As the United States and its European allies work to make sense of last weekend’s chaos in the Kremlin, they’re urging Kyiv to seize a “window” of opportunity that could help its counteroffensive push through Russian positions.
The forming response: Transatlantic allies are hoping, largely by keeping silent, to de-escalate the immediate political crisis while quietly pushing Ukraine to strike a devastating blow against Russia on the battlefield. It’s best to hit an enemy while it’s down, and Kyiv would be hard-pressed to find a more wounded Russia, militarily and politically, than it is right now.
In public, American and European leaders stressed that they are preparing for any outcome, as it still remained unclear where the mercenary rebellion would ultimately lead. Wagner Group chief Yevgeny Prigozhin, who led the revolt, resurfaced on Monday, claiming he had merely wanted to protest, not topple the Russian government — while simultaneously insisting his paramilitary force would remain operational.
“It’s still too early to reach a definitive conclusion about where this is going,” U.S. President Joe Biden said Monday afternoon. “The overall outcome of this remains to be seen.”
For the moment, European officials see no greater threat to the Continent even as they watch for signs that Russian President Vladimir Putin’s two-decade hold on power might be slipping.
Western allies attribute the relative calm to how they managed Prigozhin’s 24-hour tantrum.
During the fighting, senior Biden administration figures and their European counterparts agreed on calls that they should remain “silent” and “neutral” about the mutiny, said three U.S. and European officials, who like others were granted anonymity to discuss fast-moving and sensitive deliberations.
In Monday’s meeting of top EU diplomats in Luxembourg, officials from multiple countries acted with a little-to-see-here attitude. No one wanted to give the Kremlin an opening to claim Washington and its friends were behind the Wagner Group’s targeting of senior Russian military officials.
“We made clear that we were not involved. We had nothing to do with it,” Biden said from the White House Monday, relaying the transatlantic message. However, Russian Foreign Minister Sergei Lavrov signaled on Monday that his regime would still look into the potential involvement of Western spies in the rebellion.
The broader question is how, or even if, the unprecedented moment could reverse Ukraine’s fortunes as its counteroffensive stalls.
The U.S. and some European nations have urged Ukraine for weeks to move faster and harder on the front lines. The criticism is that Kyiv has acted too cautiously, waiting for perfect weather conditions and other factors to align before striking Russia’s dug-in fortifications.
Now, with Moscow’s political and military weaknesses laid bare, there’s a “window” for Ukraine to push through the first defensive positions, a U.S. official said. Others in the U.S. and Europe assess that Russian troops might lay down their arms if Ukraine gets the upper hand while command and control problems from the Kremlin persist.
British Secretary of State for Defence Ben Wallace | Sean Gallup/Getty Images
“Russia does not appear to have the uncommitted ground forces needed to counter the multiple threats it is now facing from Ukraine, which extend over 200 kilometers [124 miles] from Bakhmut to the eastern bank of the Dnipro River,” U.K. Defense Secretary Ben Wallace said in the House of Commons Monday.
Ukrainian officials say there’s no purposeful delay on their part. Russia’s air power, minefields and bad weather have impeded Kyiv’s advances, they insist, conceding that they do wish they could move faster.
“We’re still moving forward in different parts of the front line,” Yuri Sak, an adviser to Ukrainian Defense Minister Oleksii Reznikov, said in an interview.
“Earlier it was not possible to assess the solidity of the Russian defenses,” Sak added. “Only now that we are doing active probing operations, we get a better picture. The obtained information will be factored into the next stages of our offensive operations.”
Analysts have long warned that, despite the training Ukrainian forces have received from Western militaries, it was unlikely that they would fight just like a NATO force. Kyiv is still operating with a strategy of attrition despite recent drills on combined-arms operations, maneuver warfare and longer-range precision fires.
During Monday’s gathering of top EU diplomats, Ukrainian Foreign Minister Dmytro Kuleba said now was the time to pump more artillery systems and missiles into Kyiv’s arsenal, place more sanctions on Russia and speed up the training of Ukrainian pilots on advanced fighter jets.
“Together, all these steps will allow the liberation of all Ukrainian territories,” he asserted.
In the meantime, European officials will keep an eye on Russia as they consider NATO’s own security.
“I think that nobody has yet understood what is going on in Russia — frankly I have a feeling also that the leadership in Moscow has no clue what is going on in their own country,” quipped Latvia’s Foreign Minister and President-elect Edgars Rinkēvičs in a phone interview on Monday afternoon.
“We are prepared, as we always would be, for a range of scenarios,” U.K. Prime Minister Rishi Sunak told reporters Monday.
NATO allies will continue to watch for whether Russia starts to crumble or if the autocrat atop the Kremlin can hold his nation together with spit and tape.
“The question is how Putin will now react to his public humiliation. His reaction — to save his face and reestablish his authority — may well be a further crackdown on any domestic dissent and an intensified war effort in Ukraine,” said a Central European defense official. The official added that there’s no belief Putin will reach for a nuclear option during the greatest threat to his rule in two decades.
In the meantime, an Eastern European senior diplomat said, “we will increase monitoring, possibly our national vigilance and intelligence efforts. Additional border protection measures might be feasible. We need more allied forces in place.”
Alexander Ward reported from Washington. Lili Bayer reported from Brussels. Suzanne Lynch reported from Luxembourg. Cristina Gallardo reported from London.
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Alexander Ward, Lili Bayer, Suzanne Lynch and Cristina Gallardo
Anger is growing over the handling of a migrant boat disaster off Greece last week that has become one of the biggest tragedies in the Mediterranean in years. The calamity is dominating the country’s political agenda a week ahead of snap elections.
The Hellenic Coast Guard is facing increasing questions over its response to the fishing boat that sank off Greece’s southern peninsula on Wednesday, leading to the death of possibly hundreds of migrants. Nearly 80 people are known to have perished in the wreck and hundreds are still missing, according to the U.N.’s migration and refugee agencies.
Critics say that the Greek authorities should have acted faster to keep the vessel from capsizing. There are testimonies from survivors that the Coast Guard tied up to the vessel and attempted to pull it, causing the boat to sway, which the Greek authorities strongly deny.
The boat may have been carrying as many as 750 passengers, including women and children, according to reports. Many of them were trapped underneath the deck in the sinking, according to Frontex, the European Border and Coast Guard Agency. “The ship was heavily overcrowded,” Frontex said.
About 100 people are known to have survived the sinking. Authorities continued to search for victims and survivors over the weekend.
The disaster may be “the worst tragedy ever” in the Mediterranean Sea, European Commissioner for Home Affairs Ylva Johansson said on Friday. She said there has been a massive increase in the number of migrant boats heading from Libya to Europe since the start of the year.
Frontex said in a statement on Friday that no agency plane or boat was present at the time of the capsizing on Wednesday. The agency said it alerted the Greek and Italian authorities about the vessel after a Frontex plane spotted it, but the Greek officials waved off an offer of additional help.
Greece has been at the forefront of Europe’s migration crisis since 2015, when hundreds of thousands of people from the Middle East, Asia and Africa traveled thousands of miles across the Continent hoping to claim asylum.
Migration and border security have been key issues in the Greek political debate. Following Wednesday’s wreck, they have jumped to the top of the agenda, a week before national elections on June 25.
Greece is currently led by a caretaker government. Under the conservative New Democracy administration, in power until last month, the country adopted a tough migration policy. In late May, the EU urged Greece to launch a probe into alleged illegal deportations.
New Democracy leader Kyriakos Mitsotakis, who is expected to return to the prime minister’s office after the vote next Sunday, blasted criticism of the Greek authorities, saying it should instead be directed to the human traffickers, who he called “human scums.”
“It is very unfair for some so-called ‘people in solidarity’ [with refugees and migrants] to insinuate that the [Coast Guard] did not do its job. … These people are out there … battling the waves to rescue human lives and protect our borders,” Mitsotakis, who maintains a significant lead in the polls, said during a campaign event in Sparta on Saturday.
The Greek authorities claimed the people on board, some thought to be the smugglers who had arranged the boat from Libya, refused assistance and insisted on reaching Italy. So the Greek Coast Guard did not intervene, though it monitored the vessel for more than 15 hours before it eventually capsized.
“What orders did the authorities have, and they didn’t intervene because one of these ‘scums’ didn’t give them permission?” the left-wing Syriza party said in a statement. “Why was no order given to the lifeboat … to immediately assist in a rescue operation? … Why were life jackets not distributed … and why Frontex assistance was not requested?”
Alarm Phone, a network of activists that helps migrants in danger, said the Greek authorities had been alerted repeatedly many hours before the boat capsized and that there was insufficient rescue capacity.
According to a report by WDR citing migrants’ testimonies, attempts were made to tow the endangered vessel, but in the process the boat began to sway and sank. Similar testimonies by survivors appeared in Greek media.
A report on Greek website news247.gr said the vessel remained in the same spot off the town of Pylos for at least 11 hours before sinking. According to the report, the location on the chart suggests the vessel was not on a “steady course and speed” toward Italy, as the Greek Coast Guard said.
After initially saying that there was no effort to tow the boat, the Hellenic Coast Guard said on Friday that a patrol vessel approached and used a “small buoy” to engage the vessel in a procedure that lasted a few minutes and then was untied by the migrants themselves.
Coast Guard spokesman Nikos Alexiou defended the agency. “You cannot carry out a violent diversion on such a vessel with so many people on board, without them wanting to, without any sort of cooperation,” he said.
Alexiou said there is no video of the operation available.
Nine people, most of them from Egypt, were arrested over the capsizing, charged with forming a criminal organization with the purpose of illegal migrant trafficking, causing a shipwreck and endangering life. They will appear before a magistrate on Monday, according to Greek judicial authorities.
“Unfortunately, we have seen this coming because since the start of the year, there was a new modus operandi with these fishing boats leaving from the eastern part of Libya,” the EU’s Johansson told a press conference on Friday. “And we’ve seen an increase of 600 percent of these departures this year,” she added.
Greek Supreme Court Prosecutor Isidoros Dogiakos has urged absolute secrecy in the investigations being conducted in relation to the shipwreck.
Thousands of people took to the streets in different cities in Greece last week to protest the handling of the incident and the migration policies of Greece and the EU. More protests were planned for Sunday.
Pakistan has enough problems — including escalating attacks by Taliban insurgents and a spiraling economic crisis — without the added headache of a new Cold War between China and the U.S.
In an interview with POLITICO, Pakistan’s Secretary of State for Foreign Affairs Hina Rabbani Khar insisted Islamabad had no appetite to pick a side in the growing global rivalry between Washington and Beijing.
As a nuclear-armed heavyweight of 250 million people, Pakistan is one of the most closely watched front-line states in the contest for strategic influence in Asia. While Pakistan’s old Cold War partner Washington is increasingly turning its focus to cooperation with Islamabad’s arch-foe India, China has swooped in to extend its sway in Pakistan — particularly through giant infrastructure projects.
Khar insisted, however, that Islamabad was worried about the repercussions of an all-out rupture between the U.S. and China, which would present Pakistan with an unpalatably binary strategic choice. “We are highly threatened by this notion of splitting the world into two blocs,” Khar said on a visit to Brussels. “We are very concerned about this decoupling … Anything that splits the world further.”
She added: “We have a history of being in a close, collaborative mode with the U.S. We have no intention of leaving that. Pakistan also has the reality of being in a close, collaborative mode with China, and until China suddenly came to everyone’s threat perception, that was always the case.”
It’s clear why Pakistan still sees advantages to walking the strategic tightrope between the U.S. and China. Although U.S. officials have expressed frustration over Pakistan’s historic ties to the Taliban in Afghanistan — and have rowed back on military aid — Washington is still a significant military partner. Last year, the U.S. State Department approved the potential sale of $450 million worth of equipment to maintain Pakistan’s F-16 fighter jets.
Simultaneously, Beijing is pledging to deepen military cooperation with Pakistan — partly to outflank the common enemy in India — and is delivering frigates to the Pakistani navy. China is also building roads, railways, hospitals and energy networks in its western neighbor. While these Chinese investments have boosted the country’s economic development, there are also downsides to going all in with China, with Beijing’s critics arguing that Pakistan has become overly indebted and financially dependent on China.
Khar grabbed headlines in April when a leaked memo appeared in the Wall Street Journal in which she was cited as warning that Pakistan’s instinct to preserve its partnership with the U.S. would harm what she deemed the country’s “real strategic” partnership with China.
She declined to comment on that leak, but took a more bullish line on continued American power in her interview in Brussels, saying the U.S. was unnecessarily fearful and defensive about being toppled from its plinth of global leadership, which she argued remained vital in areas such as healthcare, technology, trade and combating climate change.
“I don’t think the leadership role is being contested, until they start making other people question it by being reactive,” she said. “I believe that the West underestimates the value of its ideals, soft power,” she added, stressing Washington’s role as the world’s standard setter. China biggest selling point for Pakistan, she explained, was an economic model for lifting a huge population out of poverty.
Leverage — and the lack of it — in Kabul
Khar’s sharpest criticism of U.S. policy centered on Afghanistan, where she said restrictions intended to hobble the Taliban were backfiring, causing a humanitarian and security crisis, pushing many Afghans to “criminal activities, narcotics strategy and smuggling.”
The Taliban in Kabul are widely seen as supporting an expanding terror campaign waged by the Pakistani Taliban | Wakil Kohsar/AFP via Getty Images
A weakened Afghanistan is causing increased security problems for Pakistan, and the Taliban in Kabul are widely seen as supporting an expanding terror campaign waged by the Pakistani Taliban. Ironically, given the long history of Pakistan’s engagement with the Afghan Taliban, Islamabad is finding it difficult to exercise its influence and secure Kabul’s help in reining in the latest insurgency wave.
When the Afghan Taliban seized power in Kabul in 2021, Pakistan’s then Prime Minister Imran Khan celebrated their victory against “[American] slavery” and spy chief Faiz Hameed made a visit to Kabul and cheerily predicted “everything will be O.K.” Khar, who took office last year, said Khan had reacted “rather immaturely” and argued her government always knew “the leverage was over-projected.”
While the violence has put Pakistan’s soldiers and police on the front line of the fight against the Taliban at home, Khar said Islamabad was taking a highly diplomatic approach in seeking to win round the Taliban in Afghanistan, pursuing political engagement and focusing on economic development — rather than strong-arm tactics.
