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10 Aug 22. Austin’s Visit to Latvia Underscores U.S. Commitment. Latvia is a NATO frontline state that shares borders with Russia and Belarus, so Secretary of Defense Lloyd J. Austin III and Latvian Defense Minister Artis Pabriks had much to discuss when they met today in Riga, Latvia.
While Russia’s invasion of Ukraine dominated talks, the leaders also spoke about plans to implement decisions made at the Madrid NATO Summit in June and the bilateral relationship between the United States and Latvia.
“I’m visiting at a critical time for Europe and for the world,” Austin said at a press conference following the meeting at the defense ministry. “As we stand here today, Russia continues its cruel and unprovoked war of choice against Ukraine. Russian forces are indiscriminately killing civilians and destroying civilian infrastructure all over the country. And as Ukrainian people fight heroically to defend themselves, they are showing that they demand and deserve to live in freedom and not under Russia’s boot.”
Latvia is a small nation that is vulnerable to Russian attack. During the NATO Madrid Summit, alliance leaders recognized Russian aggression as “the most significant and direct threat to the security of our allies and to peace and stability in Europe,” Austin said. “President Putin thought he would divide the NATO alliance with his aggression. But, in fact, he achieved just the opposite.”
The United States has roughly 600 troops in Latvia, with some as members of the NATO Battle Group in the county and the rest in country for bilateral purposes. Alliance leaders decided to increase the number of troops in the region and beef up capabilities in light of Russia’s aggression against Ukraine.
“The NATO alliance is more united and stronger than ever before,” Austin said. He noted that President Joe Biden signed the U.S. legislation to permit Finland and Sweden’s accession into the alliance. “We encourage our remaining NATO allies to conclude their own ratification processes quickly,” he said. “And I look forward to working with Sweden and Finland as members of the most powerful defensive alliance in history.”
The United States will enhance its presence in the frontline states, and Austin assured Latvians that will include their country. “Let’s be clear,” he said. “We seek no confrontation and pose no threat to Russia. Our updated posture simply reflects our ongoing and solemn commitment to Article Five — an attack on one NATO ally is an attack on every NATO ally. And our new posture positions us to respond swiftly and surely to security challenges today and in the years ahead.”
Latvia sees the Russian invasion as a do-or-die event. “The outcome of the Russian invasion of Ukraine must … only one result, which means Russia must lose and Ukraine must win,” Pabriks said. The Russians cannot be allowed to even have a stalemate in Ukraine because Russia will only wait until it builds up more power and attack again, he said.
Latvia also borders Belarus, which has allowed Russia to launch attacks on Ukraine. Pabriks said this shows Belarus is a partner of Russia, and Belarus will be integrated with Russia when Russians will decide to do so.
Russia has committed a significant portion of its most capable forces to its Ukraine attack. “As a result, they have lost quite a bit of important equipment, tanks and mechanized vehicles,” Austin said. “They’ve also lost enormous amount of people killed and wounded.”
Still, Russia has significant military capability — especially in the air and sea domains, the secretary said. “We don’t ever want to lose sight of that. But, again, you know, Russia would endeavor … to regenerate capability going forward,” he said. “The sanctions and some of the trade restrictions will make that a bit more difficult.”
