It is unsustainable for the EU to continue teetering upon this thin line of internal cooperation and solidarity, as EU solidarity is not (or at least should not be) for sale (see discussion in Bajnai et. al., 2012). The EU’s power has long stemmed from the power of its internal market. In particular, it stems from the prospect of growth and prosperity that membership in, or partnership with it, promises. This runs a serious risk, both because of Eurozone’s and Europe’s declining economic performance, but also due to the unattractive and unfriendly mode of intra-Eurozone negotiation, which works to reassure members and non-members that Europe does not treat all its members equally. This new European reality risks making the European integration project less attractive to existing members, prospective members, neighbourhood states, as well as all other outsiders. Thankfully, as was demonstrated by the Croatian vote, there is still soft power left, but efforts to boost it are desperately needed.

The EU’s transformative, structural and normative powers are inextricably linked to this promise of either a place in the ‘post-modern paradise’ or a steady and solid relationship with a vibrant and successful EU internal market. If the latter malfunctions, there will be a smaller incentive for states to cede sovereignty in return for membership, and, equally, the emulation of the EU project will seem a less attractive path for other nations in other regions of the world.

The ‘Other’ Costs of ‘Austerity’

In one word the crisis in the EU’s attractiveness can be attributed to ‘austerity’ and the politics thereof. The policies of austerity, advocated chiefly by the IMF and the so-called ‘Merkozy’ axis, and implemented mainly by the countries of the European periphery have been so far the cornerstone of the EU’s response to the Euro-Area’s crisis and the quest for ensuring debt-sustainability for Eurozone’s ‘weakest links’. The aims or ‘general direction’ as Pagoulatos (2011) observed, is the appropriate one. Budget deficits need to be tamed, and gradually be turned into surpluses to signal a country’s ability to repay its debt, or at least the interests associated with it. Nonetheless, the remedy of austerity very rarely works, if at all. Arguably, it could work when coupled with Keynesian countermeasures – massive injections in the market, strategic and far-reaching job creation efforts (mostly state-led).

The IMF/German-led quest of higher competitiveness via horizontal cuts is a very tricky one. It could work in theory, but only in theory. In other words, put succinctly, it could only work if states imposing such austerity programmes enjoy simultaneously a highly modern, extensive production infrastructure and produce such goods (e.g. heavy industry), that a reduction in the costs of production could allow for an overwhelming boost of exports (which would in turn bring renewed wealth in the market via surpluses in the balance of trade). In times of global economic adversity, such an experiment would stand even lesser chances. Greece, Portugal and Spain are not the Asian tigers, and will not flourish through exportation of information technology; nor are they to emerge as major financial centres with privileged regimes for the attraction of foreign wealth (not least due to applying EU laws). The usual IMF recipe (which is emulated with few changes in the ‘Memorandum countries’ today) stands no chance of success in Europe if not coupled with solid countermeasures targeting growth, the diminishment of unemployment, major infrastructure developments and the quick implementation of simplifying, growth-generating reforms which pressurize the shadow economy into the actual economy and reduce the space for corruption and tax evasion (see Christodoulakis, 2011).

The Case for Growth

In other words, the EU’s underlying aim must be to keep GDP high, keep the economy growing – or pursue a swift return to growth, and help the economy create new jobs, either with strategic guidance (i.e. a comprehensive plan) or with strategic government injections in the market (i.e. subsidies or infrastructure investments, ideally in tight cooperation with the healthy forces of the private sector). If one allows the economy to slide into recession and then enforces new cuts to reduce deficits, imposing in parallel new taxation to boost government revenue, then the market dries out. As a result, the economy’s weakest firms are pushed out of the market, the stronger ones having to undertake cuts in size and ambitions, while the largest migrate out of the country. Capital – economic, but also human – flees to destinations which promise higher prosperity, better opportunities and allow for one’s capacities, skills and ambitions to flourish.

This multiple drain that ‘Europe under Austerity’ currently suffers from is killing the EU’s internal engine and the motor of EU integration – the common market. This trend must end. The answer is, indeed, ‘growth’. However, its – so far at least – rhetorical pursuit will not suffice. The ECB and the EIB particularly, must dynamically re-examine their approach, demanding a higher commitment from the member states, in order to initiate the (re-)turn to growth-generating policies. It is false to believe (or worse, passively expect) that it will boil down to one political leader, a single government or a single member state. It will require a far-reaching, collective effort of the Euro-Area countries, but also of the European family in its entirety, in order to overcome this taunting phase of European politics. The change of the tide may begin in France next week, but we all have to work together to form a solid counter-proposal to change the current approach. Francois Hollande will need more than vague suggestions and a ‘socialist identity’ in his ‘briefcase’ to sway Germany into a true change of heart, mind and strategy. It must go as far as to include solid country-specific proposals and strategies, costed and tailored to the specificities and irregularities of each country in question (e.g. Majocchi, 2011). Time is of the essence, and we must act upon this now. This must be one of the main aims of the next Greek government too.

The Way Ahead

It is clear that Europe is at yet another critical juncture. The dilemmas are big and tough – but not complicated. The two main options are further integration, or steps back at potentially much higher cost. Steps back, in the form of variable intra-EU speeds[1], groups, divisions and so forth will open the exit door for member states (small or large, poorer or richer) as these will feel that this new Europe has become less inclusive, unfriendly, or that the post-modern Kantian paradise has been distorted thanks to the (dynamic) return of European power politics. Further integration on the other hand, is not as easy as it sounds. In many countries where euro-scepticism is resurging drastically, enlightened political leaders will need to employ their charisma to soothe first, and subsequently inform and educate confused publics into the distinct value and significance the EU has for members and outsiders alike. It is a colossal political decision that we owe to our people, not only for reasons of identity and history; but more so for the political, economic, and strategic implications a failure of the European integration project now would imply for the gravitas and influence of our Union.

In the context of the multipolar world currently being shaped, a strong European pole is imperative for global stability, economic prosperity, as well as the protection and advancement of human rights and fundamental freedoms. We must never forget that the whole world looks at the EU hoping that they could once emulate our example in their own regions. We must not allow this aspiration to fade. It is crucial for the global common good.  Europe is, and must remain, the true beacon of democracy and the most solid evidence of how democracies can maximize their collective strength and authority.  We owe it to our people and the world; Europe’s political leadership must not fall short in front of this major challenge.

(This article is also published with ELIAMEP/Politics in Spires – The author wishes to thank George Arvanitidis and Petros Efthymiou for their comments and suggestions on previous editions of this article)

References

Bajnai, G., Fischer, T., Hare, S., Hoffmann, S., Nicolaïdis, K., Rossi, V., Viehoff, J. and Watt, A., eds., 2012. Solidarity: For Sale? The Social Dimension of the New European Economic Governance. Güterloh: Bertelsmann Stiftung.

