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The Haizum National Security Brief is a monthly news service that follows the topic of national security, as it intersects with US and EU strategic issues, transatlantic matters and underrated international facts. The Brief is dedicated to policymakers, experts, journalists, students, and the interested public. The main goal is to stay informed with a global perspective in the fastest way possible.
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This early December National Security Brief confirms the recent trend of global instability witnessed since the Russian invasion of Ukraine back on February the 24th. There is an historical saying that goes like this: If Athens cries, Sparta does not laugh. This expression uses the two ancient Greek cities, known to have often found themselves in conflict, in order to state that despite the historical differences and long-standing contrasts, if one of them finds itself in a difficult situation the other does not have it any easier.
This applies to the United States and China, the two main competitors of the contemporary grand strategic conflict. Whereas North America and Europe are dealing with economical and financial constraints, China is closing even more within a renewed “iron curtain”, thanks to the last Communist Party Congress, that has certified Xi Jinping’s power grip and the Global Security Initiative as a substitute of the more commercial Belt and Road Initiative. The Dragon’s economic system equilibrium is tilting even more towards a public center approach, with a harder regulatory framework imposed on big tech companies.
The situation doesn’t look idyllic for Emerging countries, which are dealing with energy shortages, institutional crises and food insecurity. In the background, the climate crisis and the last COP’s arrangements.
Strategic vision and coordination is necessary if the US and the EU want to find long term answers on how to deal with major issues, starting from the global economy and its impact of Inflation (an example is the Inflation Reduction Act in the US).
The efforts of EU Member states on defense matters are aimed at increasing the readiness and capabilities of the Alliance forces. The mix of hard power and soft power, the so-called sharp power, is working perfectly in disrupting the Russian economy, even if the Bear’s propaganda states otherwise. A stronger EU – on a defense and security capabilities perspective – bolsters NATO capabilities.
The crucial point remains energy. European nations are focusing on renewables, but mainly on gas, in the form of LNG (Liquefied Natural Gas). Resolving the energy crisis, also by containing prices, is essential to contain the risk of higher inflation too. Energy remains a leverage in the hand of authoritarian global actors. A non-ideological push towards green technologies, coupled with a transatlantic shared strategic approach, will allow to protect a world order based on the rule of law.
We are back in the Westphalian era: this renewed competition between mighty nation-states, after some decades, requires that key public and private stakeholders cultivate a responsibility to factorize national security matters within the decision making frameworks, finding new perspectives on how to thrive as conscious actors on the international arena.
TRANSATLANTIC AFFAIRS
UNITED STATES
Congress is considering the American Innovation and Choice Online Act (AICOA) to curb what some see as the excessive power of large U.S. technology companies.
The bill has yet to come up for a vote, in part because of numerous concerns that it would undermine U.S. tech companies against competitors. Therefore, one of the most pressing concerns is that it would mandate that U.S. tech companies provide third parties with unprecedented access to their platforms and data.
President Joe Biden hosted French President Emmanuel Macron at the White House for the first state visit of his presidency. The two leaders pledged to maintain support for Ukraine and hold Russia accountable for its invasion.
Macron also raised European concerns about how Biden’s Inflation Reduction Act (the U.S. anti-inflation and manufacturing stimulus law signed by President Joe Biden last August), will affect European economies amid the energy crisis. Biden said there are “tweaks” that can be made to help alleviate the impact on Europe. Regarding China, the two reiterated vows to counter China’s challenges to the rules-based international order.
President Joe Biden has given every indication that he will run for reelection in 2024. But public focus on his age and his sagging approval ratings continue to feed speculation that he’ll make room for a younger generation of leaders within his party. If Biden opts out, here are four potential candidates to watch:
EUROPEAN UNION
On 3 November 2022, the EU-US Task Force on Energy Security met in Washington to discuss implementation of the 25 March Joint Statement by Presidents von der Leyen and Biden, which aims to help diversify the EU’s natural gas supplies and reduce natural gas demand and consumption. The Task Force builds on long-standing cooperation under the EU-US Energy Council.
This year alone, between January through October, approximately 48 bcm of LNG was exported from the US to the EU, which is 26 bcm more than for the full year of 2021. The participants committed to work on keeping a high level of LNG supplies to Europe in 2023 of an additional approximately 50 bcm. This effort will be further supported with the establishment of the EU Energy Platform.