Latvia and the United States “stand in solidarity with the Ukrainian people and their democratically elected government,” Austin said. “So, we’ll continue to work together to provide Ukraine with the military equipment that it needs to defend itself. And we’ll continue to stand strong with our NATO allies. And we’ll continue to stand up the Russians assault on democracy and sovereignty and the rules-based international order.” (Source: US DoD)
10 Aug 22. Poland: EU is likely to withhold recovery funds over rule of law debate. On 10 August, Polish Prime Minister Mateusz Morawiecki criticised the European Union (EU) amid the renewed debate regarding Poland’s judicial reforms. The development follows, European Commission President Ursula von der Leyen’s visit to Warsaw in June after which the Commossion approved the next tranche of EU recovery funds for Poland. However, von der Leyen stated that the funds are conditional on Poland reinstating the judges that were unlawfully dismissed to restore the independence of Poland’s judiciary. In response, Morawiecki accused Brussels of “imperialistic behaviour” and said Poland could retaliate if the country does not receive the funds. As the dispute over Poland’s judicial reforms is unlikely to be resolved in the short to medium term, the EU will likely withhold recovery funds for 2022. This will increase threats to socio-economic health in Poland amid the ongoing refugee crisis from Ukraine and subsequent strain on social infrastructure. (Source: Sibylline)
10 Aug 22. Cyprus-Turkey: Ankara’s resumption of drilling operations in the Eastern Mediterranean increases regional tensions. On 9 August, Turkey sent a new deep sea drilling ship to the Eastern Mediterranean for the first time in two years, potentially reigniting tensions with Cyprus and the EU. Survey and drilling operations for natural gas will take place in undisputed waters until 7 October, however, Turkey has in the past conducted drilling operations in waters contested by Greece and Cyprus as well. Tensions between Cyprus and Turkey are particularly elevated due to existence of the Turkish Cypriot breakaway state in the north of the island, which is only recognised by Turkey. It is likely that due to soaring energy prices, Turkey will step up its drilling efforts and will almost certainly continue operations in contested waters in the near future, threatening to heighten tensions with the EU, Greece as well as Cyprus. (Source: Sibylline)
10 Aug 22. Austin Visits U.S. Troops in Latvia, Meets Latvian Officials. Secretary of Defense Lloyd J. Austin III visited some of the 600 U.S. troops in Latvia and met with Latvian leaders to discuss ways to ensure the defense of an important NATO ally and to beef up deterrence against neighboring Russia.
The secretary and Latvian Defense Minister Artis Pabriks met 1st Infantry Division troops in Lielvarde Air Base. “You are here for a purpose,” Austin told the U.S. and Latvian troops at the base. “That is to defend every of NATO territory.”
He told the U.S. soldiers that they were the best ambassadors the U.S. has and urged them to get to know their Latvian allies. “Get out and get to know your Latvian partners that you may have to fight alongside,” he said.
In a question-and-answer period, one soldier asked the secretary if there wasn’t a way to increase realistic training with Latvian troops and other NATO forces in the nation to deter Russian President Vladimir Putin. The secretary told the troop that one reason he is in the country is to find ways to increase those training opportunities.
There will be more U.S. forces in Latvia and other NATO allies on the alliance’s eastern flank. President Joe Biden announced the decision at the NATO Summit in Madrid. At that historic meeting, Biden announced the decision to keep in place the substantial U.S. military forces that had surged to the region during the Russian invasion of Ukraine.
Part of that decision was to deploy a brigade combat team headquarters in Romania with units further deployed to the Baltic Republics. The president called for “a persistent heel-to-toe rotational presence in all three Baltic countries to reinforce the combat-credible capabilities of the alliance, in general, and the United States in particular,” said a senior defense official traveling with the secretary.
One of the advantages of having brigade combat teams headquartered in Europe will be the ability of the United States and NATO allies to do consistent training together, which keeps American forces in Europe ready, the official continued. “What’s even better, it enhances interoperability and the readiness of our NATO allies.”
The secretary will meet Latvian leaders in the capital city of Riga and thank them for their contributions to the defense of Ukraine. The official said Latvia and the United States have important bilateral issues to discuss. Austin is the first U.S. defense secretary to visit the country since 1995, DOD officials said. (Source: US DoD)
10 Aug 22. France: Knife Attack.
EVENT
Shortly after 0800 hrs (local time) on 10 August, a man threatened staff with a knife at Terminal 2F of the capital Paris’ Charles de Gaulle Airport (CDG). The man was subsequently shot dead by the police. Nobody else was injured in the incident.
SIGNIFICANCE
- According to police reports, the attacker had no links to extremist or terrorist organisations. He began arguing with security personnel at the airport, after which he was removed from the scene by the police. He later returned with a knife.
- Travel disruption in the vicinity of the airport is likely in the coming hours, as are delays to flights arriving at and departing from the facility. A heavy police presence will almost certainly be enforced in the coming days.
- Violent and org nised crime rates are significantly higher across France in 2022 than in recent years, with the rates of violent attacks, robberies and sexual assault experiencing the largest increase. The ongoing cost-of-living crisis and the related increase in socio-economic health risks will almost certainly continue to drive violent and organised crime rates into 2023.
