Political and economic news with a Baltic accent

For several years now, we have witnessed a public debate about whether the Russian Humanitarian Center in Nis needs to be given a diplomatic status, more precisely, should Russian employees working in this center receive such status. And although the Serbian authorities have not indicated a clear and unequivocal position on this issue for a long time, we can (now with certainty) conclude that the answer is negative, that is, the state leadership of Serbia does not want to provide diplomatic protection to the center’s staff.

The public could make a similar conclusion after President Vucic’s visit to the Kremlin in late 2017 and be assured after the recent visit of the Russian Foreign Minister Sergey Lavrov to Belgrade. However, the question arises: where does this solution come from? Why is the status required by the Russians a problem for the government of Serbia?
The Serbian leaders have several times stated that there is no need to provide diplomatic protection to the center in Nis, since it is not an international mission, and besides, they do not want to undermine their “neutral position” and thereby openly stand on the Russian side. On the other hand, the Serbian government allegedly demonstrates its Russophilia and gratitude for the confident Russian support for Kosovo and Metohija by the fact that, despite the pressure, it rejected the European Union’s demand to impose sanctions against the Russian Federation. But this “politically colored” position of the Serbian authorities should be considered in more detail.

Although the European Union, of course, suggested that Serbia join the sanctions against Russia, Serbia is not obliged to do this until it becomes a full member of the EU. By the way, the point of negotiations related to foreign policy has not yet been discussed with Serbia even after four years, during which official negotiations on accession are held. So it can hardly be said that Brussels exerted strong pressure on Serbia on this issue. On the other hand, the Serbian public knows little about the fact that the imposition of sanctions against Russia would have long-term and negative consequences, primarily for the energy sector. And that is the main reason for Serbia’s refusal to impose anti-Russian sanctions.

The European Union imposed sanctions on the economic entities of Russia: they are prohibited from trading, as with their representations in other countries (outside the EU!), That is, with Russian subsidiaries in countries that are not members of the European Union, including candidates for membership, then there is also Serbia. If Serbia imposed sanctions, this would mean that the companies bought by Russian partners in Serbia (primarily those that sell energy, that is, NIS) would be virtually blocked. This would greatly complicate the supply of citizens and economic entities with energy, primarily natural gas. It is easy to imagine what a collapse would have occurred in the country. So precisely because of this scenario, Serbia did not impose sanctions against Russia, and not because of the alleged preservation of some independent political position.

Here it should be clearly noted that, granting Serbia diplomatic status to the Russian center in Nis, it would just make a step towards forming its own independent position. It would show both to the East and to the West that it has the courage to pursue a truly independent and sovereign policy, instead of the hypocritical line that the current and all previous ruling regimes have so far led. After all, what kind of independence and balance can be discussed if NATO has an office in Belgrade, whose staff has diplomatic status? What kind of independence can be said if Serbia has been involved in the NATO Partnership for Peace program for many years, and this treaty is linked by the treaty on the free movement of its troops?

What kind of independence is it, if for the last ten years or more, since Serbia participates in the Partnership for Peace, she took part in 150 military exercises together with NATO forces and in just 12 exercises together with the Russian army? What kind of independence and neutrality can we talk about when part of the territory of Serbia (Kosovo and Metohija) is directly controlled by NATO and there is one of the largest military bases in Europe “Bondsteel”?

Granting diplomatic status to Russian personnel of the humanitarian center is not a priority political issue, but it is an excellent opportunity to prove to citizens of Serbia that its authority is subordinated to Western interests, but at the same time continues to simulate affinity with Russian partners, thereby earning points among pro-Russian voters. All key positions in the state: security services, customs, defense industry, energy – are used not to strengthen the state, but to consolidate the ruling party, which is the most devoted supporter of Western interests.

The revival of Germany’s grand coalition should support stability and keep the eurozone’s plans for tighter fiscal union on course, according to investors and analysts, as months of political uncertainty ended on Sunday.