The Commission and the High Representative put forward an Action Plan on Military Mobility 2.0 and a Joint Communication on an EU cyber defence policy to address the deteriorating security environment. The Action Plan works towards better connected and protected infrastructure. The European Commission is supporting the Action Plan with funding instruments such as the Connecting Europe Facility (a EU fund established in 2014 for EU-wide infrastructure investments in transportation, energy, digital and telecommunications projects) and the European Defence Fund (the EU Commission’s initiative to support collaborative defence research and development).
Yes to competition, no to cold war. The EU will not adopt the Chinese strategy of the United States. China is doing everything to distance Brussels from Washington. Moreover, in recent times Xi Jinping has preferred to woo European leaders individually rather than dialogue with EU leaders.
The European Union is in the process of approving a large aid plan for companies to keep them competitive with their U.S. rivals, which can rely on subsidies from the Inflation Reduction Act.
The European Union plans to respond with its own subsidy scheme, the European Sovereignty Fund: according to initial indications from the European Commissioner for the Internal Market, Thierry Breton, the new Fund should stand in continuity with other initiatives taken by the Union to reduce dependence on other countries-such as Russia (fossil fuel side) and China (critical raw materials side)-and support the dual green and digital transition: the European Chips Act, the REPowerEU plan, industrial alliances for hydrogen, batteries and raw materials.
European Space Agency member states have provided the agency with 16.9 billion euros for the next three years, a significant increase over 2019 but more than 1.5 billion euros below what the agency sought.
The Council of the European Union has given final approval to the Foreign Subsidies Regulation. The regulation addresses distortions created by subsidies granted by third countries to companies operating in the European Union’s single market. It establishes procedural rules for investigating such subsidies in the context of large mergers and bids in large public procurement procedures. The regulation proposes three tools for the Commission to investigate financial contributions by a public authority in non-EU country: two prior authorisation tools — to ensure a level playing field for the largest mergers and bids in large-scale public procurement procedures; a general market investigation tool for investigating all other market situations as well as lower-value mergers and public procurement procedures. As a next step, the Regulation will be published and is expected to enter into effect as from Q2 2023 (exact date to be confirmed).
ITALY
U.S., French and Italian aircraft carriers operated together near Italy, the Navy announced on Wednesday. USS George H.W. Bush (CVN-77) joined with Italian carrier ITS Cavour (CVH 550) and the French carrier FS Charles de Gaulle (R 91) for unspecified exercises in the Ionian Sea. These operations present an opportunity for allied nations to coordinate critical military power throughout the Euro-Atlantic area while showcasing NATO cohesion and interoperability.
Air force chiefs from around the world flew to southern Italy to discuss getting the best out of their F-35s. The conference at Amendola, which coincided with Falcon Strike 2022, an exercise involving Italian, Dutch and American F-35s, brought together representatives from the surging number of F-35 customers.
NATO
Brussels has allocated 1.6 billion euros ($1.67 billion) to military mobility projects in the bloc for the 2021-2027 period, part of a wider budget of 33.7 billion euros, known as the Connecting Europe Facility, to support key infrastructure projects. The military mobility project is coordinated by the Netherlands.
Poland is working hard to improve its infrastructure. The Baltic connections will be part of a 35 billion euro effort to improve military mobility across central Europe, known as the Solidarity Transport Hub.
ECONOMY & FINANCE
Inflation is projected to remain high in the OECD area, at more than 9% this year, but gradually moderate to 6.6% in 2023 and 5.1% in 2024 as tighter monetary policy takes effect, demand and energy price pressures diminish, and transport costs and delivery times continue to normalise.
Higher energy prices have triggered increasing prices across a broad basket of goods and services, which have in turn slashed purchasing power as real wages are falling in virtually all countries in the world.
While central banks around the world are increasing interest rates to curb inflation and anchor inflation expectations, rising interest rates can also increase financial challenges for households, firms and governments. Low-income countries are particularly at risk.
Economists are warning that 2023 is likely to be an ugly year. Global economic growth will drop to a weak 3.1% for this year to just 2.2% for next year. With higher prices for food and fuel in particular, more developing countries, faced with the risk of social unrest, will need financial help, and fewer wealthy countries will have the spare cash and political willingness to help them. Global order is at risk, a new equilibrium is to be found.
Goldman Sachs is stepping firmly into the buying and selling of loans in Italy. It has reportedly put up for sale a large portfolio of performing exposures with a nominal value of more than 1 billion euros. The stock would consist mostly of leased loans with related real estate collateral and stemming from purchases made by Goldman before the pandemic.