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From Rome to Riga: Why German efforts to read Blinken’s mind on Nord Stream 2 are probably misplaced

The Financial Times had an interesting piece recently about the tea leaves some German policymakers have been peering at to figure out how the new US administration will approach the Nord Stream 2 project. “Ally Versus Ally: America, Europe, and the Siberian Pipeline Crisis,” a book written by US Secretary of State Antony Blinken during his law school days, is supposedly “one of the most-read items among German foreign policy experts these days.” And it appears to be providing solace to those that support Gazprom’s $11 billion pipeline hobbled by US sanctions. “My impression is that [he] doesn’t think sanctions are the right way to deal with an ally, and we trust him,” said a CDU MP after reading the book.

But could a book written about Reagan’s handling of the Urengoy–Pomary–Uzhhorod pipeline really give perspective on how the author would treat a similar project in today’s Europe?

As Biden addressed the Munich Security Conference on Friday, Feb. 19, the State Department sent Congress a report that listed the companies potentially subject to sanctions given their involvement in Nord Stream 2. The Administration has repeatedly called the project “a bad deal” for Europe – a gentle euphemism to brush over the significant risks to European energy security and independence many see it as posing. Nevertheless, the lack of new targets prompted disappointment from several lawmakers and signaled to some that the administration was willing to buy time to work on the issue with Germany, which will be a key ally in negotiations on the Iran deal and on curbing Chinese influence.

In his book, Blinken’s argument against sanctions in the case of the Urengoy–Pomary–Uzhhorod pipeline, according to the Financial Times, was that “it was more important for Washington to nurture its allies than dictate their economic relations with Moscow.”

A quick reading of how the crisis played out shows that Blinken may have been right. Reagan and Congress feared the pipeline would “make West European participants overly dependent on Soviet natural gas and equipment orders and, thus, vulnerable to Soviet threats to cut off the gas in a political crisis” as well as provide convertible currency to the USSR. Reagan, first, imposed sanctions in 1981 on American companies furnishing equipment to the project, before expanding sanctions in 1982 to any European companies involved using American technology. The European Economic Community then sent a joint statement to the US calling its sanctions against the pipeline illegal. Reagan eventually backed down and let the pipeline move forward, limiting punitive measures to American companies.

In the case of Nord Stream 2, the European Union has not issued a joint statement, but Josep Borrel condemned the US sanctions in July 2020 as “against European companies and interests” and as also as illegal. A communication on economic sovereignty in 2021, he said, would address the issue. Indeed, the Commission’s January communication outlines a broad strategy against “extra-territoriality” (European term often used to describe American legal provisions with international impact) and its willingness to the deploy the Blocking Statute, “the EU’s unified response to the extra-territorial application of third-country measures, in particular secondary sanctions, on EU operators.” So why would Blinken, now in office, act any differently than what he advocated in his book?

Well, let’s put aside the idea that people can change opinions over the course of three decades. One difference between the current tension of NS2 today and the Siberian Pipeline Crisis that Blinken analyzed is that, at the time, the alternative United States had to offer Western Europe was its coal, which cost too much for them to import and process. Now, the US is pushing its own liquid natural gas which, until a few years ago, it had barred itself from exporting for decades. But a much greater change since the 1980s that German policymakers must keep in mind, not only for this predicament but for any future diplomacy with the US, is that the Biden Administration is not dealing with the same European bloc and therefore not the same ally.

In 1982, when Reagan received the joint statement in response to his expansion of sanctions to European subsidiaries, the EEC (the precursor to the EU) was made up of 10 members, and mostly chaperoned by a Franco-German partnership. The most easterly of these countries was Greece, which had joined the year before. French and German corporations participated in the project designed to bring Russian gas into Ukraine, which would then be transported into the West European natural gas network.

Things are no longer so simple. Today, Biden is faced with a 27-member European Union that includes Poland and the Baltic States, all hostile to the Nord Stream 2 project. Its current Commissioner on Trade is Valdis Dombrovskis, Latvia’s former Prime Minister who said in 2009 that Nord Stream was “not inline” with the EU’s common energy policy. Former soviet satellites, which are wary of Gazprom gaining a footing in Germany and Russia thereby having more leeway to turn off its gas supply to Ukraine when it feels like it, are now a part of the voice that represents Europe. In 2016, eight Central and Eastern European member states sent a letter to the EC arguing that the project would undermine European energy security and warning of its “potentially destabilising political consequences.”

German policymakers may want to reconsider the faith they’ve put into Blinken’s book as a proxy for his diplomacy in the 21st Century. 18 companies have recently quit the Nord Stream project due to the prospect of ongoing sanctions. After four years of belittlement of the transatlantic partnership from the Trump Administration, Biden is wisely treading softly in reengaging the EU. But today’s EU is certainly not the EEC of the 1980s. As Biden said in his remarks at the Munich Conference, the US will work with “its European partners and the capitals across the continent” which now stretch “from Rome to Riga.”

