Bulletin January 2021
THE GEOPOLITICAL SITUATION IN THE WIDE BLACK SEA REGION
(GREECE, CYPRUS, IRAQ, LIBYA, UKRAINE, MOLDOVA)
08 февруари 2021
THE GEOPOLITICAL SITUATION
IN THE WIDE BLACK SEA REGION
(Greece, Cyprus, Iraq, Libya, Ukraine, Moldova)
(January 2021)
Dr. Plamen Hristov (Greece, Cyprus, Iraq, Libya)
Valentin Sarlov (Ukraine)
Dian Dinev (Moldova)
Boost in relations with the Republic of North Macedonia
The official visits by the minister of foreign affairs of the Republic of North Macedonia to Athens (15th January 2021) and by high-ranking representatives from the Greek MoD to Skopje marked a positive step in the framework of the bilateral relations of both countries.
The initiative is part of countries` ambition to intensify the implementation of the Prespa agreement (Final Agreement for the settlement of the differences), linked to the change of the constitutional name of the Republic of Macedonia, and the adaptation of its armed forces to NATO standards. Memorandums of understanding were signed between the Diplomatic Academies, and in the sphere of civil protection and foreign investments. Significant progress was achieved by the joint scientific committee on controversial historical, archeological and educational matters.
Greece states its intention to establish itself as the "best ally and friend" of the Republic of North Macedonia and makes no secret of this being a counterpoint to Turkey's policy in the Balkans. In this context, Athens declares its full support for the European membership of Albania and the Republic of North Macedonia and considers it an urgent need to fill the strategic gap in regional political stability in relation to Turkey's foreign policy towards revisionism and the export of political Islam. Athens and Skopje are synchronizing their positions, intentions and policies.
Vaccination against COVID-19 - an opportunity for a political restart
The vaccination campaign was seen by Prime Minister Kyriakos Mitsotakis as an opportunity for a political restart through cabinet reshuffles. The hope that vaccination will control the financial, economic and social consequences of the pandemic is the argument for a surprise reorganization (January 5) of the government - 4 ministers and 16 deputy ministers. Mitsotakis' argument was confirmed by the sociological agency ALCO, according to which New Democracy (39%) has a 15% advantage over the main opposition party SYRIZA (23.9%) against the background of general dissatisfaction with the pandemic management (drop in approval from 84% - May 2020 to 43%).
The aim of the government changes is to provoke an impetus in the political process and a boost in the financial and economic recovery, restoring optimism and confidence in investors, businesses and the general public. Simultaneously, the reshuffle in the cabinet will likely consolidate and expand public support, given that the mandate has already been halved.
The absence of changes in leading ministries such as finance, foreign affairs, healthcare, defense and regional development means that the priorities of the government remain unchanged.
The de-escalation of the Greco-Turkish controversy goes through the resumption (January 25) of exploratory contacts across their spectrum. The EU must demonstrate seriousness and determination in its intentions towards Turkey, which will be reflected in a report (March) by Special Representative for Foreign Affairs and Security Policy Josep Borrell. Confidence in Turkey as a candidate country has been damaged and can be restored through predictable policies and co-operation.
However, the two countries have the opposite approach - the Greek seeks to permanently implement the issue on the European agenda, while the Turkish - to bring it on a bilateral basis.
Ankara offers an expanded dialogue and unconditional dialogue across a range of open issues and controversies. The act (January 21st) of expanding Greece's maritime territory in the Ionian Sea from 6 to 12 nautical miles is presented by Athens as a legal precedent, a basis for further intentions (Crete), while Ankara neglects it and reaffirms the decision of the Grand National Assembly. that in the Aegean or the Mediterranean such an act would constitute a casus belli. Greek demands are categorized by the Turkish side as "pluralistic" with the argument that Athens treats the distance of the sea borders at 6 nautical miles, and the air - 10 nautical miles. There is no such precedent.
Turkey has the ambition to package the Cyprus issue in the common spectrum of Greek-Turkish controversy, which Athens and Nicosia strongly oppose. Erdogan's ambition is to seize the opportunity to provoke a regional conference on the Mediterranean, whose agenda includes the Greek-Turkish conflict, the Cyprus issue, the conflicts in Syria and Libya, to which should be added the Nagorno-Karabakh conflict and the stabilization of Iraq as post-conflict models. development.
Athens relies on the so-called "Strategic patience", not in a hurry to enter the procedure of exploratory contacts. By March, Greece will divert proposals to the Common European Framework from current issues rather than at bilateral level, despite the formal resumption of consultations on 25 January. The European Council will serve as an institutional lever for additional pressure for concessions from Turkey.
