Ditching the West to Join The Rest

By joining the Eurasian Economic Union, Ankara can greatly benefit as a result.

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Nine years ago I wrote a post in which I alluded to the possibility of Turkiye joining the Eurasian Economic Union: 

"As was the case between France and Germany, Turkey had been Russia's number one enemy for centuries, the two countries had fought a long series of wars with each other. Both empires - the Russian and the Turkish - disappeared, however the states that emerged from their ruins enjoy excellent economic and diplomatic relations today.

Pushing the analogy with the EU further, we find that the new Eurasian Economic union needs a nucleus formed by two strong states around which new members from Eurasia can be attracted in the future.

Thus, according to a statistic published by Geo magazine (French edition) in December 2011, between 2002 and 2011 Turkey attracted a number of 27,000 foreign companies, of which 15,000 came from Russia. This being the situation, we can consider that the integration of the two economies - Russian and Turkish - has already reached an advanced stage."

As most of us know, the Eurasian Economic Community (EEC) appeared after the dissolution of the USSR and - in a way - because of it. Although headquartered in Moscow, the union was actually the brainchild of Nursultan Nazarbayev, the former president of Kazakhstan. 

After 2000, Russia wished to use the EEC as the nucleus of a larger common market, hoping to enlist Ukraine as a member. That prospect greatly upset the American Secretary of State at the time Hilary Clinton, who by 2011 campaigned internationally against it. The matter was put to rest by the Maidan coup d'etat, after which Ukraine decided to join the European Union instead.

Since then, the membership of the EEC has only included states like Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia.

During the same period, Turkiye all but gave up on its bid to join the EU after more than 50 years of waiting for a decision from Brussels. Geographically considering the matter, Turkyie is an Eurasian country with a different religion and culture from the rest of the EU members.

Taking the analogy between France and Germany after World War II and present-day Turkiye/Russia further, it is obvious to me that both the Russians and the Turks would greatly benefit economically from joining forces within the EEC.

Furthermore, the EEC includes republics from Central Asia whose populations are of Turkic descent. Finally, both Russia and Turkyie are governed by populist authoritarian leaders who strongly support traditional family values and reject Western-style liberalism with its current corollary, the LGBTQ agenda.

But there is more. 

For such a momentous transition for Turkiye to be complete, the Erdogan government should seriously consider joining the Cooperative Security Treaty Organisation (CSTO). Over the past few years there have been quite a few calls within American policymaking circles, including The Atlantic Council, for Turkiye to be evicted from NATO.

Again, given the fact that the CSTO includes among its members some of the Turkic republics from Central Asia such as Kazakhstan, Kyrgyzstan and Tajikistan, Turkiye could play a vital role in helping stabilise those republics which periodically experience political turmoil. Thus, the 5th of January 2022 Russian intervention in Kazakhstan could very well have been undertaken by a Turkish contingent instead.

Another area where Turkiye would have made an essential contribution is that of the conflict between Armenia and Azerbaijan in Nagorno-Karabakh. Russia has obvious leverage in Yerevan, but very little influence in Baku where Turkiye has a big say. Clearly, with both Russia and Turkiye being part of the same security organisation, Central Asia and the rest of Eurasia could only stand to benefit as a result.

The US is about to Cancel Itself

 After initiating bombing campaigns over the last 23 years in Serbia, Afghanistan, Iraq, Libya and Syria, and fomenting "color revolutions" in Eastern Europe, American politicians have lost the moral authority necessary to lecture the Kremlin about its military actions in Ukraine.

The average European or American TV viewer can naturally be excused for believing that Russia, and especially its president Vladimir Putin, bears the blame for what is happening in Ukraine. After all, citizens of Western countries are being bombarded on a daily basis with sickening images of buildings in ruins, crying women with babies, with the occasional cat or dog being thrown into the mix for good measure. To top it all off, Putin's latest actions in Ukraine are being presented as the acts of a madman, a bloodthirsty dictator, whose expected downfall justifies the adoption by Western countries of the harshest possible sanctions ever devised. The objective is clear: Russian people have to suffer for supporting their president, until they take to the streets to bring down those responsible.