Brexit from Erasmus: Why the UK’s withdrawal signals difficulties to come for its students and for British influence abroad

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On Christmas Eve 2020, a respite from the constant COVID commentary finally came to Europeans in front of their televisions as news of the Brexit deal was finally delivered in dueling press conferences in Brussels and the UK. Amid a lively slew of announcements, Boris Johnson surprised viewers by declaring the UK would be leaving the Erasmus+ program. The decades-long program was “too expensive.” Rather than accepting the EU’s offer to stay on as a non-EU state, like Turkey or Switzerland, the UK would instead be creating its own program, the ‘Turing Scheme,’ so UK students would “have the opportunity… not just to go to European universities, but to go to the best universities in the world.”

Symbolically, the decision drives home Mr. Johnson’s determination to cut the cord from the European project. Unfortunately, the withdrawal deprives UK students, apprentices and teachers of a vast network of thousands of universities until its new scheme can catch up, and it has hampered one of its strongest sources of soft power—the lure of its world-class universities.

Saying ‘goodbye’ to the Erasmus Generation(s)

Erasmus, recently revamped as Erasmus + in 2016 to include opportunities for teachers and apprentices and enlarge cooperation with countries around the world, has often fueled narratives of a freely mobile European youth. Academics have long foreseen an ‘Erasmus generation’ of alumni who would someday harbor more positive attitudes toward European integration than their forebears. Movies like Pot Luck (better known as L’Auberge Espagnole in French) played to this narrative of a new generation of European students of mixed nationalities living, studying and eventually sleeping with each other.

Aspirations of a long-term contribution to European integration were not absent from the minds of EU policymakers themselves. Explicit objectives of increasing skills among a heterogenous market of job searchers have commingled with greater ambitions of making youth more open to foreign cultures and even as far as finally solidifying a true European identity.

Like many EU initiatives, its stated objectives have varied depending how it is being championed. Although its foundations had been laid out by 1985, the ECJ, in its decision Gravier v. City of Liège that year, ruled that EU member states were required to allow nationals from other member states to access ‘vocational training.’ With the spectre of uncontrolled migration of students, the decision added pressure on the council to adopt the Erasmus proposal.

At the same time, Michel Richonnier, a cabinet member of Peter Sutherland, commissioner for Competition, noted the need to encourage a mentality of cooperation among Europeans in order to the “economic and social development of the community as a whole” as he dramatically scaled up the proposal.

The program is now part of a broader European Education Area set to take shape by 2025. This strategy’s goals include increasing overall mobility across countries, ensuring seamlessness and recognition of diplomas between universities and high schools, and making trilingualism the new norm.

The European Commission promotes the program as a driver in support of multiculturalism among younger generations. The 2017 Erasmus Annual Report pointed out that 93% of mobile higher education students say they are more receptive to Europe’s multiculturalism after their stay abroad.

However, Iain Wilson from the University of St. Andrews has questioned the methodology of studies that ask students simply after their experience how they feel about Europe, but also insinuations from others that the program contributed to deeper European identity or greater affinity toward the EU itself.

In 2008, he attempted to more accurately measure how much Erasmus changed participants’ political attitudes toward a more pro-European agenda. He polled participants before their studies abroad and afterwards, and also compared them with a control group of students. The findings showed that those who chose to study abroad through Erasmus typically began with more favorable attitudes toward the EU project than those who did not, and that those attitudes showed little change on average after the experience.

Although a clear picture of how the program can change political attitudes is still wanting, there is no doubt that the program provides a more international scope to participants’ lives long after they finish their studies. According to the Erasmus Impact Study published in 2015, 40% of Erasmus alumni end up living and working abroad. A third had a partner of a different nationality, compared with only 13% of those who stayed at home during their studies.

Alain Lamassoure, a former French Eurodeputy, is convinced that the more profound effects will manifest in subsequent generations, thanks to what Umberto Eco described as a ‘sexual revolution.’ In 2012, with austerity pinching EU spending, Mr. Lamassoure led a public awareness campaign to save the program’s budget, calling together a press conference, and most notably estimating that the international couples formed through the program had resulted in the birth of nearly one million babies. Today, he is willing to extrapolate that the number has reached two million.

The status of these Erasmus babies raises legal issues to which the EU has no response, a predicament that Mr. Lamassoure witnessed firsthand. “While studying in Scotland, my eldest daughter and her Spanish boyfriend had a child named Pablo. Three questions came up. First, whose job is it to declare the child at St. Andrew’s City Hall? Second, whose family name for the little Pablo? Third, which nationality? The laws between France, Spain and the UK were all different,” he says.