 

Italy was also holding a national election under a complex new voting system that has made the outcome even trickier than usual to predict. Germany’s Social Democrats (SPD) voted decisively for another tie-up with Chancellor Angela Merkel’s conservatives, clearing the way for a new government in Europe’s biggest economy more than five months since the country’s inconclusive election. Sixty-six percent of party members who voted supported a continuation of the grand coalition, while 34 percent opposed it — a clearer margin than many in the party had expected. More than 450,000 SPD members had been called upon to cast their votes in a mail-in ballot. The outcome was announced at party headquarters in Berlin on Sunday morning. Investors expect the German deal to support the euro, stock and bond markets. German business also greeted the result with relief. The wait for a government since September was the country’s longest post-election interregnum. Italy Pollsters in Italy generally expect a hung parliament, with former prime minister Silvio Berlusconi’s alliance of center-right groups emerging as the biggest bloc. The anti-establishment 5-Star Movement looks almost certain to be the biggest single party. Italian bond yields, which are a reflection of government’s credit market borrowing costs, dropped to a three-week low on Friday. The gap with Germany’s borrowing costs also narrowed to the smallest in two weeks.

Tajikistan is a “underdog” among post-Soviet republics. On the one hand, the republic actively cooperates with Russia, on the other hand it tries to find common ground with Europe and the United States. Moreover, after the investment drought of the 2000s, Tajikistan has been actively attracting foreign investment for the past 10 years. However, the country’s authorities have not yet decided on what path to develop: a reliable partner of Russia or a country that actively cooperates with the United States and Europe. The second way, of course, will negatively affect relations with Moscow.

 

The key to choosing the right path is the attitude of Tajiks to Russia, as well as social ties. And here the language comes to the forefront, in which people from Tajikistan speak and receive information. Here in Europe there is an opinion that the Russian language is leaving all the former Soviet republics in general and from Tajikistan in particular, which, supposedly, can become the foundation for the future distance of Dushanbe and Moscow. However, not everything is so obvious. The fact is that a large proportion of the working-age population of Tajikistan works in Russia. And according to unofficial estimates, about 20% of men go to work in Russia at the age of 18 years. For a good salary in the RF, a Tajik citizen needs to obtain a labor license and pass an examination in the Russian language. It turns out that at least 20% of Tajiks know Russian. And this figure is only growing.

One of the experts of News of Baltic, Raymondas Butkus, recently visited the westernmost Russian city of Kaliningrad, the former German Koenigsberg, which was transferred to the USSR following the Second World War. Raimondas Butkus took part in the events within the framework of the visit to Kaliningrad of the official ambassador of the Republic of Tajikistan to Russia Imomuddin Sattorov.

According to the ambassador, in Tajikistan the Russian-speaking population does not need help or support. “We have no anti-Russian sentiments. All laws and decrees are issued in two languages – in the state language, in Tajik, and in the language of interethnic communication – in Russian. In addition, Tajikistan has a huge number of Russian-language media: newspapers, the Internet, radio, television. The most active media channels in Tajikistan are Russian. I am generally surprised that there are so many far-fetched information about Tajikistan in Kaliningrad.” – said Imomuddin Sattorov.

Imomuddin Sattorov stressed that the Tajik side constantly appeals to the Russian government with a request to increase quotas for the admission of Tajik students to Russian universities.

The head of the diplomatic mission in Russia noted that Tajik students studying in Russian are already a qualitative indicator of the relationship between countries, and it is necessary to start from schools.

“Today we talked about Russian schools, with the Russian language of instruction. Of course, they are in large cities – Dushanbe, Kulyab, Kurgan-Tube, Khujand, but this is not enough. As a result of agreements with the leadership of Russia and Tajikistan, as early as 2018, five such schools will be built. And plans to bring the number of new schools with the Russian language of instruction to 20”, – said Imomuddin Sattorov.

However, the Tajik ambassador to Russia also acknowledged that students are enrolled in all the leading universities of the world. “Thousands of Tajik students study in the People’s Republic of China, thousands in European universities, in the US, but such a large number of students who study at Russian universities are incomparable with China and the European Union. 20 thousand is studying in Russia! And this is natural, because Russia is our strategic partner – economic, political. We are connected by a common history, “summed up the Tajik ambassador to Russia Imomuddin Sattorov.