FORECAST
Amid the resumption of international travel following the lifting of Covid-19-related restrictions, the number of physical security incidents at airports and key travel hubs across France is likely to increase. The latest incident at Charles de Gaulle Airport highlights the increasing risks posed by violent crime across the country. Additional such security incidents will lead to further travel disruption. At least four similar incidents have been reported across France since December 2021. France’s worsening socio-economic health will exacerbate the risk of future security incidents in the coming weeks and months. (Source: Sibylline)
09 Aug 22. Germany lacks defence industrial strategy despite budget hike. Germany’s pledge to increase defence spending to 2% of GDP has not been accompanied by a strategy to leverage its industrial base. Germany’s promise to increase its defence budget to 2% of its gross domestic product (GDP) by 2024, with this figure then being sustained as an average across a rolling five-year period, will equate to a defence budget of $82.0bn in 2024, rising to $85.7bn in 2027, according to GlobalData.
This will result in a positive compound annual growth rate (CAGR) of 5.0% between 2023 and 2027, which is a slower rate of growth compared to the 2018-22 period, which saw a positive CAGR of 7.3%. GlobalData’s latest report, ‘Germany Defense Market Size and Trends, Budget Allocation, Regulations, Key Acquisitions, Competitive Landscape and Forecast, 2022-2027’, notes that Germany may struggle to spend the planned budget increases unless a reformed approach to the defence industry is implemented.
Madeline Wild, associate defence analyst at GlobalData, commented: “In order to utilise the growth in its defence budget, Germany must review its approach to the defence industry. Currently, there is a lack of a strong defence industrial strategy meaning that the country is not unlocking the full potential of its relationship with the industry.”
Germany releases a short policy document every few years outlining its plan to strengthen the industry. What is lacking, however, is the utilisation of the defence industry as a strategic tool: by encouraging investment and funnelling spending into certain areas to promote job growth and economic stimulation. Creating a strong policy would help Germany to spend its new funds effectively, efficiently and have maximum impact on both the capabilities of its military and feeding back into the domestic economy.
Wild added: “One problem that Germany faces in this realm is public acceptance. In comparison, the UK released its Defence and Security Industrial Strategy paper last year, which highlighted across hundreds of pages (compared to Germany’s ten) how the Ministry of Defence would use and develop the industry in the hopes that the impact would be felt beyond the defence sector.
“However, the UK public is, on the whole, far more accepting of government support of the defence industry. The German public is relatively more cautious, with a greater focus on arms control.”
Industrial policy review is not the only barrier to spending the new defense funds effectively. Ongoing issues with the procurement department (BAAINBw) have already caused up to 10% of the acquisition budget to go unspent in some years, despite efforts to reform the department.
Wild continued: “Problems within BAAINBw are well publicised, with low staff numbers and overly bureaucratic procedures preventing the effective spending of the defense budget. Successive defence ministers in Germany have tried to address these problems and overhaul the department. Until this is achieved, BAAINBw will continue to act as a significant hurdle for the Bundeswehr.”
Meanwhile, neighbouring Switzerland could prove to be a profitable market over the next decade for foreign defence companies such as Lockheed Martin, Saab and Elbit Systems, as the country’s steadily growing defence budget allocates more funds to acquire defense capability on the international market.
According to the GlobalData’s report, ‘Switzerland Defense Market Size and Trends, Budget Allocation, Regulations, Key Acquisitions, Competitive Landscape and Forecast, 2022-2027’, reveals that Switzerland’s defence budget is forecast to grow from $9.44bn in 2022 to $10.35bn in 2027, with funding split between acquisitions, operations and other ancillary costs including training, pensions, intelligence activities and miscellaneous services.
The budget allocation for acquisitions has continued to grow, rising from $1.5bn in 2018 to reach $2.2bn in 2022 and GlobalData forecasts that it will reach $2.6bn by 2027.
Tristan Sauer, land domain analyst at GlobalData, commented: “While this increase is primarily due to the Air2030 programme, other acquisitions such as the purchase of six Hermes 900 Medium Altitude Long Endurance (MALE) unmanned aerial systems from Israeli firm Elbit Systems under the ADS 15 programme illustrate the diversification of the Swiss military’s modernisation initiatives.”