Bounias D., Donadio R., 2012. Far-right Golden Dawn Sees Opening in Greece‘s Woes. International Herald Tribune (12^th April 2012). doi: http://www.nytimes.com/2012/04/13/world/europe/far-right-golden-dawn-sees-opening-in-greeces-woes.html?_r=1&ref=racheldonadio#

Christodoulakis N., 2011. Can One Save the Titanic? From the Memorandum Back to Growth Again. Athens: POLIS.

Ferguson N., 2011. Why EU Collapse is More Likely than the Fall of the Euro. The Washington Post (19^th November 2011). doi: http://www.washingtonpost.com/opinions/why-eu-collapse-is-more-likely-than-the-fall-of-the-euro/2011/11/17/gIQAuY6wZN_story.html

Gabriel S., 2011. Setting Europe Back on its Feet. Social Europe Journal. doi: http://www.social-europe.eu/2011/09/setting-europe-back-on-its-feet/

Majocchi A., 2011. Towards a European Federal Fiscal Union. The Federalist. Pavia: Edif.

Mallias A., 2012a. My Europe: Attractive, not Fearsome. Defence and diplomacy, Issue 248, March 2012.

Mallias A., 2012b. For the Europe of Citizens with Dignity. doi: http://www.tovima.gr/default.aspx?pid=6525&la=1&aid=441248

Pagoulatos G., 2011. The Government will Survive for as Long as the Problems Impose it. doi: http://www.tovima.gr/default.aspx?pid=6525&la=1&aid=436270

Papachelas, A., 2012. Do not humiliate the Greeks. doi:  http://www.nytimes.com/2012/02/17/opinion/do-not-humiliate-the-greeks.html?_r=1

[1]Arguably, the first notable differentiation of speeds was the non-adoption of the euro by ten member-states. We have already seen how this has complicated intra-EU decision making.

This was one more episode in a country where the Shiite-Sunni rivalry in Iraq is fourteen centuries old. After Saddam Hussein’s deposal in 2003 and the emergence of the Shiites primarily, and the Kurds, as the protagonists in the domestic political scene sent alarming messages to the regional Sunni governments. Since then the Shiite-led government of Iraq is at odds with most regional Sunni states who view Baghdad as an ally of Tehran, aiming to spread and consolidate Shiite Islam in the region. Hashemi’s case is significant because it converts a domestic issue to a regional one.

Hashami’s presence in Doha, Riyadh and Ankara was greeted as an official visit by these Sunni governments. By contrast Baghdad views Hashemi as a criminal fugitive and has asked them to hand him over. Hashemi’s presence in these countries has worsened the already negative relations between the Shiite-led government of Iraq and the aforementioned states. For instance the refusal of Doha to hand him over is seen as an intervention of Qatar in the domestic affairs of Iraq.

Given that Hashemi cannot return to Iraq because of the pending criminal warrant, he is expected to take refuge, or hosted officially, by one of the leading Sunni states. This is a setback for the Sunni minority of Iraq in their effort to balance Shiite supremacy in their political domestic scene. Hashemi’s network and experience are expected to weaken and slow down their political activity in the short term.

Yet geopolitically Hashemi’s case will become a thorn for the diplomatic rapprochement between Shiite Iraq and its Sunni neighbors, distancing Baghdad further from other regional states. For instance it has sparked the diplomatic raw between Iraq and Turkey. In a Neo-Ottoman context, Ankara accused the Iraqi Primi Minister Maliki for being too self-centered in his policy and decisions. Maliki accused Ankara for interfering in domestic political issues of Iraq. This was not the first time that Turkey was involved in the Sunni-Shiite rivalry in Iraq. On 17 January 2012 both countries had ambassadors summoned to protest for remarks made on Iraqi domestic affairs.Hashemi’s case is expected to isolate further Baghdad from regional Sunni states and enhance Iraq’s rapprochement with Tehran. The Sunni-Shiite polarization in Iraq will boost rivalry in the Persian Gulf and influence developments in Syria. In the meantime Hashemi will influence Iraqi politics from his power base in one of Sunni regional states that accommodate him.

Trade in Services covers a wide range of intangible and heterogeneous products and activities, classified in 12 core Services sectors: Business, Communication, Construction and related-engineering Services, Distribution, Educational, Environmental, Financial (banking and insurance), Health and Social Services, Tourism and travel-related Services, Recreational, Cultural and Sporting Services, as well, as Transport Services (Eurostat). These sectors are further subdivided into a total of some 160 sub-sectors.

A ‘traded service” is a service sold to a customer from another country, regardless of location. This can happen through any one of the four modes of supply (GATS, I:2):

-         A service crosses the border from a country to another (cross border service, mode 1)

-         A customer crosses the border temporarily (consumption abroad, mode 2)

-         A service firm establishes a commercial presence abroad (commercial presence, mode 3)

-         A services firm representative crosses the border into another market to provide a service (presence of natural presence, mode 4).

The World Trade Organization (WTO) agreement on Services, well known as General Agreement on Trade and Services (GATS, 1995), is about liberalization of the entry of foreign services and foreign services providers into a country. As seen above, the creation of GATS should be viewed as a milestone in the history of the multilateral trading system providing for its extension to Services. GATS definition of trade is not confined to cross-border inflows (mode 1) but extends to consumer movement abroad (mode 2), as well as, the presence within a member’s territory of foreign commercial entities (mode 3) and foreign natural persons supplying servicers (mode 4).

The WTO negotiations began in 2000, as mandated under Article XIX.1 of the General Agreement of Trade in Services. They subsequently became part of the single undertaking when the Doha Round was launched in 2001, aiming at further liberalization of Trade in Services. Formally, in November 2001 the Ministerial Conference in Doha agreed on a comprehensive negotiating agenda which was to be concluded by 1^st January 2005. For, the major developed countries are pushing for further liberalization in the developing countries. On the other hand, developing countries are asking for liberalization in the areas where they may have prospects in the developed countries.

Till 2007, Services negotiations in the WTO revealed a slow pace of progress and poor results. The submitted Services offers from member countries for negotiations were remarkable not only for the relatively low number of new sector inclusions, but also for the absence of liberalizing the sectors substance. Simultaneously, the slow pace of progress seems to have further strengthened interests in regional approaches. Most services liberalization all around the world were undertaken unilaterally. It became, and it, still, is also apparent that Services are more difficult to negotiate, due to various sectoral particularities, as well as, to the fact that they are related to the progress of negotiations in Agriculture and Goods (NAMA) issues. Indeed, developing and transition economies do not yet benefit from Services Trade opportunities to the extent that developed economies do and therefore they do not show any interest in Services liberalization offers. On the contrary, they use Services liberalization as a tool for getting back more benefits in Agricultural negotiations.

