In Geopolitics Today: Friday, June 16th
Germany and France Clash Over Reform of EU Fiscal Rules, US Deploys F-22 Fighter Jets to Syria, and other stories.
Germany and France Clash Over Reform of EU Fiscal Rules
The reform of the European Union's fiscal rules has become a battleground between Germany and France, the bloc's two largest economies. Germany is pushing for uniform standards that ensure fiscal discipline across member states, while France advocates for flexibility to accommodate highly indebted countries. The current rules, which require keeping budget deficits below 3% of GDP and public debt levels below 60% of GDP, have been on pause. As the bloc aims to reinstate the rules in early 2024, an ideological clash has emerged, with France emphasizing national sovereignty and growth, and Germany advocating for automatic and uniform rules.
Under the proposed reform, the 3% and 60% targets would remain intact, but the approach to meeting them would change significantly. Each member state would design its own mid-term fiscal plan, negotiated with the European Commission and approved by the EU Council, to reduce deficits and debt levels sustainably. The adjustments would take place over four years, extendable to seven with additional reforms. Germany, however, seeks to introduce a debt-based benchmark for reduction, ranging between 0.5% and 1% annually, with possible exemptions during recessions. The country argues that aiming for a 1% reduction in the debt-to-GDP ratio is not over-ambitious, especially considering some member states' debt levels surpassing 100%.
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Iran Strengthens Ties with Latin American Allies
Iranian President Ebrahim Raisi recently concluded a five-day tour of Latin America, visiting Venezuela, Nicaragua, and Cuba, where he signed numerous agreements. Raisi emphasized the strategic nature of Iran's relations with Venezuela and criticized the United States and its economic sanctions against Iran and its Latin American allies. The agreements signed during the tour covered various sectors, including energy, maritime transport, agriculture, medicine, information technology, and cultural ties.
During Raisi's visit to Caracas, Iran, and Venezuela signed agreements to strengthen bilateral relations, aiming to increase the volume of trade between the two countries from $3 billion to $20 billion. In Managua, Raisi and Nicaraguan President Daniel Ortega criticized US sanctions imposed on both countries. The tour concluded in Havana, where Raisi and Cuban President Miguel Díaz-Canel signed cooperation agreements and discussed bolstering political engagement. The visit underscored Iran's efforts to expand economic and political ties with Latin American countries and challenge US influence in the region.
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Central and Eastern Europe's Evolving Perceptions of China
A study to examine how Central and Eastern European countries perceive China and its increasing engagement with the region revealed a notable shift in perceptions. Many nations in these regions now view China as a “systemic competitor” or “systemic rival” under the leadership of General Secretary Xi Jinping. This changing perception has prompted a re-evaluation of economic and political relations, although its economic power makes it challenging to ignore or exclude from global decision-making.
Central and Eastern Europe, particularly Central Europe, has witnessed significant Chinese engagement in the past decade, as the region is considered a gateway for the Belt and Road Initiative (BRI). However, individual governments in the region are increasingly cautious, with some perceiving Chinese engagement as a commercial opportunity, while others are aware of geopolitical risks associated with US sanctions. Central European parliamentarians are recognizing the need to understand China's geopolitical objectives to better protect their political and economic systems from interference, while also finding ways to engage and compete with Beijing strategically.
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US Deploys F-22 Fighter Jets to Syria
The US has announced that it will be sending F-22 fighter jets to Syria. Washington is justifying the move as a response to threats from Russia, highlighting a transformation of the stated US military mission — purportedly aimed at combating the Islamic State (IS) — into a broader geopolitical struggle.
The US presence is justified under the pretext of fighting terrorism, but its main objective is depleting Iran and Russia. The US is faced with challenges from increased Russian overflights and attacks by Iranian proxies, putting its embedded troops at higher risk. Although there is no clear endgame for the US in Syria, a withdrawal anytime soon appears unlikely. As the Syrian conflict nears its end, President Assad seeks to regain control of northeast Syria, a fertile region that holds strategic importance due to its oil fields.
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Emergence of Submarine Diplomacy
The concept of “submarine diplomacy” has emerged as a new strategy employed by the United States to reassure allies in the Indo-Pacific region. Traditionally known for their covert operations, nuclear submarines are now being utilized as visible assets to communicate capabilities and strengthen the credibility of extended deterrence. In April, the US and South Korea signed the “Washington Declaration,” which includes plans for an upcoming visit of a nuclear ballistic missile submarine.
The shift towards submarine diplomacy raises important considerations. Unlike strategic bombers, submarines possess extended underwater capabilities, allowing them to remain submerged for extended periods of time. However, making submarines visible during port visits poses challenges, potentially compromising their deterrence mission. Additionally, while South Korea welcomes these visits as a means of reassurance, Japan's strict non-nuclear principles prevent them from hosting SSBN visits.