China-Europe: a curious conversation
Early April in Beijing and the sky is unusually clear and blue, cherry blossoms are in full bloom and the roads are eerily quiet. It’s “tomb sweeping” day and most of my Chinese friends and colleagues are on holiday, commemorating their ancestors.I’m in Beijing for meetings on EU-China relations. I need to get my thoughts together, write up my talking points for the upcoming seminars. But I can’t concentrate. And since all offices and shops are shut, it’s the perfect moment to visit the Great Wall.And so here I am, climbing up the long and winding road that takes me to the bus stop that takes me to the cable car that takes me — finally — to one small but majestic portion of the Great Wall.It’s breath-taking. All the pictures I’ve seen do not prepare me for the magnificent reality. Like everyone else I’ve looked up the impressive facts and figures. The Wall is old, long and high — and every stone, every inch has an interesting story to tell. But seeing is believing, and the Wall, with its majestic vistas and amazing construction, does not disappoint.I like the legends and the history. But I’m more focused on modern-day China and the enormous challenge of economic transformation that President Xi Jinping has embarked on. I’m also watching my fellow tourists who are slowly wheezing up the steep slope with me.We are a motley bunch. Chinese grandmas and grandpas with toddlers in tow, young lovers out on a date, foreign tourists from India, Indonesia and the Philippines and an attractive blonde woman on her own who stops every two minutes or so to take a selfie with the Wall as a backdrop. Who needs friends when you have a smartphone?The return journey to Beijing is complicated as the roads clog up with traffic and our driver struggles to find ingenious back roads to get us to the hotel. We get to see more cherry blossoms on the side roads, small carts full of fruit, strawberries for sale in tiny stalls. It’s like going back in time.Tomorrow Beijing will be back to normal, our driver warns. Beware of pollution and traffic jams, he says. Be prepared.I am. And not just for the congested roads and stinging eyes. I’m all geared up for some interesting discussions with Chinese academics and think tank representatives on relations between China and Europe.I’ve been tracking the ups and down of relations between Europe and China for many years and the EU-China “strategic partnership” continues to fascinate and intrigue me.Unlike the US, Europe doesn’t see China as a rival or competitor. Never having achieved the “super power” status, Europe isn’t too wary of the changed world order and the rise of China — and India, Asean and others.Europe isn’t an Asian power but an Asian partner, EU policymakers insist. There is much that the EU and China can do together on the bilateral level and on the global stage. Europe is a strong supporter of China’s new economic transformation agenda. Its mutual say Chinese officials who insist that Beijing wants a stronger and more integrated Europe.Both sides are cooperating on a range of issues, including China’s plans to build a “One Belt, One Road” connectivity network linking Europe and Asia. There is heady talk of an EU-China partnership on urbanisation, building 5G technology and warmer people-to-people relations.This is heartening — but its only part of the story. In the public discussions in Beijing, Chinese academics make no secret of their anger at Europe’s stance on two key issues: the EU’s reluctance to grant China “market economy status” and Europe’s failure to lift the arms embargo imposed on Beijing after the Tiananmen Square clampdown in 1989.There are accusations that Europe is too easily swayed by American pressure to take a tougher stance against China. And since it is not a “hard” security actor, some Chinese colleagues insist that the EU has no business making statements on rising tensions in the South China Seas.Europeans, for their part, complain about market access restrictions facing European exporters and investors, the slow pace of economic reform in China and worry about the country’s increased assertiveness on the regional stage. There are worries about China’s overcapacity in sectors such as steel which is making life difficult for Europe’s steelmakers.But while the talk sometimes gets tough, it’s clear that Europe and China need each other. Trade between the two sides is worth about 1.5 billion euros a day. An estimated three million jobs in Europe depend on relations with China. Beijing needs Europe’s intellectual expertise, technology and experience.Both sides face the challenge of ensuring growth and jobs, looking after their ageing population while also providing hope and employment for young people. There is talk of synergies between the EU 2020 agenda for growth and jobs and China’s plans for a “new normal” of lower but high-quality, sustainable and inclusive growth.As European and Chinese leaders prepare to meet in Beijing in July for their 18th summit, it is clear that EU-China relations have grown and matured over the years. Brussels and Beijing talk to each other on multiple topics and in multiple fora.There are disagreements and occasional bitterness and sparring. But the conversation is intense, much more so than the EU’s relations with other Asian nations. There is mutual curiosity. And the beginnings of a mutual understanding.In a world marked by inter-state rivalries, power struggles and competition between nations, can anyone really — and realistically — ask for more?
Trade discord should not affect EU-China relations
EVERYONE loves a good trade war or at least a trade skirmish. As a reporter, I’ve written endlessly about quarrels between nations over imports and exports of textiles, footwear, bicycles, steel and other equally mundane products.
The battles are over tariffs (too high or too low), market access, quotas, subsidies, non-tariff barriers and other obstacles and restrictions. And they usually involve the European Union — after all I am based in Brussels and the EU is the world’s largest trader — and a motley group of nations including the United States, Japan, China, India, Pakistan and so on.
With global trade in goods running at around 18 trillion or so dollars a year, it is hardly surprising that nations sometimes rub each other the wrong way. Trade is important because it creates jobs, growth and development.
But confrontations over steel, textile and other products have a nasty way of infecting not just the conversation on trade between states but also their overall “beyond trade” relationship.
This is what may happen in the ongoing debate in the EU over granting market economy status (MES) to China.
The story goes back to 2001 when China joined the World Trade Organisation (WTO) and promised to liberalise trade and undertake a swathe of economic reforms. The deal was that China’s partners would continue to treat it as a “non-market economy” until December 2016 after which according to Beijing’s interpretation it would get full MES.
So what’s so important? If China is granted MES, the EU (and other WTO members) will find it more difficult to slap anti-dumping fines or duties on Chinese products believed to be sold in Europe at unfairly low prices.
China believes it should be granted MES automatically under WTO rules. The EU is split on the issue. And the discussion is further complicated by the global oversupply of steel and the recent increase in Chinese steel exports to Europe.
The European Commission is under pressure from many of its member states to step up action to relieve an ailing steel industry suffering from tumbling prices and cheap imports from China and Russia.
The EU is the second largest producer of steel in the world after China, producing over 177 million tonnes a year and accounting for 11 per cent of global output. But 85,000 jobs in the steel sector have been lost since 2008 representing over 20 per cent of the workforce. The EU also has some of the world’s highest energy costs and green taxes.
Disgruntled steel workers have poured on to the streets of Brussels demanding that the EU stop any moves to grant MES to China because it would worsen their fate. Alarmist studies warn that between 1.7 million and 3.5 million jobs would be lost if China gets MES. Washington is also adamant that Brussels should not meet China’s demands for MES access.
While Brussels deliberates over the matter, Beijing insists that the EU must not renege on its WTO obligation. Tempers are beginning to fray, raising concerns that the carefully-crafted overall EU-China relationship is being impacted.
That would be a pity. Total trade between China and the EU comes to almost one billion euros a day. Anti-dumping actions and the granting of MES only account for a small percentage of such trade. And in any case, granting MES to China would not prevent the EU from pursuing anti-dumping cases against China.
But trade quarrels have a way of becoming politicised and spiralling out of control. Which is exactly why both the EU and China need to think carefully about keeping their relations on track while resolving the MES issue.
It’s no secret that China has an over capacity in the steel sector of 400 million tonnes. Much of the surplus is exported to Europe, with 53 per cent increase of steel imports from China last year.
This has led EU Trade Minister Cecilia Malmstrom to warn that “whatever happens to the market economy status, China needs to behave responsibly and to make sure that its overproduction of steel isn’t dumped into the global market”.
According to some reports, the EU may give MES to China on the condition that Beijing reduces the amount of steel it exports to Europe. Other options could include the negotiation of a “package deal” under which China would agree to restrict its exports of steel and speed up negotiations on a bilateral investment treaty in exchange for an EU decision to grant MES and to undertake an exploratory study on an EU-China free trade agreement, a long-standing Chinese demand.
China has already made some conciliatory moves. In a letter sent to the EU, China’s Trade Minister Gao Hucheng has said Beijing is committed to decrease the steel output “by between 100 and 150 million tonnes”.
But the conversation continues. A decision on MES will likely be made by the EU towards the end of 2016. In addition to the European Commission, the European Parliament and national governments also need to give their approval.
It’s going to be complicated. Both sides need to tackle the issue carefully and cautiously. The focus must be on compromise and cool-headed deliberation.
It would be unfortunate if the carefully-crafted and multifaceted EU-China relationship were to suffer because of discord over trade.
Europe - China forum 2015: Video
Trade and business have long been the backbone of EU-China relations. But as both Europe and China expand their regional and global presence, there are an increasing number of areas where EU-China cooperation and consultation have become a compelling necessity. Building on successful efforts to work together in anti-piracy operations in the Gulf of Aden, Beijing and Brussels are interested in further developing their security and defence cooperation.
China’s economic transformation continues to intrigue and mesmerise – and create immense business opportunities – for a closely-watching world. The coming decade promises to be even more transformative as China shifts the focus to sustainable, green, high-quality growth, the development of the service sector and speeds up efforts to build a digital economy. China's start-up scene is abuzz with new products, new ideas and new investments. With access to some 640 million Chinese netizens, including 530 million mobile internet users, China now boasts a new class of internet companies which are creating their own business models, becoming increasingly innovative and extending their outreach in rural as well as in urban areas.