Going further, Mr. Lamassoure also insists on little Pablo’s self-perceived identity. “When he watches a match between Scotland and Spain, what team will he root for? For kids like him, sovereignty is abstract.”

Many EU initiatives have spill-over effects that bind member states into deeper interdependence. Babies with multiple nationalities are nothing new in Europe, but Erasmus may very well force cooperation between member states on naturalization and family law—domains jealously guarded by national governments. “Politicians and the media are not interested in it, but there will come a time when these millions of babies represent a European people,” he says. “What I really regret is that Erasmus alumni haven’t joined together to bring more attention to these issues and to resolve the problems created by this huge success.”

Losing out: The flawed notion of a zero-sum Erasmus deal

A future generation of European babies was likely absent from the arguments advanced by Michel Barnier in negotiations with 10 Downing St. But in terms of the UK’s own self-interest, Mr. Johnson was surely aware of the substantial funding the UK has received from the program, as well as the opportunities afforded to its students and teachers.

Half of British students who study abroad do so through Erasmus, totaling about 15,000 every year. According to the Erasmus+ UK National Agency, out of the €14.7-billion Erasmus+ budget for 2014-2020, €867 million were allocated specifically for projects led by UK-based organizations. This includes €200 million for the 2019-2020 school year alone as 1,207 received grant approvals, a record compared with all previous years.

Boris Johnson specifically insists that the UK ‘loses out’ financially with Erasmus+ because of the larger number of EU nationals studying in the UK. Indeed, 31,727 EU nationals studied in the UK through Erasmus in 2017, compared with 16,561 British students participating in the program.

His solution however of a replacement scheme will do little to raise the number of British students studying abroad. Meanwhile, not a single centime from Erasmus’s next five-year budget – a whopping €26 billion – will fund any European students anxious to attend British universities.

Although Mr. Johnson has pledged £100 million for his Turing Scheme (meant to send British students abroad while leaving foreign students to their own devices), the UK’s own House of Lords has put in doubt the scheme’s capacity to rival Erasmus+. According to a 2019 report, the upper chamber found that even if the UK managed to fund its own scheme with the same financial means, it “would be impossible to replicate aspects of Erasmus which are key to facilitating international exchanges, namely, the programme’s strong brand, trusted reputation, common rulebook and framework for partnership agreements, and its established network of potential partners.” The UK’s departure means the bureaucratic burden of building and maintaining relations with European universities will now fall to British civil servants.

The French former Eurodeputy sighs, “Their budgetary argument is miserable. They say more foreign students attend British universities than British students attend European ones. Well, all the better for British influence! Nobody is forcing Oxford to welcome Erasmus students and make them pay fees. Sure, once European citizens start getting treated like other foreign students, they will pay more money. But there will be far fewer of them.”

Putting educational soft power on the backburner

Former US Secretary of State Colin Powell once said referring to foreign students in the United States, “I can think of no more valuable asset to our country than the friendship of future world leaders who have been educated here.” As the second biggest magnet for foreign students, the UK has little reason to think otherwise of its own educational soft power. One in seven countries has a leader who studied in the UK.

Erasmus+, available to all 27 EU member states, 6 associate non-EU member states, and partnered with more than 20 other countries around the world, opens the eyes of tomorrow’s generation to other cultures and languages. In the long term, the resulting social interactions may very well produce growing generations of Europeans each with multiple nationalities, but its use as a soft power tool likely boosts the influence of the individual participating countries much more than it serves the political agenda of European Union integration.Asked if the UK could rejoin the Erasmus someday in the future, Mr. Lamassoure pauses, “Of course, it could be negotiated.”

Reunification of Cyprus fueled by merging energy interests?

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After a first round of talks ended Thursday, 12 January, rival Turkish and Greek Cypriot delegations have agreed to continue negotiating an agreement on the final reunification of their island into one state.

A context of new geopolitical factors sets this deal apart from previous attempts at reunification. $50 billion in natural gas reserves have been found in Cyprus’ waters where the construction of a pipeline between Israel and Turkey is also under discussion. An agreement would strengthen European energy independence and represent a boon in Turkey-EU relations, potentially assuaging the distrust that has grown from the migrant crisis and accusations of a Western role in the failed July coup d’état attempt.

The European Union currently imports most of its natural gas from Russia. Despite publicly supporting Cyprus’ reunification, Russia has been accused by sources within the government of Nicos Anastasiades, President of the internationally recognized Republic of Cyprus, of trying to undermine the UN talks. Exxon Mobil, Total, ENI and Quatar Petroleum all won contracts last month to explore and drill off the island’s southern shores, according to CNBC.

Turkey, also dependent on Russian gas, is vying for a new pipeline to import natural gas from Israel. Yet, Anastasiades’ government has stated that any such pipeline running through its waters would be blocked if the island remains divided.