Since then, the most striking event was the Signaling Conference held in WTO headquarters in July 2008. This Ministerial 3 days gathering ended, once again, in failure. Although its outcome is disappointing and frustrating, it yielded some indication of what member countries would be willing to include in the negotiations in 20 sectoral and modal groups, like Air Transport, Maritime, Computer and related services, Construction, Distribution, Education, Energy, Environmental, Financial, Legal, Logistics, Telecommunications, Postal/Courier, Tourism, Audiovisual, Architectural/ Engineering, Cross-border trade etc. The sectors in bold indicate the vast sectoral interest Greece should invest in the outcome of Services negotiations. Since July 2008, no progress has been achieved on Services negotiations at multilateral level, despite G20 and G8 appeals for successful Doha negotiations.

In conclusion, Civil Servants and bureaucrats must add their efforts and support to those authors and Services’ friends who claim that Services are increasingly important as a vehicle to generate economic growth, reflecting increasing specialization and exchange of Services through markets along with an increase in variety and quality of Services providers. Therefore, more international efforts are needed to liberalize trade and investment in Services at multilateral level.

]]> http://blogs.eliamep.gr/en/imylon/john-mylonakis-trade-in-services-under-the-wto-auspices-%e2%80%93-an-exhibition-of-many-lost-opportunities/feed/ 0 http://blogs.eliamep.gr/en/g-konstan/giorgos-konstantinidis-turkey-after-erdogan-what-next/ http://blogs.eliamep.gr/en/g-konstan/giorgos-konstantinidis-turkey-after-erdogan-what-next/#comments Sun, 22 Apr 2012 12:53:45 +0000 Giorgos Konstantinidis http://blogs.eliamep.gr/en/?p=1495 The Balkan economies and mainly the Greek economy are negatively influenced by the European debt crisis during the last years. The Turkish economy dominates in the Balkans and can be considered as an emerging one, belonging to the G-20 group (16th largest economy).The economic governance of T. Erdogan is successful until now. The macroeconomic indexes improved significantly and the Turkish economy up to 2011 had robust growth rates surpassing even 10%. In 2011 it was the 2nd more developed economy worldwide after China.

One critical question concerns the continuity of the Turkish economic “miracle”. I expect that Turkey will slow its economic performance in 2012, because inflation is rising and its economy is overheated. The current account deficit is increasing and the cost of living is rising especially in financial centers like Istanbul and Ankara. The successor of T. Erdogan will most probably adopt the effective policies implemented in the last 10 years (A.K.P. is the ruling party from 2002). During this period Turkey “built” its economy on strong “foundations”, enhancing its fundamentals.

The essential strategic planning and decision making processes, with political insight and determination, led to the disengagement from the International Monetary Fund in 2008, since Turkey increased its production capacity, utilizing its domestic capabilities, competitive and comparative advantages and depreciating the Turkish lira when necessary. In my opinion, in the following years the Turkish cabinet will stress on the extroversion of the Turkish companies, because exporting activity is a solution to the liquidity and profitability difficulties that companies deal with in an economic turbulent environment. Simultaneously, Turkish officials will tend to promote exporting motives and provide tax and investment incentives in order to attract more foreign direct investments. The real estate sector will also develop, as Istanbul is regarded one of the top metropolitan cities in the field of acquisitions and returns are quick.

I believe that the tourism sector will be one of the priorities of the next Turkish Prime Minister. The level of tourism services is improving while prices are competitive and in this way net tourism revenues exceeded USD 20 billion in 2010. Turkey benefits from the diminishing arrivals of tourists in Greece, due to its severe economic crisis and the frequent strikes. Tourists substitute the offered Greek tourist product with the Turkish one and they often select Turkey as holidays’ destination.

Undoubtedly, the Turkish authorities invest extensively on the energy sector, which plays a predominant role nowadays. The energy policy of Turkey is strategically structured on principles and it is one aspect of the economic diplomacy of Turkey, which is affected by the theory of “strategic depth” developed by the Turkish Foreign Minister Ahmet Davutoglu. New business collaborations and mutual economic interstate agreements with countries such as U.S.A., Russia, Egypt, Lebanon, Iran, Iraq, China, Austria even Greece and Israel (although political relations are almost ruined) are included in the strategic objectives of the Turkish economic policy in the next years, concerning energy projects of high importance, such as oil and gas exploitation and the construction of oil and gas pipelines for the transportation of energy resources to Europe.

Overall, the future prospects of the thriving Turkish economy seem to be positive, so Turkish and foreign companies enjoy plenty of opportunities to start or expand their operations in Turkey. I believe that the economic agenda of the successor of T. Erdogan will more or less focus on similar strategic goals, reinforcing the peripheral and international role of the Turkish economy. Moreover, this constitutes the Turkish officials’ vision.

]]> http://blogs.eliamep.gr/en/g-konstan/giorgos-konstantinidis-turkey-after-erdogan-what-next/feed/ 0 http://blogs.eliamep.gr/en/admin/harry-syringasthe-energy-balance-of-power-in-the-south-mediterranean/ http://blogs.eliamep.gr/en/admin/harry-syringasthe-energy-balance-of-power-in-the-south-mediterranean/#comments Mon, 12 Mar 2012 11:29:24 +0000 ELIAMEP http://blogs.eliamep.gr/en/?p=1491 It all started with Cyprus announcing its’ intentions to start off shore drilling for natural gas. The drilling was about to take place on the island’s northern borders to Turkey, in an area which is in Cyprus’ Exclusive Economic Zone (EEZ), totally under its’ jurisdiction. However the flame between the two countries ignited in 2009, when the Turkish PM raised his tone when speaking with his Israeli counterpart, Peres at Davos. Analysts saw that as the beginning of an attempt for Turkey to re-establish its position among Muslim states in the Middle East. When the drilling started it wasn’t just a case of a country simply gaining from its’ own soil, as it raised a series of reactions, coming especially from Turkey.

Turkey and Israel have recently had a new and quite serious diplomatic rift, since the 2010 flotilla incident where nine activists were killed by Israeli commandos in their attempt to get humanitarian aid to Gaza. Where does Cyprus step into? The liaison between Israel and Cyprus lies to the fact that Israel discovered natural gas reserves that could be exploited in Block 12 (the area in question) after having done so a year ago, in an area close to Israel-Cyprus maritime borders. The two countries already sharing common energy interests have come to an agreement. The plan is to co-establish a natural gas facility on Cyprus, operated by both countries. A point needed to be negotiated in the UN Convention on the Law of the Sea, leaves a narrow, still existing, margin for creating heated discussions and clashes and it says that each country is given the right to exploit resources in an “exclusive economic zone” up to 200 nautical miles from its coastline, but maritime border agreements with neighbouring states (including offshore neighbours located less than 400 nautical miles away) still need to be negotiated [Simon Henderson, Turkey's Threat to Israel's New Gas Riches, Washington Institute, in www.thecuttingedgenews.com, 14 Sep.2011).

This is how once again an energy policy issue is strongly connected to a country's "soft power" mechanism. Oil exploration rights in the area have been a matter of a rift already between Greece, Cyprus and Turkey, without Israel adding up tension. However, Turkey has taken the opportunity to increase its military presence in this region and a year ago it created and deployed a Navy Task Force for the Mediterranean. The flotilla incident worsened the situation and the securitization of the region became a priority for the Turkish foreign policy [Meliha Benli Altunisik, The eastern Mediterranean back to power politics, 8/9/2011, www.hurriyetdailynews.com].