“Threatening anyone normally gets you worse results than the ones you started with. Even when it is exceptionally difficult to engage at a point when you think your red lines have not been taken seriously, we will still try the route of engagement.”
She firmly rejected the idea that any other country — either the U.S. or China — could play a role in helping Pakistan defeat the Taliban with military deployments. “When it comes to boots on the ground, we would welcome no one,” she said.
Pakistan is seeking bailout cash from the International Monetary Fund as the economy is hammered by blazing inflation and collapsing reserves. When asked whether she reckoned Washington was holding back on supporting Pakistan, partly to test whether China would step up and play a bigger role in ensuring the country’s stability, Khar replied: “I would be very unhappy if that were the case.”
No to navies
When it came to Europe’s role in the Indo-Pacific region, she was wary of the naval dimensions of EU plans, an element favored by France. She was particularly hostile to any vision of an Indo-Pacific strategy that was dedicated to trying to contain Chinese power in tandem with working with India.
One of the leading fears of the U.S. has long been that China could use its investments in the port of Gwadar to build a naval foothold there, a move that would inflame tensions with India, and allow Beijing to project greater power in the Indian Ocean.
Khar said Europe should tread carefully in calibrating its plan for the region.
“I would be very concerned if it is exclusively or predominantly a military-based strategy, which will then confirm it is a containment strategy, it must not be a containment strategy,” she said of the EU’s Indo-Pacific agenda.
“[If it’s] a containment strategy of a certain country, which then courts a certain country that is a very belligerent neighbor to Pakistan, then instead of stabilizing the region, it is endangering the region.”
The COVID pandemic, the war in Ukraine and the merger of UBS and CS represent the three most prominent in a series of events that have affected the Swiss economy. While pandemic-related aid given by the Swiss government was covering up parts of it, the consequences of higher corporate debt are manifesting now. In this blog we investigate the effects of these developments on corporate loans and on how financial services providers are and will be affected.
Over the past few years, the financial markets have experienced several shocks, most recently the announcement of the merger of Switzerland’s two largest banks, Credit Suisse, and UBS. Before that, the armed conflict between Russia and Ukraine and the COVID-19 pandemic had already weighed on the economic outlook. The accumulation of these events in a short period of time resulted in severe economic consequences, which we explore in this blog.
To begin with, the measures taken by the Swiss government in March 2020 to counter the impact of COVID-19 negatively affected the local economy. The restrictions on personal mobility led to a sharp reduction in household consumption. Consequently, many firms faced a large drop in revenue. Liquidity shortages and a wave of company bankruptcies were expected, and a spillover into the banking sector, with defaults and, ultimately, loan losses was widely anticipated.
Such scenarios were not just predicted by analysts and the media – banks themselves were anticipating an increase in defaults in their loan books. This expectation manifested itself mainly through large increases in banks’ loan loss provisions in the first quarter of 2020. Banks in both Europe and the US reported much higher loan loss provisions compared to the same reporting period in the previous year (Deloitte 2020). A similar pattern was observed for Swiss banks. Graph 1 shows the changes in Swiss banks’ loan loss provisions over time. The large Swiss banks increased their loan loss provisions by over 100 bps in the first half of 2020, whereas the retail and cantonal banks increased their provisions more moderately.
Graph 1: Development of provisions by banks (loan loss provisions as a share of total loan book)
Nevertheless, as shown in Graph 2, a wave of corporate defaults did not occur in 2020. On the contrary, a significant reduction in the number of defaults was observed throughout 2020-2021, compared to the pre-pandemic years. This was likely a consequence of the legal and fiscal measures implemented by the Swiss government.
The legal measures, which included an extended debt collection holiday and no obligation to report over-indebtedness, gave firms additional time to adapt to the changed circumstances. The financial aid directly supported firms through two different measures: first through the COVID-19 credit programme which from the end of March 2020 onwards enabled companies to obtain state-backed loans on favourable conditions, and second, the government allowed firms to introduce short-time working, thereby reducing their fixed personnel costs.
Graph 2: Cumulative number of Swiss corporate defaults on a monthly basis
These government measures were successful in preventing the anticipated wave of bankruptcies. However, COVID-19 was only the first in a series of hits to the economy.
Interplay of negative factors
While the pandemic did not cause an immediate wave of bankruptcies, it had several secondary effects. In order to remain liquid, many Swiss firms made use of additional credit lines and corporate loan volumes in Switzerland increased substantially, both during and after the pandemic, by a total of CHF 53 billion. Of this total, only CHF 13 billion in loans were granted as part of the federal COVID-19 credit programme. The remaining credit of over CHF 40 billion since then has consisted of standard bank loans.
In addition, the global economy experienced complications due to the mobility restrictions imposed around the world. This resulted in a first wave of upward price pressure, but central banks did not respond to the signs of inflation because they considered it transitory. Subsequent the easing of pandemic measures by governments, the macroeconomic outlook worsened following the attack by Russia on Ukraine in February 2022, which led many European countries to impose sanctions on Russian fossil fuel exports. The resulting energy scarcity and rising energy costs led to increased production costs in many industries, and higher consumer goods prices. The price pressures in Switzerland were lower than in many other European countries. This can be attributed to the favourable energy mix in Switzerland and the comparatively low energy intensity of the Swiss economy. Nonetheless, as shown in Graph 3, year on year price inflation in Switzerland reached more than 3 per cent in June 2022, a 25-year-high. In response, the Swiss National Bank raised its key interest rate by 225 bps in a period of less than a year.
Graph 3: Development of the inflation rate in Switzerland and the SNB key interest rate over time
The rising cost of capital might already have worried over-leveraged Swiss firms, but the overall lending outlook for the Swiss market worsened further with the announcement of the merger between Credit Suisse and UBS. Given that the share of the enlarged UBS in trade finance, bank guarantees and unsecured corporate loans might be as high as 70 per cent, costs for corporate clients are expected to increase. Corporate clients from Credit Suisse are in a particularly difficult situation. In the best-case scenario, UBS will take over the existing loans from Credit Suisse – 15 per cent of total corporate loan volume in Switzerland – and refinance firms at similar risk assessments. In the worst-case scenario, the newly established bank would introduce stricter risk assessment and therefore deny refinancing of some corporate loans. Given that clients may be unknown to the bank, this second scenario is not unlikely. If it turns out to be the case, further corporate liquidity shortages would occur – assuming that no smaller lender would be willing or able to take over the credit risks instead.
Spill-over to banks
While the effects of lower corporate revenues caused by the pandemic were partially offset by state intervention, the effects of events following the pandemic could not be dealt with as effectively by the Swiss government. Even though the state interventions during the pandemic could mitigate the problems temporarily, due to the subsequent external shocks they failed to prevent corporate defaults in the long run. In the current situation, Swiss firms not only pay significantly higher interest for the debts they accumulated in the past, they also face challenges in refinancing their debt.
Mortgage rates in Switzerland are an illustrative example. These rates hit a low of below 1 per cent in 2020 but in less than 3 years, correcting slightly to levels that still constitute an increase by a factor of 2.5. The increases in loan rates, combined with historically high loan volumes, negatively affect companies with tight budgets. This is also reflected in the analysis of corporate defaults, shown in Graph 2, which shows a 14 per cent year on year increase in the first months of 2023. It is expected that this rising trend will continue further throughout the year. The sharp increase in corporate defaults is worrying not only for the indebted firms themselves, but it also directly affects banks. Lenders are expected to incur significant losses on defaulted corporate loans as a consequence of these developments. In addition, losses due to greater market volatility and the resulting need to reshuffle loans will weigh on banks’ operations and results. Similar trends are visible in wealth management, securities-backed Lombard loans as well as retail, private, and leasing credits. Graph 1 shows that the large Swiss banks began to readjust their loan loss provisions in Q4 2022 in response to recent developments.
In addition to being concerned about loan defaults, lenders should also be aware of the fair value of their loan books in relation to their liquidity reserves. The recent outflows of upwards of USD100 billion in deposits at First Republic Bank can be taken as a warning sign of what can happen when lenders neglect this ratio. As a result, the lender was first seized by the Federal Deposit Insurance Corporation and later sold to JP Morgan.
Rising key interest rates will in general cause a fall in the fair value of loans: the fall is greater the longer the maturity and the lower the interest rate on the loan. In the current situation, in which central banks are trying to counter inflation and are therefore raising interest rates at a faster than usual pace, it is more important than ever to stay alert to changes in the fair value of loan books.
In order to minimise their losses, lenders need to act fast to mitigate rising non-performing loan ratios and perform quality reviews on their loan books and assets. Measures such as stress testing uncover potential problems in time to allow banks to adjust their asset and loan books to fit their risk appetite. Additionally, lenders should monitor closely the fair value of their loans and ensure that they have sufficient liquidity reserves to meet a potential outflow of assets.
This is the third blog in our series on the impact of the COVID-19 crisis on Swiss banks and the increased risk of loan defaults. Read the previous parts here.
Key contacts
Dr. Marc D. Grüter – Partner – Risk Advisory
Marc leads the FS Regulatory, Risk and Compliance practice of Deloitte in Switzerland and is part of the leadership team for FS Regulatory within Deloitte North West Europe (NWE). In addition to this he is a senior financial services Partner and lead client Partner for leading Financial Institutions in Switzerland. With nearly 20 years of experience in financial services and Consulting (leading global Strategy Consulting firms, Big4) he has built deep expertise in this context with large financial services organisations in Switzerland, Germany, UK, USA, Middle East and Asia.
Eric is a Director at Deloitte specialising in the Financial Services industry, with a particular focus on process optimisation and digitalisation as well as TOM design projects. He brings over 10 years of strategy consulting experience in financial services, for both, leading global institutions and developing players, as well as central banks and regulators, in various established markets (Switzerland, UK, US, HK, Germany, Canada) and also in emerging markets (CEE, Middle East).
Marco is an Assistant Manager with the Financial Services Transformation team of Deloitte’s Risk Advisory practice in Zurich. Besides his core focus on front-to-back process optimization, Marco worked on projects around stress testing, scenario modelling as well as operational risks for Swiss and international banks. The first-hand client expertise coupled with his quantitative background contribute to his interest in macroeconomic developments and their manifestation within the banking sector.
KYIV — Ukrainian officials insist the destruction of the Nova Kakhovka dam, which unleashed massive flooding in the Kherson region, won’t stand in the way of Kyiv’s counteroffensive.
“Ukraine is equipped with all the necessary watercraft and pontoon bridge crossings for crossing water obstacles,” the Strategic Communications Center of the Armed Forces of Ukraine (Stratcom) said in a statement on Tuesday. “Ukraine is ready to restore and rebuild the territories liberated from Russian aggression.”
Western leaders, including NATO chief Jens Stoltenberg, German Chancellor Olaf Scholz and EU High Representative Josep Borrell, among others, have blamed Moscow for blowing up the dam, which is located in an area of Ukraine occupied by Russian forces. Kyiv argues that the Kremlin was seeking to flood the areas around it to make them less accessible to Ukrainian tanks and personnel in a counteroffensive.
Ukraine has been warning that Russia would seek to destroy the dam since last October, when Kyiv launched its surprise counteroffensive and regained swathes of territory from Moscow’s forces.
Russia, after initially claiming the dam had burst of its own accord on Tuesday, subsequently blamed Ukraine’s forces for bombing it. Kremlin spokesman Dmitry Peskov claimed Kyiv had sabotaged the dam, which supplied water to the Russian-occupied Crimean peninsula, to deprive it of water.
Ukrainian President Volodymyr Zelenskyy rejected this argument, saying in a video address to the Bucharest Nine Summit on Tuesday: “Russia has been controlling the dam and the entire Kakhovka HPP for more than a year. It is physically impossible to blow it up somehow from the outside, by shelling. It was mined by the Russian occupiers. And they blew it up.”
Meanwhile, last week, a Russian government decree suspended requirements to investigate incidents at energy infrastructure in occupied Ukraine.
On Monday, a day before the dam was blown up, the Kremlin claimed Russia had prevented Ukraine’s counteroffensive. Kyiv dismissed that idea, stating instead that its forces had succeeded in retaking some territory around Bakhmut, the town in Donbas that Russia’s forces claimed to have full control over.
In the early hours of Tuesday morning, Russia responded with another barrage of airstrikes aimed mostly at Kyiv; Ukraine shot all 35 missiles down.
SEVILLE, Spain — Socialist Prime Minister Pedro Sánchez won’t be on the ballot when Spaniards vote in local elections Sunday — but he might as well be.
Everyone in the country sees this weekend’s municipal votes as a dress rehearsal for the national election, which has to be held by the end of the year.
That’s bad news for Socialist candidates like Antonio Muñoz, the mayor of Seville who just wants to be reelected on his own merit — but may end up losing his post because Sánchez is so unpopular.
In an interview with POLITICO, Muñoz complained that the national framing of the election — and the conservative party’s critiques of Sánchez — had undermined the possibility of real debate over how to improve Spain’s fourth-largest city, the capital of the country’s Andalusia region.
“If you want to just generate noise and have a debate about national politics: run for parliament, not mayor of Seville,” Muñoz said. “Me, I’ve stayed faithful to my slogan in these elections — Seville and only Seville — and I think that’s what voters want to hear about.”
In any ordinary election season, Muñoz might be right.
The openly gay, 63-year-old economist is an unusually popular mayor in Seville, a city that once had a reputation for being inward-looking and socially conservative.
Elected to the city council in 2011, Muñoz has worked to redefine the city’s identity and reinforce the idea that there’s more to it than bullfights, religious processions and flamenco — while being careful not to alienate Seville’s traditionalists.
As the city council member in charge of the powerful urbanism, tourism and culture portfolios, he bet on a more alternative, vibrant vision of Seville — promoting electronic music and indie film festivals; and lobbying to steal major events like the Goyas, Spain’s version of the Oscars, away from Madrid.
It was under Muñoz’s watch that Game of Thrones came to town, when the dragon-packed extravaganza used the lush Alcázar palace as a stand-in for the kingdom of Dorne. The producers of Netflix’s The Crown also passed through, using the palatial Alfonso XIII Hotel as a double for Beverly Hills and filming Mohamed Al-Fayed’s Egyptian wedding in Seville’s sumptuous Casa de Pilatos estate.