Over the forecast period, the main drivers of Swiss defence expenditure will be the need to modernise its air defence forces in order to ensure the continued defence of its territory from external threats. The Air2030 programme will provide Switzerland with 5th generation F-35 fighter jets capable of responding to advanced threats in Swiss airspace. (Source: airforce-technology.com)
08 Aug 22. Kosovo: Regional Tensions.
Key Takeaways
- Regional tensions between Kosovo and Serbia, as well as ethnic tensions in Kosovo, increased after Pristina announced the implementation of new measures requiring the use of Kosovar number plates instead of Serbian variants. In response to the legislation, ethnic Serbs organised protests and erected roadblocks near the border crossings at Jarinje and Brnjak.
- After consulting the EU and the US, Kosovo decided to delay the implementation of the reforms until September. However, until a permanent resolution is reached, risks of inter-ethnic violence will remain heightened in Kosovo’s northern regions. If Kosovo decides to continue with the implementation, regional tensions with Serbia will almost certainly increase.
Context
Following mass protests and the threat of violence along the border with Serbia, the government of Kosovo decided on 31 July to postpone the introduction of two new measures aimed at further centralising governance in Kosovo. In anticipation of the new rules, ethnic Serbs erected roadblocks along roads near the Serbian border at Jarinje and Brnjak on the evening of 31 July. There were also reports of gunfire in several locations. In response, Kosovar border force personnel closed the two border crossings, while NATO’s Kosovo Force (KFOR) deployed troops to patrol affected cities and towns in the north of the country.
Kosovo’s prime minister, Albin Kurti, originally planned to implement two new measures on 1 August. He wanted to introduce Kosovar number plates displaying the abbreviation RKS (Republic of Kosovo) to replace old versions issued by Serbia, and also to mandate new travel documents for people entering Kosovo from Serbia. These would replace existing documents that have been in place since Kosovo’s declaration of independence in 2008.
The planned implementation of these measures sparked protests in northern Kosovo, where most of Kosovo’s minority ethnic Serbs are concentrated. Therefore, in a bid to reduce tensions, Kurti postponed the implementation of the travel requirements until 1 September following discussions with Western partners. However, given that the implementation of the new measures has merely been delayed, tensions with Serbia will almost certainly escalate in the run-up to September, driving the likelihood of border clashes.
Proposed travel requirements will sustain ethno-religious tensions with Kosovar Serbs
Ongoing tensions between Kosovo and Serbia are a part of a long-standing dispute. Kosovo declared independence from Serbia in 2008, which Belgrade refuses to recognise. Most efforts by Kosovo’s political leadership to centralise governance in Kosovo and to reduce the influence of Serbia’s authorities in the country have frequently led to ethnic tensions within Kosovo between the minority ethnic Serb and the majority ethnic Albanian populations. They have also led to regional tensions with Serbia’s government.
Kosovo announced the introduction of temporary number plates in September 2021 for cars with Serbian plates entering Kosovo, a reciprocal move to a measure that has been in place in Serbia since 2008. The announcement sparked 13 days of ethnic Serb rallies in Kosovo, as well as attacks against registration offices in northern Kosovo and the deployment of soldiers along the border. In a bid to de-escalate the situation, both sides agreed to a temporary resolution that required stickers to be placed on number plates to conceal national flags on vehicles travelling between the two countries. However, a long-term solution was never reached, and the most recent flare-up represents the latest manifestation of these tensions. These tensions will escalate in the coming weeks.
Tensions increased again in early 2022 when Kurti’s government banned Kosovar Serbs from voting in a referendum on constitutional changes in Serbia. The government accused Belgrade of organising Serbian elections on Kosovan soil. The decision triggered protests by Kosovar Serbs and attracted heavy criticism by Kosovo’s Western partners, including France, Germany, Italy, the UK and the US, as well as the EU’s Rule of Law Mission to Kosovo.
Given the more confrontational policies of the current Kosovar government as compared to previous governments, it is highly likely that Kurti will proceed with the implementation of the new regulations from 1 September. This will lead to increased regional tensions with Serbia in the coming weeks and months and could also increase tensions with the EU. Serbia’s president, Aleksandar Vučić, stated that the recent move by Kosovo was an ‘assault’ on Kosovar Serbs and a breach of past EU-mediated agreements on freedom of movement, stating ‘there will be no surrender’.