Another argument for Turkey is the forging of closer ties between Israel and Greece. The two countries jointly conducted a military exercise in 2008 with Israeli pilots having clearance to fly around Greek airspace and ended up signing a security cooperation agreement. In early September 2011, during a three day visit in Jerusalem, Greek Defence Minister Panos Beglitis, signed a Cooperation Memorandum in the security sector with his Israeli counterpart Ehud Barak. After his return to Athens, the weapons committee of the Greek Parliament approved the purchase from Israel of the Spice 1000 and 2000 range extension kits bombs precision and guided ammunition. The purchase of the Rafael-made systems is at a cost of about $155 million for 400 systems [Greece, Israel sign security cooperation agreement, 5 Sep 2011, http://www.stljewishlight.com].

We deal here with a complicated conflict management issue: the handling of the consequences of differences between “adversaries” where parties are obliged to share a scarce resource – drilling rigs – so that none is completely satisfied; according to the conflict management theory, that’s the result of coercion. If we add the countries’ power ambitions and power balance tricks to that, we have a complex case that might take long for parties to find a way to dissolve their incompatibilities and move on. Greece and Turkey face a difficult situation, socially and economically and try to gain from signing agreements with actors such as Israel that neither the other political parties nor people/voters in these countries had the best of feelings towards it.

Lately, this change of politics meant a change in the balance of power in the Eastern Mediterranean. Greece and Cyprus lean on a more “open” policy vis-à-vis Israel as Turkey keeps the same hostile attitude with its Aegean neighbors, making a u- turn concerning Israel, once choosing to be closer to it and being disapproved by Muslim states and now raising the red flag, aiming at regaining their trust and the leader’s role in the Arab world.

The Cypriot-Israeli side has another important advantage though: the implicit US implication. Delek Energy, the Israeli company that signed the cooperation with Cyprus, has given shares worth 307 million dollars to an American company, Noble Energy. Once the US got involved in the drilling, there is a very narrow margin left for Turkey to become more hostile to Israel, as it would also affect American interests [Fourlis, Antonis, Clouds in the eastern Mediterranean,http://www.protagon.gr/?i=protagon.el.8emata&id=8679]. Together with the Americans, other interested actors such as Russia, US and most recently France showed their support to the Cypriot efforts and their opposition to the Turkish threats by sending ships, submarines and/or planes close to bock 12. This of course indicated the interests that they have from the drillings as well [Tziarras, Zenonas, Eastern Mediterranean: energy developments and geopolitical implications, www.rieas.gr, 15 Sep. 2011).

Another important factor that forces Turkey to be less of the region’s bully, is its European prospect. Last week’s report of the European Commission was not that encouraging for the first Muslim state trying to get full EU accession. Cyprus is blocking many chapters of the Turkish file, together with France that lately started to exercise fierce criticism and be more than wiling to block it. Overall, this conflict is a complicated issue, not easily resolved and very carefully handled by Greece and Cyprus especially. Israel is bound to be backed up in case Turkey went too far which leaves Erdogan the only actor that must think harder about its policy on the matter of the drilling and the EEZ claims.

The conflict management theory is all about compromise – full satisfaction for players is almost never an issue – and consequences. The rest of the players legitimately go on with the drilling, meaning they don’t break any rules pursuing their best interests and Turkey is left provoking a rift with all three of them on no serious enough grounds. As a result of this policy, Turkish government risks to ignite the flame with the US and worsen its relations with France or even Germany, whose vote of confidence for accession is vital. Someone seems that needs to rethink its tactics and decide how to play the game, because the odds aren’t that good!

]]> http://blogs.eliamep.gr/en/admin/harry-syringasthe-energy-balance-of-power-in-the-south-mediterranean/feed/ 0 http://blogs.eliamep.gr/en/evangelos/evangelos-venetisthe-doha-agreement-and-the-palestinians-is-a-breakthrough-in-sight/ http://blogs.eliamep.gr/en/evangelos/evangelos-venetisthe-doha-agreement-and-the-palestinians-is-a-breakthrough-in-sight/#comments Mon, 05 Mar 2012 21:37:07 +0000 Evangelos Venetis http://blogs.eliamep.gr/en/?p=1485 On February 22, the agreement between Hamas and Fatah to form an interim unity government which will lead the Palestinians to elections in the forthcoming months caught many by surprise. The Qatari mediation played a major role in an effort to return to the status quo ante in Palestine prior to the 2006 elections. The various players in the region viewed this development with cautious optimism. This agreement is a positive and, given the bitter rivalry between Hamas and Fatah, an important development. Yet major questions arise in this regard. Is such a solution viable? Could the forthcoming elections lead to a well-accepted government?  What is the Israeli policy going to be? This brief analysis provides insights about the goals and expectations of every party involved one way or another in the Palestinian problem, the Gordian knot of modern times.

Abu Mazen feels that the time has come for the Palestinians to unite against the Israeli aggression. Yet he risks many things by agreeing to collaborate with the winner of the last and only free elections five years ago. Abu Mazen feels that in the meantime the momentum of Hamas has been weakened and that now is the time to collaborate and actually make gains at the expense of the Palestinian Islamist movement. His belief results from the impact that the Arab spring has had in Hamas’s political modus operandi. Abu Mazen feels that Hamas’s endeavor to moderate its dependence on Damascus by approaching Cairo and Ankara is a clear sign of Hamas’s political moderation in a wider context. Additionally he is convinced that the Palestinian public opinion in the West Bank and the Gaza Strip has changed in favor of his movement. He also thinks that discord amongst the Palestinians benefits only Israel and that the time has come for the Palestinians to face Israel united.

In the last year Khaled Meshaal, Hamas’s leader, has been active and influential, attempting to strengthen his power base outside and inside Palestine. By approaching Turkey and Egypt and by keeping a low profile of his dependence on Assad’s support, Meshaal has successfully promoted the profile of an extremist leader who has become more moderated and realistically attempts to gain more support by employing diplomacy in a wider Islamic framework. He collaborates with governments which, superficially or not, have an Islamic agenda. His Islamic diplomacy has not alienated him from Assad with whom Meshaal shares many common strategic interests. Besides in the last 20 years Assad has been his more trustworthy ally and it would be risky on Meshaal’s part to rely exclusively on governments with unstable agendas with regard to the Palestinians. His recent decision to move Hamas’s political offices from Damascus to Qatar and Egypt does not necessarily mean that he will refuse the Syrian patronage in the short term. If he does so, then his power base will be severely shaken and Israel will have achieved a strategic victory in this respect. By promoting successfully the profile of the moderate leader Meshaal has got brownie points amongst fellow Arabs in countries who formerly mistrusted him. The Palestinian meeting and accord occurred in Doha and this is a mere fact of the change of mind, or at least policy, that some Anti-Syria Arab countries manifest toward Hamas.