The sorry spectacle of Russian bombs falling over Ukrainian cities and of millions of refugees heading towards the borders cannot obscure the fact that the heaviest responsibility for these horrors belongs to the neoconservative-dominated US foreign policy establishment. As known, they are now the main backers of the Zelensky regime, the ones writing his speeches and the ones opening doors for him in the West.

The harshness of the sanctions against Russia is the result of applying woke ideology to the field of international relations. Indeed, these sanctions are not meant to lead the Ukrainian conflict to a resolution, or the Russians to the negotiating table, far from it. The true goal of American neoconservatives is, astoundingly enough, to "cancel" Russia both as a country and as a menace to America's status as sole hegemon left after the demise of the bipolar world.

Taken together, the US' actions directed over the past few years against Russia and especially against China can only be explained by the desire of American foreign policy circles to keep America on top, at the expense of all other military and economic powers, established or emerging ones. To this end, crippling entire economies and vast geographical areas of the world and reigniting the spectre of war in Europe seem a small price to pay for the initiators of American unipolarity in world affairs.

There is currently talk in Washington about hegemonic transition and the Thucydides trap which, if not carefully managed, could finally erupt into an all-out war between the US with its NATO allies, on the one hand, and Russia & China on the other. This time around, however, the leadership of the would-be hegemon supposed to replace the US, namely China, is a hell of a lot smarter than American policymakers ever were. To be sure, China deserves a much more important role in world affairs than is currently the case. To their credit, however, the Chinese do not want to replace the US as the world's sole hegemon, but instead prefer to see the world run in multipolar fashion, by a kind of revamped G7 in which nobody is at the head of the table, but where all major participants share into decisionmaking concerning global affairs. 

In the first decade of this century, the US hoped that they could enlist Russia to organise a Washington-operated balance of power aimed at containing China's rise. American policymakers sensed, rather correctly, that no policy of containment towards China can be successful without having Russia on board. This was the main reason why , between 2009 and 2012, the Obama administration tried to mend fences with Moscow during the so-called reset. Fortunately, the Russians felt the danger of being used for the wrong ends and refused the US's overtures, siding over the last decade with China instead. As Russia refused to come on board, America's architects of unilateralism in international affairs, the neocons, have supported the 2014 upheavals in Ukraine and practically took over the political management of that country in order to turn it against Russia. What we are now witnessing is Russia's military reaction to the threat on its western borders. Regardless of how strident the Biden administration is now in framing the resulting competition as a fight between democracies and autocracies, from an IR point of view the strategy is shallow and is backfiring.

Coming back to the sanctions regime and NATO's posturing in the media, these have only proved to the Western public and to the new allies in Eastern Europe how ineffective the US has become in managing global affairs, especially in Europe. As much as American neocons would like to treat Putin like Saddam and Russia like Iraq and sanction them out of existence, the truth of the matter is that the use of the financial A-bomb (cutting out Russia from SWIFT) and of the financial H-bomb (freezing its central bank reserves in Western banks) is hugely counterproductive and can be fully met by the Russians -if pushed too far- with real atomic and hydrogen bombs. 

Now everyone would agree that this is not the type of global leadership with which the world could put up for long. America's extreme tactics call into question the current arrangements in global affairs: the fact that most commercial transactions are conducted in US dollars, and that all countries have to obey US diktats or else. In fact, all the US has succeeded in doing by interfering in Ukrainian internal affairs since 2014, and by supporting the war against Russia, has been to speed up its own demise as the sole world hegemon. By "cancelling" Russia, the US has initiated the process of cancelling itself. 

Multilateralism and the Remaking of G7

Following the oil shock of 1973, the G7 was created in 1975 to coordinate the West's macroeconomic and fiscal policies so as to avoid a global recession. Today the world economy faces an even bigger predicament, which could be addressed by restructuring the membership of the G7 and ending the war in Ukraine.