At the same time that he’s shown off the city center — famed for its narrow, winding streets, whitewashed homes, interior gardens and Moorish architecture — he’s also promoted newer parts of Seville. These include the high-tech Cartuja Science and Technology Park, where the European Commission recently inaugurated the headquarters of its new European Centre for Algorithmic Transparency.
He’s also an enthusiastic booster of the eclectic Fibes Conference Center, located in the working-class Sevilla Este district, which this year will host the 2023 Latin Grammys, the first-ever to be held outside the United States.
“During the next term, we’ll be doing even more to consolidate this city as a Spanish and European reference point for culture, the green economy and the digital transition,” said Muñoz. He became mayor early last year when his predecessor stepped down to run for office at the regional level.
While crafting a more modern image of Seville, Muñoz has been careful not to neglect the city’s classic cultural scene.
He may not be a member of any religious brotherhood, but he has no problem joining religious processions during Holy Week. He may not be a bullfighting enthusiast, but he’s happy to socialize with famous toreros. And while he may not have a passion for flamenco, he’s an almostomnipresentforce at the city’s annual April Fair, where smartly dressed men spend a week dancing with women in long, ruffled, polka-dot dresses while downing pitchers of rebujito, the signature Andalusian cocktail.
“You can like those events more, or less … but they’re a part of our history, our way of life,” said Muñoz.
The skill with which Muñoz has walked the line has played well among sevillanos, especially those who work in the hospitality sector and have been delighted to see the number of tourists in the city boom. Some 6.5 million overnight stays were registered last year.
“I’ve always been proud of my city, but right now I feel that Seville is at a new level as a destination, as a brand,” said restaurant owner Emilio Gimeno. “I think a lot of that has to do with the mayor because he’s always promoting the city, he never stops.”
“I like that he’s a normal guy who lives in the city and doesn’t move around in an official vehicle or surrounded by bodyguards,” he added. “If you’re opening up a new bar, he’s the sort of person who will make time in his schedule to show up at the inauguration, the sort that wants things to work out and go well for you.”
The Sánchez problem
The trouble for Muñoz is that when Sevillanoshead to the polls, they’re be making their choice based not just on his performance — but on the reputation of his party.
“The polls suggest that three out of four Spaniards intend to base their vote on local matters, but a quarter admit their vote will depend on national issues,” said Pablo Simón, a political scientist at Madrid’s Carlos III university. “That’s problematic for some mayors because Sánchez is such a polarizing figure.”
The local election will take place just months before Sánchez’s fragile left-wing coalition government — the first in Spain’s history — is set to complete its four-year term in December.
Despite the devastating impact of the COVID crisis and the economic impact of the war in Ukraine, from the outside, Sánchez’s administration appears to have weathered the storm well.
Spain’s gross domestic product has been growing at a rate above the EU average, and unemployment has dropped to levels not seen since 2008.
The country’s residents pay some of the lowest power prices in Europe, thanks to the Iberian Exception energy price cap. The European Commission has applauded Spain for efficient handling of its share of the bloc’s pandemic recovery cash.
And yet, within Spain, perception of the government is negative, and all of the parties in the ruling coalition have suffered a steep drop in the polls. Since May of last year, Sánchez’s Socialists have trailed behind the country’s conservative Popular Party, which is currently 7 percentage points ahead.
Simón, the political scientist, said that some Spaniards distrust Sánchez for having entered into a coalition government with far-left parties with which he said he’d never govern. Not to mention that, like most political leaders, the prime minister’s prestige took a hit during the pandemic.
“The government’s policies — the higher minimum wage, the basic income, the country’s role in Europe — are broadly popular,” Simón said. “But at a personal level, he isn’t.”
Juan Espadas, Muñoz’s predecessor in Seville’s city hall and current leader of the Andalusian Socialists, admitted that the prime minister’s unpopularity had become a factor in the local elections.
“The right has realized that they can’t challenge him on his politics, so now what they’re trying to do is to discredit him on a personal level,” he said, adding that the Popular Party had focused on casting Sánchez as “an egoist” willing to do anything to hold on to power.
“Their only goal is to make it so that people won’t go vote because they don’t like the person behind the party,” he said.
The ghost of ETA
In addition to invoking the unpopular prime minister, the Spanish conservatives have been reminding voters of the coalition government’s cordial relations with pro-independence parties in the national parliament.
When the Basque pro-independence party EH Bildu included 44 former members of the terrorist group ETA in its official lists for the local elections earlier this month, the Popular Party seized on the issue and turned it into a major talking point in its campaign in cities across the country.
Muñoz has worked to redefine Seville’s identity and reinforce the idea that there’s more to it than bullfights, religious processions and flamenco | Cristina Quicler/AFP via Getty Images
In Seville, José Luis Sanz, the conservative candidate for mayor, rallied supporters by declaring that his neighbors “could not understand how Muñoz’s Socialists have surrendered to the heirs of ETA.”
Like other Socialist candidates, Muñoz has denounced this line of attack, stressing its irrelevance in a campaign that should be about the threat posed by housing insecurity or extreme heat — not a terrorist group that ceased to exist more than a decade ago.
“I think what the [Popular Party] is doing is enormously disrespectful toward voters,” he said. “Instead of talking about what’s needed in this city’s poorest neighborhoods, about what we can do to promote culture, about how we should manage tourism, they want to talk about a party that isn’t up for election in Seville.”
But what politicians want to talk about and what voters are hearing seem to rarely be the same thing.
In the middle-class Los Remedios district, 83-year-old María Camacho Rojas has followed the campaign and decided she won’t give her vote to the mayoral candidate of a party led by Sánchez, a politician she believes to be “a compulsive liar.”
“[Sánchez] does deals with ETA, he doesn’t care about Spain, and I — like most Spaniards — am worried about the state in which he’s going to leave our country,” she said.
She added she’d vote for Muñoz in a heartbeat if he belonged to another party. “I like the mayor, I like how much he does for the city, how much he cares about Seville,” she said. “I’m not going to vote against him but I won’t vote for him: I’ll cast a blank ballot on Sunday.”
In Seville, the latest polls predict a technical tie, with Muñoz’s Socialists winning 12 or 13 seats in the city council and the Popular Party taking 12. That would leave the two mainstream parties dependent on the support of more extreme elements, the far-right Vox party on one side and array of left-wing groups on the other — with those two ideological blocs also nearly tied.
Whatever the outcome, the fallout is not likely to remain contained within city limits: Muñoz’s Sánchez problem could easily become Sánchez’s Seville problem.
Losing the city — the largest municipality controlled by the Socialists — would be a severe blow for the prime minister just months ahead of the national elections.
“One city won’t decide a general election,” said Simón. “But it can make the outcome easier for some, and all the more difficult for others.”
ZURICH — In one of Europe’s wealthiest squares, overlooked by the looming headquarters of a huge international bank that disintegrated just weeks ago, the impeccably dressed men and women who shuffle in and out of gleaming offices are in the grip of a Mafia-like omertà.
“You won’t get anything from anyone,” one of them says with a firmness that’s meant to draw a line under any conversation before it’s even begun. The informal code of silence dominates. His friend drags him away, through the doors of a second global bank — the one that rescued the first for 3 billion Swiss francs.
This is Paradeplatz in Zurich, Switzerland’s biggest city. Home to Credit Suisse, whose collapse in March after 167 years could have triggered a full-on global crisis had UBS not been forced to step in and take it over. The recriminations started almost immediately. Now, amid its rattling trams and luxury chocolate shops, this 17th-century square could rival the Vatican for the way the fog of secrecy has descended.
Stay there long enough and an occasional whisper about the demise of the once-great bank might be overheard. Speculation, nothing more. Gossip about political repercussions or what could happen to bonuses — exchanged over strong coffee and furtive early-morning glances at the Financial Times or Neue Züricher Zeitung. But not with outsiders of course, and certainly not with those who approach with journalist notebook in hand.
It’s easy to spot the bankers in the Swiss financial capital: a perfectly tailored blue suit, single-breasted trench coat, hand-held briefcase (leather, preferably). And what about the demise of Credit Suisse, then? “We can’t talk about it,” says one of them over an espresso with a colleague.
Turn the corner, to where a younger man is smoking, behind the dead bank’s HQ that still stands at Paradeplatz’s northern end. He dismisses all questions too: “For that, we have corporate comms.”
Nobody’s responsible
There’s a reason for all this silence. The Alpine nation, known for its utmost discretion in its role as banker to the world’s rich, is still trying to process exactly what went wrong — and what to do about the people who took Credit Suisse to the brink.
The public is “very angry,” according to Tobias Straumann, professor of modern and economic history at the University of Zurich, especially as it’s been just 15 years since UBS’ own public bailout.
“The taxpayer has to save a bank, where people earned a lot of money, and nobody’s responsible now,” he said. “That’s the feeling.”
With national elections coming up in October, the question turns to who will be on the receiving end of that feeling. Just the bankers themselves? The regulators who watched it go up in flames? The politicians who set the rules in the first place? All of the above?
The Swiss parliament has started exerting its authority — rejecting the government’s request to approve an emergency credit line underpinning the takeover. But that was largely symbolic. It will decide in June whether to launch a parliamentary commission — which would then be able to summon those involved for questioning.
The Swiss parliament has started exerting its authority — rejecting the government’s request to approve an emergency credit line underpinning the takeover | Fabrice Coffrini/AFP via Getty Images
“My prediction would be that in the short run, not much is going to happen,” Straumann said. “But probably after the elections, then you’re going to see a bigger coalition that really does something,”
Pig market
It won’t help the public mood that some Credit Suisse bankers plan to sue over lost bonuses. A few hundred years ago Paradeplatz was known as Säumärt — pig market, and now accusations of snouts in troughs have become ever more common in public discourse.
Céline Widmer, a Swiss Social Democrat lawmaker, has called for a ban on bankers’ bonuses, as well as for higher capital requirements for lenders to make them safer. In her view, Switzerland’s financial watchdog should also get stronger sanctioning powers.
“It was the behavior of the banks, which [demonstrated] they are not accountable,” she said of what went wrong at Credit Suisse.
The Swiss authorities find themselves under intense scrutiny. Although they stopped the bank’s collapse from triggering broader financial contagion, the government and regulators face questions over why they didn’t step in earlier.
As it was, Credit Suisse had problems for years, but over a few days in March, it rapidly lost the trust of financial markets amid broader panic over bank failures in the U.S.
According to Finance Minister Karin Keller-Sutter, the bank would have run out of money without the hasty takeover by UBS, as clients pulled their deposits and its shares and bond prices tanked.
The government promised to swallow up to 9 billion francs of losses if needed and the Swiss central bank offered 100 billion francs of liquidity.
Legal cases are underway contesting the decisions taken over that pivotal weekend of the merger — including the Swiss financial watchdog’s wipeout of 16 billion francs of Credit Suisse bonds, reversing the usual hierarchy of losses in a collapse.
Those investors, whose bonds are now worth nothing, have won an early victory by forcing the release of a contested emergency decree.
A banking monster
And life might get harder for the other bank with its headquarters in Paradeplatz now that it’s gobbled up its rival.
“We created a monster with UBS,” said Thomas Borer, a former Swiss ambassador to Germany, who is involved in representing the interests of Credit Suisse bondholders wiped out in the takeover.
“[It’s now] one of the biggest banks in the world when it comes to wealth management. We are not one of the biggest countries in the world. How should we regulate that? That’s now where the debate is focusing on.”
According to Finance Minister Karin Keller-Sutter, the bank would have run out of money without the hasty takeover by UBS | François Walschaerts/AFP via Getty Images
The parliamentary investigation could lead that debate — and even Switzerland’s tight-lipped bankers are keen.
“We are supporting that there be an independent and complete and open-minded review of these events,” said August Benz, deputy chief executive of the Swiss Bankers Association.
Credit Suisse’s failure had triggered “certain emotions,” Benz said, but hoped an inquiry would help Switzerland pick “the right measures” in response to the bank’s failure. He pushed back against the idea that a global bank like UBS could be too big for the country.
“Germany has one [globally systemic bank], Italy has one, Spain has one, [the Netherlands has one] and Switzerland looks like it’ll have one,” he said.
Stable no more
Back on the streets of Zurich, Credit Suisse’s HQ is a visible reminder of the uncertainty brought about by its failure, peering over at UBS across Paradeplatz.
“It’s a huge institution that suddenly disappears,” says Reinhard Berger, a 36-year-old chemist, waiting for the tram.
A few blocks away, Eliane Christen, a patent engineer, 35, is wistful. The failure makes her “unsure about the stability we always say Switzerland has,” she says. The stability seemed to vanish in one weekend.
It’s an hour before dawn breaks over the North Sea. Aboard the KV Bergen, the officer of the watch is wide awake.
The 93-meter long Norwegian Navy Coast Guard vessel is on patrol, 50 miles out to sea. The sky is dark, the sea darker. But off the starboard bow, bright lights gleam through the rain and mist. Something huge and incongruous is looming out of the water, lit like a Christmas display.
“Troll A,” says Torgeir Standal, 49, the ship’s second in command, who is taking the watch on this bleak March morning.
It’s a gas platform — a big one.
When it was transported out to this desolate spot nearly 30 years ago, Troll A — stretching 472 meters from its seabed foundations to the tip of its drilling rig — became the tallest structure ever moved by people across the surface of the Earth. Last year, Troll, the gas field it taps into, provided 10 percent of the EU’s total supply of natural gas — heating homes, lighting streets, fueling industry.
“There are many platforms here,” says Standal, standing on the dark bridge of the Bergen, his face illuminated by the glow from the radar and satellite screens on his control panel. “And thousands of miles of pipeline underneath.”
And that’s why the Bergenhas come to this spot today.
In September 2022, an explosion on another undersea gas pipeline nearly 600 miles away shook the world. Despite three ongoing investigations, there is still no official answer to the question of who blew up the Nord Stream pipe. But the fact that it could happen at all triggered a Europe-wide alert.
The Norwegian Navy’s KV Bergen, seen in the background, after departing from the port of Bergen
Against a backdrop of growing confrontation with Moscow over its brutal invasion of Ukraine and its willingness to use energy as a weapon, the vulnerability of the undersea pipes and cables that deliver gas, electricity and data to the Continent — the vital arteries of comfortable, modern European life — has been starkly exposed.
