Wednesday , May 23, 2018

CLT.biz Insights 17.01.12

Featured In This Issue

Our world changes constantly, but this year seems to be launching into a whole new era of change with the advent of our 45th President of the United States. The prospects for change are what the American public supported during last year’s political campaign. As 2017 begins, we know that change is coming. Yet we are still not confident what exactly the new changes will look like. And so, with faith in the American system of democracy, many have no choice but to take on an attitude of ‘wait and see.’

In the meantime, change is also happening around the globe. This issue of CLT.biz Insights provides insight into several aspects of change that bear upon the nature of the changes ahead. As we contemplate our future, we ought to look back with some clarity on what progress we have made and what we have put in place that brings us to this day. Read about the top 10 risks for 2017, the thinking behind the creation of a new world order, the progress on our globe when we look at everyone around the world, and how the European Union is preparing for the exit of Great Britain. These insights should provide a basis for decisions about our future.

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Top 10 Global Risks 2017Eurasia_logo

The World Enters Geopolitical Recession

 The Eurasia Group first wrote about the coming of the “G-Zero” world—a world with no global leader—six years ago. Prescient. While it seemed unconventional at that time, it is becoming increasingly evident. The group’s President Ian Bremmer and Chairman Cliff Kupchan recently presented their Top Risks 2017 report, identifying the most challenging political and geopolitical trends and stress points for global investors and market participants in 2017.

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“The underlying shifts in the geopolitical environment have been clear,” according to the report, “a U.S. with less interest in assuming leadership responsibilities; U.S. allies, particularly in Europe, that are weaker and looking to hedge bets on U.S. intentions; and two frenemies, Russia and China, seeking to assert themselves as (limited) alternatives to the U.S.—Russia primarily on the security front in its extended backyard, and China primarily on the economic front regionally, and, increasingly, globally.

“These trends have accelerated with the populist revolt against ‘globalism’—first in the Middle East, then in Europe, and now in the U.S. Through 2016, you could see the G-Zero picking up speed on multiple fronts: the further deterioration of the transatlantic alliance with Brexit and the ‘no’ vote on the Italy referendum; the end of America’s Asia pivot with the collapse of the Trans-Pacific Partnership and the Philippine president announcing a break with the U.S.; the Russian victory in Syria after backing President Bashar al Assad through nearly six years of war.

“But with the shock election of Donald Trump as president of the U.S, the G-Zero world is now fully upon us. The triumph of ‘America first’ as the primary driver of foreign policy in the world’s only superpower marks a break with decades of U.S. exceptionalism and belief in the indispensability of U.S. leadership, however flawed and uneven. With it ends a 70-year geopolitical era of Pax Americana, one in which globalization and Americanization were tightly linked, and American hegemony in security, trade, and promotion of values provided guardrails for the global economy.”

Ominously, the report indicates, “This year marks the most volatile political risk environment in the postwar period, at least as important to global markets as the economic recession of 2008. It needn’t develop into a geopolitical depression that triggers major interstate military conflict and/or the breakdown of major central government institutions. But such an outcome is now thinkable, a tail risk from the weakening of international security and economic architecture and deepening mistrust among the world’s most powerful governments.”

According to Bremmer and Kupchan, at the top of the list in 2017 is the risk presented by Independent America: “The triumph of ‘America first’ as the primary driver of foreign policy in the world’s only superpower marks a break with decades of U.S. exceptionalism and belief in the indispensability of U.S. leadership. Independent America renounces exceptionalism, the notion that the U.S. actively promotes democracy, civil rights, and rule of law.”

Below follows a summary of the top 10 global risks for 2017.

Click here for the full report.

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Click here for the exclusive video.

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1- Independent America

The world’s sole superpower was once the international trump card, imposing order to force compromise and head off conflict. Now it’s a wildcard. Instead of creating policies designed to bolster global stability, President-elect Donald Trump will use U.S. power overwhelmingly to advance U.S. interests, with little concern for the broader impact. Trump is no isolationist. He’s a unilateralist. Expect a more hawkish—and a much less predictable—U.S. foreign policy. Allies, especially in Europe and Asia, will hedge. Rivals like Russia and China will test. U.S.-led institutions will lose more of their international clout.

2- China Overreacts

China’s leadership transition will create risks that matter far beyond that country’s borders. The need to maintain control of the transition ahead of next fall’s party congress will increase the risk of economic policy mistakes that rattle foreign investors and international markets. In addition, President Xi Jinping knows this is a dangerous time to look weak and irresolute. Provocations from Trump, and the multitude of areas where U.S.-Chinese tensions might play out—North Korea, Taiwan, Hong Kong, the East and South China Seas, and in U.S.-Chinese political and economic relations—make 2017 a dangerous year for China and all who depend on it for growth and stability.

3- A Weaker Merkel

Strong leadership from Angela Merkel has proven indispensable for Europe’s ability to manage crisis in recent years. Europe will face more challenges in 2017—from France’s elections, Greece’s finances, Brexit negotiations, and delicate relations with both Russia and Turkey. Unfortunately, though Merkel is likely to win reelection as Germany’s chancellor in 2017, she’ll emerge as a weakened figure. This will leave Europe with no strong leadership at all—at a time when strong leaders are badly needed.

4- No Reform

Don’t expect a surge in needed economic reforms in 2017. Some leaders, like India’s Modi and Mexico’s Pena Nieto, have accomplished as much as they can for now. In Russia, France, and Germany, reform will wait until after coming elections, and China faces an all-consuming leadership transition next fall. Turkey’s Erdogan, Britain’s May, and South Africa’s Zuma are fully occupied at the moment with domestic political challenges. In Brazil, Nigeria, and Saudi Arabia, ambitious plans will advance but fall short of what’s needed.

5- Technology and the Middle East

Each year, governments in the Middle East lose more of their legitimacy. Technological change is critically weakening an already fragmenting region. The risks are both top-down and bottom-up. The revolution in energy production undermines the stability of states still deeply dependent on oil and gas exports for state revenue. Automation of the workplace will make it even harder to create jobs for growing numbers of young people. New communications technologies continue to enhance the ability of angry citizens to commiserate and organize. Cyber conflict is further shifting the region’s precarious balance of power. Finally, “forced transparency” (think Wikileaks, etc.) is especially dangerous for brittle authoritarian regimes.

6- Central Banks Get Political

Western central banks are increasingly vulnerable to the same sort of crude political pressures that distort economies in developing countries. Britain’s May has blamed the Bank of England for low rate policies that have increased income inequality. In Germany, Wolfgang Schaeuble has argued that low interest rates have reduced the incentives for peripheral European states to reform. Trump accused the Federal Reserve of helping Hillary Clinton. In 2017, there’s a risk that Trump will use the Fed as a political scapegoat, putting new pressure on future Fed decisions. He might also use Janet Yellen’s departure to replace her with a personal ally, undermining the Fed’s credibility for years.

7- The White House vs. Silicon Valley

Trump and the tech sector don’t have much in common. Trump wants security and control. The tech firms want freedom and privacy for their customers. Trump wants jobs. The tech firms want to push automation into overdrive. The two sides differ substantially on investment in science. In 2017, there will be plenty for the White House and Silicon Valley to fight over.

8- Turkey

President Erdogan continues to use an ongoing state of emergency to tighten his control of day-to-day affairs, as well as on the judiciary, bureaucracy, media, and even the business sector through waves of arrests and purges. In 2017, he’ll use a referendum to formalize his powers, and his strengthening grip will exacerbate the country’s economic problems and its tense relations with neighbors and with Europe. Turkey is a volatile player in an increasingly volatile region.

 9- North Korea

It’s hard to know exactly when North Korea will have a missile capability that poses a clear and immediate danger to the U.S., but the DPRK appears to be approaching the finish line at a time of dangerously deteriorating relations between China and the U.S. Serious tensions will likely arise between the two over additional sanctions. And if President Park is forced from office in South Korea and replaced with a center-left government that favors diplomacy, a tough Trump policy could roil geopolitics throughout the region.

10- South Africa

The deeply unpopular President Zuma is afraid to pass on power to someone he doesn’t trust. Resulting infighting over succession poses an obstacle to any effort on needed reforms and limits South Africa’s ability to offer leadership to help stabilize conflicts inside neighboring countries.

* Red herrings

Bremmer and Kupchan expect that U.S. domestic policy poses fewer risks than foreign policy, because Congress has greater power to impose predictability on an unpredictable new president. Don’t expect a flare-up in India vs. Pakistan at a time when both governments need stability. And Brazil will have an easier 2017 as legislators try to appease public anger for change by making progress on President Temer’s agenda.

Eurasia Group is a leading global political risk research and consulting firm, providing information and insight on how political developments move markets and helping clients anticipate and respond to instability and opportunities everywhere they invest or do business. Top Risks 2017: The Geopolitical Recession was prepared by Eurasia Group, 3 January 2017.

 

NEW Perspective on Alliances

Post-WWII New World Order Begins

Former Secretary of Defense Chuck Hagel recently addressed the World Affairs Council of Charlotte, after the election results were certain but before the new administration is installed. Secretary Hagel’s global insights and perspective on changing alliances suggest that a post-WWII new world order is emerging.

Former SECDEF Chuck Hagel visiting with CLT.biz Publisher John Paul Galles
Former SECDEF Chuck Hagel visiting with CLT.biz Publisher John Paul Galles

Here are some interesting points he raised.