The key question, however, is whether Hamas has strengthened its power base in the West Bank or not. Gaza remains the stronghold of Hamas and it should be noted that the Israeli blockade of Gaza has retained, if not strengthened, the Gazans’s support to Hamas. As far as the West Bank is concerned in the past five years there has been a silent political struggle between Hamas and Fatah over the control of the West Bank. Hence if future elections take place the West Bank is going to define the winner. Yet nothing suggests that Hamas’s popularity has suffered a setback. Israel has also systematically intervened in this power struggle game, favoring Fatah. Meshaal has invested much on increasing Hamas’s influence in the region and the fact that he has consented to hold elections under Abu Mazen’s interim government highlights Meshaal’s confidence that he will the elections in the West Bank.

On its part Israel views the recent Palestinian agreement with concern. The Israelis feel uneasy with the fact that Hamas, that has not recognized Israel’s right as a sovereign state, is going to collaborate with Fatah. Undoubtedly in the past five years Israel has been quite content to see the Palestinian discord. Tel Aviv knows that any future interim government with the participation of Hamas is going to be a threat toward Israel and the Israelis do not expect Hamas to change its policy towards Tel Aviv. They are concerned that Hamas is going to win a landslide victory in the future elections in the West Bank. Such a scenario would be a nightmare for Tel Aviv. That is why Israel is expected to sabotage the ongoing Fatah-Hamas rapprochement in order to prevent the Palestinians from holding elections anytime soon.

As for the major regional powers, Iran, Egypt, Saudi Arabia and Turkey keep a close eye on these developments. Tehran supports the prospect of holding elections soon. It is probably at the expense of Hamas to have a prolonged stay of Abu Mazen as head of the interim government. By contrast Cairo and Riyadh also support the prospect of elections but it pays more attention to the significance of the interim government under Abu Mazen. The Saudis believe that Abu Mazen is going to make gains in terms of popularity as prime minister of the interim government and will be able to influence the public opinion in favor of Fatah. That is why Riyadh is going to support Abu Mazen by promoting the prospect of prolonging the duration of the interim government and giving key ministerial posts to the Fatah party. On its part, Turkey is expected to have an important role in this process because it is the only regional country that supports both Hamas and Fatah. Yet Ankara’s influence in the Palestinian issue cannot be compared, at least for now, with that of the Arabs and the Iranians.

Another key question is whether the Doha Agreement is going to last. Given the differences amongst the Palestinians and that Israel is against the prospect of elections, both Hamas and Fatah have a long way to go before reaching the ballots. It is certain that the election will not be held in May as originally planned. In the next few months there are going to be many negotiations as well as ups and downs with regard to the time of the elections, the structure of the future interim government and the ministries that Hamas and Fatah are going to control.

As a whole the Doha agreement is a positive development for the Palestinians. After five years of a protracted discord, Hamas and Fatah seem to be willing to heal their wounds and collaborate for the sake of the Palestinian people.  Whether they succeed or not in this process it is uncertain. But after five years of bitter division both Hamas and Fatah do not have any other choice but to collaborate. The way ahead is long and painful.  The Doha agreement shows the Palestinians the only way to secure unity and collaboration. Both parties must be ready to make concessions for the sake of the Palestinians. Given that there is going to be a long time gap between the formation of the interim government and the elections, it would be pointless to assess the result of the future elections. Such a prediction would not be based on developments which would unfold in the meantime and would influence the public opinion ahead of the elections. What is certain is that if Hamas and Fatah manage to form an interim government and pave the way for the elections, then they will be also able to manage the elections results. The mistakes committed in the last elections cannot be repeated.

If the interest to survive financially, maintain one’s living standard and retain one’s political, social and economic standing is one of several motives which can potentially aggravate tensions among nations[1], then the following conclusion can be safely drawn: Europeans should be more cautious, subtle and understanding when trying to assist a country out of a deep economic, social and political crisis. In particular, it is now the dominant view that austerity alone does not constitute the silver bullet, coupled with a growing recognition of the need for a counterbalancing strategy aiming at reigniting growth (e.g. Castle, 2012; Juncker, 2012). It is also increasingly possible that this new model of tough intra-EU negotiation might erode the Union’s attractiveness/ soft power (Biscop, 2011; Tsoukalis, 2012; Youngs, 2011: 3-4; Watt, 2012: 68).

The fact that the Greek people see their misfortunes to an extent as the result of an externally-pursued strategic reduction of their living standard is perhaps the clearest indication that EU and its most powerful member states need to be careful when interacting with this proud nation. Efforts to ‘save Greece’ may be imbued in the Greek collective memory as exactly the opposite, as an external economic punishment, through what was at times perceived as a deeply humiliating process. The gap between self and external perception is often the most hurtful. This could go as far as humiliating a great European nation. “Humiliation peaks when you are convinced that the Other has intruded into the private realm of your own life and has made you utterly dependent…[A] future in utter contrast with an idealized, glorified past a future in which your political, economic, social, cultural conditions are dictated by the Other.” (Moïsi, 2009: 56-57). To complete the equivalence, after difficult months of external pressure it is understandable to feel the fear of default and total failure and lack hope and perspective. Moïsi’s conclusion regarding humiliation without hope worryingly backs Lebow: “humiliation without hope lead to despair and to the nurturing of a yearning for revenge that can easily turn into an impulse towards destruction” (Moïsi, 2009: 57 – our emphasis).

Signs of Tenuousness in the Greek-German/Troika Relations

If the message of the Greek president, accusing the German Finance Minister of insulting his nation (Reuters, 2012) is indicative of a growing dynamic inside Greece, then a change of gear by European and particularly German leaders is required urgently.

The Greek nation is not calling to arms yet, nor will it do so in the future. The major risk for both Greece and Europe is the possibility of Greece cracking under pressure, and – in a brief-nationalist/populist moment of ‘bravery’ and national ‘pride’ – abandoning the mechanism, and together with it, the euro and Europe. In other words, as domestic politics matter for German decision makers – be that opinion polls, media, or upcoming regional or national elections – the same is true for Greece, where populism and pride have already re-appeared in the Greek political scene, gaining ground everyday and epitomized by the rise of the left and the withdrawal of the far right from the coalition government. An unfortunate self-destructive ‘Greek moment’ would critically hamper European integration, undermine the promise of prosperity ‘in the Kantian Paradise’ (Kagan, 2005), and potential post-default geopolitical implications for Greece would shatter the EU’s credibility as a security provider and/or guarantor (see Solidarity Clause). Tsoukalis (2012: 1) has framed very accurately the dilemma for Germany, Greece and Europe: “The stakes are high. Will the crisis act as a powerful catalyst for further integration in Europe? The alternative facing us today is disintegration at very high cost”. In effect the choice is simple, we either take some strategic, calculated steps forward in terms of politico-economic integration in Europe, or we risk a leap back, a free-fall into unknown waters of disintegration and clustering.