It is obvious by now that the biggest casualty of the conflict in Ukraine - second only to the human casualties -  is the world economy. Oil and gas prices have spiked in all major economies to unacceptable levels and could go even higher, jeopardising a timid economic recovery which followed the shock of the pandemic, and adding a few percentage points to existing inflationary pressures. The culprits here are both the US' unilateralism in foreign affairs and the current design of the global economic system's governance, which is also US-centric.

After the demise of the bipolar world, it should have been obvious to Western policymakers that the next stage in the governance of international affairs can only be multilateralism. Unfortunately, American neocons decided to launch their unipolar project which led to the Afghanistan and Iraq wars, and ultimately to Maidan and the current conflict in Ukraine. This situation, if left as is, won't lead to a second Cold War as some would hope, but to all-out nuclear war.

I believe that world leaders should start addressing the problems created by American unilateralism and unipolarity by first rebuilding existing collaborative institutions, such as the G7. In truth, the global economy can no longer be governed successfully by a G7 which has an almost exclusively Western membership, while leaving huge emerging economies like China to be part of a second-class economic grouping known as the BRICS.

In order to reflect today's economic realities, the G7 has to shed its purely Western image and drastically restructure its membership. This means including in this group systemically essential countries like China, Russia and Brazil as the next engines of economic growth, which would replace countries such as Great Britain, Italy or Canada. Granted, Russia cannot be called these days an economic power, but its huge oil, gas and mineral wealth makes it essential as a supplier of energy to all the other major economies in the group, as current events have amply demonstrated.  

To bring the world back from the brink of a prolonged economic recession and a potential nuclear war, American and EU leaders should also stop ignoring Russia's security concerns and the material support for the Maccabeean state Zelensky has been trying to build in Ukraine since 2019. In its 30 years of existence, Ukraine has proven to the world that it is unable to govern itself independently and build a state that can contribute to the peace and stability of Eastern Europe. Even more worrying is the fact that under Zelensky's leadership the Ukrainian constitution has redefined Ukraine as an anti-Russian state, a fact that Russia cannot overlook or tolerate on its Western border.

For me as a trained historian from the region, Russian tutelage of Ukraine looks more productive than any weird geopolitical designs recommended by a distant superpower like the US. I have always been convinced that "cancelling" Russia, instead of involving it in the macroeconomic management of the global economy, is not only self-defeating but also plain stupid. 

The fact that the Zelensky administration has to be replaced as soon as possible should be a given not only for Moscow, but also for the leaders of those Western powers still interested in peace and stability in Europe, a stop to war casualties and a steady supply of energy to the EU.

The EU and China: Geo-economic Agendas Compared

 November 22, 2015

The wave of blowback terrorism currently sweeping Western European capitals is likely to obscure a major event due to take place on November 24th and 25th in China: I am referring to the annual meeting of the leaders of 16 Central and Eastern European countries (Albania, Bosnia and Herzegovina, Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Macedonia, Montenegro, Poland, Romania, Serbia, Slovakia and Slovenia) with the Chinese leadership in Suzhou. Following immediately after this weekend’s ASEAN summit in Malaysia, the meeting provides an extremely useful glimpse of China’s geo-economic agenda from the Balkans to Poland and Hungary.

An even more useful exercise, however, would be to compare the EU’s geo-economic agenda, with that of China and Russia in our parts of Europe.

The leading exponent of the West’s geo-economic agenda has to be considered Pascal Lorot, the founder of geo-economics. In the 1990s he published a booklet, suggestively titled “La conquête de l’Est”. The book contains the main tenets of the West’s economic expansion in the ex-Soviet bloc states from Central and Eastern Europe. Although NATO expansion has preceded that of the European Union, the main actors of the West’s geo-economic agenda in the region are the global corporations headquartered in France, the US or other participating Western countries.

While financial transfers from the EU to new member states from Central and Eastern Europe have diminished significantly over the years, having contributed only marginally to upgrading their infrastructure to EU standards, Western global corporations have taken over even the water supply or gas distribution in countries like Romania.