I believe what we’re seeing in our country, is a reflection of a new post-World War II order being built in the world today. The world order that was built after World War II has lasted about 70 years. In the scope of history, world orders that last 70 years are rather unique, especially in a world where the demographic has shifted in an unprecedented way. Seven billion people exist today, and that number is increasing every day. Demographers tell us we are hitting nine billion by 2050 by the data.

“A new world order is being built, is being defined, today. It is a different kind of dynamic today than what it was in 1946 for many reasons. Significantly, there was only one economy in the world of 1946 that was left standing; it was the U.S. economy. There was no other economy left with its own military force. That gave the United States a tremendous amount of leadership capacity, confidence and ability to—along with allies—build this new world order.

“These great men and women had such vision after World War II, they did something that had never been done before in the history of man. They built coalitions of common interests: the United Nations, World Trade Organization, international development banks and institutions, IMF, World Bank, NATO, and dozens of other alliance-painted coalitions. They built those coalitions around and predicated on the common interest of most nations.

“Those coalitions have served the world very well for 70 years. They’re imperfect—can’t solve everything—but think for a moment if the world had not had these institutions over the last 70 years. Does anyone really think the world would be safer and more stable and better? I don’t think so. I don’t think so.

“As we are seeing this new world order evolve, develop, we are seeing a natural questioning of the effectiveness of existing alliances. Challenged alliances because of trade, which now connects us into the political world—because you can’t disconnect the political world from the reality of economics, of security, of environment, the big issues. The political world is the vehicle, the highway in nations, in particular democracies, to arrive at some destination as the decision-makers.

“It would be natural that what we saw in this country this year, in the recent election, would follow a manifestation of this concern, this uncertainty, the volatile ‘Where are we going’ disconnect with our government, disconnect with institutions, lack of confidence, lack of trust in institutions in every poll in the country for over two years. When asking the question, ‘Is America going in the right direction/wrong direction?’, an overwhelming 65 to 75 percent of the American people consistently responded ‘America is going in the wrong direction.’

“Where all this goes, I don’t know, but it’s clear to me that in our recent election in America was a political realignment. They tell me that there’s nothing you can do to stop it. It’s like a bad storm. You do two things in a bad storm whether it’s a tornado or a hurricane, whatever the storm. You head for the potato cellar and get out of the way first. Second, you try to think through and plan for what happens a day after the storm blows through and how you rebuild. That’s kind of where we are I think in our country and in the world today.”

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U.S. Defense Security Blocs

Secretary Hagel provided a first-hand perspective from his experience at the Defense Department as a Republican working for a Democratic President. He expressed concern about President Obama’s lack of commitment to his “drawing a red-line in Syria,” relating quite an interesting story about what happened, and expounded upon the global consequences from that lack of action.

He was genuinely concerned that Obama’s lack of action opened the door for Vladimir Putin and Russia to side with President Assad in Syria. That gave Putin the opportunity to lead the way in Syria and to extinguishing the opposition forces to Assad inside Syria. Secretary Hagel was demonstrably upset with the lack of action taken by the United States. It was following that action that he stepped down from the Pentagon.

“The answer to this is a, not just a continuation but a strengthening of alliances, of building new partnerships that aren’t necessarily based on a NATO-type alliance. Mutual security because there is no such thing as just straight military security as we think of security. The security of any nation rests upon the most fundamental of all securities and that’s economic security. A nation is only as powerful as its economy. It’s very simple. Your household. If you don’t have any income you probably don’t have any options. It’s the same thing about nations.”

Secretary Hagel finished his remarks by saying, “It’s going to be a balance. New partnerships, stronger enhanced relationships, alliances and trade. I mean, we couldn’t back away from trade if we wanted to. We are so connected to the world in every way and trade is not a guarantee. Never has been. Trade is an opportunity.

“Trade does so much more than just exchange goods and commerce. It opens doors that allow nations to respond to each other, understand each other, communicate with each other, connect with each other, coordinate with each other in ways that nothing else can. It opens everything up. It can’t do everything—you need all the other pieces of government as well—but those are fundamentals. Alliances and trade.

Former Defense Secretary Chuck Hagel’s remarks at the World Affairs Council in December 2016 are included below, edited for brevity.

I believe what we’re seeing in our country, is a reflection of a new post-World War II order being built in the world today. The world order that was built after World War II has lasted about 70 years. In the scope of history, world orders that last 70 years are rather unique, especially in a world where the demographic has shifted in an unprecedented way. Seven billion people exist today, and that number is increasing every day. Demographers tell us we are hitting nine billion by 2050 by the data.

A new world order is being built, is being defined, today. It is a different kind of dynamic today than what it was in 1946 for many reasons. Significantly, there was only one economy in the world of 1946 that was left standing; it was the U.S. economy. There was no other economy left with its own military force. That gave the United States a tremendous amount of leadership capacity, confidence and ability to—along with allies—build this new world order.

These great men and women had such vision after World War II, they did something that had never been done before in the history of man. They built coalitions of common interests: The United Nations, World Trade Organization, international development banks and institutions, IMF, World Bank, NATO, and dozens of other alliance-painted coalitions. They built those coalitions around and predicated on the common interest of most nations.

Europe had just been through two tremendously destructive world wars in the first half of the 20th century. We were going to avert that. We were going to have to do something radically different. Therefore, these coalitions of common interests were made.

Those coalitions have served the world very well for 70 years. They’re imperfect—can’t solve everything—but think for a moment if the world had not had these institutions over the last 70 years. Does anyone really think the world would be safer and more stable and better? I don’t think so. I don’t think so.

As we are seeing this new world order evolve, develop, we are seeing a natural questioning of the effectiveness of existing alliances. Challenged alliances because of trade, which now connects us into the political world—because you can’t disconnect the political world from the reality of economics, of security, of environment, the big issues. The political world is the vehicle, the highway in nations, in particular democracies, to arrive at some destination as the decision-makers.

It would be natural that what we saw in this country this year, in the recent election, would follow a manifestation of this concern, this uncertainty, the volatile “Where are we going” disconnect with our government, disconnect with institutions, lack of confidence, lack of trust in institutions in every poll in the country for over two years. When asking the question, “Is America going in the right direction/wrong direction?”, an overwhelming 65 to 75 percent of the American people consistently responded “America is going in the wrong direction.”

Now, when you see those kinds of numbers, consistently crossing all socioeconomic lines, something’s going to happen. As the historians will reflect on this time and there will be a lot of books written, a lot of analysis will go on for years. What happened in the United States? It was only a manifestation of the realities of this disconnect, this distrust, this confusion, this concern about not just the direction of our country, but the institutions that have a responsibility of keeping the society together.

Like any of us in our own lives, we are disrupted by what happens around us. Disruption affects our trust. If you lose trust in personal relationships, business relationships, there is no currency. It’s pretty hard to ever get it back. We have lost a lot of that currency, not just here in the United States, but around the world.

Look at what’s happening in every democracy in the country today starting with what happened in the UK a few months ago with Brexit. The presidential election in France is coming up. Elections in Germany, Italy. Half of the countries in Europe are having either presidential or parliamentary elections within the next six months. Some of them are already underway. Like the United States, it is the same feeling about their governments, about their leaders, about their politics.

I don’t think it’s all just a breakdown in leadership but the reality is in politics, and again in especially democracies, the politics always reflects the will of the people. Politics never leads. Those of us who have had the privilege of serving in office, being elected, know that quite well. You respond to the needs, the will of the people.

I suspect other elections that will take place will not be too dissimilar from what happened here in the recent election. Look what happened in the UK and it is in the process of continuing a political realignment.

Where all this goes, I don’t know, but it’s clear to me that in our recent election in America was a political realignment. They tell me that there’s nothing you can do to stop it. It’s like a bad storm. You do two things in a bad storm whether it’s a tornado or a hurricane, whatever the storm. You head for the potato cellar and get out of the way first. Second, you try to think through and plan for what happens a day after the storm blows through and how you rebuild. That’s kind of where we are I think in our country and in the world today.

As we move forward a new government is being formed now in Russia. A new government was formed the last few months in Great Britain. We know there will be new governments being formed in France, Italy, maybe Germany, and even in Austria, and Hungary. We will see how those governments will address the people and how well governments and political leaders in society will adapt and adjust to the realities of the world that we live in today.

We’re playing catch-up here. It’s like regulation in government. The markets are always ahead of regulation. You can only do so much in the way of regulation. You must depend not on government regulation for honesty, for decency, you’ve got to depend on the people. After all, it is about people. No institution is ever better than its people—every institution is only as good as its people, as its leaders. No better, no worse.

Now, this is all swirling around in our country, and all of this causes shift and change and fragmentation of our political philosophies. Really, when you look at the two major parties in this country, what is the legitimate question? What is the governing philosophy of the Republican Party today and the governing philosophy of the Democratic Party today? I would submit that there’s very little governing philosophy in either party today.

To add further evidence, the plurality of registered voters in the United States today are independents. Not Republicans, not Democrats. Every year that increases. We are seeing now is not necessarily an abandonment of political parties, but again a disconnect from political parties because of lack of confidence and trust and all the other things that I’ve talked about.

Now within this boiling cauldron of uncertainty, yes, there is much danger, but I think too a great opportunity because great realignments must occur in the world to respond to these realities and these challenges of our time. Change is not new. We all know that. Every generation in the history of man has had change. The defining moment of change or challenge is how each generation responds.