Reasons for Additional Care

Looking at the history of war, peace and honor in Greece (from the ancient times of King Leonidas and Alexander the Great, to WWII and the Korean War, to the 1974 student movement) might help one understand the importance of honour, standing and revenge in Greek society. We should also not forget the Greek and Spartan fighting morale, which few European countries can rival. In times of financial austerity, military spending is constrained by the willingness of a society to pay for its security and interests. No country in Europe can really match Greece in its willingness to defend its pride, interest and standing – and similarly, for no country in Europe are the costs of potential economic collapse so closely associated with possible geopolitical implications (e.g. Dokos, 2012: 17). In view of this reality, further sensitivity should be shown towards Greece, whose feeling of pressure is naturally exacerbated by difficulties associated with juggling with maintaining independent deterrent capabilities – its dominant strategy since independence, and overcoming one of the worst financial situations the nation has ever experienced. Greece and Europe are at a critical juncture, failure to understand each other promises to be very damaging for both.

In the last ten years (1999-2009) Greece has spent 3.7% of its GDP on defence, more than one percentage point more than any other European nation. France, the United Kingdom and Cyprus, the next in line are spending between 2.4 to 2.5%.  In 2010, the Greek army employed 156,600 military personnel, or 8.3% of all European military personnel. This compares to 9.3% of all European military personnel by the United Kingdom (or 175,690)[2]. If we put this in relation to the population and calculate the share of the armed forces as part of society, an unrivalled 1.48% of Greeks are serving in the army (averaged from 1999-2009). The second in line is Cyprus with 0.99% of its citizens serving in the army and over a percentage point more than in France or the UK where 0.48% or 0.34% of its populations serves in the armed forces. Of course the main explanation for Greco-Cypriot defence expenditure is their shared fear of Turkey’s geopolitical ambitions. Nonetheless, for other EU and/or NATO states with anxieties membership to these institutions was seen as the main security guarantee. Therefore, the fact that Greece has tried to retain a sufficient national deterrent, which includes a guarantee of Greek-Cypriot territorial integrity, is telling of Greece’s belief in counting heavily on national capabilities for external defence.

So if military indicators are any guide to how much a nation cares about its pride, standing and honour, then Greece is playing in a league of its own in Europe. Without a doubt it does so in regard to culture, history and developments in philosophy, politics, medicine, mathematics or almost any discipline for that matter if it comes to laying the foundations of Western civilization. Its historical importance and the expressed willingness of its population to defend its standing is in stark contrast to the average European Union member in general and Germany in particular, where anti-military sentiments are the norm and civilian and economic interests trump national sentiments (at least since the re-education after World War II). This might be the reason why technocrats in Brussels and German newspapers in particular are not able to comprehend how this situation affects Greek citizens, families and its national spirit and hurts their pride beyond reckoning – with the word ‘humiliation; coming up everyday in the leading media, and especially when the signatures of party leaders are requested by the Troika accompanied by rough statements by mainly German policy-makers (see Chancellor Merkel, Finance-Minister Schäuble and Economic Minister Rösler). While Greek policy-makers and arguably the people have so far endured this process, feelings of shame, humiliation, and anger are multiplying, and the bitterness of this grudge is not going to abandon the Greeks until they feel an equal partner in the European family. Moïsi explains that humiliation nurtures revenge, which according to Lebow is among the main mn n otives for states going to war. European leaders must not allow a resurgence of conflictual relations (of any form) in Europe, and especially between member states. The credibility of the EU depends extensively on its impressively successful (insofar) intra-EU mechanisms to resolve issues and disagreements.

Many Members of ONE European Family

Political messages are often devoid of content, but more than ever does it count in a situation of crises of how they are transmitted, announced and perceived. A swift overview of the balance of power in the Greek parliament – with the dramatic weakening of the coalition, of the opinion polls which show a dramatic shift towards parties advocating easy, pain-free solutions – investing on the populist line, of the Greek media recording the reactions of the Greek people, one undoubtedly wonders ‘how much more the Greek nation can take’. If Lebow’s and Moïsi ’s alternative readings of the dynamic of International Relations are any guide, then understanding that it is not just the national interest that motivates nations, but also fear, honour, humiliation, standing and revenge, is an urgent necessity. If European policy-makers fail to switch gears and respect Greek pride and honour when approaching the economic crisis, the potential backlash might be devastating for both Greece and Europe with far-reaching social, political and economic implications.

In particular, German politicians need to be more cautious in tuning their messages to the Greek audience. Similarly, it is the responsibility of the political elites in all EU member states, and especially those states, which have a leading role in the efforts to address the crisis be that through their strength or weakness, to educate their publics and give to the media messages in the spirit of European ideals and values. We have to avoid ‘othering’ processes and stereotyping in Europe at all costs, and steer clear of phenomena as those recorded in the Spiegel (Spiegel 2012; Korge and Batzoglou, 2012) or as the attacks by Bild (see Kounalaki, 2012) and most (in)famously the German Focus magazine (22.02.10) (Spiegel, 2011). Such public expressions hamper the European identity shared equally by all EU citizens, and distort the images held by the respective collectives. It is time to bend differences and bridge the gaps in the understanding of each other, come to terms with how the Greek people feel, because they are not only friends but family.

Yes, some members of the European family are today in crisis, and need to change in order to meet the economic reality and challenges of this globalized 21^st century world economy. However, this should work as a catalyst to boost EU solidarity and not as a divisive force that puts it to the test. It is time to recognise that the efforts of the Greek nation deserve Europe’s respect and support, in achieving what is after all our common goal – greater strength through our unity! However, it is also absolutely necessary that Greece takes ownership and does what it is necessary for its future. Yes, external pressures and support can prove useful and beneficial, but overall this has to be a process of partners, not one European country depending on others. Greece needs to become more proactive, leading the rescue effort, pushing multiple growth-targeted reforms and evade the current passivity of awaiting dictums from abroad. And when it so does, Europe must be there, supportive and encouraging, to help Greece pull it out.

*Pavlos Efthymiou is a PhD Candidate in Politics and International Studies, St. Edmund’s College, University of Cambridge, UK. Hubertus Juergenliemk  is a PhD student at the University of Cambridge and a visiting doctoral student at the University of Oxford during the 2011-12 academic year. Material for this piece was last collected on 28 February 2012

References

Bajnai, G., Fischer, T., Hare, S., Hoffmann, S., Nicolaïdis, K., Rossi, V., Viehoff, J.    and Watt, A., eds., 2012. Solidarity: For Sale? The Social Dimension of the New European Economic Governance. Güterloh: Bertelsmann Stiftung.

Biscop, S.,  2011: Foreign Policy and the Euro: We Have an Idea. Egmont Institute Security Policy Brief, 30, pp.1-4.