In response, Norway, alongside NATO allies, increased naval patrols in the North Sea — an area vital for Europe’s energy security. The presence of the Bergen, day and night, in these unforgiving waters, is part of the effort to remain vigilant. The task of the men and women on board is to keep watch on behalf of Europe — and to stop the next Nord Stream attack before it happens.
The officers of the watch
But what are they looking for?
In recent weeks the Bergen has tracked the movements of a Russian military frigate through the North Sea — something that it has to do “several times every year,” says Kenneth Dyb, 47, the skippsjef, or commander of the ship.
The Russians have a right to sail through these seas out to the Atlantic, and it is very unlikely Moscow would be so brazen as to openly attack a gas platform or a pipeline. But, says Dyb, as his ship steams west to another gas and oil field, Oseberg, “it’s important to show that we are present. That we are watching.”
Recent reports that Russian naval ships — with their trackers turned off — were present near the site of the Nord Stream blasts in the months running up to the incident have reinforced the importance of having extra eyes on the water itself.
The Oseberg oil and gas field, 130 kilometers north-west of Bergen
Of course, the gas didn’t come for free. Norway has profited hugely from the spike in gas and oil prices that followed Putin’s invasion of Ukraine. The state-owned energy giant Equinor made a record $75 billion profit in 2022. Oslo is sensitive to accusations of war profiteering — and keen to show Europe that it cares about its neighbors’ energy security as much as it cares about their cash.
But the threat to the pipelines could also be more low-key. One of the many theories about the Nord Stream attack is that it was carried out by a small group of divers, operating from an ordinary yacht. In such a scenario, something as seemingly innocent as a ship suddenly going stationary, or following an unaccustomed course through the water, could be suspicious. The Bergen’s crew have the authority to board and inspect vessels that its crew consider a cause for concern.
Russia’s covert presence in these waters has been acknowledged by Norway’s intelligence services in recent weeks. A joint investigation by the public broadcasters in Norway, Sweden, Denmark and Finland uncovered evidence of civilian vessels, such as fishing ships, being used for surveillance activities. This is something that has been “going on forever,” according to Ståle Ulriksen, a researcher at the Royal Norwegian Naval Academy, but it has increased in intensity in recent years.
“We always look for oddities, anything that is unusual, like new ships in the area that have not been here before,” says Magne Storebø, 26, senior petty officer, as he takes the afternoon watch on the bridge later that day.
The sky is leaden and the horizon lost in cloud. Coffee in hand, Storebø casts his eye over the radar and satellite screens as giant windscreen wipers whip North Sea spray from the floor-to-ceiling windows. There are few ships around, all of them familiar to the crew; service vessels plying back and forth from the gas and oil platforms.
The Nord Stream incident and the new security situation has changed the way Storebø thinks about his work, he says.
He is “more aware of the consequences suspicious vessels could have,” he says. “More awake, you could say.”
Senior Petty Officer Magne Storebø keeps watch from the bridge
Soft-spoken and calm beyond his years, Storebø is philosophical about the potential dangers of his work. He has been in the Navy for four years, in which time war has broken out on the European continent and the threat to his home waters has come into sharp focus.
“If you are going to put a rainy cloud over your head and bury yourself down, I don’t think the Navy or the coastguard is the right place to work in,” he says in conversation with two shipmates later that day. “You need to adjust and to look in a positive direction — and to be ready in case things don’t go that way.”
Energy war round two
As Europe emerges from the first winter of its energy war with Russia, its gas supplies have held up better than almost anyone expected.
But as the Continent braces for next winter, the risk of another Nord Stream-style attack to a key pipeline is taken seriously at the highest levels of leadership.
“Things look OK for gas security now,” said one senior European Commission official, speaking on condition of anonymity to discuss sensitive matters of energy security. “But if Norway has a pipeline that blows up, we are in a different situation.”
EU policymakers see four key risks to gas security going into next winter, the senior official added: exceptionally cold weather; a stronger-than-expected Chinese economic recovery hoovering up global gas supply; Russia cutting off the remaining gas it sends to Europe; and last but not least, an “incident” affecting energy infrastructure.
Such an event might not only threaten supply but could potentially spark panic in the gas market, as seen in 2022, driving up prices and hitting European citizens and industries in the wallet. And nowhere is the potential for harm greater than in the North Sea.
Norway is now Europe’s biggest single supplier of gas. After Russian President Vladimir Putin and the energy giant Gazprom shut off supply via Nord Stream and other pipelines, Norway stepped up its own production in the North Sea, delivering well over 100 billion cubic meters to the EU and the U.K. in 2022. European Commission President Ursula von der Leyen visited Troll A herself in March this year — the first visit of a Commission president to Norway since 2011 — to personally thank the country’s president, Jonas Gahr Støre, for supplies that “helped us through the winter.”
“We have a huge responsibility, supplying the rest of Europe with energy,” Defense Minister Bjørn Arild Gram told POLITICO. “To be a stable, reliable producer of energy, of gas, is an important role for us and we take that very seriously. That is why we are also doing so much to protect this infrastructure.”
The vast majority of that gas is transported into northwest Europe via a complex network of seabed pipes — more than 5,000 miles of them in Norway’s jurisdiction alone. The North Sea has an average depth of just 95 meters. That’s not much deeper than the Nord Stream pipes at the location they were attacked.
“It actually doesn’t take a particularly sophisticated capability to attack a pipeline in relatively shallow waters,” says Sidharth Kaushal, research fellow at the Royal United Services Institute think tank in the U.K. A small vessel, “some divers and an [explosive] charge” are all it could take, Kaushal says.
The navy chief
After the Nord Stream incident in September, suspicion instantly fell on Russia. Moscow has a record of operating in the so-called gray zone — committing hostile acts short of warfare, often covertly.
To date, the three investigations looking into the incident have yet to confirm that suspicion. But European governments — and their militaries — are not taking any chances.
In the days immediately following the explosions, NATO navy chiefs started calling each other to try to coordinate efforts to protect energy infrastructure, says Rune Andersen, the chief of Norway’s navy, speaking to POLITICO at Haakonsvern naval base, before the KV Bergen’svoyage.
Everyone had the same thought, he says. “If that happens in the North Sea, we will have a problem.”
Andersen joined the Navy as a young man in 1988, in the last days of the Cold War. Now 54, he is used to the Russian threat overshadowing Norway’s and Europe’s security.
“After decades of attempts to integrate or cooperate with Russia, we now have war in Europe. We see that our neighbor is brutal and willing to use military force,” he says grimly. “I worked in the Navy in the ’90s when it was enduring peace and partnership on the agenda. We are back to a situation where our job feels more meaningful — and necessary.”
Kenneth Dyb, the skippsjef, or commander of the ship
However, he points out, his own forces have so far not seen any Russian movements or operations “that are different to what they were before” the Nord Stream attacks. “The job we are doing is precautionary, rather than tailored to any specific threat,” he adds.
Even so, those early discussions with NATO allies have now formalized into daily coordination via the Allied Maritime Command headquarters in the U.K., to ensure there are always NATO ships on hand that can act as “first responders” to potential incidents. British, German and French ships have joined their Norwegian counterparts in the monitoring and surveillance effort.
It is “by nature challenging” to protect every inch of pipeline, all of the time, Andersen says.
The role of the Bergen and ships like it, he adds, is just “one bit of the puzzle.” Simply by their presence at sea, these ships increase the chances of catching would-be saboteurs in the act, and hopefully deter them from trying in the first place.
The goal, in other words, is to reduce the size of the “gray zone” — or to “increase the resolution” of the navy’s picture of the activity out on the North Sea, as Andersen puts it.
In collaboration with the energy companies and pipeline operators, unmanned underwater vehicles — drones — using cameras and high-resolution sonar have been used, Andersen says, to “map the micro-terrain” around pipelines. These are sensitive enough to spot an explosive charge or other signs of foul play.
Equinor, alongside the pipeline operator Gassco, has carried out a “large inspection survey” of its undersea pipeline infrastructure, a company spokesperson says. The survey revealed “no identified signs of malicious activities” but pipeline inspections are ongoing “continuously.”
Senior Petty Officer Simen Strand speaks to the crew. “We haven’t had much to fear in the past. We are probably less naïve nowadays,” he says.
Perhaps understandably, the heightened level of alert has led to the occasional false alarm. A spate of aerial drone sightings near Norwegian energy infrastructure around the time of the Nord Stream attacks last year included a report of a suspicious craft circling above Haakonsvern naval base itself.
“After a while, we concluded it was a seagull,” says Andersen, with the shadow of a grin.
Europe on alert
The navy chief is nonetheless deadly serious about the potential threat. A Nord Stream-style attack in the North Sea is possible. Anderson will not be drawn on the most vulnerable points in the network, saying only that “easy to access” places and “key hubs” are “two things in the back of mind when we think [about] risk.”
Throughout Europe, the alert has been raised. This month, NATO warned of a “significant risk” that Russia could target undersea pipelines or internet cables as part of its confrontation with the West.
Several countries are increasing patrols and underwater surveillance capabilities. The British Royal Navy accelerated the purchase of two specialist ocean surveillance ships, the first of which will be operational this summer. The EU and NATO have established a new joint task force focusing on critical infrastructure protection, and a “coordination cell” has been established at NATO headquarters in Brussels to improve “engagement with industry and bring key military and civilian stakeholders together” to keep the cables and pipelines secure.
Norway — and Europe — are in this struggle for the long haul, Andersen believes.
Indeed, even as Europe transitions from fossil fuels to green energy, the North Sea will remain a vital powerhouse of offshore wind energy, with plans for a huge expansion over the next 25 years. Earlier this year, the Netherlands’ intelligence services reported a Russian ship seeking to map wind farm infrastructure in the Dutch sector of the North Sea. “We think the Russians wanted to investigate the possibilities for potential future sabotage,” Jan Swillens, head of the Dutch Military Intelligence and Security Service tells POLITICO in an emailed statement. “This incident makes clear that these kinds of Russian operations are performed closer than one might think.”
At the same time in the Baltic, countries are shoring up security around their infrastructure, at sea and on land. Late last year, Estonia carried out an underwater inspection of the two Estlink power cables and the Baltic Connector gas pipeline linking it to Finland, the Estonian navy says. Lithuania, meanwhile, is paying “special attention” to security around its LNG terminal at Klaipėda and the gas cargoes that arrive there, a defense ministry spokesperson says.
Torgeir Standal, left, the KV Bergen’s second in command
It was in Lithuania that Europe had its first major false alarm since the Nord Stream incident, when a gas pipeline on land exploded on a Friday evening in January. Foul play was briefly considered a possibility in the immediate aftermath but was quickly ruled out. The pipe was 40 years old, and had been subject to a technical fault.
The danger posed by Russia to infrastructure throughout Europe should not be underestimated, says Vilmantas Vitkauskas, director of Lithuania’s National Crisis Management Centre and a former NATO intelligence official.
“We know their way of thinking, [the way] they send signals or apply pressure,” Vitkauskas says. “We understand Russia quite well, and we are quite worried by what we see — and how vulnerable our infrastructure is in Europe.”
The watchers on the water
Back aboard the Bergen, life for the sailors carries on as normal. It’s a young crew, with an average age of around 30. Some are conscripts. It’s still compulsory in Norway for 19-year-olds to present themselves for national service, but only around one in four are actually recruited for the mandated 19-month stint.
The days are long. Surveillance, maintenance and exercises in search and rescue are all part of the crew’s regular routine. A helicopter from one of the Oseberg oil and gas platforms soars overhead, and the crew are drafted into an exercise winching people on and off the deck of the Bergenin the dead of night, simulating a rescue operation.
The ship needs to be ready to respond to an incident should the call come in from naval headquarters that help is required, or a suspicious vessel has been identified in their patch of the North Sea. But in their downtime, the sailors head to the gym on the lower deck, or play FIFA on the X-box in the sparse games room. Three hearty meals a day are served in the galley kitchen. There is even a ship’s band, cheekily named “Dyb Purple” after their commander. Dyb “takes it well,” says Senior Petty Officer Storebø.
In the daily whirl of activity, most of the young sailors don’t think of their work in the grand strategic sense of protecting the energy security — the warmth, the light, the industry — of an entire continent.
But the context of the Ukraine war — and the precedent set by the Nord Stream attack — has added a note of solemnity just below the surface of the comradeship and bonhomie.
“We are probably less naïve nowadays,” says 33-year-old Senior Petty Officer Simen Strand, who has a wife and two children, a boy and a girl, back home in Bergen. “We haven’t had much to fear in the past, there hasn’t been a concrete threat.”
Storebø agrees but is characteristically sanguine. “Russia has always been there … I’ve not personally felt any more unease than before.”
The next day, Storebø has the night watch, from midnight to four in the morning, as the Bergen travels back to base for a short stop before heading out to sea again.
It’s dark up on the bridge, with the glow of the control panel screens the only light inside. Twenty miles away, little lights can be seen on the Norwegian coast. A lighthouse flares to the south, at Slåtterøy, not far from Storebø’s home island of Austevoll. Beneath the waves, unseen, gas flows from the Troll field back to the mainland, where it is processed. From there, it continues its journey south to light the dark of European nights.
All is quiet but Storebø can’t afford to lose focus. “Coffee and music help,” he says. “I like the night shifts.”
As the officer of the watch, he has to be ready, should the radar, the satellites, or his own eyes see something out of the ordinary — ready to call the captain and raise the alarm.
That’s the job, he says. “You always have it in the back of your mind.”
It’s meant to be a legally binding deal that could prevent the next pandemic.
Originally proposed by European Council President Charles Michel in the worst days of the COVID-19 pandemic, the aim is to create a new set of rules to guide countries on pandemic preparedness and response.
But with countries fiercely divided on key issues and just 12 months left to agree, it’s looking increasingly likely that the text will end up as a damp squib.
As the who’s who of global health descends on Geneva in the coming days for the World Health Assembly — the annual meeting of the decision-making body of the World Health Organization — the fate of the treaty will be the main topic of discussion over glasses of champagne at swanky receptions.
The behemoth draft version of the text was ambitious, covering everything from access to vaccines to strengthening health systems so they can respond to health crises.
But with countries facing off over intellectual property rights and the rules around sharing medical products developed during a pandemic, a compromise with any substance looks increasingly difficult to reach.