According to Raymondas Butkus, Kaliningrad has a sufficient number of migrant workers from Tajikistan who know Russian well and intend to continue working in Russia. In addition, in Tajikistan itself, about half of the population in one form or another receive information from Russian-language media. Labor relations, Russian-language media and historical ties – all this inclines Dushanbe towards the pro-Russian development path.

Sauli Niinisto, the President of Finland, declared that NATO is not actually a European organization, it is entirely dependent on the United States.

As the Finnish President noted, he had nothing against NATO, however, even if Donald Trump tempered criticism against it, the Atlantic alliance was not a Euporean organization, NATO completely depended on the United States. He also added that the European Union should provide security for citizens of the EU members. Safety has priority over prosperity. For many years, they thought that they did not have to worry about it, but now everything has changed. He believes that if Brussels could promise security guarantees to the citizens of the European Union, it would be much more popular.

Today it became known about the successful launch of intercontinental ballistic missiles by North Korea. This event becomes even more interesting due to two key factors.

First, the aggravation of the situation around the DPRK nuclear missile program is a threat to the safe holding of the Winter Olympic Games in South Korea. Secondly, official Washington is only waiting for such actions from Pyongyang to tear off its military might. In this regard, the introduction of the martial law in DPRK in January 2018 is evident, which will automatically lead to an aggravation of the military and political situation in the region. The United States has already demonstrated its attitude to the upcoming winter Olympics in Pyeongchang, banning representatives of the leading hockey league of the NHL to participate in the games. In addition, most of the leading American TV channels refused to broadcast the Olympics on their air. All this indirectly indicates that the US is ready to unleash a military conflict on the Korean peninsula. Any of the parties to the conflict at any stage of the conflict can use weapons of mass destruction. In addition, long-range artillery and missile systems of the DPRK will first destroy the strategic infrastructure of South Korea: energy, transportation and chemical facilities. In this regard, the security of thousands of athletes and millions of fans from around the world raises great doubts.

A number of sports experts and representatives of law enforcement agencies have already expressed themselves in the press and on the pages of Internet publications that it would be advisable to transfer the Olympics to another country, for example, to Germany. Germany has all the necessary sports and tourism infrastructure to host such a large-scale event. At present, there is no hotter geopolitical point in the world than the Korean peninsula. Moreover, on the peninsula there are militant neighbors supported by the two powers of the United States and the PRC. In any case, no matter how unpredictable events develop, the DPRK can use the olympiad as a strategic element of its military campaign. At the same time, the olympiad is unlikely to stop the US authorities from unleashing a conflict provoked by Pyongyang.

On November 24, the “EU-Armenia Comprehensive and Enhanced Partnership Agreement” will be signed. The historic step that President Sargsyan will make, on the eve of the transfer of basic powers to the Parliament, speaks of the great attention paid by the Armenian leadership to the construction of a multi-vector foreign policy in the conditions of the republic’s membership in the EAEC.

New projects that can be launched within the framework of the partnership between Brussels and Yerevan give Armenians hope for strengthening their country’s economy and improving their personal well-being. At the same time, the European business traditionally striving for active implementation of innovations in the projects being implemented can become the force that will bring Armenia to the list of technologically advanced countries.

One of the priorities in the republic’s economy is the modernization of the energy system and the diversification of electricity sources, the key one of which is currently the Metsamor nuclear power plant. The deputy minister of energy infrastructures and natural resources of the Republic of Armenia (RA), curating this reform, Hayk Harutyunyan managed to achieve undoubted successes in the development of “green energy” in the country in 2017. At the same time, Harutyunyan voiced in the national mass media large-scale plans to expand partnership in this direction with European investors.

The development of alternative energy in Armenia is a promising direction for investment, since the form of public-private partnership implemented by Yerevan allows the state to subsidize the high (in the initial payback period) cost of “green” electricity at the expense of budget revenues received from nuclear power plants.

 

However, one of the paragraphs of the Agreement implies the closure of the station in Metsamor. This step of the Armenian leadership, dictated by the position of Brussels, will reduce the investment attractiveness of the alternative energy sector in Armenia for European investors, substantially increasing the costs for the development of a new industry, which under current conditions is actually subsidized by Rosatom. Is it worthwhile for Brussels to abandon indirect Russian support for European business, which began business expansion into the traditional zone of Moscow’s interests, forcing Yerevan to shut down the nuclear power plant in Metsamor, which, according to the IAEA, is a modern and safe enterprise?