Castle, S., 2012: EU Leaders Set to Conclude that Austerity is Not Enough. New York Times [online]. Available from: http://www.nytimes.com/2012/01/30/world/europe/30iht-union30.html [Accessed 24 February 2012].

International Institute for Strategic Studies (IISS), 2011. The Military Balance. London: Institute for Strategic Studies.

Juncker, J-C., 2012. Mega Channel [online]. Available from: http://www.megatv.com/megagegonota/summary.asp?catid=17571&video=1 [Accessed 25 February 2012].

Kagan, R., 2004. Paradise and Power: America and Europe in the New World Order. New York: Atlantic Books.

Kounalaki, 2012. Germans not fascists, Greeks not lazy. Kathimerini [online]. Available from:

http://www.eurotopics.net/en/home/presseschau/archiv/article/ARTICLE100854-Germans-not-fascists-Greeks-not-lazy [Accessed 25 February 2012].

Korge, J. And Batzoglou, F., 2012. Anti-German Mood Heats Up in Greece. Spiegel [online]. Available from: http://www.spiegel.de/international/europe/0,1518,814344,00.html  [Accessed 25 February 2012].

Lebow, R.Ν., 2010. Why Nations Fight. Cambridge: Cambridge University Press.

Lebow, R.N, 2008. A Cultural Theory of International Relations. Cambridge: Cambridge University Press.

Lebow, R.N., 2006. Fear, interest and honour: outlines of a theory of International Relations. International Affairs, 82 (3), pp.431-448.

Moïsi , D., 2009. The Geopolitics of Emotion. How Cultures of Fear, Humiliation and Hope are Reshaping the World. New York: Anchor Books.

Reuters, 2012: Greek president attacks German minister’s “insults” [online]. Available from: http://www.reuters.com/article/2012/02/15/us-greece-germany-idUSTRE81E1VK20120215 [Accessed 14 February 2012].

Spiegel, 2011. Angry Greeks to Sue German Magazine for Defamation [online]. Available from: http://www.spiegel.de/international/europe/0,1518,758326,00.html [Accessed 25 February 2012].

Spiegel, 2012. Greek President’s ‘Wrath Is Exaggerated but Ominous’ [online]. Available from: http://www.spiegel.de/international/0,1518,815973,00.html [Accessed 27 February 2012].

Watt, A., 2012. Solidarity and Cohesion within and between Countries in a Europe in   Crisis. In: G. Bajnai, T. Fischer, S. Hare, S. Hoffmann, K. Nicolaïdis, V. Rossi, J. Viehoff and A.Watt, eds. Solidarity: For Sale? The Social Dimension of the New European Economic Governance. Güterloh: Bertelsmann Stiftung, pp.45-72.

World Bank, 2012. Open data for Population, GDP and Defence expenditure as share of GDP [online]. Available from: http://data.worldbank.org/ [Accessed 17 November 2011].

Youngs, R., 2011: European Foreign Policy and the Economic Crisis: What Impact and How to Respond. Madrid. FRIDE Working Paper, 111.

[1] A historian would probably refer here to Ancient Rome’s policy vis-a-vis Carthage.

[2] Based on the IISS Military Balance 2011 and the World Bank population estimate for 2010.

In his previous analysis in the ELIAMEP blog in December 2012 the author highlighted the political significance of Tehran’s decision to supply oil on credit to Athens at a time of international credit unreliability of Athens. He also emphasized that, beyond the temporary beneficial stance of Iran toward Greece, the continued dependence of the energy from Athens to Tehran will have political repercussion within the EU regarding Tehran’s effort to increase its influence in the EU decision-making over its nuclear program. To avoid such a scenario an alternative source had to be found, i.e. to supply Greece with oil with the help of partners and allies. Indeed, in January there was ferment in the EU and Washington in this direction in order to secure the consent of Greece for the general EU oil ban against Iran. The EU assurances led Athens to lift its reservations and to sign the ban from July 1, 2012 onwards. That decision prompted various centres of power in Iran suggest a preemptive oil sales ban by Iran to the EU. It was in this context that the Greek Ambassador in Tehran was summoned at the Foreign Ministry in Tehran.

Undoubtedly the current geopolitical situation is expected to test-relations between Athens and Tehran. In the last three decades Greece, of all EU countries, has adopted the most positive foreign policy toward the Islamic Republic of Iran. In the same context of reciprocity Iranians treat Greece as an important gateway to the EU in a period of intense geopolitical competition with EU countries like Britain and France. However, increasing tensions in relations between Iran and Israel, the U.S. and EU have already an impact on Greek-Iranian relations.

At this stage the financially weak Greece has limited room for maneuver both to respond to the callings of lenders countries that are pushing for larger economic blockade of Iran and to maintain its level of cooperation with Tehran. Due to vital Greek economic interests in Iran, Athens is always cautious with regard to imposing new sanctions against Tehran. But the broader economic interests of Athens at this time lie in the West. In this context, Athens is expected to exercise the greatest possible maneuver to Tehran, but these maneuvers in the current economic climate are at its lowest in terms of options.

Although Iran knows the financial vulnerability of Athens and in this context understands the Greek policy within the EU, it does not mean that it will accept or tolerate the Greek stance. The removal of Greek objections to the sanctions from July 1 onwards is a cause for the change of course in Tehran towards Athens. Amongst other reasons Tehran has had offered oil on credit because Athens had the right of veto within the EU. Yet when Greece has ceased to exercise the above right and voted, albeit reluctantly, in favor of sanctions against Tehran, Iran retains the right to alter its policy towards Athens. So is Tehran ready to take measures against Athens, alter the overall positive bilateral ties with Greece and face the repercussions of such a move?

Iran needs access to the EU and Greece is an important channel to Tehran. The Iranian decision to ban the sale of oil to Britain and France clearly states that Iran intends to move against the geopolitically strong European countries. This may happen indirectly by hurting the energy reserves of the economically weak Greece. Although the last action is on the agenda of Tehran, it is estimated that the Iranians will not engage in a show of force against a friendly country whose geopolitical policy is shaped by temporary unbearable economic pressures. Nevertheless, if Tehran takes measures against Athens, it is estimated that these will deal with the quantity reduction of oil sold rather than the abrupt cessation of total sales. As a whole it is estimated that neither Athens nor Tehran are ready to reduce the level of their bilateral relations, which are also a useful channel of communication both to the Middle East and the West.

Mural by Kemp Ndao, Dakar, Senegal

To Eduardo Galeano

It happened in 1987.

The Organization of African Unity assembled in Addis Abbeba, Ethiopia, in the last days of that hot July. And there he was. With his khaki uniform and his bone-breaking humor, Thomas Sankara, the revolutionary president of Burkina Faso, Africa’s own Che Guevara, gave his last speech and stole the hearts of the world’s poor and exploited. Para siempre.