If an agreement is found, a referendum will likely take place this summer, giving ethnic Greeks and Turks a chance to put forty years of tension behind them and live in mutually recognized federal states. Greek Cypriot president Nicos Anastasiades and the Turkish Cypriot leader Mustafa Akıncı are both eager to only sign an agreement that they think can gain majority support from both their camps. A similar referendum for what was termed the Annan Plan was rejected in 2004, with most Greeks voting ‘no’ and a majority of Turks voting ‘yes.’ The Republic of Cyprus, located in the Greek south, subsequently joined the European Union. Turkey continues to claim the Northern Republic of Cyprus, where it stations 30,000 troops, as its own.

Points of contention include the status of its guarantor countries—Greece, Turkey and the UK—who have played some role in Cyprus’ security for the past hundred years, Turkey’s troop levels and the boundaries between the two states.

Even if technocrats manage to hammer out a deal that’s viable for both sides, a referendum would ultimately decide the fate of Cyprus’ unity. Turkey has shown willingness to substantially reduce its troop levels. But the younger generations have become accustomed to division. It remains to be seen whether public sentiment will be swayed by growing energy investment in the Levant basin.

Trump, Twitter and Protectionist Rhetoric in the French Presidential Race

French presidential candidates Arnaud Montebourg—a strong contender in the left primaries—and Marine Le Pen—the uncontested leader of the National Front—seem to believe in the magic of US President-Elect Trump’s tweets as much as he does himself. And they aren’t wasting any time trying to share in the spotlight created by them.

After Trump took credit for Ford’s decision to call off its plans for a $1.3 billion factory in Mexico, choosing rather to invest $700 million in a Michigan factory, Le Pen reportedly said on January 4, 2017, to journalists, “Political will pays. The proof is what Donald Trump obtained.” She connects Trump’s vision with her own. “Protectionism works, when it is led by determination, and when a country can exercise its economic independence.”

Reports of what Montebourg actually said are not clear. The Associated Press quoted him as exclaiming, “I see that Donald Trump used the Montebourg method!” However, with no other media quotes available, the one short clip I found had him saying something more akin to, “He has taken some of my themes, because I came before him in politics.”

The two have often cited American examples of trade and industrial policy to defend their own protectionist positions. Montebourg compared his proposal of reserving 80% of government procurement for French SMEs to those laid out in the Small Business Act of 1953 and similar legislation onwards. The National Front likes to point its finger at the Buy America(n) provisions that allegedly give the United States an advantage over French companies who seek American infrastructure contracts.

The appeal of such arguments is two-fold. The reciprocity of doing unto the US what the US does unto France makes them seem tough and willing to take on unfair competition—in the same vein as Trump’s blaming of China, though not as dominant. The second objective is to poke a hole in the narrative of the United States as a country that practices what it preaches. Rather than playing by the rules of open, free trade, it’s real economic prowess would stem from its bare-knuckled protectionism it has been practicing in the shadows.

Questions of the validity of those arguments are for another blog entry. For example, the quotas in American rules that protect critical infrastructure from foreign investment can be interpreted very loosely and, unless I’m mistaken, reach nowhere near the 80% Montebourg is promising. What’s interesting is how willing these two foreign presidential candidates are to lend credence to the myth that Ford’s production strategy follows Trump’s whims at the stroke of a key.

In an article portraying it as a victory, even Fox News conceded the following, “Fields (Ford CEO) said Ford would have gone ahead with the decision whether or not Trump was elected president.” The article then went on to describe the news as “the latest in a string of pre-inauguration successes for Trump in the manufacturing sector.”

So, victory is claimed in favor of a man who is not yet President, for an event that would have happened regardless of him winning the election. Granted, CEO Fields did cite Trump’s “pro-growth” policies as encouraging. But if he admits that his move would have happened with Clinton in line for the Presidency, the moral of the story is clear: Companies that want to succeed in Trump’s America are going to have to do everything necessary to flatter his ego and play to his own communications strategies.

In a recent article for Slate, Daniel Gross explains the factors behind the forces that would have led Ford to redirect capital to Michigan. The marked trend for cars with high-tech equipment and greener motors requires a level of R&D most easily found in the US. But, especially for Ford, it’s also because the Department of Energy Loan Guarantee Program, made available to automakers by the Bush administration, and carried on by Obama, was provided for “batteries, electrification and fuel efficiency.” Ford, the only one of the Big Three to take advantage of this program, took out a loan of $5.7 billion in 2009 and used it to upgrade 13 factories.

These programs resemble more what the EU’s Juncker Plan was meant to put in place—providing public funds to secure private investment for innovation, green technology and infrastructure—than the sort of protectionism that Montebourg and Le Pen seem to find attractive in Trump’s proposals and rhetoric. Not exactly an observation either of these two candidates would be willing to concede, though Montebourg has proposed a sweeping national stimulus plan that many critics have doubted would fly under the EU’s budgetary rules.