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Double transition: economics and politics across Europe and the Mediterranean

Istanbul, 02/03/2012 - 04/03/2012, Aspen Bosphorus Dialogue
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Those attending this second installment of the Aspen Bosphorus Dialogue embarked on a renewed consideration of the overarching issues stemming from the relationship between the trends unfolding within Europe and the transformations taking place in its neighboring regions.

Discussion among the participants over the future of the eurozone confirmed the existence of very different views on how to address fiscal and budgetary issues, regulation of the banking system, and disparities in competitiveness. What did emerge clearly from the debate, however, is that management of the euro has revealed a series of tensions and contradictions throughout the entire structure of the European Union, especially as regards the mutual support mechanism – or more precisely, its failure to function in times of more acute crisis. It was felt that the reactions of member states to the crisis threaten to cast doubts over political integration as a core principle, notwithstanding efforts to boost cooperation on certain shared policies, starting with the fiscal compact – which itself has shown up the limits of intra-European consensus when one considers its enforcement mechanisms and the fact that it has not been unanimously adopted.

From a broader perspective, the participants perceived a need to face up to the major challenge posed in terms of political consensus, given that governments have been forced – more or less directly and with varying degrees of room for maneuver – to adopt unpopular measures, as concerns mount over poor growth in European economies and, naturally, unemployment. The obvious risk is that of a surge in populism with anti-European overtones.

It was observed that this current phase of difficulty is also leading the EU to indulge in introverted behavior in a global scenario that would, in contrast, seem to call for an increased capacity for concerted action on various strategic fronts.

Against this backdrop, the role of Turkey is growing in importance, notwithstanding lingering obstacles in its accession process, with Cyprus’ upcoming presidency of the Council of the EU in the second half of this year presenting a particularly difficult stumbling block. The Dialogue participants stressed the crucial need for the development of new pragmatic forms of cooperation between Brussels and Ankara on priority matters such as energy, immigration, and internal and external security (especially in the face of marked instability in the Middle East).

Indeed, Turkey has undertaken high-profile initiatives in respect of the situation in the Middle East, and has been at the forefront in the difficult task of managing the Syrian crisis, which calls for efforts to rebuild a solid multilateral front to overcome the divisions that have emerged on this issue within the forum of the UN and to come up with realistic solutions that are sustainable in the long term. Although it was conceded that the many regional ramifications of the Syrian problem (involving Iran, Iraq, Lebanon, the Gulf states, and so on) clearly make it paramount to proceed with utmost caution, such considerations were not seen as eliminating the need to address what in fact amounts to a serious humanitarian – as well as security – crisis.

The issue of Iran’s nuclear program, linked to some degree with the Syrian question, was also viewed as fraught with regional and even global implications. It was stressed once again in this regard that a united international front is absolutely essential in order to render diplomatic measures, sanctions and possible negotiation proposals more effective, given the objective difficulties posed by the attitude of the regime in Tehran. Apropos of this, the position of the United States was pointed to as a factor of relative uncertainty: despite recent clarifying statements by President Obama, the US stance is perceived as ambiguous, both by some of its allies and, most probably, by the Iranian leadership itself. Much ambiguity also surrounds Iran’s intentions. Indeed, differences of opinion emerged among the participants on this point, giving rise to varying recommendations regarding the mechanisms to be employed and timeframes needed to address the nuclear issue per se, along with the wider issue of the role played by the country within the region.

The same lack of consensus could be said to apply in the case of the Israeli-Palestinian conflict, in respect of which there is a divergence of views concerning the regional importance of the issue and on how best to revive the peace process. It was noted, in any event, that the regional actors seem to have gained greater influence over the Israeli-Palestinian situation, and that this could have positive consequences, though the contribution of Western countries was still seen as remaining essential.

As far as the changes unfolding in the Arab world are concerned, it was emphasized that economic and social policies will play a decisive role in their prospects of success. It was suggested that without a clear improvement in certain indicators, starting with a reduction in the levels of unemployment and endemic corruption, any political progress made will be at risk of sudden upheavals and of being eroded. Intra-regional trade also needs to be stepped up considerably to enable sustainable growth and greater openness to international markets. It is against these criteria – rather than on the basis of any overtly ideological clash – that the participants felt the performance of governments or coalitions led by Islamist forces will be gauged. Whilst it was acknowledged that doubts and concerns remain in terms of the values and state models to be adopted, the immediate test will be that of the concrete choices taken to create a better relationship between the state and citizens. In this regard, rather than finding role models (such as modern Turkey, in particular) that they can emulate, countries of the region need to come up with pragmatic solutions based on their own specific social and economic circumstances.

One final issue deemed by the participants to be of great importance – given that it links the future prospects of European countries with those on the southern shores of the Mediterranean – is that of energy. It was noted that the economic crisis has had contradictory effects in this regard, bringing pressure to bear on prices due to Asian demand whilst contributing to the major slowdown of Western economies. Medium- and long-term projections were cited pointing to a predicted growth in demand, particularly from the southern shores of the Mediterranean, whilst on the European front, a diversification and shake-up of the energy mix was envisaged. The biggest question mark – it was suggested – hangs over the allocation of funding for the large infrastructure needed to increase production and improve transport security, in a scenario characterized by a high degree of geopolitical uncertainty in many key countries. In conclusion, it was noted that Turkey is at the center of several projects targeting both Western and Asian markets, and could also benefit from the business and financial relationships that tend to develop in tandem with energy deals. Russia was also seen as remaining a pivotal country in energy markets for the foreseeable future, especially for Europe, though it was highlighted that a number of offshore discoveries and a likely substantial increase in the importance of shale gas deposits could significantly alter the relative market shares of traditional producers, in both the Middle East and other regions.