“If the groups can give up a little bit and try to compromise, I think that in the middle, we might have something left … we might have something that is useful for the future,” said a Geneva-based diplomat, who requested anonymity to talk about confidential negotiations. However, they added that the “fallback position might be a treaty with a little bit of content — just a little bit.”
And then there’s the all-important question: How to ensure that countries actually comply with what’s agreed. “A treaty with no compliance mechanism is just a piece of paper,” warned Nina Schwalbe, founder of the public health think tank Spark Street Advisers and former senior official at UNICEF and Gavi, the Vaccine Alliance.
POLITICO walks you through the biggest sticking points:
Face-off with Big Pharma
There are two highly contentious proposals in the draft text. One calls on countries to take measures to support time-bound waivers of IP rights so that companies other than patent holders could make vaccines or treatments — an issue that countries never truly succeeded in solving during the COVID-19 pandemic. The second is to ensure that countries that share information about dangerous pathogens can access any resulting treatments and vaccines developed using this data.
Developing countries see these as central to ensuring equity in the next pandemic. But both are fiercely opposed by Big Pharma, which has the backing of some wealthy Western nations.
On intellectual property rights, the U.S. has taken a big red pen to the draft text, stripping out mention of waivers of intellectual property rights. It also wants to weaken provisions that would require pharmaceutical companies to license other manufacturers to produce their products.
The U.S. wants to weaken provisions that would require pharmaceutical companies to license other manufacturers to produce their products | Thibaud Moritz/AFP via Getty Images
For the debate over whether sharing information regarding new pathogens should be linked to some kind of benefit — potentially monetary — the line is less clear. The Global South, which is pushing to include the benefits link, has the biggest ask, said a second Geneva-based diplomat who also requested anonymity to talk about confidential negotiations. But a flat no from the Global North could see them lose timely access to those pathogens — something that could delay the development of pathogen-specific vaccines or treatments, and cost lives.
Too many cooks, too little time
When WHO members agreed in December 2021 to negotiate a pandemic treaty by May 2024, the deadline seemed a lifetime away. But a lot of time was lost at the start of the process on procedural matters, said the first diplomat. That delay was likely “strategic at some point also for some groups,” they said, without specifying who they were referring to.
There’s no denying that the text tries to cover a lot of ground, much of it highly controversial. Given that, the deadline of May 2024 is “an extreme challenge,” said the second diplomat. What may be necessary is a streamlining of sorts. “It’s not about lowering the ambition but maybe lowering the level of detail,” they said.
Ambassador Nora Kronig, head of the international affairs division in the Swiss Federal Office of Public Health, told POLITICO that there is still uncertainty about the scope and content of the treaty. “There’s still a lot of work ahead of us to make it tangible and realistic and implementable,” she said.
‘Just a piece of paper’
Perhaps the biggest question is how the treaty will actually be enforced.
“There hasn’t been a lot of discussion about this because it touches on the difficult issue about sovereignty and about having an international organization or other countries, [having] a look on what you do, [and] on how you prepare,” said the second diplomat.
In a draft text, countries including China, Russia, Iran, Namibia and Egypt express strong reservations about monitoring mechanisms such as a peer review process, where countries would carry out regular reviews of each others’ pandemic preparedness. Meanwhile, the EU, Canada and Switzerland have put forward proposals for stronger language on monitoring how ready a country is for a health crisis.
Some countries fear a naming and shaming process, but it doesn’t matter how well-prepared one country is, if another isn’t, said the first diplomat. “I think that we should be accountable to each other, and we should be transparent, and we should try our best to allocate resources and also to make the necessary changes to improve, and also to help others to improve,” they said.
Some observers want to go even further. Schwalbe would like to see a committee of independent people reporting on the treaty. “Whatever’s in it, we need to hold states accountable for what they’ve agreed to,” she said.
Ultimately, the outcome will be “the fruit of international negotiations,” said the second diplomat. “Of course, it will be the [lowest] common denominator.”
But their view is that if it binds countries on anything new then it’s worth something. “One could see anything that those countries agree upon [as] progress, even if it is watered down and it is incremental or iterative,” they said.
ATHENS — The biggest crime in Greece? The state of the police force.
That’s according to opposition politicians, who are putting security and law enforcement center-stage ahead of this month’s national election.
Syriza, the leftist main opposition party, accuses the conservative New Democracy, which is hoping for another term in office after the May 21 vote, of allowing the police to become run by organized crime gangs. The conservative government maintains a lead in the polls, although a second round will likely be needed and is penciled in for July 2.
“The Greek police are collaborating with the crime instead of fighting crime,” Syriza leader Alexis Tsipras said, adding that the “Greek mafia is in the police.”
For sure, Greek police have been in the headlines for all the wrong reasons of late, thanks to the alleged involvement of police officials in mafia gangs profiting from illegal brothels and casinos; the murder of a 16-year-old Roma boy during a police chase; an alleged rape in a central Athens police department; and complaints of police brutality.
The Greek police force has a long history of corruption and excessive use of force but since New Democracy was elected in 2019 — at least in part on a law-and-order platform — complaints have soared.
In recent protests following a deadly train crash, police were accused of using unjustified violence during peaceful rallies, with several videos exposing the brutality. In one case, police officers sped toward a group of peaceful protestors on motorcycles and threw firecrackers at their feet. Prosecutors have ordered an investigation after a police tow truck drove at high speed into dumpsters being wheeled into the middle of a street by protesters.
The chief of police, Konstantinos Skoumas, was replaced in March. In an open letter, Skoumas defended his record and blamed politicians for forcing him out, saying he wouldn’t be “anyone’s scapegoat,” and arguing that his actions “caused strong resentment in certain centers of power, which, as a result, led to the violent termination of my term of office.”
The opposition blames both the police and the interior ministry that oversees it. “Impunity, the cultivation of an omertà mentality, the lack of accountability, are unfortunately characteristic of the way the Greek police operates, with the tolerance, if not the complicity, of the ministry,” said Giorgos Kaminis of the socialist Pasok party.
Minister of Civil Protection Takis Theodorikakos hit back, calling Syriza’s accusations “slanderous” and “nationally damaging,” as they could potentially scare away tourists.
“Our daily concern in practice is the safety of citizens, which is why we put an end to the lawlessness and delinquency,” he said on a recent visit to a police station. “This is why in 2022 the Greek police arrested 7,000 illegal migrants in the Attica [region that includes Athens], and now we are placing 600 new special guards at the Attica police stations,” Theodorikakos said, adding that Greece is a safe country.
Government spokesman Akis Skertsos said on Monday that there has been a reduction in all medium and low crime rates during the government’s term. Comparing January to August of 2019 to the same period in 2022 there has been a 15 percent reduction in thefts and 35 percent reduction in robberies.
Complaints on the rise
In 2022, preliminary data from the Greek Ombudsman showed a 50 percent rise in citizens’ complaints against the police compared to 2019, the last pre-pandemic year, and a 14 percent rise in incidents of racially motivated police actions.
“The tone set by the political as well as the natural, operational leadership of the security forces undoubtedly plays a vital role” in these increases, Greek Ombudsman Andreas Pottakis told POLITICO. Pottakis said the government’s attitude toward the police was “overly supportive” and could “be misinterpreted” by officers, making them think they have “carte blanche” to do whatever they want.
One of the government’s first tasks after taking office four years ago was to revive a police motorcycle unit that had been disbanded under the previous Syriza government over human rights violations. Many of the 1,500 recruits were drafted from the ranks of military special forces, bypassing the police academy.
New Democracy’s efforts to establish the first university police force in Europe also failed. Α special unit with 1,000 officers was set up in September but still hasn’t set foot on campuses. The idea is so unpopular that on the rare occasions officers from the unit have ventured near universities, they have been accompanied by riot police. Some 600 officers meant for the uni police have already been transferred to other departments, the police confirmed.
Last month, an officer fired his gun into the air outside Athens University of Economics and Business in the center of the capital during clashes with hooded, masked youths.
Theodorikakos, the interior minister, said such incidents happened because, in the pre-election period, some people want to “blow up the political climate.” He added that some people “even want him dead,” a comment that was heavily criticized by the opposition.
“Let’s stop playing games at the expense of the seriousness of the issues, as [Prime Minister Kyriakos] Mitsotakis did with the university police,” said Pasok leader Nikos Androulakis. “He made a body which was paid for by the Greek taxpayers, did nothing of substance, and instead of apologizing he continues doing the same.”
Abuses of power
Police have also been accused of resorting to violence and intimidation to hamper journalists covering demonstrations and the refugee crisis on the country’s islands.
“We have cases of police officers arresting and even stripping lawyers and journalists off their clothes or humiliating them even though their professional identity is made known,” Pottakis, the ombudsman, said. “Young people are mainly targeted. The age element seems to act as an encouragement.”
Last December a 16-year-old Roma boy died after being shot in the head by police chasing him after he fled a petrol station allegedly without paying for €20 of fuel.
A 19-year-old girl reported she had been raped in a station by two policemen who filmed their actions in the main central police department last year. The officers involved said the sex was consensual. They have been suspended pending an investigation.
“We are heading from one fiasco to another,” said Syriza MP Christos Spirtzis. “Where are the internal investigations that have been conducted? There is no information, no one has been punished.”
Such investigations have, however, been launched. In January, Supreme Court prosecutor Isidoros Dogiakos and Interior Minister Theodorikakos ordered an investigation into the relationship between senior police officials and members of the mafia, after leaked conversations showed gang leaders negotiating with officers about continuing their activities undisturbed.
Posters of the communist party in Thessaloniki | Sakis Mitrolodis/AFP via Getty Images
This was not the first report linking the police with organized crime.
Active and retired police officers stand accused, together with mafia members, of widespread corruption, with the criminal organization alleged to be running a protection racket involving 900 businesses — from clubs to brothels and casinos — with a turnover of at least €1 million per month.
Investigative website Reporters United revealed that one official implicated in the racket was promoted to director of the Attica Security Department, one of the most important positions in the fight against organized crime. Police later said they weren’t aware of the allegations against the officer.
“Citizens’ trust relationship with the police is broken when those who break their oath are not punished,” the ombudsman said.
BRUSSELS — The EU’s high command is calling on European governments to keep talking to China amid deepening tensions between Washington and Beijing.
The European Union’s diplomatic arm wants member countries to “be prepared” for a potentially critical escalation in the crisis over Taiwan, warning that a military conflict would upend the vital supply of microchips to Europe.
But while there’s a need to reduce risks to Europe, it may not seal itself off from China, according to an internal document drafted by the European External Action Service and seen by POLITICO.
The document, which will be discussed by the bloc’s foreign ministers at a gathering in Stockholm on Friday, comes at a crucial time for the EU as it navigates an increasingly complex relationship with China. The U.S. is doubling down on its hawkish stance toward Beijing, while European leaders have not yet agreed on a unified approach.
The paper triggered immediate backlash from some of Europe’s more hawkish governments. “With all possible alarm lights flashing, we seem to prefer hitting a snooze button again,” one senior EU diplomat said on condition of anonymity in order to discuss sensitive issues.
In the document, prepared by the EU executive’s diplomatic officials, the bloc’s 27 member countries are urged to seize “a window of opportunity” to reduce the risk of China’s growing influence over economic and security matters.
A chance remains for Europe to speak directly to President Xi Jinping’s government, the paper says. “China and Europe cannot become more foreign to each other. Otherwise there is a risk that misunderstandings will grow and spread to other areas,” according to the draft.
“Systemic rivalry may feature in almost all areas of engagement. But this must not deter the EU from maintaining open channels of communication and seeking constructive cooperation with China […] Such cooperation can serve to break through a growing self-induced isolation of the Chinese leadership but most importantly should advance the EU’s core interests,” the paper continued.
Friday’s debate at an informal meeting of foreign ministers in Sweden will fire the starting gun on a discussion over the EU’s relationship with China that is expected to dominate policymaking in the coming months, with a more comprehensive debate expected at an EU leaders’ summit in Brussels this June.
De-risking Beijing
The paper calls on member countries to speed up plans for “de-risking” and reducing overdependence on China.
“De-risking can ensure predictability and transparency in our economic and trade relations, while promoting a secure, rules-based approach,” the paper says.
The call for de-risking comes as Beijing appears increasingly impatient with the narrative that it poses a threat to the West. Chinese Foreign Minister Qin Gang, speaking in Berlin this week, criticized European politicians for attempting to “get rid of China” in the name of de-risking.
The paper also tackles the politically sensitive issue of Taiwan, with ministers due to discuss this issue as well on Friday. French President Emmanuel Macron told POLITICO in an interview last month that Europe should avoid getting dragged into a confrontation between China and the U.S. over the self-governing island, which Beijing claims as its own.
On Taiwan, the paper says: “The EU is […] adamant that any unilateral change of the status quo and use of force could have massive economic, political and security consequences, at global level, especially considering Taiwan’s primary role as supplier of the most advanced semiconductors.”
The document continues: “The EU needs to be prepared for scenarios in which tensions increase significantly. The risk of escalation in the Taiwan Strait clearly shows the necessity to work with partners to deter the erosion of the status quo in the interest of all.”
Some 90 percent of advanced semiconductors imported into the EU come from Taiwan, according to the bloc’s own estimates.
Taiwan’s semiconductor giant TSMC has been under pressure to relocate some of its manufacturing capabilities, but so far it has only moved in the direction of Taiwan’s two presumed security providers — the U.S. and Japan.
On Ukraine, the EU is not impressed with China’s latest diplomatic show, marked by President Xi Jinping’s belated first call with his Ukrainian counterpart Volodymyr Zelenskyy.
“China’s ’12-point position paper on the Ukraine Crisis’ […] confirms its firmly pro-Russian stance,” the document said. “Direct dialogue between China and Ukraine would be the best opportunity for China to contribute to a fair political settlement,” it continued.
EU member countries should keep warning Beijing to refrain from supporting Russia, including by circumventing sanctions, the same paper added.
The paper also casts gloom on the outlook for China’s domestic development, saying the Asian superpower “is likely to face unprecedented economic and political challenges internally” due to the deceleration of economic growth and demographic change.