So far, over our almost 250-year history in the Unites States, we’ve done pretty well. We’ve done pretty well I think for many reasons. First of all, we are a nation of laws, but we also have a system that allows us to self-correct. Now democracies have that, but we can self-correct without guillotining each other, without revolutions erupting. We have mechanics, mechanisms, processes to fix the problem and if the alignments need to be shifted, we can fix those alignments and make them relevant to the challenges of our day.

The United States does it better than anyone. That doesn’t mean we’re any smarter. Doesn’t mean we’re any better or mean we are God’s chosen few. While we’ve got this great capacity to self-correct, that’s what’s happening.

Let me shift a little bit to more current global challenges, to not just the United States but the world, because we are not an island. As we all know there has been a considerable amount of conversation during the election about essentially pulling back and lessening our commitments to NATO, to other alliances, trade issues. I’m not concerned about the challenging of those relationships in the sense that I think relationships should be challenged. Are they working? Are they relevant? Are they good for all the parties involved?

Businesses have to do that every day or you’re not going to be in business anymore. You’ve got to review your product. You’ve got to review every element of your business. Your life, your personal lives. If you’re getting a little bit out of line somewhere, people aren’t buying your product, whatever the signs are, you’re going to have to adjust. You’re going to have to do some things differently. That doesn’t mean you throw away your product. That doesn’t mean you throw away your relationship or you disband the alliance. There’s always a threat of that, of course, in these big global issues. We need to probe a challenge. We need to question.

I was a kid once in the Florida Senate and I was questioning a policy in Iraq and someone said that I was disloyal, and I even had someone call me a traitor. I said on the Florida Senate, “It’s not unpatriotic to question your government. It is unpatriotic not to question your government’s policies.” I further explained in elected office I, like all elected officials in Congress, took an oath of office to a constitution, not to a president, not to a political party. I think that needs to be realigned as well because we have become too brutally partisan.

Both parties are to blame on this I think in too many ways. They have become captive to special interests. I remember all the special interests that we—all almost all of us—were representing. It’s the larger purpose. It’s the larger responsibility than your special interests. If we are to lose that then we will lose our magic. We will lose our self-direction. We will lose our country.

There’s a lot riding here on how all of this plays out and I think we’re in for a bumpy road the next few years as we work through this alignment. It’s not going to be easy because the issues today are so complicated—whether it’s Syria, whether it’s the Middle East, whether it’s North Africa, whether it’s North Korea—because each of these issues is part of this bubbling toxic brew that connects so many pieces now to everything.

For example, ISIS. A lot of different views on ISIS. What do we do about ISIS? Well I have taken the view over the years, whether it’s ISIS, Syria, Iraq, terrorism wherever, that the military of the United States or anyone’s military is not going to fix that problem. Because what we haven’t done very well over the years is try to figure out how did this all happen? What produced ISIS? What produces Al-Qaeda? What produced this fundamentalism?

It just didn’t appear. Something happened. Something deep down in society and I think there’s where it starts to become complicated because ISIS, the Middle East in particular, Sunnis, Shias, Kurds, Persians—all of that not unlike how Catholics and Protestants killed each other for 30 years in the 30 Years War in Europe—all of that has been produced by centuries of cultural differences, religious differences, ethnic tribal differences.

I think we’re still seeing a very disastrous hangover from when the British and the French divided up the Middle East in 1923 and they invented countries that shouldn’t have been invented. They cut across lines of tribal and ethnic areas. The Kurds being a good example. The Kurds are in five countries on those corners. Kurds have never had their own country.

I remember meeting with President Erdogan a number of times. The Secretary of Defense, in fact Joe Biden and I were the first to meet Erdogan when his party just developed, just stepped into power in November of 2002. 2002. Biden and I were in the Middle East for 10 days to visit all the countries. We were talking with Erdogan then which you all know could hold no public office because he was not a member of Parliament. He was a leader of the party. We spent two hours with him and then Biden and I drove into Kurdistan that night, an eight hour drive to speak with the Kurdistan Parliament. This was December 2002 and then we invaded Iraq in March of 2003.

It was an interesting drive. Senator, Vice President Biden is a good friend. That was an interesting experience being locked into an SUV with Joe Biden for eight hours. Some of our staff people said by the time we reached Erbil the Kurdish driver spoke flawless English.

Point being with Erdogan—just to give you an idea of the complications—here is Turkey, as probably an indispensable member of NATO as any country since 1952. My point in telling you this story about when I first met Erdogan, I’ve known him for years and had a very good relationship with him. Last time I saw him, when I was Secretary of Defense, we had a long conversation about trying to get the Turks to allow us, the Unites States, and some of our NATO allies to use the NATO base there in Turkey for short range and into Syria both pilot and pilotless aircraft.

He said to me, “We have a problem, the U.S. and Turkey on this issue.” Because he, Erdogan, was one of the first and the strongest leaders of the area to get rid of Assad. We were trying to get this agreement with him that focuses on ISIS and Al-Qaeda. He said to me, “ISIS is not our biggest problem. It’s a problem. We’re going to handle it, but the Kurds are our biggest problem. You are supporting the Kurds and you won’t go to war with Assad. You won’t help me by setting up a safe zone or a fly zone in northern Syria.”

Now let me stop there. I think you get my point. Here’s a country, Turkey, that has been as close to the United States and as reliable NATO partner as we’ve had. It’s important because before the implosion of the Soviet Union there was only one NATO country that lived right on the border of the Soviet Union republics. The only Muslim country in NATO. Our interests diverged in a very significant way. This is a good example of the complications of not just that part of the world but every part of the world.

We’re going to have to be smarter in how we do things. The military can’t fix the problem. The problem in the Middle East can’t be fixed in the Middle East. The problems in the Middle East aren’t going to be fixed without the Russians. The Russians are there and they’re not going anywhere. That problem in the Middle East isn’t going to get fixed without the Iranians. We may not like either one of them and have major differences with both of them, but then the alternative is to just allow the continuation of the systematic destruction of the Middle East.

That’s just wrong. You go across most of those countries in the Middle East and things get worse in Saudi Arabia. There’s a lot of internal conflict going on there. That isn’t getting better, I don’t think. GCC (Gulf Cooperation Countries) countries are threatened, very concerned about where does this put us.

We’re going to have to think through some things a little differently. I think do some things differently our NATO allies are questioning in many ways our leadership in some of these areas. Afghanistan is another area. We are in our 16th year in Afghanistan and we’ve still got 8,500 troops there taking casualties there. That’s not getting better. Actually, the Taliban control more territory today in Afghanistan than they have in 15 years.

We have NATO partners with us. We also have partners like Jordan in Afghanistan. How much longer their public are going to put up with their troops being in Afghanistan not seeing any kind of turn is an open question. Obviously North Korea, how do you deal with that continued complicated problem, especially now in light of the problem in South Korea. President Park will be soon to leave office.

Our new administration transitioning in from the former administration is always a time of great danger and threat because of countries challenging us, taking advantage of that vacuum. You’re not going to fix any of those problems with the military. There is a military piece to it, but I go back to the two fundamentals that did more to help the world and help the United States. They were the defining platforms of the world order that was built after World War II that I was referencing.

Alliances, strong common-interest alliances and trade. Now both can only do so much but without those you have no common-interest platforms to work together from. Middle East again. There will be no possibility, no hope for any kind of solution or resolution in the Middle East until there is some platform of stability that’s constructive to allow the next stage to start taking shape. We may see it differently at least in borders. The 1923 borders maybe changed once we see a cease-fire that everyone can agree to.

When I say everyone, you’re still going to have terrorist groups that won’t agree. That’s not new. You’ve got to put that in perspective too. Terrorism. Terrorism is not new. The sophistication of terrorism and the empowerment of non-state activists is new because of technology and technology is driving as much of this as any one thing. It has now empowered groups. Social media for example. ISIS is as adept and sophisticated at using social media as any country. In fact, more so than most countries. Their equipment and techniques, strategies. You’re not going to undo that.

Again, I go back to a comment I made early. We’ve got to get underneath this. Stability in the Middle East. That’s going to require enough of the powers there, the governments there. Certainly the Russians, certainly us. You can’t put NATO troops in the Middle East. I don’t think an American president anytime soon is going to put any kind of significant troop strength back in the Middle East. I remember my predecessor Bob Gates said a few years ago, “Anybody who again advises a president of the United States to put troops on the ground in the Middle East ought to have his head examined.” I fully subscribe to that. Fully subscribe to that.

The answer to this is a, not just a continuation but a strengthening of alliances, of building new partnerships that aren’t necessarily based on a NATO-type alliance. Mutual security because there is no such thing as just straight military security as we think of security. The security of any nation rests upon the most fundamental of all securities and that’s economic security. A nation is only as powerful as its economy. It’s very simple. Your household. If you don’t have any income you probably don’t have any options. It’s the same thing about nations.

Our economics, our diplomacy, our trade, our relationships, everything is now connected in the world fabric of security. That is security. Partnerships, new partnerships in Asia-Pacific. When I was Secretary of Defense, I took many Asia-Pacific trips, more than Secretary Kerry did. More than anybody in the administration. United States, in fact the entire Western Hemisphere, the western border of the Western Hemisphere from Canada all the way down to the tip of Chile, border the Pacific, so we’ve always been a Pacific partner. You know all the demographics and the economies and all the dynamics in play there.