[embed]https://vimeo.com/112476744[/embed]
In part 1, Friends of Europe Secretary General, Giles Merritt, moderates the discussion. The panel includes Shada Islam, Director of Policy at Friends of Europe; Chi Fulin, President of the China Institute for Reform and Development (CIRD); Linda Corugedo Steneberg, Principal Adviser at the European Commission Directorate General for Communications Networks, Content and Technology (DG CONNECT); Luigi Gambardella, President of China-EU; Jeongmin Seong, Senior Fellow at the McKinsey Global Institute (MGI) and co-author of the MGI report: “China’s digital transformation: The Internet’s impact on productivity and growth”;and Guo Wei, Chairman and Executive Director of Digital China
The disussion focusing on what are the key challenges facing “Digital China”? How do China’s ambitions fit in with Europe’s own efforts to create a more competitive “Digital Europe”? What is the significance of China’s “Internet Plus” plan and 5G cooperation between the EU and China? Does China’s service-led economic transformation create new opportunities for EU-China innovation cooperation? What new investment opportunities will be opening up in China’s services sector in areas such as transport, communications, finance and health care?
[embed]https://vimeo.com/112487949[/embed]
In part 2, the panel discuss strengthening connections: “One Belt, One Road”, trade and investments. President Xi Jinping’s plans for the Silk Road Economic Belt and a 21st Century Maritime Silk Road (termed together “One Belt, One Road”) aimed at building two economic corridors with important development implications for many nations. China has set aside 40 billion dollars for the Silk Road Fund and another 100 billion dollars are being invested in the Asian Infrastructure Investment Bank (AIIB).
How will Europe benefit from the construction of the Silk Road Economic Belt? What is the potential for synergies between the Chinese and European infrastructure and connectivity policies? Which sectors are likely to benefit most from such cooperation? What will be the role of the Asian Infrastructure Investment Bank in financing the “One Belt, One Road” initiative? Can the EU and China work together to build and improve the decision-making and governance mechanisms of the AIIB? How are negotiations proceeding on an EU-China Bilateral Investment Treaty? How will the Transatlantic Trade and Investment Partnership (TTIP) and the Trans-Pacific Partnership (TPP) impact on China? Could the successful negotiation of the investment accord pave the way for talks on an EU-China free trade agreement?
Introductory remarks are made by Lv Fengding, Vice President of the China Public Diplomacy Association (CPDA) and Former Chinese Ambassador to Sweden. Speakers in part to include Jo Leinen, Chair of the European Parliament Delegation for Relations with the People’s Republic of China; Mario Esteban, Senior Analyst at the Real Instituto Elcano; Yonghui Li, President of the International Relations Institute, Beijing Foreign Studies University; Haiyan Zhang, Director of NEOMA Confucius Institute for Business at the NEOMA Business School and Professor of Asia/China Business Strategy and Management at Antwerp Management School; André Loesekrug-Pietri, Founder & Managing Partner, A CAPITAL, Finance committee board member, Friends of Europe and Liqin He / General Manager of Bank of China (Luxembourg), S.A. Brussels Branch.
View from abroad: Xi’s visit to Britain: it’s also about the EU (Originally published 24/10/2015 at Dawn.com)
President Xi Jinping’s recent trip to the United States grabbed global headlines. By going to Britain, the Chinese leader has sent an equally important signal of his interests and determination in deepening and expanding China’s ties with Britain — but also with Europe.Beijing and Washington certainly need to talk to each other on a range of bilateral and international issues. And the Sino-American agreements reached on cybersecurity and climate change will help ease relations between the world’s two leading political and economic actors.But President Xi and Prime Minister Li Keqiang’s many visits to Brussels, Paris and Berlin this year — and now Xi’s high-profile trip to Britain — underline that China and Europe have also made a strategic choice to further develop and expand relations.China’s focus on Europe and on Britain is important for several reasons. Tackling challenges in a multipolar and multi-complex world requires more than cooperation between China and the US. It also demands working in tandem with the European Union and its 28 member states.Britain, given its global role and influence is, of course, especially important. President Xi’s visit, including his high-level meetings, underline to a watching world — and to the rest of Europe — that China still views Britain as a key international player.Significantly, Xi’s visit follows a trip to China by UK Chancellor George Osborne last month, during which he said Britain should be China’s “best partner in the West”.It’s not just Britain that wants closer ties with China, however. Germany remains a strong contender for the title of Beijing’s ‘best friend’ in Europe. And more generally while relations between China and individual EU states are important, ties with the EU are also improving, with the launch of the connectivity platform and the agreement to cooperate on developing 5G networks.Europe certainly has the markets China needs for its exports — and trade is still booming. European expertise and know-how is critically important to help meet China’s urbanisation, climate, innovation and other developmental challenges. Most recently, there is a focus on synergies between the ‘One Belt, One Road’ project and Europe’s own investment blueprint for transport, digital and technology networks. Britain and British companies have a key role to play in such cooperation, both on a bilateral level but also through the EU.True, the EU’s many recent crises have eroded much of its lustre. Last year has been especially difficult as EU leaders have grappled with continuing troubles in the Eurozone, struggled to tackle the influx of refugees fleeing war and conflict in Syria and Africa while also dealing with longer-term problems of low growth and high unemployment.For the next few months, the focus in London, Brussels and in other EU capitals will be on Britain and the country’s upcoming referendum on its membership of the EU.The EU is hoping that Britain will opt to stay in. And while no EU leader would say so in public, many are clearly hoping that President Xi gives a clear but subtle message to British citizens to vote in favour of EU membership. As such, it is especially significant that the Chinese president has met leaders of the opposition parties and parliamentary leaders.But that’s not the only reason that the EU kept a close watch on President Xi’s speeches and meetings in Britain. China-watchers in Brussels and elsewhere in the EU wanted to learn more about the state of the Chinese economy after the market volatility over the summer and what to expect as China’s development priorities in the upcoming 13th Five-Year Plan.Meanwhile, Xi’s speech in London provided further insight into China’s hopes for the internationalisation of the renminbi and also information on China’s priorities as it prepares to take over as chair of the G20.Certainly as in other EU capitals, the focus was on business, with Britain looking for Chinese investments in key projects such as a high speed rail line in the north of the country and a deal on Chinese investments in the Hinkley Point C nuclear plant. The UK is now China’s largest investment destination country in Europe.More investment opportunities for Chinese companies opened up in the railway, energy, aviation and telecommunications industries. Significantly, leading the way for other European countries, Britain joined the Chinese-led Asian Infrastructure Investment Bank (AIIB), despite opposition from Washington, earlier this year. Within the EU, Britain’s opinion is important as the EU and China negotiate their Bilateral Investment Treaty and will be even more important if and when the two sides start discussions on a Free Trade Agreement.There used to be a time not so long ago when China’s friendships with individual EU member states were viewed with suspicion by Brussels. This was especially the case as regards China’s ‘special relationship’ with Germany and the burgeoning ties between Beijing and the Central and Eastern European states. Fortunately, such unease is now mostly over, with many policymakers agreeing that stronger bilateral ties between China and the individual EU member states — including Britain — help to consolidate and deepen the wider EU-China relationship.