The Serbian authorities placed the military on high alert in September 2021 and deployed troops to southern areas of the country in response to the tensions. Belgrade will almost certainly respond in a similar fashion in the coming weeks. As such, ethno-religious and regional tensions will remain elevated, with clashes likely to occur between ethnic Serbs and the Kosovar security forces in Kosovo’s northern regions. Further border closures, travel restrictions and roadblocks are also likely, as is the targeting of government buildings by ethnic Serbs.
Failure to resolve the dispute will likely derail EU expansion in the Balkans
Kurti and Vučić will meet in Brussels (Belgium) on 18 August to discuss the current tensions, though it is unlikely that the two parties will reach an agreement before 1 September. Serbia is a long-standing ally of Russia, and was one of the few European countries which refused to join EU-led sanctions imposed against Moscow following Russia’s invasion of Ukraine. Nevertheless, Serbia applied to join the EU in 2009, with Brussels granting Serbia candidate member status in 2012. While Serbia pledged to normalise relations with Kosovo in order to pave the way for EU accession, its relations with the EU remain highly volatile due primarily to ailing governance standards and its pro-Russian foreign policy. Belgrade’s EU integration trajectory already remains highly uncertain, though an increase in cross-border tensions will threaten to further undermine integration efforts.
Even if a solution to the number plate issue is reached in the coming months, wider indicators point to Serbia backtracking on its EU integration pledges. Serbian support for EU membership fell significantly this year after Brussels confirmed that Belgrade’s recognition of Kosovo was a prerequisite for membership. This will remain a major fissure which could delay EU accession indefinitely as Belgrade continues to deny its recognition of Kosovar independence. Russia has already utilised the opportunity to support Belgrade, with its foreign ministry blaming last week’s tensions on both Kosovo and the US. The issue will suit Moscow’s foreign policy aims of stalling EU expansion in the Balkans and retaining its influence in Serbia.
Furthermore, the Kurti government’s reluctance to comply with EU mediation efforts since the 2020 election will exacerbate the West’s concerns regarding minority rights in Kosovo, as will Pristina’s harsher stance on centralising governance to the detriment of Kosovo’s ethnic Serb minority. This will possibly deteriorate relations between the EU and Kosovo, hindering the latter’s EU integration.
Scenarios
Below are three scenarios which will possibly evolve in the coming months and their probability (in brackets).
Scenario 1: Kosovo goes ahead with the proposed legislation (70%)
Scenario outline:
- Kosovo decides to continue with enforcing replacement number plates and a separate travel document for visiting Serbs, elevating regional and ethno-religious tensions.
- This is the most likely outcome, given the perception in Kosovo that these policy reforms are essentially a reciprocation of Serbian law.
Impact:
- If Kosovo does pass the legislation, this will almost certainly trigger protests near the Serbian and Kosovan borders at Jarinje and Brnjak which will possibly spill over to other Serb minority regions. This will likely prevent any cross-border travel and/or trade taking place.
- An escalation of violent protests is likely amid further efforts by NATO peacekeepers to prevent conflict between Serbian demonstrators and the Kosovan authorities. The presence of KFOR in the region is highly likely to prevent an escalation of violent protests into military clashes.
- An increase in regional tensions following the implementation of the legislation will likely damage Serbia’s ambitions to join the EU. This will provide Russia with an opportunity to strengthen its relations with Belgrade, further undermining EU expansion in the Balkans.
Scenario 2: Kosovo decides to postpone the legislation indefinitely (25%)
Scenario outline:
- Ahead of 1 September, Kosovo chooses not to implement the legislation, postponing the number plate requirements indefinitely.
Impact:
- Kosovo’s withdrawal of the legislation indefinitely would reduce immediate ethno-religious and regional tensions with Serbia and reduce the risk of protests along the border. However, if Kosovo chooses only to delay implementing the legislation, tensions will simply be put ‘on hold’, as they have been since September 2021.