I focused on strengthening our alliances there, certainly military, certainly our more refined security interests. Also on new partnerships. I’ll give you an example. I was the first Secretary of Defense to invite all the ASEAN defense ministers to Hawaii for a conference. Never been done. Ten ASEAN ministers to a three-day conference. Half of those three days I put together an agenda having very little to do with military issues. I had the USAID director there. I had senior members from the Agriculture Department, the Commerce Department, Weather Bureau all there meeting with the ministers because I wanted to focus on where the common denominators are of people. Of people. Of your country, your people. How can you improve the lives of your people?

Education, agriculture, everything. The rest of it flows from that. I think we actually did quite a bit of good from that. Then we had a day and a half of military and we showed off all our power. We didn’t have to do that. The ASEAN nations knew that. Give them a little inside sense of that.

It’s going to be a balance. New partnerships, stronger enhanced relationships, alliances and trade. I mean, we couldn’t back away from trade if we wanted to. We are so connected to the world in every way and trade is not a guarantee. Never has been. Trade is an opportunity.

Trade does so much more than just exchange goods and commerce. It opens doors that allow nations to respond to each other, understand each other, communicate with each other, connect with each other, coordinate with each other in ways that nothing else can. It opens everything up. It can’t do everything—you need all the other pieces of government as well—but those are fundamentals. Alliances and trade.

Let’s go back to the Middle East here a moment. How does anyone believe that eventually the Middle East gets put back together? In the destruction of the Middle East and Syria, Syria is unique. It’s a destroyed country, the infrastructure, the housing. Good parts, major parts of Iraq, Libya, Danube, and it just continues to see more destruction, more destruction. What’s happening in Mosul? I mean it’s just how do you put that back together?

It’s going to require immense, immense new building and economic efforts, trade to do that. What do you do with the people? People just can’t keep risking their lives going across the Mediterranean however they want to get to Europe. That, in itself, is starting to seriously fray the EU. That’s probably the jolting gong that led to the Brexit vote. The Syrian refugee issues.

There were other issues too that were more basic and academic contributing to that. Brussels has become this empire of a parliament, a European parliament which is silly. People are fed up with it and I understand that. Why are we having to listen to what the people in Brussels have to say on … We are French, we’re Italian, we’re British, and so on and so on and so on. By the way, to say that just can be said about NATO. That they’ve been likened to these large model, this huge bureaucracy. Now that’s no reason to do away with them, but that’s part of what’s happened here too.

We’re going to need the trade. We’re going to need the relationships to rebuild any part of the world. We don’t often think enough I think and the United States is guilty of this or thinking through these things. Certainly, if the United states military faces another military there is no country whether it’s partnered with Saddam Hussein or Muammar Gaddafi that’s going to stand a chance. No one can on a battlefield against the United States power. This ain’t going to happen because no one has that kind of power. Does that fix the problem?

I think we learned a hard lesson in Iraq, we learned a hard lesson in Afghanistan. Unless there are functioning institutions of governments. This is the biggest problem I think there is in Afghanistan. Afghanistan has never had a central government. It’s never had functioning institutional bodies. It’s still a tribal country. That doesn’t mean they can’t have, won’t have, shouldn’t have. It’s up to them to have democracy but we can’t dictate that. The United States cannot dictate that. The Europeans cannot dictate that. We can help facilitate. We can help support but that’s beyond our capability to do that. We are surely not going to shock and awe countries into new democratic governments and new freedoms. Again we’ve learned some tough lessons the last 16 years and I think that was also part of what happened in this country in the election here this year.

I end with this. Is this fixable? Is this doable? Do we have a future? Yes. Yes. Yes. We do. It’s really within our grasp. The Chinese aren’t going to dictate that. The Russians are not going to dictate that. We control our own destiny with our friends, with our allies. Boy, if there was a time you need friends and you need allies it sure as hell is now. It sure as hell is now. You don’t want to be pushed back.

I used to be asked a question, “What’s it like to be the leader of the largest entity in the world?” The Defense Department is. Most complicated too. I said, I was Secretary of Defense but I never confused that with the reality. The Department of Defense consisted of empires within empires. You had to deal with all these different emperors at times. Once you start believing you’re running things, oh you’re in for a real shock.

Chuck Hagel served as the 24th Secretary of Defense from February 2013 to February 2015. During his tenure, he directed significant steps to modernize America’s partnerships and alliances, advance the rebalance in Asia-Pacific, bolster support for European allies, and enhance defense cooperation in the Middle East while overseeing the end of America’s combat mission in Afghanistan. In addition, he led major initiatives for service members and their families, including increasing resources for suicide prevention, combating sexual assault, and accounting for missing personnel. He is the only Vietnam veteran and the first enlisted combat veteran to serve as Secretary of Defense.

 

Our World Better or Worse Off?

A History of Global Living Conditions

Global_Max_Roser_300px
Max Roser

In an incredibly important article, economist and media critic Max Roser, known for his research on global trends of living conditions and his visualizations of these trends, shows us the history of global living conditions—“the history of everyone.”

Very few people think that the world is getting better. In a handful of charts, Roser instantly communicates the progress of the human population over the last two centuries in poverty, literacy, health, freedom, fertility and education. If you don’t read anything else this week, make sure you make to time to read this and consider its implications with respect to your current world view.

Here are the highlights of Roser’s piece:

https://ourworldindata.org/grapher/share-world-population-in-extreme-poverty-absolute

Global_world-population-living-in-extreme-povertyPoverty: In a time of unprecedented population growth, increasing productivity—more output from less input—and economic growth—you are better off when others become better off—have combined to give more prosperity to more people and to continuously lift more people out of poverty. Roser points out that because of disparaging media reports, it is easy to miss the slow developments that reshape our world, suggesting that the headlines since 1990 could have read instead, “The number of people in extreme poverty fell by 130,000 since yesterday!”—and that could have run every day.

https://ourworldindata.org/grapher/literate-and-illiterate-world-population

Global_literate-and-illiterate-world-populationLiteracy: It was in the last two centuries that literacy became the norm for the entire population. If you think science, technology, political freedom are important to solve the world’s problems and you think that it helps to read and write to do this, Roser points out that in 1800 there were 120 million people in the world that could read and write; today there are 6.2 billion.

https://ourworldindata.org/grapher/global-child-mortality-timeseries

Global_global-child-mortalityHealth: In 1800 the entire world lived in poor conditions; in all countries of the world more than every third child died before it was 5 years old. For a combination of reasons—rising prosperity, changing social life, improved housing and sanitation, healthier diet, and innovations in science and medicine—child mortality is now down to 4.3 percent—10-fold lower.

https://ourworldindata.org/grapher/world-pop-by-political-regime

Global_world-pop-by-political-regimeFreedom: Using the Polity IV index to measure regimes, Roser points out that the share of the world population living in democracies has increased continuously; now more than every second person in the world lives in a democracy, and 4 out of 5 living in an authoritarian regime live in one country—China.

Fertility: Population growth increases humanity’s demand for resources and amplifies humanity’s impact on the environment. Roser points out that world is well into the demographic transition and global population growth has in fact peaked. Global life expectancy doubled just over the last hundred years; global fertility has more than halved in the last 50 years.

https://ourworldindata.org/grapher/projection-of-world-population-SSP2-IIASA

Global_projected-world-population-by-level-of-education

 

Education: Roser points out that the revolution in how we live was not only driven by education, it also has made education more important than ever. Researchers expect that there will never be more children on the planet than today. Their projection suggests that by 2100, there will be almost no one without formal education and there will be more than 7 billion minds who will have received at least secondary education.

https://ourworldindata.org/wp-content/uploads/2016/12/World-as-100-people-2-centuries-1.png

Global_world-as-100-peopleRoser concludes by pointing out that most of us have a very negative perspective of global development and suggests that the media is in part to blame because the media does not tell us how the world is changing, it tells us what in the world goes wrong. When we are ignorant about global development, he says, it is not surprising that few think that the world is getting better.

“What is clear from the long-term perspective is that the last 200 years have brought us to a better position than ever before to solve these problems,” Roser summarizes. “Solving problems—big problems—is always a collaborative undertaking. And the group of people that is able to work together today is a much, much stronger group than there ever was on this planet. We have just seen the change over time; the world today is healthier, richer, and better educated.

“For our history to be a source of encouragement we have to know our history. The story that we tell ourselves about our history and our time matters. Because our hopes and efforts for building a better future are inextricably linked to our perception of the past it is important to understand and communicate the global development up to now. A positive lookout on the efforts of ourselves and our fellow humans is a vital condition to the fruitfulness of our endeavors.”

To read the entire Roser article: https://ourworldindata.org/a-history-of-global-living-conditions-in-5-charts.

Max Roser is an economist and media critic. He is known for his research on global trends of living conditions and his visualizations of these trends. He is currently a research fellow in economics at the University of Oxford.

 

 

 

 

EU Response to Brexit

Brexit and Populism: The Future of the “European Project” from a German Perspective

Dr. Celine-Agathe Caro, Senior Policy Analyst at the Konrad Adenauer Foundation, a German political foundation affiliated with the Christian Democratic Union (CDU), addressed a gathering in the fall of 2016 sponsored by the Eric M. Warburg Chapter of the American Council on Germany, to discuss the “European project” from a German perspective following the Brexit vote and the movement toward greater populism.EU_Caro_Celine

The European Union currently includes 28 member states with over 500 million people delivering almost 25 percent of the global domestic product. Dr. Caro’s remarks included the following, edited for brevity:

The outcome of the British referendum has created increasing pressure on the EU to reform itself to better respond to the expectations of its citizens. At the same time, the European member states will only be able to overcome common challenges like the refugee crisis, terrorist threats, or Russia’s aggressive foreign policy if they act together.