Shada Islam quoted in 'World positive about development of China-Britain ties following Xi's interview with Reuters' (Xinhua 19/10/2015)
This year marks the second 10-year comprehensive partnership for the two countries as well as the 40th anniversary of the establishment of the China-Britain ties. Xi stressed that the good China-Britain relationship bodes well for the good China-Europe ties."Recognition of China as a global and regional strategic player is growing very much in Europe," said Shada Islam, director of policy at Brussels-based think-tank Friends of Europe, in a recent interview.Islam upheld that the China-EU ties are based on a fundamental and indispensable necessity.China and the EU have scored fruitful progress in cooperation since the two sides forged ties 40 years ago, and their leaders have worked out a good road-map for the future, which is based on practical and pragmatic cooperation in areas that the two sides have mutual benefit, such as China's initiative of One Belt and One Road, the EU's Juncker investment plan, innovation, 5G telecommunication technology, education, energy links, urbanization, and smart cities, she said.The potential for China-EU cooperation is immense, not just in business and economic cooperation, but also on global stage, Islam said.There has been good cooperation so far over Iran, and both sides are hoping to get similar dialogue going on the Korean Peninsula and need to settle the havoc in Syria, she said.China is not only an indispensable player economically, but also strategically and politically, Islam added.For the full article, visit:http://news.xinhuanet.com/english/2015-10/20/c_134729483.htm
View from abroad: It’s official: the EU is in a mess (Originally published 12/09/2015 at Dawn.com)
The 28-member bloc is in disarray, beset by crises, member governments are squabbling, people are angry and disenchanted, leaders are mostly querulous and hesitant — and sometimes outrageously odious.This isn’t just the opinion of just any EU watcher or EU insider; it’s the point of view of Jean-Claude Juncker, the president of the European Commission, the EU’s executive body.“The European Union is not in a good state,” Juncker told the European Parliament in his first-ever “State of Europe” address this week. “There is not enough Europe in this Union. And there is not enough union in this Union.”Unusually for a politician, Juncker did not mince his words during his hour-long speech to the 700 plus EU parliamentarians. It was time, he said for honesty.And he was certainly honest, refreshingly so. In fact, frighteningly so. Like most people, I’ve become used to untruthful politicians, men and women to whom lying comes naturally, automatically.This is especially true for anyone in an official position who is asked to comment on his/her country’s political future, economic prospects or social challenges.Market turmoil, economy in danger? China’s leaders don’t seem to think so. At a conference in Dalian last week, Chinese Premier Li Keqiang was adamant that Chinese markets were stable and potential systemic financial risks have been forestalled. Recent troubles were just due to “rumour mongers” and other nasties.India, meanwhile, is talking up its shining economic future and readiness to overtake China despite evidence that the economy is in desperate need of reform and growth.Politicians in the US still brag that their country is a “superpower” despite evidence that no one believes it any more.And at a recent seminar in Brussels, a Pakistani diplomat waxed lyrical about the country’s respectful treatment of women and efforts to empower them while people looked on in disbelief.Of course everybody takes such blatant hyperbole with a huge chunk of salt. We roll our eyes, shut off the TV, shout obscenities at the liars.Which is why Juncker’s speech took many by surprise. Yes, there were some hecklers from the Far Right in the European assembly but mostly the intervention — long and rambling at times — prompted respect for its brutal assessment of 21st century Europe — and Juncker’s recipe for changing things.The Commission chief was especially honest in his references to Europe’s refugee crisis and governments’ response to it.At a time when many EU leaders continue to waiver on Europe’s responsibilities towards the hundreds of thousands of refugees seeking shelter in Europe, Juncker made clear that Europe had a moral obligation to help those fleeing war, terror and oppression.“We Europeans should remember that Europe is a continent where nearly everyone has at one time been a refugee. Our common history has been marked by millions of Europeans fleeing from religious or political persecution from war, dictatorship or oppression,” Juncker underlined.It is a theme that German Chancellor Angela Merkel has dwelt on repeatedly over the last few weeks. Germany’s welcome of refugees may be rooted in its history but it certainly puts other EU leaders — especially in Britain and in Central and Eastern European countries — to shame.And it looks likely that while many countries have more or less grudgingly accepted more newcomers on their territories, Juncker and Merkel’s calls for compulsory quotas for the resettlement of refugees in the 28 countries will continue to run into opposition from Britain, Hungary, the Czech Republic and others.Meanwhile, following a moment of unusual silence, Europe’s Far Right groups have once again found their poisonous voice. The Netherlands’ leading Muslim-hater Geert Wilder has warned that the refugees represent an “Islamic invasion” of Europe.In France, Wilder’s counterpart Marine Le Pen has decided that “99 per cent” of the refugees coming to Europe are men who are making the journey for economic reasons. She made the statement as television images should pictures of joyful children arriving in Germany.Juncker — like Merkel — has warned against distinguishing between Jews, Christians and Muslims, saying there is “no religion, no belief, no philosophy when it comes to refugees”.There were also tough words on Greece and the need for economic reform to bring back confidence in the economy and among Greeks.And he voiced support for a “fair deal for Britain” as the country prepares to hold its referendum on EU membership before the end of 2017.Finally, Juncker urged EU states to be united in trying to shore up Ukraine while also engaging with Russia.EU governments’ response to Euro troubles in Greece and the refugee crisis has indeed spotlighted a disunited, squabbling Europe. Yes, the EU is the world’s most successful — and inspirational — example of deep regional integration, with a single currency shared by 19 countries, and 26 nations agreeing to scrap their national borders through the “Schengen” agreement.But Greece almost brought about the unraveling of the Eurozone. And the mass cross-border movement of refugees is threatening the Schengen pact. On foreign and security policy, divisions among the 28 countries are ever-visible.While the world watches closely and with concern, the EU will have to tread carefully in the coming months to preserve its many achievements and strive for more.
View from abroad: Free trade and the new world order (Originally published 01/08/2015 at Dawn.com)
The signal for exporting nations is clear: if you count — or want to count — in the new world order, make sure you join a regional free trade agreement.That’s the message that many global trading nations will be taking home if — as expected — the US-led Trans-Pacific Partnership (TPP) free trade deal is finalised this weekend in Hawaii.Certainly, most nations still pay lip service to the multilateral trading system symbolised by the World Trade Organisation (WTO). And yes, there is also a focus on bilateral free trade agreements as well as plurilateral deals.But once, again, loudly and clearly: the trend towards mega-regionals is unstoppable and that’s where savvy nations are headed.As described by one newspaper, FTAs are “the new Great Game at the dawn of the 21st century”.The TPP is about trade and commercial interests, certainly. It’s about creating growth and jobs. But it is about more than that: it’s also about overarching strategy and geopolitics and just which nation will emerge as the primary power in the Asia-Pacific region.So let’s be clear: the TPP is US-led and China — along with India and Indonesia — is excluded. Still, the TPP would create a 12-nation grouping including five countries in the Americas (Canada, the US, Chile, Mexico and Peru); five in Asia (Brunei, Japan, Malaysia, Singapore and Vietnam); and New Zealand. South Korea, the Philippines and Taiwan have voiced interest in joining.Once signed, the TPP will form a free trade area with a population of 800 million, which accounts for 30 per cent of global trade turnover and nearly 40 per cent of global output.That is impressive. And clearly those outside the TPP are worried. And are not sitting still.First, China. Convinced that TPP is meant to “contain” China’s regional and global outreach, Beijing is working on several fronts to counter the US led initiative.Beijing is actively promoting the Regional Comprehensive Economic Partnership (RCEP) which would include members of the Association of Southeast Asian Nations (ASEAN) as well as India.China is also taking up the Free Trade Area of the Asia-Pacific (FTAAP) which would bring together members of the Asia Pacific Economic Cooperation (APEC) forum.Most significantly, China’s President Xi Jinping has come up with the ambitious ‘One Belt, One Road’ initiative to connect an array of Asian and European nations through transport, infrastructure and ICT links — and ultimately through unfettered trade.India’s actions may not be that visible but Delhi is creating stronger trade links with Southeast Asian nations while also seeking to negotiate a free trade agreement with the European Union. The EU-India negotiations are in an impasse at the moment — but both sides are trying to inject much-needed momentum into the talks.Which brings us to the EU. European trade officials did not, at first, take the TPP very seriously. As the deal looks set to be signed, attitudes appear to be changing.The EU is negotiating FTAs with a number of Asian nations — Japan, Vietnam and Malaysia — which are also members of TPP. A free trade deal with New Zealand and Australia has not been ruled out. And Singapore has already signed a free trade pact with the EU.And, significantly, for the EU, China is demanding exploratory talks on the pros and cons of an EU-China FTA. Brussels has so far filibustered by insisting that it first wants to conclude ongoing negotiations on an EU-China Bilateral Investment Treaty (BIT) before considering a free trade deal. But sooner rather than later, the EU will have to acquiesce.The EU has of course responded by trying to hammer out its own Transatlantic Trade and Investment Partnership (TTIP) with Washington. But those negotiations have run afoul of civil society groups which fear that TTIP will lower EU health, food and other standards.In Asia, however, if it is to compete with the US and China, the EU needs to start FTA negotiations with the 10-member Association of Southeast Asian Nations (ASEAN). Europe could be even more ambitious and seek a trade deal which covers ASEAN as well as New Zealand and Australia.More ambitious still would be a trade agreement which would cover all 51 countries which have signed up for ASEM, the Asia Europe partnership.Clearly, therefore, trade agreements these days are about commercial and economic interests but also geopolitical outcomes.US President Barack Obama has no doubts that “if we don’t write the rules for free trade around the world, guess what, China will … and they’ll write those rules in a way that gives Chinese workers and Chinese businesses the upper hand.”Make no mistake: the TPP and other FTAs of its kind are not easy to negotiate. The scope of such deals is enormous — covering questions ranging from copyright law to labour and immigration issues, as well as more standard trade talk of import tariffs and exceptions for sensitive commodities.It is crucial that TPP — and the transatlantic TTIP if it is ever completed — keep the doors open, with no discriminatory terms set for newcomers.Finally, while it is understandable that countries, frustrated by the long-stalled Doha round of global trade talks, have turned their attention to various initiatives to set up regional FTAs, they should try to maintain the WTO’s central role in global trade liberalisation.The TPP process itself is an admission that the consensus-driven WTO is too cumbersome a venue for so-called “high-standard” trade deals. But it would be counterproductive and harmful to give up on the WTO and its ability to create a “level playing field” for all trading nations, big or small, rich or poor.
Europeans eager to trade, do business with Iran (Originally published 18/07/2015 at Dawn.com)
Suddenly last week, after weeks of acrimony, arguments and threats, the dark clouds over the European Union appeared to clear slightly.