In the run-up to Sunday’s too-close-to-call election, he has ramped up his poisonous invective against homosexuality, as he seeks to shore up his conservative Islamist base. Almost every other speech from the campaign trail accuses the opposition of undermining family values and of being in the thrall of improbably powerful LGBTQ+ networks — sometimes with hints they are run by paymasters abroad.
“The AK Party has never been an LGBT supporter,” Erdoğan roared at a recent Istanbul rally, referring to his governing party. “We believe in the sanctity of the family. Family is sacred.”
Adding a menacing note, he followed up with: “So are we ready to bury these LGBT supporters in the ballot box?”
To some extent, the homophobic focus of the campaign is easily explicable. Increasingly deserted by his early supporters, Erdoğan is having to form coalition partnerships with more extreme Islamists in this year’s elections.
But even so, his language smacks of a fixation, and an attempt to divert attention from the country’s most pressing ailments — including a snowballing cost of living crisis and scorching inflation.
Diversionary tactics
Fulden Ergen, editor of Velvele.Net, an online debate platform for LGBTQ+ rights, said she was taken aback by the ubiquity of Erdoğan’s propaganda against the LGBTQ+ community in this year’s campaign.
She reckoned the attacks were an attempt to mask how few answers to Turkey’s profound problems the AK Party now has.
“I was not expecting them to be this devoid of policies and just talking about LGBTI,” she said. “The alliance does not have much to give people anymore,” she added, referring to the conservative coalition backing the president. “They don’t know how to deal with the economic crisis. They have no policies left, I see this campaign as a defeat.”
Though he may be running out of ideas, Erdoğan could still win. And that is now a serious concern to LGBTQ+ people.
Life is already tough, and could get significantly worse. LGBTQ+ flags are banned, gatherings are arbitrarily blocked by the government and participants in pride parades are regularly attacked or detained by police. The fear is that their organizations could now be made illegal, and — in the worst case scenario — that laws to protect families could be extended to outlaw homosexuality itself.
Activists say that if Erdoğan stays in power, violence could follow his hate speech.
An anti-LGBTQ+ rally in Istanbul in 2022 | Chris McGrath/Getty Images
One of the dangers is that his government could use security laws to crack down on homosexual relations — casting them as part of a foreign conspiracy. The government is playing on perceptions that “people don’t believe LGBTI can be from Turkey,” Ergen said.
One of the biggest setbacks for women and LGBTQ+ people has been Turkey’s 2021 withdrawal from the — ironically named — Istanbul Convention, which is intended to prevent, prosecute and eliminate violence against women and promote gender equality.
Domestic violence is a severe problem that kills at least one woman every day in Turkey. According to data from the Monument Counter, a website that commemorates women who lost their lives to domestic violence, 824 women have been killed in just the past two years.
Gender parity is another failing across the country’s political spectrum. According to the country’s Women’s Platform for Equality, a rights group that has been tracing the candidates on the various parties’ electoral lists, a mere 117 female deputies are set to be elected to Turkey’s 600-seat parliament.
‘I have seen many Erdoğans in my life’
Zeynep Esmeray Özadikti, who has been an activist for trans rights for 30 years, looks set to be an exception to that trend. She is a candidate for the Workers’ Party of Turkey and the first openly trans woman with a good chance of making it to parliament.
In a café in Kurtuluş, a neighborhood in Istanbul where there are significant numbers of trans voters, Esmeray told POLITICO that, if elected, she would fight for the rights of LGBTQ+ people against discrimination, hate crimes and violence. “I am getting very positive feedback from the streets,” she said. “If we can judge it by looking at the streets then I’ll definitely be getting into the parliament.”
If Erdoğan stays in power, Esmeray believes he will take the country in a more religiously conservative direction, even aiming for Sharia law.
Ergen, the Velvele.net editor, echoed Esmeray’s line of thought. She feared that Article 10 in Turkey’s constitution — a part of the national charter that gives some vague protection to gender equality — might be doctored, paving the way to the possible criminalization of homosexuality.
“This is my biggest fear,” she says. “If they win, they are going to do it.”
Still, the fear of Erdoğan does not mean the LGBTQ+ community feels completely protected by the opposition, whose candidate Kemal Kılıçdaroğlu is leading in the polls ahead of Sunday’s first round vote.
Ergen thinks the right-wing parties within the wide-ranging opposition alliance could also lobby to make life harder for LGBTQ+ groups.
Kılıçdaroğlu himself is fairly guarded in his LGBTQ+ remarks, knowing that the government could easily turn the subject against him.
To Erdoğan, Turkey’s LGBTQ+ community represents “deviant structures” | Burak Kara/Getty Images
He is, however, committed to a trajectory toward EU norms. When asked for his stance by POLITICO, he said: “We defend all human rights. It is our common duty to defend human rights. Democracy demands it. You cannot alienate people based on their beliefs, identities and lifestyles, you have to respect everyone.”
Both Esmeray and Ergen believed the priority should be for Turkey to return the Istanbul Convention to reinforce some basic freedoms.
And both reckoned Turkey’s population was ahead of its politicians.
“I am more optimistic about people, not political parties,” said Ergen, who based her hopes on the breadth of civil society activities in Turkey.
Esmeray added: “I have seen many Erdoğans in my life. If he wins, we will continue fighting. If it comes to that, I will face him and tell him to kill me.”
Federal Reserve officials, meeting days after the collapse of Silicon Valley Bank, agreed that the stress in the banking sector would slow U.S. economic growth, but were uncertain about how much, according to minutes of the meeting released Wednesday.
The twelve voting members on the Fed’s interest-rate committee “agree that recent developments were likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring and inflation, but that the extend of these effects were…
Ukraine’s farmers played an iconic role in the first weeks of Russia’s invasion, towing away abandoned enemy tanks with their tractors.
Now, though, their prodigious grain output is causing some of Ukraine’s staunchest allies to waver, as disrupted shipments are redirected onto neighboring markets.
The most striking is Poland, which has played a leading role so far in supporting Ukraine, acting as the main transit hub for Western weaponry and sending plenty of its own. But grain shipments in the other direction have irked Polish farmers who are being undercut — just months before a national election where the rural vote will be crucial.
Diplomats are floundering. After a planned Friday meeting between the Polish and Ukrainian agriculture ministers was postponed, the Polish government on Saturday announced a ban on imports of farm products from Ukraine. Hungary late Saturday said it would do the same.
Ukraine is among the world’s top exporters of wheat and other grains, which are ordinarily shipped to markets as distant as Egypt and Pakistan. Russia’s invasion last year disrupted the main Black Sea export route, and a United Nations-brokered deal to lift the blockade has been only partially effective. In consequence, Ukrainian produce has been diverted to bordering EU countries: Hungary, Poland, Romania and Slovakia.
At first, those governments supported EU plans to shift the surplus grain. But instead of transiting seamlessly onto global markets, the supply glut has depressed prices in Europe. Farmers have risen up in protest, and Polish Agriculture Minister Henryk Kowalczyk was forced out earlier this month.
Now, governments’ focus has shifted to restricting Ukrainian imports to protect their own markets. After hosting Ukrainian President Volodymyr Zelenskyy in Warsaw in early April, Polish President Andrzej Duda said resolving the import glut was “a matter of introducing additional restrictions.”
The following day, Poland suspended imports of Ukrainian grain, saying the idea had come from Kyiv. On Saturday, Polish Prime Minister Mateusz Morawiecki, after an emergency cabinet meeting, said the import ban would cover grain and certain other farm products and would include products intended for other countries. A few hours later, the Hungarian government announced similar measures. Both countries said the bans would last until the end of June.
The European Commission is seeking further information on the import restrictions from Warsaw and Budapest “to be able to assess the measures,” according to a statement on Sunday. “Trade policy is of EU exclusive competence and, therefore, unilateral actions are not acceptable,” it said.
While the EU’s free-trade agreement with Ukraine prevents governments from introducing tariffs, they still have plenty of tools available to disrupt shipments.
Neighboring countries and nearby Bulgaria have stepped up sanitary checks on Ukrainian grain, arguing they are doing so to protect the health of their own citizens. They have also requested financial support from Brussels and have already received more than €50 million from the EU’s agricultural crisis reserve, with more money on the way.
Restrictions could do further harm to Ukraine’s battered economy, and by extension its war effort. The economy has shrunk by 29.1 percent since the invasion, according to statistics released this month, and agricultural exports are an important source of revenue.
Cracks in the alliance
The trade tensions sit at odds with these countries’ political position on Ukraine, which — with the exception of Hungary — has been strongly supportive. Poland has taken in millions of Ukrainian refugees, while weapons and ammunition flow in the opposite direction; Romania has helped transport millions of tons of Ukrainian corn and wheat.
Volodymyr Zelenskyy and Poland’s Prime Minister, Mateusz Morawiecki | Omar Marques/Getty Images
Some Western European governments, which had to be goaded by Poland and others into sending heavy weaponry to Kyiv, are quick to point out the change in direction.
“Curious to see that some of these countries are [always] asking for more on sanctions, more on ammunition, etc. But when it affects them, they turn to Brussels begging for financial support,” said one diplomat from a Western country, speaking on condition of anonymity.
Some EU countries also oppose the import restrictions for economic reasons. For instance, Spain and the Netherlands are some of the biggest recipients of Ukrainian grain, which they use to supply their livestock industries.
Politically, though, the Central and Eastern European governments have limited room for maneuver. Poland and Slovakia are both heading into general elections later this year. Bulgaria has had a caretaker government since last year. Romania’s agriculture minister has faced calls to resign, including from a compatriot former EU agriculture commissioner.
And farmers are a strong constituency. Poland’s right-wing Law & Justice (PiS) party won the last general election in 2019 thanks in large part to rural voters. The Ukrainian grain issue has already cost a Polish agriculture minister his job; the government as a whole will have to tread carefully to avoid the same fate.
For Turkey’s President Recep Tayyip Erdoğan, next month’s election is of massive historical significance.
It falls 100 years after the foundation of Mustafa Kemal Atatürk’s secular republic and, if Erdoğan wins, he will be empowered to put even more of his stamp on the trajectory of a geostrategic heavyweight of 85 million people. The fear in the West is that he will see this as his moment to push toward an increasingly religiously conservative model, characterized by regional confrontationalism, with greater political powers centered around himself.
The election will weigh heavily on security in Europe and the Middle East. Who is elected stands to define: Turkey’s role in the NATO alliance; its relationship with the U.S., the EU and Russia; migration policy; Ankara’s role in the war in Ukraine; and how it handles tensions in the Eastern Mediterranean.
The May 14 vote is expected to be the most hotly contested race in Erdoğan’s 20-year rule — as the country grapples with years of economic mismanagement and the fallout from a devastating earthquake.
He will face an opposition aligned behind Kemal Kılıçdaroğlu, nicknamed the “Turkish Gandhi,” who is promising big changes. Polls suggest Kılıçdaroğlu has eked out a lead, but Erdoğan is a hardened election campaigner, with the full might of the state and its institutions at his back.
“There will be a change from an authoritarian single-man rule, towards a kind of a teamwork, which is a much more democratic process,” Ünal Çeviköz, chief foreign policy adviser to Kılıçdaroğlu told POLITICO. “Kılıçdaroğlu will be the maestro of that team.”
Here are the key foreign policy topics in play in the vote:
EU and Turkish accession talks
Turkey’s opposition is confident it can unfreeze European Union accession talks — at a standstill since 2018 over the country’s democratic backsliding — by introducing liberalizing reforms in terms of rule of law, media freedoms and depoliticization of the judiciary.
The opposition camp also promises to implement European Court of Human Rights decisions calling for the release of two of Erdoğan’s best-known jailed opponents: the co-leader of the pro-Kurdish Peoples’ Democratic Party Selahattin Demirtaş and human rights defender Osman Kavala.
“This will simply give the message to all our allies, and all the European countries, that Turkey is back on track to democracy,” Çeviköz said.
Even under a new administration, however, the task of reopening the talks on Turkey’s EU accession is tricky.
Turkey’s opposition is aligned behind Kemal Kılıçdaroğlu, nicknamed the “Turkish Gandhi” | Burak Kara/Getty Images
Anti-Western feeling in Turkey is very strong across the political spectrum, argued Wolfango Piccoli, co-founder of risk analysis company Teneo.
“Foreign policy will depend on the coherence of the coalition,” he said. “This is a coalition of parties who have nothing in common apart from the desire to get rid of Erdoğan. They’ve got a very different agenda, and this will have an impact in foreign policy.”
“The relationship is largely comatose, and has been for some time, so, they will keep it on life support,” he said, adding that any new government would have so many internal problems to deal with that its primary focus would be domestic.
Europe also seems unprepared to handle a new Turkey, with a group of countries — most prominently France and Austria — being particularly opposed to the idea of rekindling ties.
“They are used to the idea of a non-aligned Turkey, that has departed from EU norms and values and is doing its own course,” said Aslı Aydıntaşbaş a visiting fellow at Brookings. “If the opposition forms a government, it will seek a European identity and we don’t know Europe’s answer to that; whether it could be accession or a new security framework that includes Turkey.”
“Obviously the erosion of trust has been mutual,” said former Turkish diplomat Sinan Ülgen, a senior fellow at the Carnegie Europe think tank, arguing that despite reticence about Turkish accession, there are other areas where a complementary and mutually beneficiary framework could be built, like the customs union, visa liberalization, cooperation on climate, security and defense, and the migration agreement.
The opposition will indeed seek to revisit the 2016 agreement with the EU on migration, Çeviköz said.
“Our migration policy has to be coordinated with the EU,” he said. “Many countries in Europe see Turkey as a kind of a pool, where migrants coming from the east can be contained and this is something that Turkey, of course cannot accept,” he said but added. “This doesn’t mean that Turkey should open its borders and make the migrants flow into Europe. But we need to coordinate and develop a common migration policy.”
NATO and the US
After initially imposing a veto, Turkey finally gave the green light to Finland’s NATO membership on March 30.
But the opposition is also pledging to go further and end the Turkish veto on Sweden, saying that this would be possible by the alliance’s annual gathering on July 11. “If you carry your bilateral problems into a multilateral organization, such as NATO, then you are creating a kind of a polarization with all the other members of NATO with your country,” Çeviköz said.