With its economic and political weight, Germany will play a key role in any further decisions regarding the EU’s future, but it needs partners to assume the leadership required to help navigate these crises.

I think it’s important to mention that from a European perspective, the European project is not only about crisis and about bad news, even if it’s what the media here in the U.S. and in Europe like to focus on. The European project is the project that since 1950 is giving Europe peace and stability and prosperity. That’s something we should keep in mind while talking about all these crises and these programs.

This prosperity, this freedom, this peace, that’s still something that is true today that we have from the European project. Think of the single market. Think of the common currency and of all these common laws and regulations and norms that make it possible to manage together 28 countries—28 countries that represent roughly 500 million citizens. It might be that’s only 7 percent of the world population, but that’s 25 percent of the world GDP and 50 percent of all social expenditures worldwide.

I will give you a quick overview of the different issues we are facing in the EU today. I would like to present five top challenges I think for the EU in the future, that influence also the quality of the trans-Atlantic partnership. These five top challenges are as follows: unity, solidarity, communication, leadership, and international responsibility.

 Unity

I will start with the first challenge—unity—the idea that we should stay together. That’s closely related to Brexit and to our British friends over there. The British referendum is a big backlash for the European project from a historical perspective because for the first time in the history of the European Union a member state will leave the union. For the first time in the history of the EU, the whole project will move backwards. That’s one for history and symbolically that’s bad news.EU3

Politically speaking, that’s not good news either because the EU will lose a major partner—a key member state, one of the biggest member states, and a key player for security and foreign issues. For the current German government, Berlin will also lose an economic partner since the British are traditionally an economically liberal partner compared to the South of Europe.

Officially the negotiations between the EU and the UK haven’t started yet because London needs to trigger Article 50 of the European treatise. Since the referendum, they haven’t done it; they are not rushing into it. That is the proof that the British government wasn’t prepared for this outcome on June 23rd, that they had nothing in their drawers to present to the British public and to the rest of the European Union.

At the beginning of the month, though, Theresa May, who is the current Prime Minister in the UK, said that she will trigger this Article 50 by the end of March 2017. From that time, the UK will have 2 years to negotiate its departure from the EU and the kind of relationship it wants to have in the future with the Union. That’s why if you listen to the media, you will hear that the UK will leave the EU in March 2019. That’s the agenda we have.

The British are facing a dilemma these days, because on the one side they want to control the European immigration. It was the major topic of the campaign before the referendum. They also want to stop contributing to the EU budget. They think they pay too much and they could use the money better on their island. But on the other side, they want to keep access to the single market. Economically speaking, it makes complete sense.EU_Trade_to_and_from_Britain_2014

To give you a statistic, just keep in mind that 44 percent of British exports go to the European single market. These exports represent 12 percent of the British GDP. The other way around, in comparison, the EU exports to Britain make up 3 percent of EU’s GDP. 12 percent of the GDP on one side versus 3 percent of the GDP on the other side. Bottom line, if you summarize, immigration, EU budget, and single market. The British would like to keep the advantages of the system without burden sharing and financial obligations.

Chancellor Merkel, as you might have heard, just the day after the referendum in June, made it very clear that this kind of cherry-picking is completely out of the question. She said that very clearly at the European summit following the referendum. If you know Angela Merkel, if you follow what she says and what she does in the media, you will know that she’s a tough lady. She says what she does and she does what she says. It’s likely that she will keep this line and keep this position.

Of course, the UK has been an important partner, so there are people worrying in Europe that she might want to accommodate the British better or be particularly nice to their claims. I went to the headquarters of the CDU party in Berlin last week; our headquarters are just on the other side of the road so it’s easy and we know them very well. One of my main questions was: what do you think? Will she keep this position regarding Brexit and the fact that there is no cherry-picking? So, no access to the single market if the British wants to control the border regarding EU immigration. The answers I got were quite clear. She won’t change her mind. She will stay on this line and she will follow it. Think of the refugee crisis. She said at the beginning, in fall last year, we cannot avoid it. We can make it. Since then she didn’t change her mind. Even if it’s difficult. Even if it’s expensive—for now, she keeps her words.

Why is it her position that cherry-picking is not acceptable? First, it’s a question of principle. You can’t have the advantages of a system without burden sharing and financial contributions. Second, of course, Angela Merkel and other European leaders don’t want to open Pandora’s box. If we start accommodating the British too easily, it will trigger claims everywhere in the rest of the EU in different member states. Cherry-picking would be the priority everywhere. That’s why Angela Merkel and other European leaders will probably adopt a very firm position during the negotiations with the UK once it starts, once they trigger Article 50 to start officially talking about that.

In this context, what we call a “hard Brexit,” is likely when it comes to Brexit. Hard Brexit means no access to the single market because they want to control immigration, because Angela Merkel and other states won’t bend. The other option would be a “soft Brexit.” It means that the British would keep access to the single market, but have obligations coming with that. The British would have to respect what we call “the 4 European freedoms.” Freedom of movement, for goods, for services, for capital, and for workers. It means open borders for the Europeans. That would be one first requirement. The UK would also have to abide by most of EU regulations. Then they would have to keep contributing to the EU budget. It’s not for free to have access to the European market.

On top of that, they would have no say in European legislation. For those of you that know our system in detail, that’s what we call the Norwegian model. Norway, Lichtenstein, Iceland, they have these relationships. They are not part of the EU, but they have access to the single market and these are the conditions. Norway is paying to have access to the single market. That might be a solution for the UK, but since they want to control EU immigration, we say that a hard Brexit is more likely. No immigration, but also no access to the single market.

A hard Brexit means a complete exit then of the EU, but also comprehensive negotiation of all treaties the UK is part of as an EU member. Think about it. For example, the UK is member of the WTO as an EU member. That’s something that they will need to renegotiate once they leave the EU. They will need to have another trade agreement with the EU. Hard Brexit, no access to the single market, okay. But what comes next? Which kind of trade agreement will we have together? That will be a second thing the British will need to negotiate urgently.EU4

Think of the 12 percent GDP with the EU. The British will also need to negotiate trade agreements with all the countries worldwide the EU has a trade agreement with—roughly 50 countries in the world. Trade agreement with the U.S., for example, they will need a mini-agreement for trade agreement with Canada. If they are not part of the EU, they will also need an extra global trade agreement. You see the list of the things they will need to do is very long. It’s not only about leaving the EU. It’s about renegotiating your trade partnership, your trade agreements with almost everybody on the planet.

If we take the example of a new trade agreement with the EU, for example, it means that all the member states including the European parliament and in some cases regional parliaments must agree to the new deal. Everybody has to sign that they agree to give these new trade agreements with the UK, otherwise standard international loads will apply again for trade relationships between the UK and the EU. It means standard pricing and tariffs.

If you’re cynical, you can say the financial future of this huge country, the UK, is in the hands of a country like Malta. They are 400 people. In the hands of a country like Luxembourg, also a small country with half a million people. Also, they will of course need the backing of the biggest of the big member states like Germany, France, Spain, Italy, countries that have no interest in giving hope to their own nationalistic movements, but something is a great idea to start.

I think it will be a very hard negotiation for the UK. It’s not about bashing the British for leaving us, punishing the Brits for Brexit. The British will of course in the negotiation for a new trade agreement be very tough and they will defend their national interests. That’s normal. But on the other side the other member states will defend their national and continental interests as vigorous as London will. That’s just how business works.

It will be a tough discussion, I guess, because you can see with what I just presented that the cards, I think, are better on the European side than on the British side. In my opinion, the UK is in a critical position currently and that might explain why their local currency, the pound, is plunging towards the Euro currently, why they have difficulties with investments currently coming from abroad, and why growth forecasts for next year have been reduced.

To give you a little bit of continental perspective on all of this—what is the current strategy of the EU? Currently, as I said, there are no negotiations with the British. We are waiting for them to trigger Article 50, so officially there are no talks about that with London, but the 27 members are already thinking about what it means for the future of the European Union. For that, they started in September what we called “the Bratislava process,” because the last European council in September took place in Bratislava in Slovakia. The goal of this process is to the organization—the future of the European Union without the UK. Most of all this demonstrates EU’s capacity to act and to come forward to show unity with the message that it’s not because the UK is leaving that the European Union is falling apart. That’s the message the heads of state and government would like to communicate.

It’s a big challenge, though. It’s easy to say, but it’s harder to implement, of course. The idea is not to say, “Everything is fine. We’ll just ignore the fact that the big member state is leaving.” No. It’s a way of acknowledging that we have a crisis and we need to come forward and of course it’s hard with all the nationalistic trends that we have in different member states. The goal concretely is to prove or to show to the citizens that the EU is still the European project—EU is still a good idea and something that brings the citizens advantages in their everyday life, economically speaking, or in terms of security or culturally.

For now, the strategy is to focus on very concrete issues like national security, international security, counter-terrorism to prove that the citizen understands that we have the whole narrative of the EU. Peace, prosperity, freedom, but we also have these very relevant narratives currently of security. So, if we work together, we can improve the security and that’s what Europeans want to show now, to improve currently.