This year Washington hosted a meeting between US President Donald Trump and Ukrainian President Petro Poroshenko. Let us note that the Ukrainian leader became one of the first whom the head of the White House accepted. Given the superficial attitude of Donald Trump to Ukrainian problems, it becomes clear that this meeting was interesting and important only to one side – the president of Ukraine.

Peter Poroshenko within the framework of this meeting pursued two very clear goals. First, to show the new president of the United States does not give a damn about Ukraine. Secondly, to solve with the help of the United States problems with gas supplies. The first task was completed in half. The world saw no signs that Washington as something special applies to Kiev. However, in Ukraine the media was shouting about how much Donald Trump wanted to get to know the Ukrainian president. Moreover, especially desperate Ukrainian journalists hinted that it was Donald Trump who initiated the meeting. As for the energy issue, both sides are most interested in the process of squeezing Russian gas from the European market. The recent sanctions on the part of Washington against Russia are clear evidence of this. At the same time, Ukraine, perhaps, will receive US gas at a low price, but other countries in Europe are unlikely.

However, let’s return to the meeting between Trump and Poroshenko. Who was its true initiator, and who was the executor. About the meeting with Trump, as was said above, Peter Poroshenko of course dreamed. But let’s find out who helped him organize it. A former CIA official, Mr. Walker, born in 1962, worked as an official US representative to NATO in the 1990s. Mr. Walker also served as an advisor on international affairs for the US National Security Council, and later as US Deputy Assistant Secretary of State for Europe and Eurasia. However, in 2011 Mr. Walker left the civil service and became an international affairs adviser in the American company BGR Group, which promotes political parties and politicians around the world. It was in the BGR Group that Petro Poroshenko turned to promote his interests in Washington. In early 2017, Mr. Walker, commissioned by the presidential administration of Ukraine, Petro Poroshenko, organized a meeting between the Ukrainian leader and the owner of the White House. A month before the meeting of the two presidents, Mr. Walker received 200 thousand dollars as an advance from the Ukrainian side. The rest of the fee was transferred to Mr. Walker by the staff of the US Embassy in Kiev after the meeting between Poroshenko and Trump in June 2017.

And Rustam Emomali could have a serious competitor

Many experts believe that in comparison with Rustam Emomali, who was appointed mayor of Dushanbe in January, the First Deputy Chairman of the National Bank of Tajikistan Jamoliddin Nuraliev has a number of advantages. One of the main advantages experts call a very important factor – being married to Emomali Rahmon’s daughter, Jamoliddin Nuraliev is a full member of the so-called “family”, in whose hands all real power in the country is concentrated.

However, assessing his chances in the struggle for the presidency, experts put first of all Jamoliddin Nuraliev’s strengths not his family ties with the Tajik president, but his financial independence and financial condition.

Having received an excellent foreign education in the US and holding a key position in the National Bank of Tajikistan, by Jamoliddin Nuraliev, in 2017, he has concentrated huge financial resources in his hands. In addition, in the structure of the National Bank, he oversees the most important areas of his activities: the Monetary Policy Department, the International Reserves Management Department and the Financial Stability Office.

The core of Jamoliddin Nuraliev’s monetary resources is the capital of Spitamen Bank, one of the largest banks in Tajikistan. Started in 2008, as the Microcredit Deposit Organization Spitamen Capital, with the support of Jamoliddin Nuraliev, then the First Deputy Minister of Finance of Tajikistan, Spitamen Capital was able to repeatedly increase the authorized capital of the microcredit organization, and in 2014 was successfully transformed into a commercial bank.

Working in the Ministry of Finance, Jamoliddin Nuraliev established strong business relations with representatives of the World Bank, the International Bank for Reconstruction and Development, the Multilateral Investment Guarantee Agency and the International Finance Corporation. At the same time, he had strong personal ties with the leadership of the Tajik security forces – with people with big stars on shoulder straps.