View from Abroad: Europe and the new world order (Originally published 11/07/2015 at dawn.com)
Entangled in the Greek debt crisis, few European policymakers had the time or interest this week to pay attention to the summit talks in the Russian city of Ufa between the leaders of Brazil, Russia, India, China and South Africa (BRICS).True, Europe has its hands full with Greece and the looming possibility of a Greek exit from the Eurozone. But the world doesn’t stop for Europe. And pretending that the BRICS and their self-confident leaders don’t matter — or matter little — is not an option.Discussions about the rapidly-transforming world, the role and influence of the BRICS and Europe’s relations with the emerging powers appear to be off the European Union agenda. For now, the focus is rightly on the existential threat posed by Grexit, the acrimony the Greek crisis has triggered across the EU and the worsening relationship among Eurozone leaders.Solving the Greek problem should of course take priority. But Europeans know that more is at stake. Italy’s Prime Minister Matteo Renzi has so far been most vocal in signalling his fears that the fury unleashed by the difficulties in Greece is damaging the very existence of the EU. But this thought is also in many other minds. If Europe can’t get its house in order, it really does run the risk of becoming irrelevant on an increasingly crowded global stage.For the moment, most Europeans seem to fall into two categories: those who fear the rapidly-changing world order and the increasingly long list of nations clamouring for a stronger role on the world stage and those who hope that if they look the other way, firm up their bonds with the United States, the world won’t change too much and the BRICS will gradually fade away.There are some, wiser, people in the middle: they may not be enthusiastic about the changes being made to the global status quo; but they also know that times are changing fast and that Europe needs to adapt, adjust and accommodate.It was on the advice of such people that despite strong pressure from the US not to do so, several EU countries decided to join the Asian Infrastructure Investment Bank (AIIB) set up by China.While many Europeans voice fear that China is “buying up” European assets, cooler heads are urging the EU to join forces with China’s ambitious ‘One Belt, One Road’ transport networks to boost domestic growth and jobs.Similar arguments for and against cooperating with emerging nations are likely to come to the fore as Europeans discuss membership of the New Development Bank (NDB) being set up by the BRICS to fund projects in member countries.Headquartered in Shanghai, the bank is expected to be operational by end of 2015. Once fully operational, it will become an alternative financing source for the BRICS nations and other emerging markets.Like the head of the AIIB, the first chief of the BRICS bank, India’s K. V. Kamath has been quoted as saying that the NDB sees other multilateral lending institutions such as the International Monetary Fund (IMF), World Bank and Asian Development Bank (ADB) as partners rather than rivals.And yet many continue to be suspicious. The US and Japan have not yet joined the AIIB and many EU policymakers continue to voice fears that the new banks will fall short of high Western standards of transparency and accountability.The BRICS have made clear that they don’t really care. The Old Guard is welcome to come on board, but the world is moving on and they won’t stop for the laggards.Russia, given its tense relations with the West following the crisis in Ukraine and the annexation of Crimea, has taken the toughest line in its dealing with Europe and America. As Foreign Minister Sergei Lavrov underlined in Ufa, emerging nations represent a “new polycentric system of international relations” and demonstrate new global centres of power.As he shook hands with his Chinese, Indian, South African and Brazilian counterparts, a beaming Russian President Vladimir Putin made clear that he was far from the sad and isolated man that the West wants him to be.And it’s not just about the BRICS. An array of newly-empowered nations and groupings are challenging Europe and America’s dominance of the post World War II order. Mexico, Indonesia, Korea, Turkey and Australia are part of MIKTA which claims to act as a bridge between old and new powers.New Zealand says it is the champion of “small nations” without whose support nothing can be achieved on the global stage. The Group of 20 remains relevant as a forum which brings together industrialised and emerging countries.And then there is also the Shanghai Cooperation Organisation (SCO) which EU and Nato policymakers also tend to shrug off as an impotent “paper tiger”.They shouldn’t. As India and Pakistan set out on the road to membership of the SCO, it is clear that while the security organisation does not see itself as a rival to Nato, it does intend to make its voice heard on global security challenges.Underlining just how significantly the world has changed, the five BRICS countries and the six SCO members which include China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan — joined by India, Pakistan, Afghanistan, Iran and Mongolia which have observer status — held a joint summit in Ufa.The Greek crisis was on the BRICS agenda of course. While Europe may not like the new world out there, emerging nations know that in an interconnected and interdependent world, what happens in Europe affects them. And that a failed Europe is in nobody’s interest.
View from Abroad: All aboard the Silk Road express (Originally published 27/06/2015 at dawn.com)
Europe has been slow in its response to China’s ‘One Belt, One Road’ initiative. This may be about to change. If both sides play their cards right, the EU-China Summit on June 29 could kick-start a much-needed conversation on synergies between China’s ambitious vision of an interconnected world and Europe’s mega investment plan to boost jobs and growth.The rewards of such cooperation could be enormous. Increased EU-China connectivity will increase bilateral trade between the two partners, create new business opportunities for European and Chinese enterprises, and boost employment, growth and development in Europe and China — and in countries along the routes.To start the dialogue, Europeans will have to take the long view. With the possibility of a Greek exit from the Eurozone getting ever closer, Britain’s plans for a referendum on its EU membership becoming more strident and growing discord over how to deal with the refugee crisis, European policymakers are thinking local, not global.It’s not just about domestic difficulties; Europe’s neighbourhood is also on fire.And yet, if Europe is to fulfil its ambitions of becoming a global actor while also meeting the domestic imperative of generating stronger economic growth and creating jobs, the EU policymakers must look beyond current emergencies to Europe’s medium-to-long-term needs.This is the logic behind the $315bn investment plan drawn up by European Commission President Jean Claude Juncker to modernise Europe’s infrastructure. With its focus on investments in energy, digital, transport and innovation, the blueprint has the potential to revitalise European economies over the next decade.But Europe can’t possibly do it alone. This is why it is important that EU governments, business leaders and academics start paying more attention to China’s headline-grabbing ‘One Belt, One Road’ initiative — and ways in which this could fit in with the EU’s own investment masterplan.After months of staying relatively silent on the subject, the EU policymakers are beginning to talk about — and explore — the advantages of synergies between the Juncker plan and the ‘One Belt, One Road’ initiative.Clearly, joining forces will unleash more resources. Implementing the EU investment plan will require the mobilisation of billions of euros of private and public funds as well as capital from the European Investment Bank (EIB). As European Commission Vice-President Jyrki Katainen said recently, the EU is hoping to attract Chinese investors to stump up some of the capital for the Juncker plan. The point has also been made by European Trade Commissioner Cecilia Malmstrom as well as by the European Commission president himself.The hope is clearly that the EU connectivity projects will be able to interest both the Silk Road Fund and the Asian Infrastructure Investment Bank (AIIB). The EU is particularly interested in meeting the long-term infrastructure needs in southern, eastern and central European countries and in the Balkan states. Greece as well as some members of the so-called ‘16+1’ group of central and eastern European countries have already indicated their strong interest in such Chinese investments. If all goes according to plan, the eastern part of Europe could connect seamlessly with the western projects on the new Silk Road.As the different ‘One Belt, One Road’ projects come on stream, business opportunities will open up for construction, transport and logistical companies — including European enterprises — across the route. EU-China trade is likely to get an important boost from the expected reduction in transport time and costs while EU exporters and investors will gain access to new growth markets in inland China and Central Asia. Such a development would give an added fillip to the current EU-China negotiations on a bilateral investment treaty.As it passes through often-volatile and less-developed countries and regions, the ‘One Belt, One Road’ has the potential to unleash economic potential across the way, bringing stability as well as growth to Europe — and China’s — neighbourhood. Such a conversation could be especially useful within the 53-member Asia Europe Meeting (ASEM) where connectivity is also climbing up the agenda.It’s not just about money, technology and goodwill, however. The EU insists that investment projects selected for financing under the ‘One Belt, One Road’ initiative must meet strict governance, environmental and technical standards, and result in sustainable development.Moving from dialogue to action will require time and effort — and willingness to compromise. China has taken its time in putting flesh on the bones of the project and in explaining its many facets to a closely-watching world. A more detailed dialogue is now necessary before the EU and China get down to identifying and working on the nuts and bolts of their cooperation. Given their different working methods and cultures, European and Chinese policymakers, bankers and business leaders won’t find it easy to work together.The devil will certainly be in the detail. Expectations will have to be managed on both sides. Selecting projects will be difficult and time-consuming. And there will be no quick results.But in a world desperate for money, jobs and modern infrastructure, China has once again shown its capacity to surprise and to think big. Europeans must come on board the Silk Road ‘express’, not just watch it from the sidelines.
Shada Islam quoted in 'Upcoming EU-China summit to take relationship to new level' (Xinhua 27/6/2015)
At the first official meeting between the European Union and China since the new EU leadership in December 2014, scheduled for later this month, director of policy at Friends of Europe, Shada Islam, said the summit would take the relationship to a new level.In a recent interview with Xinhua, Islam said there were possible synergies between the EU and China on building a digital economy and cooperation in EU-China connectivity, which would provide opportunities for both sides to work together on the "Belt and Road" transportation initiative.Moreover, she said the European side was "expecting China to confirm its participation in the EU's investment plan for creating jobs and growth.""These two developments will really inject more energy and more stability into the relationship, taking it to a new level," said Islam.She said both China and Europe have two key imperatives: jobs and growth. They need to create jobs for new entrants in the labor market and they need growth to ensure continued prosperity. In politics and security, they both need to build a more stable and prosperous world, and especially a more prosperous neighborhood. In trade, both want further trade liberalization, and know how important it is to keep away from protectionism."These are signs that the relationship is becoming more diverse and also more focused on practical questions where both sides can work together and learn from each other," she said.Noting that discord over trade questions would crop up from time to time, Islam said what was important was that these questions could be resolved in a "timely and non-confrontational" manner.Concerning global issues, Islam said the world needed to work together to ensure peace and that meant working with China."If there is a good chemistry, the upcoming summit will set the tone for EU-China relations for the next few years," she said.Chinese Premier Li Keqiang will attend the 17th China-EU leaders' meeting here. Apart from the meeting, Li will also visit Belgium and pay an official visit to France, including a visit to the headquarters of the Organization of Economic Cooperation and Development (OECD) in Paris.