They also want to do more to support economic victims in the EU, people that are suffering because of global trends. For example, in unemployment. So, they want to help also these people to feel better, to avoid having these guys go to the extremist, euro-sceptic parties.

All these must be done without any treaty change. As soon as we have a new crisis in the EU, one first reaction from one capital or from someone is to say, “We need to change the EU treaties. If we change the treaties, everything will be better.” That’s not currently the discussion that we are having at the European level because the people who are in favor of more EU integration think that it’s not the right time to do it. That if we start opening these other Pandora’s box, that won’t work and indeed, even the opposite might come that we will end up with less integration. So, nobody’s talking about treaty changes for the time being. As a matter of fact, the treaties are offering different mechanisms we are not using currently. We can do more than what we are doing now based on the current European treaty. The idea is to try to use what we have instead of saying we need to change everything again.

For the German government, this Bratislava process is going in the right direction to show unity, to try to work concretely on different very important issues the citizens are currently confronted with. Especially for Chancellor Merkel, it’s very important to maintain EU’s unity with 27 member states. Maybe you are aware of this discussion that comes back regularly also, but maybe it might be better to have a core Europe. a smaller group of member states that could come forward and maybe the rest will follow or not. Currently that’s not the strategy in Berlin, in the Chancellery. The idea is more that the other 27 should stay together in a global world, in a multi-polar world. Angela Merkel thinks that the Germans and the Europeans in general are better off if they try to speak with one voice and if they try to articulate their different interests together.

Solidarity

My second challenge in this context is solidarity. That’s a challenge that is currently connected to the ongoing crisis in the Euro-zone, but also to the refugee crisis. I will focus on this refugee crisis for this presentation, but I would be happy also to talk about the Euro-zone later if you would like. The word solidarity in the middle of these discussions regarding the refugee crisis, because as you might know, thousands of people came to Europe since the beginning of last year in the wake of the Syrian war, conflict over land and over sea. Thousands of Syrians, but not only Syrians. We also have a lot of people from Iraq, coming from Afghanistan, and from Africa, especially from the horn of Africa. That’s a mix of refugees, people fleeing their home because of war, and economic migrants like many Africans who think that they could have a better future in Europe.

To face this challenge, last year in May 2015, the European commission came with a new resettlement mechanism to make sure all member states will participate and help to find solutions for all these waves of migrants because the problem in the EU is that’s very imbalanced. Most of the migrants are in Greece and in Italy—these are the points of entry when you try to enter the EU, the main points of entry. Then they are in Germany and in Sweden, countries that are particularly generous with their welfare systems, so they hope that they can start a better life quickly. The German chancellor’s very generous attitude toward the refugees has also helped a lot of people to decide to go to Germany.

But because of lack of solidarity and load sharing, the member states didn’t implement the resettlement. It was a good idea on the paper, but concretely it doesn’t work because for some reason. Different member states for different reasons don’t want to take in refugees or migrants in general. We are still facing a lot of tensions and dramas, especially in Greece and in Italy where the are still way too many people waiting for resettlement. Also in Sweden or for Germany, it’s quite a challenge to find schools and to find homes and apartments for everybody.

Nevertheless, I think it’s important also to say that the situation has improved since last fall. Especially because if the Europeans couldn’t agree on a resettlement program, at least they could agree on the fact that we need to protect EU’s external borders a little bit better. We are doing that, for example with the Frontex agency, and as a matter of fact, now it’s harder for the migrants to enter the European Union. One major factor in this Frontex is also the fact that the so-called Balkans route is now closed. It was one of the main land routes to access the European Union.

Over the Balkans, over Turkey, Greece, and then Macedonia, Serbia and Hungary, or Slovenia, Bulgaria. Bulgaria’s another situation, but if you went to Hungary, for example, then you’re free to go everywhere because Hungary is a member of the Shengen coastline area, so once you’re there, there is no border controls anymore, so you are free to go to Germany, to Austria, and to the other countries. The Hungarian government was very committed to change this and they changed the border in cooperation with Austria, for example. Now it’s very difficult to enter the EU this way and it makes it in general more difficult to access the Shengen area.

The situation is better in general from the perspective of the member states. Less people are coming, but this lack of solidarity and burden sharing is for sure something that is still in the room during European meetings and that’s still a source of tensions between the member states. It also has political consequences.

Communication

That brings me to my third challenge I call communication. I think that communication between the political elites and the population in general is a huge challenge currently in the European Union. That’s not something the media are talking a lot about. Every day it’s more about Brexit and the refugee crisis and terrorist attacks. But as a matter of fact, with all these different challenges, these different crises, populist, Euro-sceptic and nationalistic movements, nationalist movements are growing bigger in many member states. You’re aware of UKIP in Great Britain, the independence party that played a key role in the campaign for Brexit before the referendum.

If you think of France, we have the Front National over there. That’s an old party that was created in the ’80s but they are very successful currently and we will have general elections next spring and experts or polling institutions agree on the fact that they might become between 20 and 23 percent of the vote for the first round of the presidential elections. They might end up being the first party of France. Even if it’s very likely that they lose, then the run off, the second, it’s a source of concern that’s almost one quarter of the population is willing to support the Euro-sceptic and nationalist party.

Talking about elections, in the Netherlands, we will have general elections there in March. This tall blonde guy, Geert Wilders, is a very popular nationalist candidate so the election might be tough there, too. We have nationalist and often xenophobic parties that are very successful also in Austria, in Denmark, in Finland. Since 2013, in Germany, we also have the AfD, the alternative to Deutschland. The alternative for Germany. That’s a new party that was created before the last parliamentary election in September 2013. They set up the party a couple of months before. Their major topic at the beginning related to the Euro-zone crisis. It was all about leaving the Euro-zone and coming back to the mark, leaving the common currency. That’s what they focused a lot on in 2013, so Euro-sceptic, if you want.

Now it’s all about the refugees, the migrants, so it’s an anti-immigration party and they were very successful. They have been very successful at the regional level. All experts agree on the fact that they will probably enter the German parliament next year in September when it comes to the general election. Their leader is a woman named Frauke Petry. There was a long article about her in the New Yorker two weeks ago, I think. In my opinion, it’s a quite positive article about her that was written. Once again, a strong lady in Germany. It might be worth reading if you want to know more about her.

These parties in France, in the Netherlands, in Finland, in Germany, everywhere, are exploiting fears in the population. They are offering simple solutions that probably won’t work. But the problem is that for now that they are appealing to a lot of people who feel overwhelmed with all these crises and international issues and insecure in the global context. There are some parallels between what is happening in the U.S. and in the EU, I think, in this regard.

That’s why I wanted to make this point. I think we need good communication about facts, about policy, to make sure that people understand what is going on. The European level is for sure difficult to understand. That’s one of the problems of this project. We have the European council, which is completely different in its work from the council of the EU. How do you make sure that the people understand the differences between these instances? Everything has the same name.

What does it mean for the normal citizens that are not dealing everyday with the European council? It’s a major problem that we have in the EU. It’s complicated. We have different mechanisms. It’s difficult to understand why it’s democratic, so it’s easier to say it’s not democratic and that’s something that we need to do better in the future, to communicate about these projects and how it works and why it’s worth continuing this path.

Leadership

This giant is connected to my fourth challenge, leadership, as I said. You have a message, you need a strong leader to deliver the message and to communicate about that. That’s something that is also a huge challenge in the EU currently. We need people that are willing to stand up for the European project, to present why it’s in the interest of the Europeans to continue. As I said, peace, prosperity. That’s also projected a good new narrative because peace it sounds boring for young people. Yeah, of course peace, yeah. Everybody takes it for granted.

One of the new narratives, something we are promoting a lot in our foundation is to say, “You know, at least it gives us a little bit more leverage at the international level to try to speak with one voice.” Germany is a big country. But compared to China or to the U.S. or to India, well as the Chinese were in Germany. I’m not sure it will have the right understanding … I tried. They know where the Eiffel Tower is, but more than that they don’t know. They don’t make the difference. A lot of people don’t. That’s why it’s one of our narratives to say, “for international negotiations with big partners like China and the US, it’s better if we try to do it together. At least 28 countries, that’s something. A little bit more significant than just one country like Portugal and just France or just Germany.”

We need a strong leadership to do that because it makes sense for the European project in general. Just to give another current example—the refugee crisis—most of the experts agree on the fact that we can make it in the EU, that we can absorb these newcomers. In Germany, for example, we are talking about 1.2 million people that came since January 2015. These are the last official numbers that came out two weeks ago. It’s not about 1.5 million or 2 million like they mention are going up and up. We are talking about only 1.2 million people for 2015. 890,000 people and then it means much less for this year. Germany has a population of 82 million people. 82 million on one side. 1 million on the other side. That’s a little bit more than 1 percent on top. It should be doable.

Economically speaking in the country where the population is aging, it’s even smart to do it. Maybe now it’s difficult and it costs money, for sure. It’s a challenge regarding integration issues and German language and everything, but down the road, in 10 years, in 20 years, in 30 years, these people will contribute to German growth. Roughly one third of the refugees in Germany are kids. These young persons will learn German and integrate if they are part of the system. That is something that is doing, but of course, for now we have general election in Germany in September next year. It’s easier to say, “We can’t afford to have all these refugees. It’s too expensive. Let’s do something else.” They are quite successful with this message and that’s why we need strong leader that can explain why the picture is a little bit more complicated than that. And a little bit more positive.