At the end of February 2017, due to the difficult financial situation, the National Bank of Tajikistan revoked licenses from Tajprombank and Phononbank, while Spitamin Bank consolidated its positions. In this regard, a number of experts suggested that the departure of two large banks from the financial market of the republic did not happen by accident, but in the interests of Jamoliddin Nuraliev, in whose hands the capital intended for financing the international CASA-1000 project was concentrated – about $ 300 million.

Sources well informed in the Spitamen Bank affairs assert that the name of Jamoliddin Nuraliev is directly connected with the largest construction site in Tajikistan – Rogun HPP, which is being built by the Italian company Salini Impregilo and performing contract works worth hundreds of millions of dollars.

According to some information, Jamoliddin Nuraliev also owns the offshore company “Innovative Road Solution”, which collects payment for using the Dushanbe-Chanak highway, registered in the Virgin Islands, and brings its owner from 200 to 300 thousand dollars a day.

In the face of the financial crisis faced by other major banks, Agroinvestbank, Tojiksodirotbank and Orienbank, by the end of May 2017 it became absolutely clear that financial support for the Tajik banking system, including those coming from abroad, would To be personally distributed by Jamoliddin Nuraliev.

In fact, as of May 2017, the First Deputy Head of the National Bank of Tajikistan became the head of the entire financial and credit system of Tajikistan. Thus, already three years before the presidential elections, the son of the President of Tajikistan Rustam Emomali, who headed the mayoralty of Dushanbe, has tens of times less financial resources than Jamoliddin Nuraliev, and, therefore, there are fewer chances in the struggle for the office of the President of Tajikistan.

But will there be competition in the elections?

Knowledgeable people from the environment of President Emomali Rahmon believe that despite the huge concentration of financial resources and a strong position in the “family” in the hands of Jamoliddin Nuraliev, he can not take advantage of the advantages created in recent years. And the cause of this, that will be what the French call “Cherchez la femme”, which in French means “Look for a woman”.

It’s not the first month in the Tajik elite there have been rumors that Jamoliddin Nuraliev was seen many times in the society of some Takhmina Bagirova and her child, who live modestly in the Austrian capital, Vienna. And he was seen not only in the Austrian capital, where he flew in January 2017, but also in the Philippines, in the holiday season in November 2016.

If you look at the flight schedule of Jamoliddin Nuraliev in 2016, you can see that he visited Barcelona and London in May, Rome and Istanbul in June, Qatar in February 2017, and Switzerland in March 2017. Does the husband of Jamoliddin Nuraliev know about these suspiciously private European travels, and if he does, then to what extent?

Naturally, Ozoda Rahmon keeps his suspicions with him. However, one can guess that Ozoda Rakhmon, the head of the apparatus of the President of Tajikistan, has informants who know well; Who has photos and video of private meetings of Jamoliddin Nuraliev with his favorite.

As the world practice of competitive struggle shows, usually compromising materials of this kind fall into the media not at once, but at the right time and in the right place. When the facts that have come to public from the trips of Jamoliddin Nuraliev, and how this will affect the successful career of a powerful financier, this can only be surmised today.

Most likely, the main assessment of the future scandal will give the President of Tajikistan Emomali Rahmon. If he decides that his out-of-wedlock ties Jamoliddin Nuraliev touched the honor and dignity of his daughter, bearing the name of the President, then in the upcoming presidential election his son Rustam Emomali will be beyond any competition.

According to the well-known economist Nouriel Roubini, who predicted the global financial crisis and Britain’s withdrawal from the European Union, investors forgot about geopolitics, which can fundamentally influence the markets.