The Cyprus issue faces the dilemma of its solution: "dual-zone, dual-community federation" or final division
The international factor and Cyprus are preparing to resume negotiations on a solution to the Cyprus issue by convening a new five-party conference on the so-called external aspect of the conflict. The conference, adjourned in 2017, Mont Peleran, Switzerland, will be under the auspices of the UN General Assembly and will involve the Greek Cypriot community, the Turkish Cypriot community and the three guarantor countries of the Republic of Cyprus - Britain, Greece and Turkey.
The conference has the task of defining the framework of an agreement that will guarantee the legitimate rights of the Greek Cypriot and Turkish Cypriot communities through the de jure reorganization of the existing Cypriot state. According to the relevant UN RCC, the principles are one, single sovereignty, one international representation and one national citizenship.
The new regional realities have confronted the countries with the dilemma of the formula for resolving the Cyprus issue: a "two-zone, two-community federation", a confederation or the creation of two states. Controversies over the access to and exploitation of hydrocarbon resources in the Cypriot EEZ are high on the content of the consultations. Turkey is proposing an equal distribution of revenues from future gas production in Cyprus' exclusive economic zone (EEZ). The two communities maintain whether this issue should be included in the negotiations as a separate topic or considered as a consequence of the future agreement.
Iraq in election campaign
The political situation in Iraq is in preparation for the early parliamentary elections, originally scheduled for June 2021. President Barham al-Saleh's New Year's address focused on holding elections on the scheduled date so as not to waste time on much-needed financial, economic and political reform. Moreover, Saleh said Iraq's current political system, adopted in 2003, was dysfunctional, causing serious problems, and that its reform should cover the Iraqi Kurdistan Autonomous Region. The political parties of the Shiite bloc (Al Fatah, Ad Dawa al Islami, Al Sayruun) announced the start of their election campaign. However, the existence of real organizational and technical difficulties led the Iraqi Supreme Independent Electoral Commission to propose a postponement of the elections, and the government approved a new date, October 10, 2021. It is actually possible that they will be further postponed for next year.
The political process takes place in a fragile security environment with ongoing armed provocations against US military and diplomatic sites and the International Coalition to Combat Islamic State in Iraq and the Levant. There is a high risk of incidents provoking escalating reciprocal US military strikes on Iranian targets on Iraqi territory, causing regional destabilization.
The financial and economic recovery has marked important steps. The government's draft budget for 2021 was submitted for parliamentary vote, the Iraqi Central Bank devalued (20.83%) the Iraqi dinar, and an investigation was launched by the Supreme Judicial Council of the Iraqi Central Bank and 13 private banks for money laundering and terrorist financing. . The concession procedure for the FAO (Southern Iraq) strategic project, which creates a maritime transport corridor between Europe and the Middle East, bypasses the Suez Canal, the first phase of which is worth $ 2.645 billion. The concessionaire of the project is the South Korean company Daewoo Engineering & Construction , preferred to a Chinese competitor backed by the pro-Iranian political factor.
Libya
Libya's political process has emerged from a plateau phase after the Geneva National Forum agreed (January 16th) on a UN-sponsored mechanism to elect a transitional presidential council and government to prepare for the December 24, 2021 meeting early national elections.
The failure (December 21, 2020) in the appointment of Nikolai Mladenov as Special Representative of the UN General Assembly and Head of the UN Mission in Libya is a direct reflection of the state of the political process. The failure was a projection of the extremely fragmented foreign policy situation in the Libyan conflict, whose geometry is very dynamic, with Russia and Turkey being the leading factors. Political Islam, professed by the Turkish government, is an obstacle to restoring strategic relations between Turkey and Israel for co-operation in resolving the Libyan conflict. Turkey is looking for opportunities to restore co-operation with Tel Aviv in the diplomatic, economic, military and security fields. The United States maintains a balanced position in support of Turkey and the UAE, insofar as the latter successfully oppose Russia's permanent establishment in Libya, respectively. North Africa, as the second point in the Mediterranean region (along with Latakia and Tartus, Syria). The announcement (January 15th) of Mladenov's alternative in the person of Slovak veteran diplomat Jan Kubis, the UN special coordinator for Lebanon, and his approval by the UN Security Council is a consequence of the above-mentioned breakthrough in the political process.