International Responsibility

The last challenge is international responsibility. I wanted to mention that to open the discussion to the trans-Atlantic partnership. Be sure that the Europeans are aware of discussions taking place here in the U.S. about the fact, for example, that there are free riders in the NATO alliance. That they don’t contribute enough financially for the security that the NATO alliance gives them. No matter who will win the election in November here in the U.S., it’s also quite clear that the Europeans will need to do more in the future for their own security in the EU and in the neighboring countries. That could be also interesting for the trans-Atlantic partnership.

As a matter of fact, all bloody attacks that have taken place in Europe in the last month, especially in Belgium, in France, but also in Germany, are wake-up calls that we need to do more in terms of national security, international security, counter-terrorism, international affairs, and development aid. It’s also clear that it should be or it would be in the interest of all member states to coordinate their different policies a little bit better, their different actions better.

For the external part of the security policy, the European Union has a mechanism. In 2001, the EU started to develop what’s called the common security and defense policy. The idea is to work better together on security issues worldwide. This Italian lady, Federica Mogherini, is our high representative of the European Union for foreign affairs and security policy. She’s the person in charge of coordinating the action of the different member states. As you can imagine, it’s very difficult for 28 member states to agree on a topic like this.

When it comes to security, of course all European capitals want to make sure that’s exactly as they want to have it. They are wary of giving sovereignty to a supra-national level. Also, for good reason. It’s serious. If we have states, if we have national governments, that’s first of all to make sure that people are safe in the country. Working together at the European level on these issues is not something simple for member states and governments. When you think we are doing nothing and we are way too slow, think about what it means to cooperate with 27 other member states. Progresses are there, but very slow.

To mention Germany briefly, I think it’s fair to say that Germany is a cautious partner in the efforts to establish more common security and defense policy for obvious historical reasons. It’s still difficult to imagine that soldiers, German soldiers, can be active abroad and in the country. They are very reluctant in Germany to play an important role in this area. Once again, if you think that nothing is happening and that’s annoying, keep in mind that things are changing, but only with small, small steps.

From a German perspective, for example, the fact that president Gauck, in January 2015, started the debate on this issue is a big deal. President Gauck said that Germany needs to take more responsibility at the international level and to engage more in zones of conflict. For Germans, it was a big deal. There were a lot of talks about that. There have been a lot of talks about that since then.

In July, this year, the current defense minister, another strong lady, Ursula Von der Leyen, published a new white paper about security policy in Germany and the future of the Bundeswehr, the German army. This paper also reflects that the mentality is changing a little bit in Germany currently regarding this question of taking more responsibility at the international stage in zones of conflict or to help fix conflicts. The road is still ahead. There is still a lot of progress to make, but things are changing. Traditionally, France and the UK are more active at this level, but Germany is also getting there step-by-step. It’s important to mention it.


Celine Agathe CaroEU_Caro_Celine

Dr. Céline-Agathe Caro is a Senior Policy Analyst at the Washington office of the Konrad-Adenauer-Foundation (KAS), a German political foundation affiliated with the Christian Democratic Union (CDU). Dr. Caro is in charge of monitoring U.S. think tanks and universities with a special emphasis on U.S. foreign and transatlantic policy, U.S. positions on key international issues, and the American perceptions of current developments in the EU. Between 2010 and 2015, Dr. Caro was the Coordinator for European Policy in the headquarters of the KAS in Berlin. In addition, in the spring and fall of 2013, she was a visiting lecturer at the Université Sorbonne Nouvelle in Paris and at the Ecole Normale Supérieure (ENS) in Lyon, a French grande école. Dr. Caro attended the Université Sorbonne Nouvelle, where she obtained a master’s degree in German Studies as well as a joint Ph.D. in German and French Studies in cooperation with the University of Dresden.

University of Dresden.

BizXperts

How Far Will He Go?

Predictions for Changes in U.S. Immigration Under the Trump Presidency

With immigration serving as one of the centerpieces of Donald Trump’s campaign, anticipation is mounting as to what he will actually do whiile in office. During his campaign, Donald Trump proposed three core principles of immigration reform:

Secure the Southern Border. Trump favors building a border wall between the U.S. and Mexico, and asserts that Mexico should pay for it or be subject to adverse action from the U.S. government including impounding remittance payments sent to Mexican families from undocumented workers in the U.S. (requiring wire transfer customers to prove legal status in the U.S. to wire money abroad), increasing visa fees for Mexican CEOs and diplomats, increasing fees on all border crossing cards, increasing fees on NAFTA visa applications by Mexicans, and increasing fees at U.S. ports of entry.Trump Immigration Reform

Increase Enforcement of Immigration Laws. Trump has proposed increasing the number of ICE (Immigration & Customs Enforcement) officers, implementing nationwide usage of the E-Verify system to verify workers’ identity and work authorization, mandatory deportation of foreign nationals with criminal convictions, requiring detention rather than catch-and-release, defunding sanctuary cities (jurisdictions that have laws or practices in place to limit their assistance to federal immigration officials), increasing penalties for individuals who overstay their allowed time to be in the U.S., cooperating with local gang task forces, and ending birthright citizenship.

Focus on Helping American Workers. This prong of Trump’s plan includes long-term reform for legal immigration such as raising the prevailing wage for H-1B petitions, hiring unemployed U.S. workers before recruiting foreign workers, eliminating the J-1 visa (work and study exchange visitor) and instead offering similar job opportunities to inner city youth, and ending welfare abuse by requiring foreign nationals to certify the ability to pay for housing, health care, and other needs before entering the U.S.

While these three prongs made up the backbone of Trump’s formal immigration plan, he has also proposed other actions, including ending Obama’s executive actions which benefit the undocumented. This would include terminating Deferred Action for Childhood Arrivals (DACA), which has provided work authorization for approximately 700,000 recipients.

It is unknown whether the Trump administration will terminate existing grants of DACA as of a set date, or instead let DACA recipients continue working through the expiration of existing work authorization. Administrative programs like this have never been used for deportation in the past, so those who have already received or applied for DACA will not necessarily be targeted for deportation.

Trump has also proposed renegotiating NAFTA and possibly eliminating the TN work visa category for Mexicans and Canadians, suspending U.S. visa issuance to people where adequate screening cannot occur, ensuring foreign nationals are taken back by their own countries when deported from the U.S., fully implementing an entry and exit biometric system at all land/air/sea ports, ending job and benefits attractions for undocumented immigrants, vetting and ideological screening for admission to ensure individuals share America’s values, and reform legal immigration to historic norms.

The Center for Immigration Studies (CIS), an anti-immigration organization, helped Trump craft his immigration plan and earlier this year released a list of 79 actions the next president can take without necessarily needing legislative action to change the immigration laws. These actions focus on restricting and/or terminating certain benefits, reform of existing visas, and increasing enforcement, both in investigations/audits and prosecution/fines. The CIS also recommends collection of mandatory DNA samples from permanent resident applicants.

However, many of the CIS recommendations aren’t feasible without major repercussions to the current system and Trump has already started to somewhat soften his stance on immigration. In a 60 Minutes interview after the election, Trump conceded that the promised wall between the U.S. and Mexico may end up being a fence in some places. He also indicated his priority is to deport 2 to 3 million immigrants with dangerous or criminal records, rather than the 11 million undocumented immigrants targeted during the campaign. Over 2 million people have been deported under President Obama’s time in office.

Trump is also currently building his cabinet, which includes appointing a new Secretary of the Department of Homeland Security, the parent organization of U.S. Citizenship & Immigration Services, the benefit arm, and Immigration and Customs Enforcement, the enforcement arm. If Trump does direct widespread deportation and a southern border wall, the secretary will have to carry it out.

Based on Trump’s campaign promises, there will be directives issued to change the way the current immigration system is run, and those changes will likely be more restrictive and carry more penalties than current policy. It remains to be seen whether he will implement all of the actions enumerated in his pre-election plan, but we’ve already seen some relaxing on issues and small moves toward a political center.

Some of the proposed actions can be done rather quickly, such as reversing President Obama’s executive actions. But major changes will take longer, and some proposed changes, such as the creation of an ideological screening system for admission, will likely face constitutional challenges. At this point the extent of change is unknown and since Trump is more unpredictable than other presidents, much will remain unknown until his term begins.

Content contributed by Meredith W. Barnette, a partner in the Garfinkel Immigration Law Firm who represents employers and employees in a variety of industries including, but not limited to manufacturing, information technology, medicine and academia. She has extensive experience in the preparation of nonimmigrant visa petitions as well as extraordinary ability, outstanding researcher and multinational executive and manager immigrant petitions. She also supervises the firm’s global (non-U.S.) practice and the PERM process for lawful permanent residence.

For more information, contact her at 704-442-8080 or meredith.barnette@garfinkelimmigration.com or visit www.GarfinkelImmigration.com.

 

Opens Aren’t Everything

Vicky Ray Pace
Vicky Ray Pace

The Key to Subject Lines that Generate More Clicks and Leads

You wrote a great email…

…but WHAT IF NO ONE READS IT??

Just write a compelling subject line that gets more opens, right?

Well, yes—getting your prospect to open your email is obviously critical to your email marketing success. But the most successful subject lines don’t just entice your prospect to open your email—they pave the way for more clicks and leads.

Here’s how:

OPENS ALONE AREN’T ENOUGH

Okay, so you crafted a subject line that persuaded your prospect to open your email. Congratulations, you’ve taken the first step toward a good lead:

OPEN →

But the next step matters more.