The results of the economic penetration in the area are, in some cases, nothing short of disastrous. Thus, companies like Vivendi or Gaz de France have succeeded in imposing to consumers at least ten tariff increases for water and gas in the last four years alone, contributing heavily to further impoverishing Romania’s population whose income levels, however, were already well below the EU average. To top it all off, Brussels is about to stunt Romania’s economic growth by imposing an EC-backed premier, unelected and undesired by the locals.

Moreover, throughout the region, Western global corporations have systematically deprived all the governments of much needed taxation income via transfer pricing and other accounting gimmicks.

Sure enough, there are a few success stories of Western economic expansion in the region, like that of German, American and French auto-makers in countries like Hungary, Slovakia, the Czech Republic and Romania, but these are the exception rather than the rule.

At the time of their EU accession in 2007, citizens of predominantly Orthodox countries like Romania and Bulgaria were hoping that this would put an end to their countries’ economic plight. The ensuing cultural shock suffered during the latest drive of Western expansionism has instead reopened old wounds. The 1204 ransacking of Constantinople by the crusaders is still alive in the collective memory of the Balkans. On that occasion, Western military “assistance” morphed into full-blown pillage and plunder, followed by the occupation of the Byzantine capital.

By contrast, since 2012 when the first China-CEE meeting took place in Warsaw, China has proven more willing than the EU to invest heavily in these countries’ infrastructure and manufacturing sector. In 2013, the first direct rail link between southwest China and the Polish city of Lodz was inaugurated, greatly facilitating two-way trade between the two countries. Nowadays, it takes only 15 days by rail for Chinese goods to reach Poland, or for Polish agricultural products to reach China. The upgrade of Baltic countries’ ports with Chinese investment is also underway, not to mention the upgrade of the port facilities in Piraeus, Greece by Cosco.

To date, the most ambitious Chinese infrastructure project in the region is the building of a very fast rail link between Piraeus and Hungary, connecting Athens and Skopje with Budapest via Belgrade. Not very far behind are the Russians, who are planning to build a gas pipeline from the Balkans to Central Europe along the same route. The Russians have also agreed to finance, to the tune of a few billion euros, the upgrade and construction of nuclear reactors in Hungary in spite of vehement EU protests.

The leaders of Central and Eastern European countries are now in a position to choose from the two geo-economic agendas the one that best suits the needs of their economies. As matters now stand, it seems that the West has largely exhausted its economic growth potential and is instead trying to exploit – colonial-style – the resources or populations of the new member states accepted after 2004. With its large cash reserves and “win-win” economic philosophy, China looks set to capitalize on local disenchantment with the EU by expanding steadily into this region.

Greek geo-economic agenda in shambles

 October 2, 2011

As a general rule, with the exception of Russia and China, few developed countries have a geo-economic agenda of their own. This, after all, is the task of multinational or global corporations. The latter can benefit from logistical state support, but to a much more limited extent than in the past.

The situation is somewhat different for weaker southern members of the EU, like Greece or Spain. The core businesses there have been known to act in concert and expand in geographical areas of the world in which competitive pressures are mitigated by the pre-existence of religious, cultural and/or historical ties. Thus, since the 1990’s, Spanish banking conglomerates and telecommunication operators have been aggressively pursuing an expansion strategy in Latin America, where a common language and former political ties has given them an edge over their North American counterparts.

Up until the debt crisis derailed the country, Greek businessmen were similarly following a geo-economic agenda in the Balkans, which enjoyed the full support of the Greek state, and even that of the Greek Orthodox Church. Accordingly, Greek expansion took place in weaker markets that were undercapitalised, new to competition rules and fairly corrupt. The target countries all happened to be Orthodox, as well, and Greek diplomacy has attempted over the past ten years to become this group’s spokesman and leader within the EU.

To be sure, the minuscule size of Greece’s home market had made such economic expansion plans imperative. Like Spain in Latin America, Greek banks and telecommunication operator OTE / Cosmote opened offices and acquired stakes in companies in Romania, Bulgaria, Serbia or Albania. Until 2010, Piraeus, Alpha or the National Bank of Greece became household names in the Balkans, and attracted a large share of deposits in the region. Their market share increased steadily, sometimes at the expense of better-capitalised Central European competitors with similar expansion plans, notably from Austria. OTE’s purchase of Romtelecom in Romania, for example, and the expansion of Cosmote mobile phone operator could be considered a regional success story.