A protester pushes a cart with a RRecep Tayyip Erdoğan doll during an anti-NATO and anti-Turkey demonstration in Sweden | Jonas Gratzer/Getty Images
A reelected Erdoğan could also feel sufficiently empowered to let Sweden in, many insiders argue. NATO allies did, after all, play a significant role in earthquake aid. Turkish presidential spokesperson İbrahim Kalın says that the door is not closed to Sweden, but insists the onus is on Stockholm to determine how things proceed.
Turkey’s military relationship with the U.S. soured sharply in 2019 when Ankara purchased the Russian-made S-400 missile system, a move the U.S. said would put NATO aircraft flying over Turkey at risk. In response, the U.S. kicked Ankara out of the F-35 jet fighter program and slapped sanctions on the Turkish defense industry.
A meeting in late March between Kılıçdaroğlu and the U.S. Ambassador to Ankara Jeff Flake infuriated Erdoğan, who saw it as an intervention in the elections and pledged to “close the door” to the U.S. envoy. “We need to teach the United States a lesson in this elections,” the irate president told voters.
In its policy platform, the opposition makes a clear reference to its desire to return to the F-35 program.
Russia and the war in Ukraine
After the Russian invasion of Ukraine, Turkey presented itself as a middleman. It continues to supply weapons — most significantly Bayraktar drones — to Ukraine, while refusing to sanction Russia. It has also brokered a U.N. deal that allows Ukrainian grain exports to pass through the blockaded Black Sea.
Highlighting his strategic high-wire act on Russia, after green-lighting Finland’s NATO accession and hinting Sweden could also follow, Erdoğan is now suggesting that Turkey could be the first NATO member to host Russian President Vladimir Putin.
“Maybe there is a possibility” that Putin may travel to Turkey on April 27 for the inauguration of the country’s first nuclear power reactor built by Russian state nuclear energy company Rosatom, he said.
Çeviköz said that under Kılıçdaroğlu’s leadership, Turkey would be willing to continue to act as a mediator and extend the grain deal, but would place more stress on Ankara’s status as a NATO member.
“We will simply emphasize the fact that Turkey is a member of NATO, and in our discussions with Russia, we will certainly look for a relationship among equals, but we will also remind Russia that Turkey is a member of NATO,” he said.
Turkey’s relationship with Russia has become very much driven by the relationship between Putin and Erdoğan and this needs to change, Ülgen argued.
Turkey brokered a U.N. deal that allows Ukrainian grain exports to pass through the blockaded Black Sea | Ozan Kose/AFP via Getty Images
“No other Turkish leader would have the same type of relationship with Putin, it would be more distant,” he said. “It does not mean that Turkey would align itself with the sanctions; it would not. But nonetheless, the relationship would be more transparent.”
Syria and migration
The role of Turkey in Syria is highly dependent on how it can address the issue of Syrians living in Turkey, the opposition says.
Turkey hosts some 4 million Syrians and many Turks, battling a major cost-of-living crisis, are becoming increasingly hostile. Kılıçdaroğlu has pledged to create opportunities and the conditions for the voluntary return of Syrians.
“Our approach would be to rehabilitate the Syrian economy and to create the conditions for voluntary returns,” Çeviköz said, adding that this would require an international burden-sharing, but also establishing dialogue with Damascus.
Erdoğan is also trying to establish a rapprochement with Syria but Syrian President Bashar al-Assad says he will only meet the Turkish president when Ankara is ready to completely withdraw its military from northern Syria.
“A new Turkish government will be more eager to essentially shake hands with Assad,” said Ülgen. “But this will remain a thorny issue because there will be conditions attached on the side of Syria to this normalization.”
However, Piccoli from Teneo said voluntary returns of Syrians was “wishful thinking.”
“These are Syrians who have been living in Turkey for more than 10 years, their children have been going to school in Turkey from day one. So, the pledges of sending them back voluntarily, it is very questionable to what extent they can be implemented.”
Greece and the East Med
Turkey has stepped up its aggressive rhetoric against Greece in recent months, with the Erdoğan even warning that a missile could strike Athens.
But the prompt reaction by the Greek government and the Greek community to the recent devastating earthquakes in Turkey and a visit by the Greek Foreign Minister Nikos Dendias created a new backdrop for bilateral relations.
A Turkish drill ship before it leaves for gas exploration | Adem Altan/AFP via Getty Images
Dendias, along with his Turkish counterpart Mevlüt Çavuşoğlu, announced that Turkey would vote for Greece in its campaign for a non-permanent seat in the United Nations Security Council for 2025-26 and that Greece would support the Turkish candidacy for the General Secretariat of the International Maritime Organization.
In another sign of a thaw, Greek Defense Minister Nikos Panagiotopoulos and Migration Minister Notis Mitarachi visited Turkey this month, with Turkish Defense Minister Hulusi Akar saying he hoped that the Mediterranean and Aegean would be a “sea of friendship” between the two countries. Akar said he expected a moratorium with Greece in military and airforce exercises in the Aegean Sea between June 15 and September 15.
“Both countries are going to have elections, and probably they will have the elections on the same day. So, this will open a new horizon in front of both countries,” Çeviköz said.
“The rapprochement between Turkey and Greece in their bilateral problems [in the Aegean], will facilitate the coordination in addressing the other problems in the eastern Mediterranean, which is a more multilateral format,” he said. Disputes over maritime borders and energy exploration, for example, are common.
As far as Cyprus is concerned, Çeviköz said that it is important for Athens and Ankara not to intervene into the domestic politics of Cyprus and the “two peoples on the island should be given an opportunity to look at their problems bilaterally.”
However, analysts argue that Greece, Cyprus and the EastMed are fundamental for Turkey’s foreign policy and not much will change with another government. The difference will be more one of style.
“The approach to manage those differences will change very much. So, we will not hear aggressive rhetoric like: ‘We will come over one night,’” said Ülgen. “We’ll go back to a more mature, more diplomatic style of managing differences and disputes.”
“The NATO framework will be important, and the U.S. would have to do more in terms of re-establishing the sense of balance in the Aegean,” said Aydıntaşbaş. But, she argued, “you just cannot normalize your relations with Europe or the U.S., unless you’re willing to take that step with Greece.”
BERLIN — German Foreign Minister Annalena Baerbock is heading to China to represent Berlin, but she’ll likely have more explaining to do about Paris in the wake of French President Emmanuel Macron’s explosive comments on Taiwan.
As Baerbock embarked on her two-day visit Wednesday evening, officials in Berlin were eager to stress that Germany and the EU care about Taiwan and stability in the region, arguing it’s mainly China that must contribute to de-escalation by refraining from aggressive military maneuvers close to the island nation.
Baerbock’s trip comes amid international backlash against Macron’s comments in an interview with POLITICO, arguing Europe should avoid becoming America’s follower, including on the matter of Taiwan’s security. Although German government spokespeople refused to comment directly on the French president’s remarks, a spokesperson for the foreign ministry specifically called out Beijing when expressing “great concern” over the situation in the Taiwan Strait.
“We expect all parties in the region to contribute to peace. That applies equally to the People’s Republic of China,” the spokesperson said, adding: “And it seems to us that actions such as military threatening gestures are counter to that goal and, in fact, increase the risk of unintended military clashes.”
Nils Schmid, the foreign policy spokesperson for German Chancellor Olaf Scholz’s Social Democratic Party (SPD), said he expects Baerbock to “set the record straight” during her trip to China, which will involve meetings with Beijing’s Foreign Minister Qin Gang, Vice President Han Zheng and top diplomat Wang Yi.
“We clearly defined in the [government] coalition agreement that we need a changed China policy because China has changed. The chancellor made that clear during his visit. Above all, Scholz also issued clear warnings about Taiwan during his visit [last year],” Schmid wrote in a tweet. “I assume that Foreign Minister Baerbock will repeat exactly that and thus set the record straight and make a clarification after Macron’s botched visit.”
Berlin traditionally has been much more in sync with the U.S. on foreign and security policy than France has, which is why many politicians and officials in the German capital reacted with horror to Macron’s comments. The French president said Europe should not take its “cue from the U.S. agenda and a Chinese overreaction,” suggesting the EU stood between the two sides, rather than being aligned with its longtime democratic partners in Washington.
Macron gave the impression to some in the U.S. that Europeans see Beijing and Washington as “equidistant” from Brussels in terms of values and as allies, said SPD foreign policy lawmaker Metin Hakverdi, who is currently on a parliamentary visit to the U.S.
“That was foolish,” Hakverdi told POLITICO, adding that “Macron potentially damaged the peaceful status quo around Taiwan” by giving “the public impression that Europe has no particular interest in the conflict over Taiwan.
“The issue of Taiwan is not an internal matter for the People’s Republic of China. Anything else would virtually invite Beijing to attack Taiwan,” Hakverdi added. “I am confident that our foreign minister will make that clear during her trip to Asia — both to Beijing and to our Asian partners.”
Katja Leikert from the main German opposition party, the center-right CDU, criticized Macron’s comments as “extremely short-sighted,” and added: “Should China decide to strike Taiwan militarily, either by invading it or by starting a maritime blockade, this would have significant political and economic repercussions for us. We cannot just wish that away.
“What we actually need to do right now is strengthen our defense against aggressive measures from Beijing,” Leikert said.
For Berlin, Macron’s comments also come at a particularly bad moment for transatlantic ties. The German government is keen to mend cracks in its relationship with Washington that have emerged over the controversial benefits for U.S. businesses under Joe Biden’s Inflation Reduction Act. Europe hopes to reach an agreement so that its own companies may also be eligible for these subsidies.
Macron’s comments “will not help in renegotiations on the Inflation Reduction Act, nor will they help Joe Biden in the election campaign against populist Republican candidates,” said the SPD’s Hakverdi.
The German foreign ministry spokesperson was quick to stress that both France and Germany were involved in shaping a joint EU-China policy | Ludovic Marin/AFP via Getty Images
The German foreign ministry spokesperson was quick to stress that both France and Germany were involved in shaping a joint EU-China policy, which was also done in cooperation “with our transatlantic partner.”
During her trip to China, Baerbock plans to raise the situation in the Taiwan Strait; Russia’s war of aggression against Ukraine; the human rights situation in China; as well as the fight against climate crisis, the spokesperson said.
Baerbock’s foreign ministry is also currently drafting Germany’s first China strategy. A draft of this seen by POLITICO last year vowed to take a much harder line toward Beijing. Baerbock and her Green party are at the forefront of pushing such a tougher position, while Scholz has long preferred a softer approach.
Incidentally, however, the German government said Wednesday it is reassessing whether to potentially take a firmer stance and ban Chinese state company Cosco from going through with a highly controversial move to buy parts of a Hamburg port terminal.
Scholz had strongly pushed for the port deal ahead of his own trip to Beijing last year, but the future of the transaction is now in doubt after German security authorities classified the terminal as “critical infrastructure.”
ABOARD COTAM UNITÉ (FRANCE’S AIR FORCE ONE) — Europe must reduce its dependency on the United States and avoid getting dragged into a confrontation between China and the U.S. over Taiwan, French President Emmanuel Macron said in an interview on his plane back from a three-day state visit to China.
Speaking with POLITICO and two French journalists after spending around six hours with Chinese President Xi Jinping during his trip, Macron emphasized his pet theory of “strategic autonomy” for Europe, presumably led by France, to become a “third superpower.”
He said “the great risk” Europe faces is that it “gets caught up in crises that are not ours, which prevents it from building its strategic autonomy,” while flying from Beijing to Guangzhou, in southern China, aboard COTAM Unité, France’s Air Force One.
Xi Jinping and the Chinese Communist Party have enthusiastically endorsed Macron’s concept of strategic autonomy and Chinese officials constantly refer to it in their dealings with European countries. Party leaders and theorists in Beijing are convinced the West is in decline and China is on the ascendant and that weakening the transatlantic relationship will help accelerate this trend.
“The paradox would be that, overcome with panic, we believe we are just America’s followers,” Macron said in the interview. “The question Europeans need to answer … is it in our interest to accelerate [a crisis] on Taiwan? No. The worse thing would be to think that we Europeans must become followers on this topic and take our cue from the U.S. agenda and a Chinese overreaction,” he said.
Just hours after his flight left Guangzhou headed back to Paris, China launched large military exercises around the self-ruled island of Taiwan, which China claims as its territory but the U.S. has promised to arm and defend.
Those exercises were a response to Taiwanese President Tsai Ing-Wen’s 10-day diplomatic tour of Central American countries that included a meeting with Republican U.S. House Speaker Kevin McCarthy while she transited in California. People familiar with Macron’s thinking said he was happy Beijing had at least waited until he was out of Chinese airspace before launching the simulated “Taiwan encirclement” exercise.
Beijing has repeatedly threatened to invade in recent years and has a policy of isolating the democratic island by forcing other countries to recognize it as part of “one China.”
Taiwan talks
Macron and Xi discussed Taiwan “intensely,” according to French officials accompanying the president, who appears to have taken a more conciliatory approach than the U.S. or even the European Union.
“Stability in the Taiwan Strait is of paramount importance,” European Commission President Ursula von der Leyen, who accompanied Macron for part of his visit, said she told Xi during their meeting in Beijing last Thursday. “The threat [of] the use of force to change the status quo is unacceptable.”
Chinese President Xi Jinping and French President Emmanuel Macron in Guangdong on April 7, 2023 | Pool Photo by Jacques Witt / AFP via Getty Images
Xi responded by saying anyone who thought they could influence Beijing on Taiwan was deluded.
Macron appears to agree with that assessment.
“Europeans cannot resolve the crisis in Ukraine; how can we credibly say on Taiwan, ‘watch out, if you do something wrong we will be there’? If you really want to increase tensions that’s the way to do it,” he said.
“Europe is more willing to accept a world in which China becomes a regional hegemon,” said Yanmei Xie, a geopolitics analyst at Gavekal Dragonomics. “Some of its leaders even believe such a world order may be more advantageous to Europe.”
In his trilateral meeting with Macron and von der Leyen last Thursday in Beijing, Xi Jinping went off script on only two topics — Ukraine and Taiwan — according to someone who was present in the room.
“Xi was visibly annoyed for being held responsible for the Ukraine conflict and he downplayed his recent visit to Moscow,” this person said. “He was clearly enraged by the U.S. and very upset over Taiwan, by the Taiwanese president’s transit through the U.S. and [the fact that] foreign policy issues were being raised by Europeans.”