Here’s what you want:

OPEN → READ → CLICK

Here’s what you want to avoid:

OPEN → DELETE

Both paths start with an open. But only the first one delivers you a lead for follow-up.

So how do you avoid the OPEN → DELETE trap?

GOOD OPENS VS. BAD OPENS

More eyeballs on your message is a good thing, right?

Most of the time, yes. The more prospects you can get to open your email, the larger the pool of potential clickers.

But not all opens are equal. Some are “bad opens”—low-value prospects who will never click your email or buy anything from you because they don’t have the need you’re trying to fill. They’re a surefire recipe for OPEN → DELETE.

Others are “good opens”—prospects who could actually benefit from what you’re offering, and might actually READ your email and CLICK the link. Those are the opens you want.

OFFER VALUE, INTEREST, AND RELEVANCEBW_Opens5_600

So how do you craft a subject line that paves the way for more good leads?

As you can see from our imaginary Relevance Meter, vague subject lines (even catchy ones) don’t do a very good job of speaking to any particular prospect, or getting the rights ones to open your email. Sure, you might get some opens, but who knows whether they’ll actually be interested in what’s inside.

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17.01.18 CLT.biz Insights

     

Re-interpreting Charlotte and Its Place in the World  |  Regionally and Globally

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2017.01.18

This Friday, January 20th at noon, President-elect Donald Trump will be sworn in as the 45th President of the United States. As evidenced by the discourse online and in the media, there is much anticipation/speculation about his agenda and priorities. While winning the electoral college but not the popular vote, Americans nevertheless voted for change. Significant global changes have already begun this past year, and with the President-elect’s notoriously unpredictable tweets, which he has assured us will continue, it is anybody’s guess what direction that change will take.

So, as we enter a new administration, we know changes are coming but are not confident what those changes will look like. In an effort to provide some guidance to your thinking about our future, we have gleaned several articles that may help you put this in perspective. First up is a discussion of the top global risks for 2017–areas that we ought to be paying particular attention to. No surprise, Trump is at the top of that list! Next, we look at how the post-WWII era has brought about a “new world order” that will change traditional alliances even now being questioned.

Adversity to change is the normal human reaction, but it is instructive to take a look at changes in global living conditions over our history–basically the question of whether everyone around the globe is better or worse off. There are some surprising (and refreshing) findings there! Then we take a look at Germany’s response to Brexit and how they view the future of the European project. Hopefully, these discussions will provide you with valuable insights for better decisions about your future.

Top 10 Global Risks of 2017

The World Enters Geopolitical Recession

In 2017, we enter a period of geopolitical recession.

So sayeth the Eurasia Group’s Top Risks 2017 report, identifying the most challenging political and geopolitical trends and stress points for global investors and market participants in 2017. The Eurasia Group first wrote about the coming of the “G-Zero” world—a world with no global leader—six years ago. Prescient. While it seemed unconventional at that time, it is becoming increasingly evident.

“The underlying shifts in the geopolitical environment have been clear,” according to the report, “a U.S. with less interest in assuming leadership responsibilities; U.S. allies, particularly in Europe, that are weaker and looking to hedge bets on U.S. intentions; and two frenemies, Russia and China, seeking to assert themselves as (limited) alternatives to the U.S.—Russia primarily on the security front in its extended backyard, and China primarily on the economic front regionally, and, increasingly, globally.

“These trends have accelerated with the populist revolt against ‘globalism’—first in the Middle East, then in Europe, and now in the U.S. Through 2016, you could see the G-Zero picking up speed on multiple fronts.

“But with the shock election of Donald Trump as president of the U.S, the G-Zero world is now fully upon us. The triumph of ‘America first’ as the primary driver of foreign policy in the world’s only superpower marks a break with decades of U.S. exceptionalism and belief in the indispensability of U.S. leadership, however flawed and uneven. With it ends a 70-year geopolitical era of Pax Americana, one in which globalization and Americanization were tightly linked, and American hegemony in security, trade, and promotion of values provided guardrails for the global economy.”

Ominously, the report indicates, “This year marks the most volatile political risk environment in the postwar period, at least as important to global markets as the economic recession of 2008.”

At the top of the group’s list is the risk presented by Independent America: “The triumph of ‘America first’ as the primary driver of foreign policy in the world’s only superpower marks a break with decades of U.S. exceptionalism and belief in the indispensability of U.S. leadership. Independent America renounces exceptionalism, the notion that the U.S. actively promotes democracy, civil rights, and rule of law.” Read more…


 

 

 


 

 
NEW Perspective on Alliances
Post-WWII New World Order BeginsFormer Secretary of Defense Chuck Hagel recently addressed the World Affairs Council of Charlotte. Secretary Hagel’s global insights and perspective on changing alliances suggest that a post-WWII new world order is emerging.“It is a different kind of dynamic today than what it was in 1946 for many reasons,” Hagel points out, describing the post-WWII building of coalitions of common interests—the United Nations, World Trade Organization, international development banks and institutions, IMF, World Bank, NATO, and dozens of other alliance-painted coalitions.He says the new world order is building partnerships that aren’t necessarily based on a NATO-type alliance, but on mutual security and not just straight military security: “The security of any nation rests upon the most fundamental of all securities and that’s economic security. A nation is only as powerful as its economy.“It’s going to be a balance. New partnerships, stronger enhanced relationships, alliances and trade. Trade is an opportunity. Trade does so much more than just exchange goods and commerce. It opens doors that allow nations to respond to each other, understand each other, communicate with each other, connect with each other, coordinate with each other in ways that nothing else can. You need all the other pieces of government as well—but those are fundamentals. Alliances and trade.” Read more…

 


 

 

 


 


Better or Worse Off?
A History of Global Living Conditions

In an incredibly important article, economist and media critic Max Roser, known for his research on global trends of living conditions and his visualizations of these trends, shows us the history of global living conditions—“the history of everyone.”Very few people think that the world is getting better. In a handful of charts, Roser instantly communicates the progress of the human population over the last two centuries in poverty, literacy, health, freedom, fertility and education. If you don’t read anything else this week, make sure you make to time to read this and consider its implications with respect to your current world view.As Roser indicates, “For our history to be a source of encouragement we have to know our history. The story that we tell ourselves about our history and our time matters. Because our hopes and efforts for building a better future are inextricably linked to our perception of the past, it is important to understand and communicate the global development up to now. A positive lookout on the efforts of ourselves and our fellow humans is a vital condition to the fruitfulness of our endeavors.” Read more…

 


 

 

 


 

EU Response to Brexit
Brexit and Populism: The Future of the “European Project” from a German Perspective

Dr. Celine-Agathe Caro, Senior Policy Analyst at the Konrad Adenauer Foundation, discusses the “European project” from a German perspective following the Brexit vote and the movement toward greater populism.

“The outcome of the British referendum has created increasing pressure on the EU to reform itself to better respond to the expectations of its citizens,” Caro explains. “At the same time, the European member states will only be able to overcome common challenges like the refugee crisis, terrorist threats, or Russia’s aggressive foreign policy if they act together.

“With its economic and political weight, Germany will play a key role in any further decisions regarding the EU’s future, but it needs partners to assume the leadership required to help navigate these crises.”  Read more…

 


 

 

 


 

 
Opens Aren’t Everything
Subject Lines That Generate More Clicks and Leads
You wrote a great email……but WHAT IF NO ONE READS IT??Just write a compelling subject line that gets more opens, right?Well, yes—getting your prospect to open your email is obviously critical to your email marketing success. But the most successful subject lines don’t just entice your prospect to open your email—they pave the way for more clicks and leads.Here’s how…  Read more…

 


 

 

 


EVENTS

   WACC Speaker Series Panel on the Middle East – January 18, 2017

Challenges and Opportunities in the Middle East for the Incoming Administration

Ambassador Thomas Pickering, Career Ambassador

Dr. Jim Walsh, Research Associate, MIT Security Studies Program

Moderated by Dr. Jonathan Berkey, Professor of International Studies, Davidson College

Ambassador Pickering, a Career Ambassador, and Dr. Jim Walsh, an expert on international security, will offer unique insight on the future of U.S.-Israel bilateral relations and foreign policy concerns between the U.S. and the Middle East as the new administration takes office. They will shed light on the issues relating to the Iran Nuclear Deal, Saudi Arabia, and the ongoing crisis in Syria.

Click here for registration information!
 

WACC Business Breakfast Series – February 2, 2017

Global Economic Outlook 2017

Dr. Jay Bryson, Managing Director and Global Economist, Wells Fargo

Dr. Bryson will provide analysis on financial markets and macroeconomic developments in the major economies of the world. Dr. Bryson will share an expert presentation on the outlook of the 2017 global economy. His presentation will not only address the impact of U.S. financial markets around the world, but trending economic strategies worldwide, challenges in addressing fiscal policy domestically and abroad, and growth in emerging markets.

Click here for registration information!
 

WACC CEO Seroes – February 22, 2017

A Conversation with Brian Moynihan

Bank of America CEO Brian Moynihan will serve as co-chairman of the January 2017 meeting of the World Economic Forum in Davos, Switzerland. As the leader of one of the world’s largest financial services firms, Moynihan will share his thoughts on the global economy and the work Bank of America does to drive responsible growth in the U.S. and around the world.

Click here for registration information!

 


 

 

 


 

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Sincerely,

John Paul Galles
Publisher
CLT.biz LLC

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