View From Abroad: Getting connected — the secret to reviving Asia-Europe ties (Originally published 16/05/2015 at dawn.com)
To count in an increasingly complex and interdependent world, you have to be connected. This is true for individuals, institutions, companies, continents, regions and countries. The growth of social media sites is testimony to the increased connectivity of individuals and groups.No connections translate into lack of influence. It means no voice, no role and no chance to make an impact. What’s true for individuals is also true for countries. The nations which have clout in this rapidly-changing 21st century are those that are connected to the rest of the world.That’s why the European Union is busy breaking down internal barriers to trade, services and the movement of goods among its 28-member states. It is also the reason that the EU and the United States are negotiating an ambitious and trade-boosting Transatlantic Trade and Investment Partnership (TTIP) and it is also why the US is also hoping to conclude the Trans-Pacific Partnership (TTP) negotiations by the end of the year.Asians are embarked on a headline-grabbing connectivity agenda of their own. The Connectivity Masterplan drawn up by Asean (Association of South-East Asian Nations) is impressive in its scope and content. And of course China’s “One Belt, One Road” initiative is making waves worldwide.As these different initiatives illustrate, connectivity can and does take many forms. The first focus is clearly on transport — building roads, bridges, railways as well as maritime and air routes. There are also digital networks.Connectivity is also about building networks that connect people, schools and colleges, media, civil society organisations, businesses, policymakers and institutions.Being connected is good for the economy by helping to boost trade and investments and creating jobs. It is good for creativity and innovation. It is good for fostering mutual understanding. And, of course, it is very good for peace and stability.And that’s why is encouraging to see the attention now being paid to Asia-Europe connectivity. The topic is high on the agenda of Asem (Asia Europe Meetings) and is being widely recognised as a vital element in the efforts to revive Asem for its third decade.Certainly, compared to 1996 when Asem was first launched in Bangkok in 1996 or even 10 years ago, there is now a stronger EU-Asian conversation on trade, business, security and culture. As Asem celebrates its 20th anniversary in Mongolia next year, connectivity is expected to be an important driver for further Asia-Europe cooperation.Asia-Europe economic connectivity has grown. With total Asia-Europe trade in 2012 estimated at 1.37 trillion euros, Asia has become the EU’s main trading partner, accounting for a third of total trade and surpassing the North American Free Trade Agreement (Nafta). More than a quarter of European outward investments head for Asia while Asia’s emerging global players are seeking out business deals in Europe.The increased connectivity is reflected in the mutual Asia-Europe quest to negotiate Free Trade Agreements and investment accords. The EU and China are currently negotiating a bilateral investment agreement. The FTAs concluded by the EU with South Korea and Singapore and similar deals under negotiation with Japan, India and individual Asean countries are important in consolidating EU-Asia relations.Beyond trade and economics, Asia and Europe are linked through an array of cooperation accords. Discussions on climate change, pandemics, illegal immigration, maritime security, urbanisation and green growth, among others, are frequent between multiple government ministries and agencies in both regions, reflecting a growing recognition that 21st century challenges can only be tackled through improved global governance and, failing that, through “patchwork governance” involving cross-border and cross-regional alliances.Importantly, connectivity is the new Asem buzzword. The significance of Asia-Europe connectivity — including digital connectivity — was underscored by the Asem summit in Milan last year, with leaders underlining the contribution increased ties could make to economic prosperity and sustainable development and to promoting free and seamless movement of people, trade, investment, energy, information, knowledge and ideas and greater institutional linkages.The summit urged the establishment of an integrated, sustainable, secure, efficient and convenient air, maritime and land transportation system, including intermodal solutions, in and between Asia and Europe. It also noted the usefulness of an exchange of best practices and experiences on areas of common interest, relating for example to the governance of the EU Single Market and the implementation of the Master Plan on Asean Connectivity.A meeting of Asem summit in Milan transport ministers held in Riga discussed a common vision for the development of transport networks between Asia and Europe and emphasised the significance of connectivity between the two regions for achieving economic prosperity and sustainable development. The importance of railway links was especially underlined.Certainly, much of the talk on Asia-Europe connectivity is centred on Chinese President Xi Jinping’s plans for the Silk Road Economic Belt and a 21st century maritime Silk Road (termed together “One Belt, One Road”) aimed at building two economic corridors with important development implications for many nations, creates new opportunities for further China-EU cooperation in areas such as infrastructure, trade and investment as well as energy and resources.The initiative raises many questions: how will Europe benefit from the construction of the Silk Road Economic Belt? What is the potential for synergies between the Chinese and European infrastructure and connectivity policies? Which sectors are likely to benefit most from such cooperation? What will be the role of the Asian Infrastructure Investment Bank in financing the “One Belt, One Road” initiative? What is the role of youth and women in the drive to connect Asia and Europe?Is it only about infrastructure or can Asem also encourage institutional and people-to-people connectivity? The answer was given at a meeting of Asem education ministers — also in Riga — which highlighted the importance Asia-Europe cooperation in areas like mobility of students, teachers, researchers, ideas and knowledge. Finally, while increased connectivity would offer opportunities for business and trade, the darker security implications linked to the cross-border movement of arms, drugs and terrorists also need to be addressed.
Bandung and a changing world order
For proof that the world is a much-changed place, look no further than last week’s impressive Asia-Africa conference in Bandung, Indonesia, marking the 60th anniversary of the original Cold War era summit in the same city led by Indonesia’s then leader-Sukarno.The talk in Bandung six decades ago among representatives from twenty-nine Asian and African governments of Asian and African nations was of the role of the “Third World” in the Cold War, economic development, and decolonisation.The meeting’s final resolution laid the foundation for the nonaligned movement during the Cold War. The heady talk among leaders was on the potential for collaboration among Asian and African nations and their determination to reduce their reliance on Europe and North America.Fast forward to Bandung last week and replace references to the “Third World” with the more modern “emerging nations” and it’s clear that Asia and Africa have changed dramatically since 1955.The two regions – as well as Latin America – are simultaneously driving the transformation of the global landscape and thriving because of it.The mood may be morose in Washington and EU capitals – but Asia, Africa and Latin America are on a roll. Trade is booming – including between the three regions, investments are pouring in and an emerging middle class is changing social, political and economic lifestyles.Interestingly – and worth reflecting on – is the fact that much of the transformation is the result of China’s rise and its gradual but sustained emergence as an important regional and global actor.The West, especially the United States, is finding it difficult to adjust and accommodate the deep-seated paradigm shift in power taking place around it. That’s not difficult to understand given that the US as the current dominant global power has the most to lose from the shift of power to the East.But Europe also needs to come to terms with a changed world. Here in Brussels as the European Union prepares to hammer out a new European Security Strategy to replace the one written 12 years ago it needs to pay special attention to the myriad ways in which the world is becoming different, almost daily. And it needs to forge a new outlook on China and Asia.The world viewed from Europe is indeed violent, messy and dangerous. The EU faces a host of domestic problems – Greece, unemployment, and of course the deteriorating refugee crisis. Europe is surrounded as some say by a “ring of fire”: in the east by Russia and in the south, by a turbulent Arab world.But the EU should be wary of projecting its own morosity on other regions – and indeed of basing its assumptions of Asia’s future on Europe’s tragic, war-racked past.While Europe and its neighbours are in turmoil, the rest of the world is doing better than expected – and certainly better than 60 years ago.The economies of most of the African and Asian countries gathered in Bandung are booming. Steps are being taken to combat poverty, there were successful elections in Afghanistan and Indonesia – and changes are underway in Myanmar and Vietnam next year.Emerging countries are setting their own agenda, defining their interests, building partnerships and rallying together to forge a joint vision for the future.This time the talk is also of breaking the chains of colonialism – but of a different kind; today’s African and Asian governments want an end to the economic domination of the West and of Western insitutions.As the Bandung meeting pointed out last week, the focus is on establishing a new global order that is open to emerging economic powers and leaves the "obsolete ideas" of Bretton Woods institutions in the past.President Xi Jinping of China told the conference that “a new type of international relations” was needed to encourage cooperation between Asian and African nations.Indonesian President Joko “Jokowi” Widodo, the conference host, said those who still insisted that global economic problems could only be solved through the World Bank, International Monetary Fund and Asian Development Bank were clinging to a long-gone past.“There needs to be change,” he said. "It's imperative that we build a new international economic order that is open to new emerging economic powers.”In 1955, the 29 countries which met in Bandung accounted for less than a quarter of global economic output at that time; today they contribute to more than half of the world economy.Many of those countries, such as China, India and Indonesia, are now themselves at top tables like the Group of 20 and wield significant economic power.Indonesia’s Jokowi said the group was meeting again in a changed world but still needed to stand together against the domination of an unspecified “certain group of countries” to avoid unfairness and global imbalances.The creation of the China-backed Asian Infrastructure Investment Bank (AIIB) is one way in which emerging nations are challenging the Western-dominated economic stage. While the US has decided to stay out of the AIIB, many European countries have offered to be founding members of the new bank.Asia’s future will depend to a large extent on the economic future of China. And on relations between China and Japan.Tensions between Asia’s two biggest economies have flared in recent years due to feuds over wartime history as well as territorial rows and regional rivalry.Memories of Japan’s past military aggression run deep in China, and Beijing has repeatedly urged Japan to face up to history.In an encouraging move, Japanese Prime Minister Shinzo Abe and President Xi did meet in Bandung, prompting hopes of a cautious rapprochement between the two economic giants.Peace and prosperity in Asia hinge on cordial relations, even partnerships between the region’s leading powers. And who knows if China and Japan can sidestep their historical enmities, perhaps India and Pakistan could – one day – do the same?
View from Abroad: Life in Vietnam, Asia’s reborn tiger economy (Originally published 28/03/2015 at dawn.com)
The death last week of Singapore’s much acclaimed statesman Lee Kuan Yew has spotlighted world attention on tiny Singapore’s transformation from a tropical backwater to an affluent global city in just one generation. Certainly, Singapore stands tall in Asia as a formidable city state which proves that sometimes in geopolitics size does not matter.