- Even if Kosovo scraps the legislation, there will be extremely limited progress with regard to Serbia’s ambitions to join to the EU. Serbia will almost certainly not change its stance vis-à-vis recognising Kosovo as an independent country.
Scenario 3: Armed conflict between Kosovo and Serbia (5%)
Scenario outline:
- If Kosovo passes the legislation, Serbia will possibly send paramilitary groups to Kosovo while deploying its military along the borders.
- It is highly unlikely that Serbia will increase regional tensions to the point of launching military action. Disputes between Kosovo and Serbia are not a new phenomenon, and recent clashes suggest most violence will take place between Serbian civilian protesters and the Kosovan authorities in border areas.
Impact:
- Armed conflict between Kosovo and Serbia will likely lead to a significantly increased NATO presence in the region. According to media sources, around 3,800 NATO peacekeepers are currently stationed in the north of Kosovo. This presence will ultimately make open conflict highly unlikely (hence a remote 5 percent chance).
- If conflict between Kosovo and Serbia will likely lead to a significantly increased NATO presence in the region. According to media sources, around 3,800 NATO peacekeepers are currently stationed in the north of Kosovo. This presence will ultimately make open conflict highly unlikely (hence the remote 5 percent chance).
Forecast
Ethno-religious tensions will almost certainly remain elevated in Kosovo in the coming weeks and months. Relations with Serbia will also remain tense in the coming months, though an escalation to armed conflict between the two countries is unlikely. The presence of NATO forces in Kosovo will almost certainly discourage Serbia from escalating tensions to the point of a military confrontation. Considering that the EU is Serbia’s largest donor and most important trading partner, Belgrade is unlikely to risk jeopardising its ties with the EU by escalating the conflict with Kosovo.
While armed conflict between Serbia and Kosovo is unlikely, the EU will almost certainly step up its mediation efforts to prevent escalation ahead of the potential introduction of the new requirements from 1 September. Kurti and Vučić will meet in Brussels on 18 August to discuss the current dispute. However, at the time of reporting it seems unlikely that Kurti will comply with his Western partners’ recommendations to postpone the implementation of the new requirements indefinitely.
If the EU fails to lead fruitful discussions between the two parties in the coming weeks, a spike in demonstrations and violence in northern Kosovo’s border areas is almost certain. This would likely include arson attacks against registration offices, as happened last year. Serbia is also likely to place its armed forces on high alert, though the presence of KFOR will likely discourage Belgrade from resorting to military action. Cross-border travel and transport will almost certainly be disrupted, negatively impacting business operations in the region. (Source: Sibylline)
08 Aug 22. European Union: EU adopts gas emergency plans ahead of next heatwave, increasing policy and business risks. On 5 August, European Union member states approved the bloc’s emergency plans to reduce gas consumption across the EU by 15 percent until next March. Poland and Hungary opposed the new legislation, however, it still passed with the required reinforced majority. The new emergency plan will likely lead to further EU countries introducing restrictions on energy use for industries, similar to the ones recently introduced by Spain. As a new heatwave is scheduled to reach Europe by 10 August, exacerbating droughts and water shortages across the region, many countries will likely introduce new measures as early as this week. The emergency plan will almost certainly disupt business operations and elevate policy risks across industries. Furthermore, the Commission is also looking into introducing a gas price cap that could reduce financial pressures on household but would further increase policy risks for the energy industry. (Source: Sibylline)
08 Aug 22. Greece: Surveillance scandal will increase threat of government instability. On 5 August, Panagiotis Kontoleon, the head of the Greek intelligence and close ally of Prime Minister Kyriakos Mitsotakis, resigned following claims by journalists and opposition party members that they have been subject to illegal espionage. The leader of the opposition Socialist party, Nikos Androulakis filed a complaint with the country’s Supreme Court late July, stating the he was subject of illegal surveillance by the “Predator” software programme, and requested a parliamentary investigation into the matter. Following the official claim, the secretary general of the Prime Minister’s office also offered his resignation on Friday. The government claims that state services have not used Predator. Nevertheless, the scandal around potential surveillance of domestic political and media figures will undermine trust in the government significantly. Moreover, if high-level resignations continue, or it is found out that Greek state institutions did use the Predator software, threats to government stability will increase further, possibly resulting in government collapse. (Source: Sibylline)
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