“The debt cannot be repaid, first because if we don’t repay, lenders will not die. That is for sure. But if we repay, we are going to die. That is also for sure,” he said. And he continued: “Those who led us to indebting ourselves had gambled as if in a casino. As long as they had gains, there was no debate. But now that they suffer losses, they demand repayment. And we talk about crisis. No, Mr President, they played, they lost — that’s the rule of the game, and life goes on.”

Yet Sankara knew all too well that he could not stand alone in his resistance. And so he pleaded with the other African heads of state to follow his example: “If Burkina Faso stands alone in its refusal to pay the debt, I am not going to be here at the next Conference,” he said, prophetically. And everyone laughed…

It’s happening today.

The Greek Parliament assembled on Sunday night (in the early hours of Monday, to be more specific) to vote on a new memorandum that would impose further austerity on the already struggling middle and lower classes of the country. This in return for yet another loan, at least 70 percent of which will be spent on servicing previous debts. The session was orchestrated by an appointed (non-elected) government — led by an (equally non-elected) banker Prime Minister — within which reside, among others, extreme right-wing elements.

The new measures include a 22 percent cut in the minimum wage (32 percent for those under 25), 15.000 public sector layoffs within 2012 and 150.000 by 2015 (and that in a country with an unemployment rate of over 20 percent already!), cuts in public services (health, education, social welfare), the privatization of (profitable!) state assets, plus a guarantee that the new measures will be implemented no matter what the people’s mandate in the elections of April will be — as was recently decreed by “His Highness” Wolfgang Schäuble.

Outside of Parliament, hundreds of thousands of people (amongst them Greek resistance heroes Manolis Glezos and Mikis Theodorakis) gathered to demonstrate their opposition to the memorandum, the Troika, the dominant economic paradigm, and the country’s political class itself. Their voice, an echo coming from Addis Abbeba and the depths of time: “If we stop paying the debt, the banks and the Troika, will not die. That is for sure. But if we repay, we are going to die. That is also for sure.”

It does not matter, it seems. The memorandum was passed by Parliament, yet the Troika are now scared of it being overturned by the people’s mandate in the April elections. Therefore, the creditors are shifting the goalposts for the Greek government, in a pathetic attempt to delay the payment of the next bailout until the new Greek government pledges allegiance to the memorandum as well, after the elections.

Fear of the people. Great times for democracy!

Thomas Sankara, the man who believed that revolutionaries can be murdered but their ideas cannot, did not make it to the next Conference of the Organization of African Unity. He was assassinated three months after his famous Addis Abbeba speech.

Thomas Sankara- The Upright Man

*First published on ROARMAG

It is quite evident that the EU foreign policy is not homogeneous and is not based on an EU communal interest. It is actually overshadowed by unilateral policy making of major European countries. This is quit evident in the case of the increasing sanctions on Iranian oil exports to the EU as part of the wider transatlantic sanctions against Tehran for its nuclear programme. On the one hand you have the British initiative to ban fully Iranian oil exports to the EU from July 1 onwards. London’s move is supported by Paris, Berlin and other North European countries. On the other hand there is the European South that actually, due to the Eurozone crisis, is against the British bid over Iranian oil ban. This conflict of interests within the EU manifests the lack of foreign policy common census with potentially dangerous repercussions for the EU economy at difficult economic times. But the rising question is what the EU is after regarding Iran. Why this escalation in the relations with Tehran now?

The official justification from some EU countries for the increasing sanctioning of the Iranian oil sector is Iran’s continuous lack of cooperation and transparency regarding its nuclear programme. There are also allegations in the West that Iran is very close to no-return point of acquiring a nuclear warhead. Undoubtdely Iran is progressing day after day in its nuclear programme but the issue about these allegations is that they are unfounded, thus raising questions about their credibility, reminding us of the case of Iraq’s WMD. In spite of Tehran’s gradual progress in its nuclear programme and the US-Israeli nervousness about such a progress, it is must be noted that Iran is still far from acquiring a nuclear warhead. In this context the current timing for imposing further sanctions on Iran’s shoulders seems to be a kind of pre-emptive policy. So far so good, or bad depending on which angle someone approaches the conflict. But is the nuclear programme the only aim of the EU and US increasing sanctions policy now? Apparently not, especially if we take into account the fact that in less than two months Iran will hold its parliamentary elections.

Given the 2009 presidential elections outcome in Iran and the subsequent destabilization of the domestic political scene, one can imagine how important the forthcoming elections are for the political future of the country. The government has been already taking precautions in order to secure a peaceful atmosphere throughout and after the elections. But the government is nervous because it knows that the legitimate opposition is also getting prepared to secure that the vote transparency issue of the 2009 elections will not be repeated this time. And there are also the anti-regime opponents, royalists and mainly Islamic Marxists, who try to sabotage the process in order to gain brownie points as far as the destabilization of the Islamic Republic is concerned. It is understandable that in the next two months the stability of the Iranian establishment will undergo a crucial test for its future. The stability of the domestic scene is fragile and there you have the increasingly threatening sanctions against Iranian economy. Is it a coincidence?

In the last few months Iranian economy has dramatically deteriorated in every sector. The deterioration of the status of the exchange rate of the Iranian currency in regard to Euro and the US dollar is an alarming sign for the status of the Iranian economy. For instance, compare the current rate of 1 Euro=2.400 Tuman vis-à-vis the previous 1=1450). Lack of liquidity is ongoing in the Iranian market as a result of the sanctions against the Iranian banking sector. The Iranian stock market is in a bad shape and inflation is out of control. Given that the gas sector remains underdeveloped due to western sanctions, the oil sector is the heart of the Iranian economy. If Iranian oil sales are restricted then Iran economy is expected to face existential problems.

The aim of the US and some EU countries is not to ban Iranian oil sales 100%. It is impossible due to China’s oil needs. Given that Iranian oil exports to the EU account to 10% of the total Iranian oil exports, Tehran will be able to cope with such a ban by selling to Asian markets. The aim of the US and some EU countries is to diminish Iranian oil exports by 40-50% for a restricted period of 3 to 6 months. According to some estimations, this time will be enough for a ban to be observed worldwide both in terms of finding alternative oil resources for replacing the Iranian oil output, e.g. the Saudi, Qatar and UAE oil, and regarding the needs of oil customers. Moreover the aforementioned time could be more than enough to test the limits of Iranian economy and to influence the public opinion in Iran, especially in the middle of parliamentary elections.

From the preceding analysis it becomes evident that western sanctions in Iran aim to have multiple results going beyond the case of Iran’s nuclear programme and threatening the very existence of the Islamic Republic. At least this was the initial plan for sanctioning Iran now. The fact that some EU countries proposed to postpone the ban for July manifests the failure of the bid regarding the time prior to the Iranian elections. Given the reaction of the European South, this scenario could be still valid in the aftermath of the Iranian parliamentary elections.

It is expected that in the forthcoming months the Iranian establishment will be tested both politically and economically inside and outside the country. Iranian leaders know that the EU foreign policy toward Iran is not unified and their threat to cut first their oil exports to Europe is still on the table.