But in South-East Asia, it’s not just Singapore that impresses.Travelling in Vietnam this week, it’s striking just how quickly this once war-devastated country has dusted off a bloody past, in favour of a new life and persona as one of this region’s most exciting economies.Ho Chi Minh City, formerly Saigon, buzzes with excitement as cars, motorcycles, buses weave their noisy way around surprisingly green urban centres — and some very narrow streets. Cafes, restaurants and bars are heaving with people. New businesses keep popping up, old ones are still thriving.A Belgian-Vietnamese friend tells me the country’s growing middle class has an appetite for foreign goods, the more luxurious, the better. Certainly, more and more European and Japanese cars on the roads are big and shiny, competing for space — and winning — against the ubiquitous scooters and motorbikes. Everyone has his/her palm pressed firmly on the car horn.This is China as it was twenty years ago, friends tell me. Noisy, crowded, the old and ramshackle giving way to the new and glittering. The skyscrapers going up, the five-star hotels, the glamorous department stores boasting French luxury brands are a foretaste of the big metropolis, a mini Shanghai, that Ho Chi Minh City is poised to become. For the moment, it is still possible to find serene hideaways where time appears to have stood still. But not for long.And certainly not at the university I visit on the outskirts of Ho Chi Minh City where students rush from class to class, stopping occasionally to sit down and play the pianos which are strewn around the campus.At the lecture I give on Europe, Asia and Vietnam, the students are serious and attentive — but impassive. I wonder in despair if I am getting through. But then the questions come fast and furious. I am grilled mercilessly on the impact of globalisation, my view of Vietnam, why Vietnam and the EU are signing a free trade agreement, how do you distinguish between good and bad journalists — and so on.Globalisation means losing our identity, they tell me, oblivious to the fact that in their skinny jeans and sneakers, carrying backpacks and peering into their smartphones, they have bought into globalisation with a vengeance. I point it out, they stare at me incredulously. This is not globalisation, this is life, they argue back. Exactly.Later as we take pictures and exchange addresses, I tell them they are lucky to be living in rising Asia, with jobs, hope — and pollution, one says interrupting me. Yes, pollution, urbanisation and overcrowding. But also jobs and growth — the two things we need in Europe. Puzzlement shows in their eyes.Their self-confidence is justified. Perched along one of the world’s most crucial shipping routes, and with a young and growing population, Vietnam is — once again — being tipped for economic lift-off, after years of disappointment.The news reports I read underline that money pouring into the South-East Asian economy from the likes of manufacturers Samsung Electronics Company and Intel Corporation is giving Vietnam a second run at becoming Asia’s next tiger economy.According to PricewaterhouseCoopers LLP, the country has the potential to become one of the world’s fastest-growing economies over the period to 2050. Not only is the South-East Asian nation gaining ground as a cheaper manufacturing alternative to neighbouring China, Vietnam is also a politically palatable destination for Japanese firms boosting investment in the region amid recurring Sino-Japan spats.“Vietnam is really the big winner from China losing its competitiveness because of rising wages” and a strong currency, say specialists. As labour costs rise in China, foreign investors are knocking on Vietnam’s doors.The list of those wishing to cash in is long, led by China and Japan but also including Singapore, Taiwan, the United States and the European Union.Vietnam and the US are working hard to strengthen ties, including in the security and defence sector, with Hanoi now demanding the full lifting of the arms embargo that was eased last year. Vietnam will be taking part in the Trans-Pacific Partnership trade pact, led by the US.Relations with Beijing are fraught over rival territorial claims in the South China Sea although tensions have eased in recent months and the Chinese and Vietnamese communist parties retain close ties.The EU, meanwhile is hoping to clinch negotiations on a bilateral, free trade agreement with Vietnam before too long.European diplomats tell me the country is an exciting destination for European exporters and investors.At more meetings — this time in Hanoi — the discussion turns to journalism, open societies and freedom of expression. Vietnam’s Communist Party keeps a tight lid on the media, including bloggers. The EU and the US are pressing for change and have an ongoing human rights dialogue with Hanoi. But it’s a question of one step forward, two steps back.As in China, the government appears to have struck a defining big bargain with its citizens: we’ll provide growth and progress in exchange for your loyalty. The trade-off appears to be working. So far.I see the bright lights, the fancy restaurants and the big cars. There is also still poverty and underdevelopment. I am enchanted by the friendliness of the people, young and old. Traditional and modern mix easily in the streets. There is no doubt: Vietnam is on the move. And it’s going to keep going up
View from abroad : Transatlantic alliance: fact and fiction (Originally published 21/03/2015 at dawn.com)
So here’s the fiction: America and Europe stand united against the “rest of the world”. The transatlantic alliance is strong, solid and a bulwark against the machinations of China and the world’s other emerging nations.Washington and Brussels are like-minded, like-thinking entities which see eye to eye on almost everything. Together, they can still rule the world.Perhaps in the 20th century — but no longer. Here are the facts: the world has changed from unipolar to multi-polar or even “no-polar”. For all its military might, the US no longer rules the world. For proof, look no further than the way Israeli Prime Minister Benyamin Netanyahu is obstructing progress on US-Iran nuclear talks.And here are some more facts: America and the EU are divided over the death penalty, Guantanamo Bay, illegal renditions, the use of torture and the revelations of spying by the National Security Agency as revealed by Edward Snowden.They disagree over how to deal with Russia and Ukraine. And while America sees China mainly as a strategic competitor, Europe is happy to work with Beijing on tackling many 21st century challenges.Certainly, there are some points of convergence. Significantly, negotiations are underway on a Transatlantic Trade and Investment Partnership (TTIP), seen by many as the last attempt by a declining West to impose its economic rule-making model on a watching world.But even as they seek agreement on TTIP, many European states are posing the BIGGEST challenge to the US by deciding to join the Chinese-led, Chinese-inspired $50 billion Asia Infrastructure Investment Bank (AIIB) which Washington continues to firmly oppose.So far, EU members Britain, France, Germany and Italy have said they want to be founding members of the AIIB. But other Europeans will undoubtedly join their ranks.The story is not just about Washington vs Beijing; it’s about a changing world order, the shift of power from west to east, the rise of China and its challenge to years of US domination.It’s about the need to change and reform post-World War II multilateral institutions, including the World Bank and the International Monetary Fund.And it’s about a world desperately in need of cash, especially for badly-needed infrastructure projects — and a rising China which has more money than it can handle.To be fair, US Secretary of Treasury Jack Lew has said that the US was not opposed to the creation of the AIIB. “There are obviously vast needs in Asia and many parts of the world for infrastructure investment,” he told a Congressional hearing on the status of the international financial system.The US concern, he said, has always been whether such an international investment bank will adhere to the high standards such as in protecting workers’ rights, the environment and dealing properly with corruption issues.The bank, proposed by President Xi Jinping in 2013 during a visit to Indonesia, is expected to be launched formally by the end of this year.All Asian countries can apply to become founding members until March 31.Chinese experts say they are looking less for European financial support and more for Europe’s management experience to share with the AIIB.France, Germany and Italy announced they would join the Bank after Britain said it was doing so last week. Australia, a key US ally in the Asia-Pacific region which had come under pressure from Washington to stay out of the new bank, has also said that it will now rethink that position. South Korea is also expected to join.Other European countries are expected to follow the bigger EU nations’ lead. And why not? Like most Asian countries, Europeans are looking to invest in new infrastructure to raise levels of connectivity across the continent.Policymakers are hoping that China will be an important contributor to the 300 billion dollar infrastructure fund announced earlier this year by European Commission President Jean-Claude Juncker.Britain hopes to establish itself as the number one destination for Chinese investment. China is also a strong investor in Germany and in France.Analysts point out that the US has misplayed its hands and that the best way to ensure that China doesn’t dominate the AIIB is to fill it with other powers. This, they argue would result in much stricter governance rules and safeguards.The AIIB is not the only regional project China has proposed that Washington will have to grapple with. Beijing’s “one belt, one road” Silk Road projects are moving rapidly from theoretical to actual, much to the dismay of America and some European states.The Asian Development Bank has estimated Asia’s infrastructure needs at $750 billion a year, far beyond the ADB’s capacity. With connectivity the buzzword across the region, the new Bank is expected to be very busy pumping money into major infrastructure projects.China has also been quick to respond to huge and acute infrastructure needs in the developing world, in contrast with the lengthy project processes required by other lenders.In response to the Chinese initiatives, the Japanese government has also said it wants to focus on infrastructure projects in developing countries.World leaders at the G20 Summit in Brisbane in 2014 recognised infrastructure demand in the developing world as a new source of global growth in the aftermath of the global financial crisis.The transatlantic trade deal may see the light of the day by end-2015 — even though negotiations are tough and public resistance to the pact is high. But even if they do clinch an agreement on trade, America and Europe will not always share a similar vision of life in a rapidly-changing 21st century.
