sea . More specifically, the list could be conceived as follows:

In this context, the main centres of gravity are to my mind Russia, the US/NATO and more interestingly the EU.

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Source: Matt [email protected]

Before going further into details, I would present the theoretical framework which will guide us in understanding one of the perspectives of the issues on the ground, namely the defensive realist approach. An analysis based on this perspective follows a pragmatic, non-normative line of thinking which tries to stay away from considerations like human rights, self-determination, ideology or other liberal-democratic political principles. It has nothing to do with the lack of humanity. The justification has to do with a stronger focus on the national interest of the states under consideration.

According to proponents of this view, the world that surrounds us is similar to a system made up of units which constantly interact with one another. The main units are the nation-states that operate under anarchy, meaning that there is no hegemon and no hierarchy of states. In this sense for example, the UN is totally dependent on the interests of the member countries and especially on the veto of the Permanent Five.

There is no legal separation of power or institutional control and no real accountability for states who are autonomous and free to pursue the domestic policies they are happy with. There are only international treaties that have strength for as long as signatory countries agree to it.

Furthermore, what motivates state behaviour is the perception of own or foreign power and the threat that comes with that power. This logic results in a balance of threat among nation states. According to this concept, states will align with other states to counterbalance another stronger and threatening state or group of states. The purpose of this balancing is not for offensive or expansionist reasons but for defensive ones.

I would take a different route from traditional neorealism by arguing that leaders or political figures do matter in international relations. However, states are reluctant to trust one another even if for the moment good relations might be in place. One leader can never know with whom he will have to deal in the future or what orientation the foreign policy of another state will take in longer term.

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Source: David [email protected]

Finally, despite the common criticism that realism is an amoral or even immoral way of seeing things, I would argue that there is such a thing as morality of realism. Values like stability, prudence, pragmatism, understanding of political and social complexities, even respect for human life guide proponents of this perspective when thinking about possible solutions to common problems.

Moreover, realists are able to understand the level of regional development that the postmodern EU shows. Nevertheless, it is clear for them that in other parts of the world modernity rules under the shape of the nation states who selfishly, geopolitically and geostrategically pursue their own interests. Trust-building and paradigmatic shifts are slow processes that ought not to be forced or put aside for more interventionist measures.

Having said this, we can focus more on the EU as a potential pacifier in the above mentioned areas of the world. This part of the world is characterized by uncertainty, total mistrust, strategic thinking as foreign policy and never-ending tension. Boundaries among states are hard but at the same time very much disputed among antagonistic neighbours. History and the bloody memory is fresh in the mind of both the people and political leaders. Fear of the re-emergence of another Russian Empire or Soviet Union brings countries like Georgia, Ukraine and Moldova to pursue NATO and US led coalitions, which in turn fuels the Russian ego and builds up its security apparatus due to a Cold War view of American imperialism.

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Source: NATO-Russia [email protected]

We could sum up that the region is characterized by a vicious cycle of threat perception. We could make an analogy to Europe’s modern history. Luckily for us, it ended up well in a common structure that has been able to integrate the national interest of the member states with the need for cooperation and collaboration. Peace is here to stay, at least while economies are stable and public opinion remains strong. The EU is the best example of how to overcome the dirty nature of politics.

In its relation to the outside world, the EU can rely on its soft power, the power of attraction. Furthermore, I would argue that the EU is more capable than other international actors of pragmatism, toleration of diversity and non-ideological policies. By all this, I am referring to the ability of practically conducting relations without setting strong political or economic standards.

The aim of the member states is still to satisfy the national interest regardless of their ideological aspirations. They might have adopted the liberal-democratic system and might pursue the extension of this system to interlocutors but the EU is not imposing a particular way of organizing societies, economies or the state. Rather, the EU is encouraging a change from within. At least unofficially. Officially the situation is different and it has to be different since the values that the EU puts on paper are basic for EU’s own existence.

Going back to our disputed territories, the EU could act as a strong mediator and hub for all the conflicting parties. The EU could show understanding because the member states can put themselves in the shoes of each of the forces. Europe had experienced separatism, militarism, realpolitik, spheres of influence and strategic alliance making and foreign policy. Conflict mediation, resolution, peace-building and even reconciliation are strong assets in EU’s pocket.

Not only, but the EU has also strong economic and energy interests in this area of the world. Instability there will lead to the possibility of instability here. European companies and Russian ones are doing business on a daily basis. The leverage is mutual and this leverage should not be used as an instrument to tie up ‘the enemy’ but to build trust through mutual advantageous cooperation. Energy security is one of the fundamental parts of EU’s security strategy. Russia, Ukraine, Georgia, Azerbaijan are both elementary sources of gas and oil and transit routes. The EU should stay away from demonizing the owners of those resources and from trying to get a grip on them because this is perceived by the later as a direct attack on their national interest. Countries rich in resources put the revenue that comes from it on top of the list in their security strategies and see it as a fountain of national prestige.