Alas, the Greek economic expansion bonanza came to an abrupt halt once the true situation of Greece’s state finances became known. It is not that the geo-economic strategy was wrong, or that Greek companies operating abroad were poorly managed. Nothing of the sort. Rather, their carefully laid out expansion plans were first torpedoed, and then thwarted, by the doings of their home government. In some respects, the dire situation of Greek businesses operating abroad is similar to that of profitable Japanese companies operating globally, whose credit rating, public image and economic performance started being affected, at the turn of the millennium, by the Japanese government’s huge sovereign debt, which now stands at 225 % of GDP. In an effort to escape being overtaxed by a Tokyo administration desperate for cash, companies like Toyota, Sony and others had at one point even considered shifting most taxable assets overseas.

Nowadays, most Greek banks operating in Romania, for example, are posting losses, as depositors are fleeing them for safer banking operators Although relatively small in size, Greek banks are considered by financial analysts as conservative and well-managed, but, at the same time, saddled with quite a big chunk of the country’s treasury bonds. In the months and years to come, this might lead to some bank failures, as a result of the Greek state’s inability to honour its debts. Lending to Greek businesses operating abroad has also diminished considerably, further jeopardizing Greece’s expansion strategy adopted some fifteen years ago. Thus, deleveraging in Greece will not only affect the country’s public servants, but also its business community with operations abroad.

Asian Union Plans Attract Japan

 September 24, 2009

The plans for creating an Asian economic community grouping China, ASEAN and Japan have received an important boost recently. During his informal meeting in New York with Chinese president Hu Jintao, the new Japanese premier Mr. Hatoyama has proposed the creation of an East-Asian community which would emulate the model of the European Union. Closer ties between Japan and China should eventually create the nucleus towards which the other East-Asian nations would gravitate economically :

“Whilst recognizing our differences, Japan and China should surpass them and build a relationship based on trust. This would be the basis of the East-Asian community that I would like to create”. (Yukio Hatoyama, quoted by Asahi Shimbun and Courrier International)

The Japanese prime minister’s overtures have been positively received by the Chinese leader, himself in favour of closer economic and political ties with Japan.

At first glance, the new Japanese premier’s plans might seem premature. Not according to new data provided by seasoned economists, such as Neal Soss of Credit Suisse New York. Talking to The New York Times reporters recently, he points out that for some time now the gravity centre of the global economy is shifting towards China. The current crisis, however, marks a turning point. Until now, the United States was always the first to recover from recessions, followed by Europe and then Asia. This year, China has replaced the US as Japan’s biggest trading partner and it is actually leading the world out of the crisis, due to its massive recovery package and the banking credits extended to the business sector and individuals alike .

The corresponding increase in consumption by Chinese businesses and households has also prompted a surge in US exports to China, especially in May, June and July this year. German manufacturers, too, are looking East to increase their exports, less towards the United States. According to Jens Nagel from the Federal Association of German Exporters, “what we lose in exports to the US, we gain in China” (Courrier International).

Nor is this all. The Chinese have not only increased the amount of imports from the US, but continue to finance the huge US budget deficit on which the American recovery depends.

This considerable economic clout would have been unachievable in such a short period of time without the financial crisis, which spurred the Chinese recovery efforts. Little wonder, therefore, that Japan sees its economic future in Asia, which is fast replacing the impoverished US market as its main trading partner.

When all these developments are taken into consideration, the Japanese prime minister’s proposal makes a lot of sense. The two leading actors of the European Union, France and Germany, have gone through two devastating wars before becoming founding partners of the EEC. The bitter enmity between the two nations was in time superseded by strong economic bonds and ever-closer political ties, an outcome surely desired by the Japanese premier in his dealings with China.

However disfunctional the EU might prove at times to be from a political perspective, from an economic point of view it is the great success story of the last few decades. To be sure, the success achieved by the 27 European nations in bridging their differences and working together for economic prosperity represents a good model to follow by the world’s largest emerging trade bloc