View from Abroad: New development paradigm (Originally published 08/03/2015 at dawn.com)
It used to be so simple: the world was divided into rich and poor countries. The rich provided aid and trade concessions to the poor ones. It was called Official Development Assistance (ODA) and often seen as a panacea for all problems facing “third world” countries. Rich nations promised to spend 0.7 per cent of their GDP as ODA. Developing nations were grateful for the help. It was neat and tidy. Orderly even.Only of course it wasn’t. It was messy, patronising and based on the notion of charity. Nothing wrong with charity — only that it begins at home. And as the going got tougher at home, growth rates dipped and jobs became scarcer, richer countries were less and less anxious to help the poorer ones.And then the world turned on its head as poor countries — or at least some of them — stopped being really poor. China, India, South Africa, Brazil began to rise, becoming more self confident and assertive by the day. They asked for stronger representation in international financial institutions, set up their own bank, started investing in and assisting their less well-off friends.In 2000 amid all the change and shift in power from North to South, the talk turned to achieving the Millennium Development Goals (MDGs) and eradicating poverty. However, it was still about the rich helping the poor, putting conditions on their aid, making sure that there was no wastage, no human rights abuses.Fast forward to 2015 and the world is a dramatically different place. The talk is of a post-2015 agenda which is about sustainable development in both the North and the South. There is a focus on governance, gender balance, and moving “beyond ODA”.There is agreement that the 17 Sustainable Development Goals (SDGs) will not be met by ODA alone. Their achievement will require the mobilisation of the private sector, a better use of remittances and philanthropy and more creative thinking about “blending” private and public funds.And above all there will be a focus on the mobilisation of additional resources by developing countries through domestic resource mobilisation, including through more thorough and efficient national tax collection.Yes, finally after years of beating around the bush, global attention is turning to tackling tax evasion, by companies and individuals. The question will be high up on the agenda of the third International Conference on Financing for Development which will be held in Addis Ababa, Ethiopia, from July 13 to 16, 2015.The reason for the focus on domestic revenue mobilisation in developing countries is clearly linked to the fact that ODA is on its way down and traditional donors are getting tougher.There is good talk about the potential benefits of taxation for state-building and the long-term independence from foreign assistance. It is also of course a question of governance.Revenue from taxation and customs provides governments with the funds needed to invest in development, relieve poverty and deliver public services directed towards the physical and social infrastructure required to enhance long-term growth.Strengthening domestic resource mobilisation is not just a question of raising revenues: it is also about designing a revenue system that promotes inclusiveness, encourages good governance, improves accountability of governments to their citizens, and cultivates social justice.Non-governmental agencies such as Christian Aid have estimated that developing countries, including lower- and middle-income countries, could be losing out on as much as $160bn a year in potential tax revenue because companies are dodging taxes. This was one and a half times the combined overseas aid budget of the whole rich world at the time, and there’s no reason to think the problem has got smaller since then.In 2011, the United Nations Economic Commission for Africa established a high-level panel to write a report on illicit financial flows (IFFs) in Africa and to come up with ways to combat them.The panel, presided by the former South African head of state Thabo Mbeki, warned that the cost of IFFs to the continent was around $50 billion each year.The report states: “Some have estimated that Africa’s capital stock would have expanded by more than 60 per cent if funds leaving Africa illicitly had remained on the continent, while GDP per capita would be up to 15 per cent more.”Worse still, this sum is even greater than the total official development assistance received by African countries, which was $46.1 billion in 2012.At a recent conference in Brussels, participants underlined that there was no dearth of money in the world and that in fact Africa was a rich continent. The money was just not in Africa, but hidden and hoarded in tax havens, most of them in rich countries.
View From Abroad: European lessons for Asian security (Originally published 14/02/2015 at dawn.com)
The just-negotiated ceasefire to stem the conflict in eastern Ukraine may or may not last. But the hard work put in by German Chancellor Angela Merkel and French leader Francois Hollande as they negotiated for over 18 hours with Ukrainian President Petro Poroshenko and Russia’s Vladimir Putin points to the still-potent and constructive security role that European states can play in their neighbourhood.It also underlines that — when it comes to the crunch — it’s Germany, France, and sometimes Britain, rather than the European Union which can do the hard labour involved in defusing tensions and securing a semblance of peace.True, the crisis has spotlighted divisions in the European Union over relations with Russia. The current sanctions regime against Moscow is not popular with all EU states.And certainly, the collapse of previous ceasefires has stoked doubts as to whether this one will hold. But before they throw up their hands in despair and accept confrontation with Russia — or follow America in seeking to send military aid to the Ukrainian army — European leaders will certainly try — and try again — to secure peace in the neighbourhood.And the lesson that peace is worth patiently, painstakingly and repeatedly striving for is an important one for Asia’s many star-crossed nations.This is also why the new European Security Strategy that the EU intends to hammer out by the end of the year should not ignore the different ways in which Europe can help Asia to deal with its many security challenges.Much has changed in the world since the last European Security Strategy was released in 2003, in the aftermath of the Iraq war. As EU foreign and security policy chief Federica Mogherini pointed out at the Munich Security Conference last weekend, the world today is a disorderly place. “The world is far from being a unipolar one, nor is it truly multipolar ... maybe we are living in times of an absence of poles,” Mogherini underlined, adding: “The big question for all of us is ... how do we manage complexity?”Asians are also struggling with the same challenge. For the first time in history, Asia is home to four — even five — important powers: a rising and increasingly assertive China, Japan that wants more influence, Korea searching for an expanded regional role, India which is being wooed by many as a counterweight to China and Asean, the regional grouping which has made peace and cooperation its leitmotif for many years.Trade and investment are the backbone of EU-Asia relations so far. But an EU-Asia conversation on security is set to be the new frontier. The EU cannot afford to be outside the loop of the dramatic geopolitical power games, rivalry and tension being played out in Asia between China, Japan and India — and the 10 south-east Asian members of Asean. Increased spending on arms across Asia is one indication that the region feels insecure, fragile and uneasy.The so-called Asian “paradox” — the fact that the region’s economies are closely knit together but governments are still grappling with historical tensions, is pushing some in Asia to take another, closer look at how Europe has been able to deal with its own tensions.Asian perceptions of security are also changing. The focus on territorial security is shifting to the importance of non-traditional security threats, such as climate change, pandemics, extremism and human trafficking, with some Asians putting the emphasis on “human security”. Across Asia, there is a recognition of the need for a collective or cooperative security architecture. But cooperative security in Asia remains underdeveloped, lacking collective security, regional peacekeeping and conflict resolution functions.Differing threat perceptions, mutual distrust, territorial disputes, concerns over sovereignty make things very difficult.But as their views of security evolve, for many in Asia, the EU is the prime partner for dealing with non-traditional security dilemmas, including food, water and energy security as well as climate change.Asian views of Europe’s security role are changing. Unease about the dangerous political and security fault lines that run across the region and the lack of a strong security architecture has prompted many in Asia to take a closer look at Europe’s experience in ensuring peace, easing tensions and handling conflicts.As Asia grapples with historical animosities and unresolved conflicts, earlier scepticism about Europe’s security credentials are giving way to recognition of Europe’s “soft power” in peace-making and reconciliation, crisis management, conflict resolution and preventive diplomacy, human rights, the promotion of democracy and the rule of law. Europeans, too, are becoming more aware of the global implications of instability in Asia. Clearly, the EU as the world’s largest trading bloc needs safe trading routes and sea lanes.Also, Europeans are now recognising that fragile peace in Asia will have an enormous impact on global security. That is one reason that the EU has signed Asean’s Treaty of Amity and Cooperation and is seeking entry to the East Asia Summit in order to sit beside the United States and Russia.An important challenge for the EU in its relations with Asia is to retain its identity vis-à-vis the much more dominant role played by the US. As it fashions its distinctive security role in Asia, the EU must make an effort to its own distinct profile in promoting multilateral approaches, the rule of law, good governance and regional integration.And that’s what makes the progress made with Russia over Ukraine so important.
View From Abroad: Ties with China are bright spot in Europe’s foreign policy (Originally published 31/01/2015 at dawn.com)
The new European Union Commission, in office since November last year, likes to talk of a “fresh start” for Europe. There is upbeat talk of streamlining EU actions, simplifying procedures, launching a new era of mega investment projects and revving up growth.The reality is more complicated. The election in Greece of a new anti-austerity coalition government headed by Alexis Tsipras has highlighted growing dissent and anger in the Eurozone over the unrelentingly rigid fiscal policies imposed by Germany and followed by the EU.The much-publicised 315 billion euro investment plan launched by the new European Commission President Jean-Claude Juncker may look impressive on paper but is seen by many as too woolly to really generate the growth and jobs that Europe needs so desperately.Additionally, the aftermath of the terrorist attacks in Paris earlier in January means that the Far Right and anti-Islamic parties continue to gain traction and become ever more dominant in the debate on immigration.It’s equally bleak on the foreign policy front. Relations with Russia remain tense. Although there is almost agreement among the 28 EU nations on the need to maintain sanctions against Moscow, depending on their national histories and experiences, European foreign ministers’ attitudes towards Moscow range from very tough (the Baltic states and some Central and Eastern European countries) to soft (Greece and Italy).In the south, the EU is struggling to forge a coherent and meaningful strategy towards Turkey and its other Southern Mediterranean neighbours as well as the Islamic State (IS). European governments also remain divided over whether or not to recognise an independent Palestinian state.Further afield, relations with Japan, South Korea and India remain largely lacklustre and uninspiring. Unlike US President Barack Obama, no European leader can claim to have a glamorous bromance with India’s celebrity Prime Minister Narendra Modi or Japan’s Shinzo Abe.Not surprisingly therefore to many observers in Asia, EU foreign policy seems slow and plodding, focused almost exclusively on trade and business and not enough on a long-term strategy for closer political and security ties.There is one striking exception, however: China. Surprisingly in a world of flux, EU-China relations remain relatively strong, vibrant and multifaceted even as Europe dithers over Russia, India and other emerging nations.The point was made at a meeting of European think tanks in Brussels this week, with experts agreeing that Europe and China must up their engagement. Such consensus is rare in Brussels, especially among academics.Certainly, it’s their mutual economic interdependence that keeps EU-China ties dynamic and buoyant. China’s growth rates may be slowing down but its appetite for European goods and investments continues to be crucial in determining the pace and success of Europe’s economic recovery.China’s economic transformation — and plans for even more change in the coming years — demands that it has access to European know-how, experience and technology.China’s reform agenda also gives European companies myriad opportunities for enhanced trade and investments. Both sides are negotiating a formal treaty to further boost mutual investment flows.Increasingly, also in Brussels there is recognition that a deeper EU-China relationship is important in order to polish Europe’s foreign policy credentials.Europe’s one-time ambition to shape China into a “responsible” international stakeholder now appears hopelessly out-of-date and patronising. But there is no doubt that the EU needs to engage with China on a range of urgent foreign and security policy issues including relations with, Russia, Iran’s nuclear plans, policy towards the IS, fighting Ebola and combating climate change.Significantly, China has invested time, effort and money into upping its relations with Europe. Beijing is working on several tracks at the same time. The focus in recently years has been on further consolidating the China-Germany “special relationship” but also reinforcing ties with former communist nations in Central and Eastern Europe, countries in the Western Balkans and also Nordic states.Responding to critics who complained that Beijing was paying too much attention to European member states and not enough to the EU, Chinese leaders have made it a point in recent months to visit Brussels.The result is a surprisingly solid and well-rounded EU-China relationship which could even become a model for other Asian countries.A key problem, however, is that the EU still treats China as just another emerging nation rather than the regional and global mammoth that it has become. The emphasis is on bread and butter issues like trade and investments, urbanisation, good and valid subjects but do not reflect Beijing’s increasing global clout and outreach.The EU should be looking at thrashing out a new narrative for China which is truly strategic and considers issues like global governance, sustainable development goals and international terrorism.In other words, as the EU and China prepare to celebrate 40 years of their relationship, the EU-China relationship should move from the ritualistic to the strategic — as quickly as possible.