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Source: Malcolm [email protected]

In order to achieve all the above the EU should follow its own path in becoming a global player. By this I mean keeping away from US instructions or way of doing things. As we all know, the US is suffering today from a very bad image due to its policing of the world. Unilateralism and interventionism should not be part of EU’s foreign policy vocabulary. Instead it should seek compromise, long-term trust-building and should push forward the idea of the EU as not taking sides unless it is the side of the civilian population.

Lastly, the EU should not be blinded by the aspirations of creating a strong economic and commercial bloc if this means threatening the same aspirations of other countries. This is dangerous and it can lead to defensive measures, like for example Russia’s pivot to Central and South East Asia. Partners should not be pushed away but attracted for the well-being of all parties.

To conclude, the area of frozen conflicts is still characterized by modernity and EU member states have managed to surpass the very same situation by own realization of the fact that mistrust leads nowhere. The EU has all the experience and instruments to show and persuade, not force other parts of the world to follow the same path. Preaching should be replaced by concrete proof of which system works best and by signs of trustworthy-ness to more sceptical neighbours.

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Economy

How to Trade Shares for Beginners

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Although expectations had been modest for 2019, the stock markets around the world had been active in 2019 and the positive returns seen so far have exceeded even the most optimistic expectations. Supported by easy monetary policies around the world, as well as by positive economic expectations for 2020, stocks continue to move, which makes a significant number of people deciding to start investing. Since stock trading is much harder than most of them think, let’s see some of the most important things beginners must consider in order to accelerate their learning curve.

Stick with the most liquid shares

Finding “the next big thing” is one of the illusions that seduces most of the beginners. They spend a significant amount of time looking for those companies that will have huge returns over the next months of years. Not even the most-skilled stock traders are able to do that, so why do you think you will?

Instead of looking for those shares, stick with the companies that already have a leading position in the industry. Google, Facebook, Microsoft, Apple, and Boeing are just some of the names that are popular at the time of writing, and looking at their performance in the long run, so far, they’ve managed to impress.

Study educational materials

Beginners fail to understand that share trading is a skill-based endeavor and study is one of the most important parts of the process. Study as many educational materials as you can and gain as much knowledge as possible because you’ll definitely need it. This guide and other similar ones will introduce you to share trading and help you understand the basic concepts. Remember this axiom: “Around 90% of the traders lose 90% of their capital in their first 90 days of trading”. Education is one of the main factors why beginners stumble into the same mistakes over and over again. You don’t want to be in the same position as most of the people who don’t learn and spend time to sharpen their skills.

Build a portfolio

Closely linked to our first tip, building a portfolio of uncorrelated assets is one of the most important things to consider, if you want to limit the damages of your mistakes. No matter how good you are, in trading, you won’t make money all the time. Diversification will help you minimize the effects of some losing trades. Don’t concentrate all the risk in a single stock and instead pick at least three or four names that might perform positively in the near-term.

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Economy

Saudi Arabia halves oil production: How long will it last, and will it affect oil prices?

Saudi Arabia announces it will halt 50% of its oil production. This Vestle news article will explore the possible financial impact.

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saudi halves oil production

Since recent drone airstrikes crippled Saudi Arabia’s Aramco oil processing facility in mid-September, the country – the world’s No. 1 exporter of oil* – has been forced to close half the plant while reconstruction takes place. While no casualties resulted from the attack, the real harm is finally coming to light, as the impact on Saudi Arabia’s oil industry is becoming clearer. This Vestle news article explores this important topic.

Aramco estimates that the closure will affect almost 5.7 million barrels of crude oil per day, which amounts to roughly 5% of the world’s daily oil production. To help you put that into perspective, consider that Saudi Arabia produced 9.85 million barrels a day in August 2019. And it’s not just oil production that will suffer. Saudi Energy Minister Abdulaziz bin Salman also indicated that the closure has forced a temporary halt in gas production, limiting the supply of ethane and natural gas by 50% as well.

One particular detail that those with an eye on the financial markets might find interesting is that the attacks took place at a time when Saudi Arabia continues to progress toward taking Saudi Aramco public – a first for the kingdom’s global-reach energy sector. How much money are we talking? As the world’s most profitable oil company, it’s estimated to be valued at around $1.5 trillion.**

Will this affect oil prices?

The short answer, according to some people, is probably yes. With Saudi oil output expected to dip below 50%, the outages present “an extreme risk situation for oil,” according to Paul Sankey, managing director for Mizuho Securities. However, measures have already been put into place. Depending on how long it takes for Saudi Arabia to recover the damaged facility, OPEC (the Organization of Petroleum Exporting Countries) is aiming to suspend production cuts to help temper the impact of the ongoing crisis. On the trading side, the International Energy Agency is expected to release strategic oil stocks, and US President Donald Trump has already authorized the release of oil from the US petroleum reserve.***

In the weeks just after the drone strikes, the price of WTI Oil on the Vestle platform showed a 13% increase, followed by a 12% decrease over the following two weeks. Also during that time, Bloomberg reported that the spread between WTI and Brent widened to 37%, which could be an indication that the oil spike might affect global prices more than other oil giants, such as the United States. Furthermore, a representative from Goldman Sachs estimates that the global benchmark for Brent Oil could rise above $75 a barrel if the plant shutdown lasts for more than six weeks.****

Will it get any worse?