In this meeting, Macron and von der Leyen took similar lines on Taiwan, this person said. But Macron subsequently spent more than four hours with the Chinese leader, much of it with only translators present, and his tone was far more conciliatory than von der Leyen’s when speaking with journalists.
‘Vassals’ warning
Macron also argued that Europe had increased its dependency on the U.S. for weapons and energy and must now focus on boosting European defense industries.
He also suggested Europe should reduce its dependence on the “extraterritoriality of the U.S. dollar,” a key policy objective of both Moscow and Beijing.
Macron has long been a proponent of strategic autonomy for Europe | Ludovic Marin/AFP via Getty Images
“If the tensions between the two superpowers heat up … we won’t have the time nor the resources to finance our strategic autonomy and we will become vassals,” he said.
Russia, China, Iran and other countries have been hit by U.S. sanctions in recent years that are based on denying access to the dominant dollar-denominated global financial system. Some in Europe have complained about “weaponization” of the dollar by Washington, which forces European companies to give up business and cut ties with third countries or face crippling secondary sanctions.
While sitting in the stateroom of his A330 aircraft in a hoodie with the words “French Tech” emblazoned on the chest, Macron claimed to have already “won the ideological battle on strategic autonomy” for Europe.
He did not address the question of ongoing U.S. security guarantees for the Continent, which relies heavily on American defense assistance amid the first major land war in Europe since World War II.
As one of the five permanent members of the U.N. Security Council and the only nuclear power in the EU, France is in a unique position militarily. However, the country has contributed far less to the defense of Ukraine against Russia’s invasion than many other countries.
As is common in France and many other European countries, the French President’s office, known as the Elysée Palace, insisted on checking and “proofreading” all the president’s quotes to be published in this article as a condition of granting the interview. This violates POLITICO’s editorial standards and policy, but we agreed to the terms in order to speak directly with the French president. POLITICO insisted that it cannot deceive its readers and would not publish anything the president did not say. The quotes in this article were all actually said by the president, but some parts of the interview in which the president spoke even more frankly about Taiwan and Europe’s strategic autonomy were cut out by the Elysée.
Swiss prosecutors have opened an investigation into possible illegal activity in connection with government support for UBS’s rushed takeover of Credit Suisse.
The two banks agreed to merge in March as part of an emergency deal targeted at avoiding a national financial crisis that could have had a knock-on effect globally.
“The Federal Prosecutor’s office wants to proactively fulfill its mission and responsibility to contribute to a clean Swiss financial center and has set up monitoring in order to take immediate action in any situation that falls within its field of activity,” the authority said in a statement.
Last month, Zurich-based UBS was forced by Swiss authorities to take over its longtime domestic rival Credit Suisse in a deal that creates a new bank.
The prosecutor’s statement said that the intention of the probe was to “analyze and identify any criminal offenses” associated with the deal, adding that various bodies had been contacted to provide clarifications and information.
The deal has been unpopular locally and on Sunday, Swiss daily Tages-Anzeiger reported that the new entity could slash jobs by up to 30 percent.
“If we had done nothing, [Credit Suisse] shares would have been worthless on Monday and the shareholders would have gone home empty-handed,” Swiss Finance Minister Karin Keller-Sutter said last weekend in justifying the deal.
Anyone looking at France right now could be forgiven for thinking the country was on the edge of a revolution.
Major cities from Paris to Lyon erupted in riots overnight on Thursday, with black-clad protesters lighting bonfires and hurling projectiles at riot police after President Emmanuel Macron rammed an unpopular reform of the pension system through parliament. More than 400 police were injured.
The violence capped weeks of mass protests as millions marched through French cities to oppose the reform, which will raise the legal age of retirement to 64 from 62 currently. More protests are already planned for next week, piling pressure on Macron’s already embattled government and prompting Britain’s King Charles to cancel a highly-awaited visit.
Yet for all the sound and fury of the protests, which could yet worsen if students join in, there’s nearly zero risk that Macron himself will have to leave office. Having narrowly survived a vote of no confidence, he may seek to reshuffle his cabinet and sack his prime minister, Élisabeth Borne — but the presidential system is so designed that the leader is nearly guaranteed to remain president until the last day of his term, in 2027.
The bigger question, then, is about what happens after Macron, whose hyper-personal style of leadership has often been described as king-like, even by the standards of France’s monarchical Republic, leaves the stage for good.
Barred from seeking a third term by the constitution, Macron will leave behind a leaderless and rudderless ruling party that may well cease to exist without him, creating a power vacuum that far-left and far-right leaders, including three-time presidential contender Marine Le Pen, are itching to fill.
And while Macron has a solid hold on power now, the parliamentary rebellion his government faced down this week — and the chaos engulfing the country — raise ominous questions about the future for anyone who hopes to see France stay firmly anchored to the pro-EU, pro-NATO liberal camp.
In other words, after Macron, le déluge.
Macron’s shaky platform
The first danger sign flashing over French democracy is the state of Macron’s own party, the centrist Renaissance group. In many systems, ruling parties have deep roots and an ideological foundation that, at least in theory, give them a raison d’être beyond exercising power.
But this isn’t the case for Macron’s party, which was born for the sole purpose of hoisting its founder into the Elysée presidential palace and then supporting his government. As such, it’s docile by nature and, with a few exceptions, hasn’t produced bold personalities who would in other circumstances be natural successors to the president.
And while the party is already short of a majority in parliament, the rebellion against the pension reform this week revealed Renaissance to be much weaker even than was previously thought — more of a hollow platform for Macron to stand on than a launchpad for future leaders. Indeed, Prime Minister Borne believed that she could rely on support from the center-right Les Républicains party to provide the necessary votes to pass the reform, as part of an informal coalition arrangement.
Yet this hope vanished suddenly and unexpectedly when a group of 19 Les Républicains, led by southern lawmaker Aurélien Pradié, defied orders from their own party leadership and announced they would support a motion of no confidence in Macron’s government. As rebellions go, it revealed not just the weakness of Renaissance, but the continued disarray of the mainstream center-right in France — which has produced most of the country’s leaders since World War II and is now a shadow of its former self.
“The political landscape isn’t just fractured; it doesn’t offer any hope for the president, the government or their supporters,” said Jean-Daniel Lévy, a political analyst with pollster Harris Interactive. “There is no such thing as a Macron doctrine or an ideological successor to Macron.”
The rebellion against the pension reform this week revealed President Emmanuel Macron’s party to be much weaker even than was previously thought | John Macdougall/AFP via Getty Images
The second alarm bell ringing is how much the pension crisis has emboldened the far-right and far-left factions in parliament. Take Jean-Luc Mélenchon, a far-left firebrand who’s made two failed bids for the presidency, and is now the most recognizable face in the NUPES, a recently-formed left-wing coalition gathering what’s left of the Socialist party, Mélenchon’s hard-left France Unbowed group and the Greens.
Having faded from view, Mélenchon has roared back into the limelight during the pension reform battle, appearing constantly in the media. Anti-NATO, Euroskeptic and calling for an end to France’s 5th republic (his 6th Republic would end the presidential monarchy), the ex-socialist whose sympathies lean more toward Venezuela than Brussels is ideally suited to produce revolutionary soundbites.
With his pension reform, Macron has “lit a fire and blocked all the exits,” Mélenchon quipped this week.
Le Pen eyes the crown
Yet Mélenchon’s prospects of taking power in 2027 look slim. According to an IFOP poll published in early March, just 21 percent of the French believe he’s best-positioned to lead the opposition — suggesting he’s not very well-loved by other adherents of the NUPES coalition.
Much better positioned is Marine Le Pen, the far-right chief whom Macron defeated twice in the final rounds of two presidential elections. Indeed, since her last defeat, Le Pen has made further strides toward making herself look presidential while continuing to try to detoxify her party’s image.
Not only has Le Pen ditched the “National Front” party name that was associated with her Holocaust-minimizing father, Jean-Marie Le Pen; she has abandoned an electorally-disastrous plan to exit the euro currency zone and she’s established herself as the leader of her party’s 88-strong delegation in the French parliament, placing her at the center of the action against the pension reform.
She hasn’t confirmed that she’ll make a fourth bid for the presidency. But there’s no reason to believe she wouldn’t. And this time, Macron won’t be around to stop her.
“After Macron, it will be us,” she told BFMTV this week, referring to her National Rally party.
Aside from Le Pen, the obvious choice to succeed Macron would be Édouard Philippe — his remarkably beloved one-time prime minister. Since leaving office in 2017, Philippe has been quietly biding his time as mayor of Le Havre, a mid-sized port city on France’s northern coast, and nurturing his own center-right political platform, Horizons.
The fact that Philippe, in an interview earlier this month, came out to address the fact that he’s suffering both from alopecia and vitiligo only seemed to bolster his popularity with the French, who rate him as their preferred political personality, according to this ranking.
But Philippe’s stance on retirement, backing an increase in the legal age to 67 — above and beyond what Macron proposed — has not done him any favors. According to a poll by Odoxa, 61 percent of the French weren’t happy with his attempt to defend the pension reform.
He still hasn’t said for sure whether he will run in 2027, and the past week’s action suggests his association with Macron could turn out to be a drag on his prospects once campaigning gets started, should he decide to enter the race.
European Commission President Ursula von der Leyen has declared Europe’s dependence on Russian oil and gas “history.”
But others, from senior Ukrainian officials to MEPs and industry insiders, say that chapter of history is still being written.
Significant quantities of Russian hydrocarbons, particularly oil, are still flowing around sanctions and into the European market, they say, earning payments that fund Vladimir Putin’s war machine.
“I had a friend in New York in the 1990s who complained cockroaches would get into his apartment through any available hole — that’s what Russia is doing with its energy,” Oleg Ustenko, economic adviser to Ukrainian President Volodymyr Zelenskyy, told POLITICO. “We have to fix these holes to stop Russia receiving this blood money they are using to finance the military machine that is destroying our country and killing our people.”
Crude oil is notoriously difficult to track on global markets. It can easily be mixed or blended with other shipments in transit countries, effectively creating a larger batch of oil whose origins can’t be determined. The refining process, necessary for any practical application, also removes all traces of the feedstock’s origin.
A complex network of shipping companies, carrying the flags of inscrutable offshore jurisdictions, adds a further layer of mystery; some have been accused of helping Russia to hide the origin of its crude exports using a variety of different means.
“Unlike pipeline gas, the oil market is global. Swap and netting systems, and mixing varieties are common practice,” said Mikhail Khodorkovsky, a prominent exiled critic of Putin and the former CEO of oil and gas giant Yukos.
“The result of the embargo is a significant increase in Russian transportation costs, a significant redistribution of income in favor of intermediaries, and some additional discount due to the narrowing of the buyers’ market.”
Crude workarounds?
The EU has largely banned Russian fossil fuels since the invasion of Ukraine in February 2022, with exceptions for limited quantities of pipeline crude oil, pipeline gas, liquefied natural gas (LNG), and oil products.
But large volumes of Russian crude oil — a bigger source of revenue than gas — are still being shipped onto global markets, leading some experts to suspect they are finding their way to Europe’s market through the back door.
“Since the introduction of sanctions, the volumes of crude oil Russia is exporting have remained more or less steady,” said Saad Rahim, chief economist at global commodities trading firm Trafigura. “It’s possible that Russian oil is still being sold on to the EU and Western nations via middlemen.”
Crude oil is notoriously difficult to track on global markets | Image via iStock
One potential route into Europe is through Azerbaijan, which borders Russia and is the starting point of the Baku-Tbilisi-Ceyhan (BTC) pipeline, operated by BP. The port of Ceyhan, in Turkey, is a major supply hub from which crude oil is shipped to Europe; it also receives large quantities from Iraq through the Kirkuk-Ceyhan pipeline.
François Bellamy, a French MEP and member of the European Parliament’s Committee on Industry, Research and Energy, aired suspicions about this route in a recent question to the Commission. Data show that Azerbaijan exported 242,000 barrels a day more than it produced between April and July last year, he said — a large margin over domestic production, which stood at 648,000 barrels a day last month and is in long-term decline, according to ministry figures.
“How can a country diminish its production and increase its exports at the same time? There is something completely inconsistent in the figures and this inconsistency creates suspicions that sanctions are being circumvented,” Bellamy said.
A spokesperson for the Commission said it is working to crack down on loopholes in sanctions regimes and has appointed the EU’s former ambassador to the U.S., David O’Sullivan, as a special envoy tasked with tackling circumvention. The official also pointed out that data cited by Bellamy on Azerbaijani oil transactions, the most recent publicly available, “happened before the sanctions entered into force so there is no question of evasion of sanctions there.”
“Azerbaijan does not export Russian oil to the EU via the BTC pipeline,” said Aykhan Hajizada, spokesperson for the country’s foreign ministry, adding that while “Azerbaijan continues to use all non-sanctioned oil regardless of source,” it “remains committed to conducting its supply and trading operations with the utmost care and diligence, in line with relevant laws and regulations.”
BP has previously been forced to deny that the BTC pipeline carries Russian oil, and data seen by POLITICO for crude shipments from Ceyhan shows a recent dip in the volume of exports to the EU, from around 3 million tons per month (about 700,000 barrels per day) in early 2022 to around 2 million tons a month this year.
Slick operations
At the same time, though, Turkey doubled its direct imports of Russian oil last year and has refused to impose sanctions on Russian crude despite simultaneously offering military and humanitarian support to Ukraine.
Finland’s Centre for Research on Energy and Clean Air (CREA) warned late last year that “a new route for Russian oil to the EU is emerging through Turkey, a growing destination for Russian crude oil,” where it is refined into oil products that are not subject to sanctions and sold on.
“We have enough evidence that some international companies are buying refinery products made from Russian oil and selling them on to Europe,” said Ustenko, the Zelenskyy adviser. “It’s completely legal, but completely immoral. Just because it’s allowed doesn’t mean we don’t need to do anything about it.”
On Monday, British NGO Global Witness released a report that found Russian oil has consistently been sold at prices far exceeding the $60 cap imposed by G7 countries in December last year.
“The fact Russian oil continues to flow round the world is a feature, not a bug, of Western sanctions,” said Mai Rosner, a campaigner who worked on the report. “Governments offered the fossil fuel industry a wide-open back door, and commodity traders and big oil companies are exploiting these loopholes to continue business as usual.”