The situation in Ukraine
On January 27, 2021, the Verkhovna Rada approved upon first reading the amendments № 4297 to the Customs bill which provide for the following:
1. Alignment of the tax and customs code with regard to determining the basis for VAT and customs duties on imports of goods into the customs territory of Ukraine or in international postal and express items, stating that the value added tax base is part of the customs value (for legal entities or natural persons-entrepreneurs) or part of their total invoice value (for natural persons), when the non-taxable minimum of EUR 150 is exceeded.
2. Possibility to defer the payment of VAT within 30 days from the date of registration in the temporary register with simultaneous registration in a supplementary register.
3. Introduction of an electronic declaration for international postal and express items by submission by postal operators and express carriers of the respective registers (temporary and additional), determination of the information that will have to be entered in such registers, establishment of the procedure and deadlines for submission to the customs authority.
4. Establish a uniform written form for declaring goods transported in international postal and express consignments, which will facilitate the automation of the processes of their customs control and customs clearance, as well as maintaining objective accounting and producing reliable statistics on such goods.
5. Expansion of the list of goods, the movement (transfer) of which is prohibited by international postal and express mail; inclusion of alcoholic beverages and / or tobacco products in such a list when sent to citizens or by citizens, regardless of the cost, as well as for sending in international postal items of goods prohibited for movement in accordance with the legislation of Ukraine.
6. Expand the list of documents that can confirm the invoice value of goods, taking into account the challenges of e-commerce.
Meanwhile, according to the latest polls conducted in mid-to-late January, President Vladimir Zelensky's party is the fourth political force, and the president's personal rating has fallen below 20%. If the elections were in the last week of January, the results would look like this:
Opposition platform - "For Life" (Yuri Boyko) - 20.7%
European Solidarity (Poroshenko) - 15.3%
"Fatherland" - 12.6%
"Servant of the people" - 11.2%
"Strength and honor" - 8.3%
"Voice" - 5.6%.
"Groysman's Ukrainian strategy" - 5.3%
If the downward trend continues until the next presidential elections, whether early or scheduled (2024), Zelensky`s chances for re-election would be greatly reduced. The same could be applied to his People's Servant party, which continues to lose ground.
Turkey, United kingdom step up trade and economic cooperation
On December 29th 2020, the Minister of trade of the United Kingdom (UK) and his Turkish counterpart signed a historic Free Trade Agreement (FTA). On the 1st of January this year, after the UK officially left the EU single market, the treaty entered into force. It guarantees the preservation of the existing trade and economic relations between the two countries after Brexit and provides for the continuation of a constructive dialogue. By 2023, Turkey and the UK are expected to sign an expanded FTA, thus deepening bilateral trade and economic relations with the inclusion of additional clauses for cooperation in the fields of digital services and foreign investment.
Turkish President Recep Tayyip Ergodan welcomed the agreement, saying it was "the most important deal for his country since the customs union agreement with the EU, signed in December 1995". The benefits for the Turkish economy already are a fact since a gradual stabilization and a rise in the value of the Turkish Lira (TRY) have been monitored throughout January 2021.
The British authorities are positive that the FTA will help stabilize the country's economy during the COVID-19 pandemic. The agreement is expected to help approx. 7,600 companies preserve the existing trade preferences, keep their businesses afloat and protect thousands of jobs in the manufacturing, automotive and steel industries in the UK.
In essence, the FTA includes provisions on trade in goods, including preferential tariffs, quotas, rules of origin, sanitary and phytosanitary controls; customs control; intellectual property; government procurement; technical barriers; competition; trade protection mechanisms; settlement of disputes, etc.
According to official data, in 2019 the foreign trade turnover between the two countries amount to approx. $ 24 billion, as the UK is the second largest market for exports of goods from Turkey. It is estimated that in the absence of such an agreement, about 75% of these exports will be subject to customs` duties, hence leading to $ 2.4 billion wroth of losses. Turkish exports of approx. $ 11 billion are composed mainly of gold, textiles, motor vehicles, iron and steel products, whereas British companies sell predominantly cars, plastics, pharmaceuticals, electronics and household goods to its partner.
The signed FTA certifies the intention of both Turkey and the UK to raise their relations to a higher level, not only in the trade and economic aspect, but also in the field of security, banking, tourism, transport and culture. Throughout 2021 we can expect an increase in the volume of direct investments from UK to Turkey and vice versa (between 2002 - 2019 amounts to - UK to Turkey - $ 11 billion; Turkey to UK - $ 3 billion).
The fact that London signed the FTA with Ankara following similar agreements with Japan, Canada, Switzerland and Norway is a testament to the prestige and the growing role of the Turkish economy globally. In the short term, this will generate potential to attract additional foreign investment to Turkey.