“With Emmanuel Macron’s defeat of the right-wing populist Marine Le Pen in the French presidential election, the European Union and the euro have dodged a bullet. But geopolitical risks are continuing to proliferate. The populist backlash against globalization in the West will not be stilled by Macron’s victory, and could still lead to protectionism, trade wars, and sharp restrictions to migration. If the forces of disintegration take hold, the United Kingdom’s withdrawal from the EU could eventually lead to a breakup of the EU – Macron or no Macron,” Nouriel Roubini notes. “At the same time, Russia has maintained its aggressive behavior in the Baltics, the Balkans, Ukraine, and Syria. The Middle East still contains multiple near-failed states, such as Iraq, Yemen, Libya, and Lebanon. And the Sunni-Shia proxy wars between Saudi Arabia and Iran show no sign of ending. In Asia, US or North Korean brinkmanship could precipitate a military conflict on the Korean Peninsula. And China is continuing to engage in – and in some cases escalating – its territorial disputes with regional neighbors,” the economist continues. “Despite these geopolitical risks, global financial markets have reached new heights. So it is worth asking if investors are underestimating the potential for one or more of these conflicts to trigger a more serious crisis, and what it would take to shock them out of their complacency if they are. There are many explanations for why markets may be ignoring geopolitical risks. For starters, even with much of the Middle East burning, there have been no oil-supply shocks or embargos, and the shale-gas revolution in the United States has increased the supply of low-cost energy. During previous Middle East conflicts – such as the 1973 Yom Kippur War, Iran’s Islamic Revolution in 1979, and Iraq’s invasion of Kuwait in 1990 – oil-supply shocks caused global stagflation and sharp stock-market corrections. A second explanation is that investors are extrapolating from previous shocks, such as the attacks of September 11, 2001, when policymakers saved the day by backstopping the economy and financial markets with strong monetary and fiscal policy easing. These policies turned post-shock market corrections into buying opportunities, because the fall in asset prices was reversed in a matter of days or weeks. Third, the countries that actually have experienced localized asset-market shocks – such as Russia and Ukraine after Russia’s annexation of Crimea and incursion into Eastern Ukraine in 2014 – are not large enough economically to affect US or global financial markets. Similarly, even as the UK pursues a “hard Brexit,” it still only accounts for around 2% of global GDP. A fourth explanation is that the world has so far been spared from the tail risks associated with today’s geopolitical conflagrations. There has not yet been a direct military conflict between any major powers, nor have the EU or eurozone collapsed. US President Donald Trump’s more radical, populist policies have been partly contained. And China’s economy has not yet suffered from a hard landing, which would create sociopolitical instability,” the expert says. “Moreover, markets have trouble pricing such “black swan” events: “unknown unknowns” that are unlikely, but extremely costly. For example, the market couldn’t have predicted 9/11. And even if investors think that another major terrorist attack will come, they cannot know when. A confrontation between the US and North Korea could also turn into a black swan event, but this is a possibility that markets have happily ignored. One reason is that, notwithstanding Trump’s bluster, the US has very few realistic military options: North Korea could use conventional weapons to wipe out Seoul and its surroundings, where almost half of South Korea’s population lives, were the US to strike. Investors may be assuming that even if a limited military exchange occurred, it would not escalate into a full-fledged war, and policy loosening could soften the blow on the economy and financial markets. In this scenario, as with 9/11, the initial market correction would end up being a buying opportunity.” “But there are other possible scenarios, some of which could turn out to be black swans. Given the risks associated with direct military action, the US is now alleged to be using cyber weapons to eliminate the North Korean nuclear threat against the US mainland. This may explain why so many of North Korea’s missile tests have failed in recent months. But how will North Korea react to being militarily decapitated? One answer is that it could launch a cyber attack of its own. North Korea’s cyber-warfare capabilities are considered to be just a notch below those of Russia and China, and the world got an early glimpse of them in 2014 when it hacked into Sony Pictures. A major North Korean cyber attack could disable or destroy parts of the US’s critical infrastructure, and cause massive economic and financial damage. That remains a risk even if the US can sabotage North Korea’s entire industrial system and infrastructure,” Nouriel Roubini says. “Or, faced with disruption of its missile program and regime, North Korea could go low-tech, by sending a ship with a dirty bomb into the ports of Los Angeles or New York. An attack of this kind would most likely be very hard to monitor or stop. So, while investors may be right to discount the risk of a conventional military conflict between the US and North Korea, they also may be underestimating the threat of a true black swan event, such as a disruptive cyberwar between the two countries or a dirty bomb attack against the US.” “Would an escalation on the Korean Peninsula be an opportunity to “buy the dip,” or would it mark the beginning of a massive market meltdown? It is well known that markets can price the “risks” associated with a normal distribution of events that can be statistically estimated and measured. But they have more trouble grappling with risk that cannot be calculated in probabilistic terms.”