Some people fear the Aramco incident represents the potential for a broader regional conflict that could escalate to the point that it affects Gulf oil production as a whole. CFRA Research oil analyst Steward Glickman said, “Oil prices are now likely to bake in a much higher geopolitical risk premium than had been absent in much of 2019.” With the recent bombing in June of oil tankers in the Gulf of Hormuz not so distant, it’s no wonder some analysts like Glickman like are raising their eyebrows. ***

Considering all the different factors that play into this situation—the global, financial and geopolitical—there’s no telling what kind of turns it will take. The only thing to do is keep an eye on the news for the political side of it, and financial sites like Vestle to see what kind of ripples such an event is making in the financial markets.

Oil prices and the financial markets

Volatility such as that recently experienced by both WTI Oil and Brent Oil can present both opportunities and risks for informed traders, such as those who invest in Contracts for Difference or CFDs, which essentially means trading on the price movement of a particular instrument without owning the underlying asset. At Vestle, you’ll find hundreds of tradable CFD instruments, from commodities like oil and natural gas to popular stocks, indices, ETFs and crypto. And thanks to a selection of trading signals, market indicators and our economic calendar, access to important financial info for global situations like this is right at your fingertips.

 Sources

*https://edition.cnn.com/2019/09/12/investing/us-oil-exports-saudi-arabia/index.html

**https://www.cnbc.com/2019/09/14/saudi-arabia-is-shutting-down-half-of-its-oil-production-after-drone-attack-wsj-says.html

***https://eu.usatoday.com/story/money/2019/09/16/saudi-arabia-oil-attack/2341141001/

****https://www.bloomberg.com/news/articles/2019-09-15/oil-prices-jump-19-after-attack-cuts-saudi-arabian-supplies

Vestle (formerly known as ‘iFOREX’) is the trading name of iCFD Limited, licensed and regulated by the Cyprus Securities and Exchange Commission (CySEC) under license # 143/11. The materials contained on this document have been created in cooperation with Vestle and should not in any way be construed, either explicitly or implicitly, directly or indirectly, as investment advice, recommendation or suggestion of an investment strategy with respect to a financial instrument, in any manner whatsoever. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 83.7% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Any indication of past performance or simulated past performance included in this document is not a reliable indicator of future results. Full disclaimer: https://www.vestle.com/legal/analysis-disclaimer.html

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Economy

Fears of a 2019 European Economic Slowdown Loom

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Although the spotlight is on the trade war between the United States and China, one aspect that is currently ignored by the media is represented by signs of weakness in the European continent.

Germany slows down

After posting a -0.3% GDP contraction in the third quarter of 2018, the economic indicators released from Germany in 2019 cannot support a positive economic picture. The manufacturing sectors continue to show signs of weakening, with the Markit PMI Composite now at 51.6, down from 52.3.

Industrial Production had been contraction by 1.9% in November, and both imports and exports had been down by 1.6% and 0.4%, respectively. DAX trading had also suggested there is growing concerns among investors and the main German stock index peaked out in July 2018, being now down by 15%.

Germany relies mostly on exports, being the third exporter in the world, only surpassed by the United States and China. That is why the weakness we see in Germany is actually a symptom of what’s happening in other European countries as well.

Italy and France not too encouraging

The new populist government in Italy, formed by La Lega and The Five Star Movement faced a serious challenge to get the EU’s approval for the 2019 budget, as the already high debt-to-GDP ratio (currently at 131.8%) raises concerns on whether the country will be able to meet its debt obligations in the future.

There are also serious concerns about the banking sector, which despite mergers and acquisitions, and huge capital available from the ECB, were unable to solve their problems which emerged after the 2008 financial crisis. The future of Italy is very uncertain, and analysts predict that the new government will not be able to meet their economic promises, given that we are at the end of a business cycle.

Speaking of France, the problems are social at the present time. President Macron was unable to stop the “Yellow Vests” protests, despite promises to increase the minimum wage and the overall standard of living for the very poor. France’s debt-to-GDP ratio currently stands at 97%, but given the latest promises, there are concerns whether the country will manage to keep the budget deficit below 3% in 2019, as the European treaties demand.

Although there’s a single currency in Europe, in terms of fiscal policy things were very fragmented, which is why the economic recovery had been very slow and the reason why investors predict Europe will face the greatest challenges to solve its economic, political, and social problems.

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