View from Abroad: Pakistan’s choice (Originally published 6/12/2014 at dawn.com)
As I prepare to travel to Pakistan — the first such visit in five years — I am filled with admiration, amazement and apprehension. They say the past is a different country. And Pakistan is certainly a very different country from the one I left all those years ago.Pakistan and I have both changed. I am obviously older (but not wiser) than the young, naive and rather demure girl who boarded the plane from Islamabad to Brussels with her parents and sister. At the time, I believed I would be away for a few months, may be a couple of years. Several decades later, Europe has become a core part of my identity and existence and Brussels is “home”, a city that has nourished and nurtured me through good times and bad.Pakistan’s transformation is more starkly radical. Sometimes I can hardly recognise my country of birth. There is much still to admire and love — and to yearn for on cold European winter evenings. Family and friends of course. The food and some of the music. The stories being told by old writers and new ones whose books I devour avidly. The artists whose pieces stir long-buried memories.But what I admire most is the resilience of the people. The indomitable spirit of the so-called common man, the “ordinary” people — or the “masses” that the Pakistani politicians refer to in derision — who keep the country humming and running against all odds.You see that unbeatable spirit everywhere, among the people displaced by floods and the deadly fighting between the army and the Taliban, after the tragic deaths of innocent civilians caused by drones, among the thousand Malalas still determined to go to school and the sick people waiting patiently for a doctor to see them in crowded hospitals.But that resilience is also about being optimistic about the future. Going to work every day in packed buses, facing harassment, electricity breakdowns, rampant inflation and corruption with stubbornness and stoicism. And to keep going on and on. I admire Pakistani business leaders and innovators who still invest and believe in the country. The young and the daring entrepreneurs. People who speak up for tolerance, resist the siren song of conformity and compromise.I have seen the same energy and resilience in many other parts of Asia and in Africa. But recently rarely in Europe. The Eurozone crisis has exhausted Europe and joblessness rates are much too high, especially for young people.But speak to young people in China, India and Indonesia and it is clear that they believe in a better future. Visit the countries and it is clear that people’s lives are getting better. Of course there is still inequality, poverty and hunger. But the governments in these countries are trying hard to tackle the multiple challenges they face. Are Pakistani politicians doing the same?So what about my amazement? Well, I suppose it’s about the patience of the people, the willingness to put up with mediocre and often corrupt politicians, war-mongering soldiers, inequality and unfairness and the rampant lack of the rule of law. Elections have not led to real democracy. All that aid money pouring in, has not led to sustainable growth and development.Reading the online version of the front page of Dawn fills me with wonder at how quickly Pakistan’s political landscape has turned into a dark, cruel, repetitive circus. The scowling, angry features of former cricketer Imran Khan, the crazy pronouncements of the Canadian preacher, the ever-chubbier and dishevelled, helpless look of the prime minister and the semi-lucid mutterings of the scion of the Bhutto family.And then there is the apprehension. Despite the disappointment and the disillusionment with a country which I once called home, I suppose there is still some lingering connection, a hope that Pakistan will survive the challenges of the 21st century, stand proud and tall and become an integral part of a rising Asia.It would be nice if Pakistan was in the headlines not because of the antics of the likes of Junaid Jamshed, anti-India rants by the foreign ministry, suicide bombings and hate-Malala crazies as well as the treatment being meted out to Asia Bibi but because the country was breaking new ground, turning a fresh page, opting for sanity rather than madness.After so many years and so many wonderful experiences in Europe and Asia — not to mention the lessons in honesty, sincerity and fearlessness that I learned from my father — I wonder if I will be able to stay silent when I encounter intolerance and religiosity and the blatant disregard for the rights of women, children and minorities that seems to have become part of the national discourse.Across Asia, there is hope and progress. Viewed from Brussels, it certainly looks like this is the Asian Century, a time when Asia is coming of age, growing and developing.Pakistan has a choice: it could join the Asian mainstream and give its people the life and future they deserve or it can opt to be part of a self-destructive Middle East mindset and stay on the periphery of a dynamic and vibrant Asia. I know what I would choose — but do they?
View from Abroad: Europe waits for trade talks but Modi ‘looks East’ (Originally published 22/11/2014 at dawn.com)
These are busy times for Asian leaders — and Indian Prime Minister Narendra Modi is among the busiest.Last week as he criss-crossed Asia, clinching business deals, attracting much-needed investments and building strategic alliances, Modi found time for a quick meeting with the European Union’s outgoing European Council President Herman Van Rompuy to underline that the “EU should take advantage of the new economic environment in India”.The two men apparently agreed that the United Nations should hold an annual international “Yoga Day”.But not much was apparently said on the EU-India free trade agreement that the two sides have been trying to negotiate for the last seven years and which now seems to have run into the ground.EU officials are still hoping that the negotiations will be back on track soon. But the Indian leader is too busy looking elsewhere.As of this autumn, Modi has his nation and the rest of Asia abuzz with his determination to inject new life into India’s “Look East” policy which, following his incessant Asian travels, including recent talks with Asean (Association of South-East Asian Nations) and other Asian leaders in Myanmar, has morphed into what Modi proudly describes as a “Look East — and Act East” policy.India’s decision to step up its game in Asia is no surprise. As an emerging power with “great power” ambitions, India has no option but to seek a stronger role in a volatile neighbourhood and a region marked by often-changing geopolitical rivalries and alliances. Also, tapping into the region’s dynamic economies is critical for India’s own growth and reform agenda.Certainly, China has the funds needed to help finance India’s infrastructure requirements while Japan and South Korea have the technical experience and expertise. South-east Asian markets are important for Indian investors and exporters. Sustainable peace with Pakistan may still be a long way off but is essential for India’s development and peace and stability in the region.While in Myanmar, Modi made the headlines by pushing his “Make in India” campaign, which aims to turn the country into a global manufacturing hub, by cutting red tape, upgrading infrastructure and making it easier for companies to do business. Modi promised to implement long-delayed plans to boost trade and deepen ties with Asean so that current trade flows could rise from $75 billion today to $100 billion by 2015.In fact, the policy is not new. India has long spoken of developing a “Look East” policy, but has lagged behind China in forging ties with emerging economies in South-East Asia. Tackling China’s influence on Asean and South Asia is still a challenge but India benefits from the fact that Japan, Asean and others in the region are certainly looking to reduce their economic dependence on Beijing by reaching out to Delhi.Indian commentators also underline that Modi used the Asean meeting to articulate for the first time India’s intent to enhance “balance” in the Asia Pacific region, arguing that the word was carefully chosen to reflect India’s shared concerns with other Asian countries about China’s growing assertiveness in the region.Interestingly, Indian defence cooperation is being stepped up with several Indian Ocean states including Sri Lanka and Maldives. India will supply four naval patrol vessels to Hanoi as part of $100 million Line of Credit signed last month. The two countries have also decided to ramp up cooperation in the field of hydrocarbon, civil nuclear energy and space.Given Modi’s focus on the Asia-Pacific, the EU’s new leaders may have to wait a long time before he signals a real interest in upgrading bilateral ties.It is no secret that the EU-India strategic partnership needs a shot in the arm and that trade and investment flows are much too modest. But negotiations for an India-EU Bilateral Trade and Investment Agreement (BTIA) — the most important issue on the bilateral agenda — have lasted for seven years, with no end in sight. And hopes that New Delhi would put energy and effort into the successful conclusion of the elusive deal have not materialised, with differences over tariffs and market access as well as questions related to the protection of intellectual property rights continuing to impede progress.The pact could be signed in 2015 — but only if both sides can summon up the political will to look beyond the array of technical issues to the deeper strategic importance of their relations.Modi and the EU’s new leaders face the uphill task of taking the relationship to a higher and more genuinely strategic level, a move that would benefit both sides.In addition to the geopolitical value of such a decision, European investors are willing and eager to enter the Indian market. European know-how could be valuable to India’s reform and modernisation agenda. Europe, meanwhile, needs new markets to keep its modest economy on track.To inject momentum into the relationship, both sides will need to make an effort. EU and Indian leaders have not met for summit talks since February 2012. An early meeting between Modi and the EU’s new presidents of the European Commission and the EU Council this autumn will therefore be crucial in signalling a fresh start in relations.