Founder and Executive Chairman of the World Economic Forum Klaus Schwab believes that European institutions of power need urgent reforms. “Emmanuel Macron’s victory in the French presidential election is the surest sign yet that after a series of crises and setbacks, Europe may be regaining some semblance of self-confidence. But renewed confidence must not lead to resumed complacency. With Macron, France’s center has fended off electoral assaults from both sides. But the vigor of those assaults shows how precarious the European Union’s circumstances remain. And, though there is broad recognition that bold action is urgently needed, there is no agreement on what action to take.

The approach that has dominated EU reform debates is the creation of a “multi-speed Europe.” The idea is that, in lieu of an agreement on when and how to reach some optimal level of integration, each EU member country should be allowed to progress toward integration at its own rate, with a set of vanguard countries driving progress,” Klaus Schwab notes. “But what may seem like a convenient way to sidestep complex negotiations actually has serious problems. For starters, the multi-speed approach ignores voters’ persistent suspicion and hostility toward the EU: the Brexit referendum is only the latest – albeit the most consequential – in a long line of examples. Equally important, it ignores the actual needs of member countries. Europe undeniably requires a shared vision – based on common values, freedoms, and standards – toward which to work. But any Europe-wide vision must respect the visions, not to mention the identities, of the EU’s member states and the governments elected to pursue voters’ priorities,” the expert continues. “Shared values are one thing; the details of social and labor-market reforms, tax systems, or regulatory regimes (beyond the essentials of a single market) are quite another. In these areas, EU member states, potential entrants, and even exiting countries have vastly different needs, depending on their particular industrial bases, demographic dynamics, historical legacies, and in the case of Balkan states, post-conflict burdens. Those differences will affect not just the pace of integration, but also the path. According to the World Economic Forum’s Global Competitiveness Report, eight of Europe’s ten most competitive economies are in northwest Europe; non-EU members Switzerland and Norway complete the ranking. But a solution to the north-south competitiveness gap can neither be imposed from above, nor be the sole objective guiding the conduct of business in the EU. It certainly cannot be closed overnight. This is not to say that addressing the competitiveness gap is not critically important. On the contrary, creating a more equitable economic landscape will benefit citizens through the EU, rekindle the Union’s appeal to the outside world, and position it as an island of stability in a global sea of conflict and insecurity,” the founder of the World Economic Forum sets forth his viewpoint. “But European leaders need to find an approach that takes into account countries’ varying needs and even perspectives. That means focusing less on being right – and more on doing the right thing. We Germans can be glad that our country navigated the 2008 economic crisis so adeptly, keeping unemployment at manageable levels and emerging, in some respects, even stronger. Yet, as Europeans, we have to acknowledge that Germany’s growing current-account surplus is creating an unsustainable imbalance in the EU. Add to that the pull of Germany’s strong labor market – not to mention the almost magnetic attraction of Berlin for European millennials – and the imbalance grows even larger. After all, nowadays, Europe’s economy is driven less by cash investment than by talent and ideas. I am realistic enough to know that no government – not in Germany, and perhaps nowhere in Europe – can agree to a major European debt-relief initiative months before a contested election. But I am also optimistic that leaders in the most competitive parts of today’s more confident EU will see the wisdom in working to support economic progress for all member states,” the expert says. “This would not be the first area in which Germany rose above damaging national egotism and displayed responsive and responsible leadership. In 2015, Germany’s coalition government decided, despite considerable domestic backlash, to welcome a million refugees fleeing the horrors of war in Syria and Iraq. The policy cost the government parties considerable political capital, but it will eventually prove its value for a country facing demographic challenges. Political leaders, and their private-sector counterparts, now must emulate the example that Germany set with its refugee policy. That means resisting the idea that compromise is a sign of weakness and a recipe for inefficiency, and instead upholding it as one of the most powerful tools of democratic decision-making – and a cornerstone of the European project. Above all, it means recognizing that what we should be talking about is a Europe not of different speeds, but of different needs,” Founder and Executive Chairman of the World Economic Forum Klaus Schwab concludes.