Lukashenko says he may quit as president
Belarus hits EU with tit-for-tat sanctions
Belarusian police introduce colour-coded torture system for detained protesters
Kremlin publicly condemns Belarusian police brutality in hint of growing frustration with Lukashenko
Russian services PMI rises to 48.2, but remains underwater as recovery continues to slow
Russia to start mass vaccinations on December 7
Azerbaijan’s Aliyev calls on Armenia, Russia, Turkey and Iran to assist in creating Nakhchivan land corridor
FPRI BMB Russia: Sberbank releases a three-year transformation strategy to e-commerce concern
Ukraine’s banking sector continues recovery, but profits still lagging last year
Ukraine’s real wages up over 10% in October but have been stagnant in dollar terms for almost a year
FPRI BMB Ukraine: Public has confused opinions on resolving the Donbas conflict
Western Balkans plus Ukraine subsidised coal with over €900mn in 2018-2019
Estonian parcel robot firm Cleveron eyes €30mn state loan
Estonia’s chief auditor says €1bn in state COVID-19 loans issued haphazardly
Economic sentiment in CEE falls in November as recovery momentum splutters
Estonian animation studio Imepilt to hold IPO
Brighter days ahead: The economic bounce back in 2021
Central, Southeast Europe stock markets jump in anticipation of COVID-free future
VISEGRAD BLOG: An easing of trade tensions but still an uncertain situation for export-oriented Central Europe
Hungary's PM risks isolation as Poland mulls dropping EU budget veto
Poland ready to back down from veto of EU budget
Hungary's ruling party in damage control mode after MEP sex scandal bombshell
Poland’s PMI remains stuck just above the improvement line at 50.8 in November
Czech companies dominate this year’s Deloitte Technology Fast 50 CE
Coronacrisis to get worse before it gets better forecasts wiiw
EU diplomats say no chance of Bulgaria removing veto for Skopje to start EU accession talks
IMF says downside risks to Albanian economy are increasing
EU ministers fail to agree on launch of accession talks with Albania and North Macedonia
Western Balkans commit to green agenda and regional common market at Sofia summit
Bosnia’s opposition ousts nationalist parties in major cities
Bosnia’s main ethnic parties fight to hold onto power in local elections
Southeast Europe’s EU members to get biggest boost from next budget and recovery funds
Bulgaria imposes 3-week lockdown to slow down COVID-19 spread
CEE politicians highlight trade and security ties as they congratulate Biden
Breakaway Transnistria fully under Sheriff’s control as Obnovlenie party sweeps board in parliament election
Moldova’s presidential election is over, now the battle for the parliament begins
Moldova’s foreign policy reset
Russian establishment quick to congratulate Moldova's new president-elect
Rising COVID-19 cases put intense pressure on CEE healthcare systems
MEPs urge European Commission to act against Hungarian media financing in North Macedonia and Slovenia
North Macedonia mulls decriminalising cannabis to boost tourism
Retail surpass pre-crisis peak as Romanians shop instead of holiday
Romania’s stability election
Romanian venture capital firm Catalyst launches new €40mn-50mn fund for TMT
The state is back in business
Slovenian PM Jansa stands alongside Hungary and Poland in EU rule of law row
BEYOND THE BOSPORUS: Turkish number crunchers deliver November inflation surprise of 14%
Erdogan needs to go says analyst assessing Turkey’s economic collapse
Ukraine strikes deal with Turkey to produce killer drones instrumental in Karabakh conflict
In Karabakh deal, as many questions as answers
Protesters flood Yerevan demanding Armenia’s “traitor” PM quit over Nagorno-Karabakh surrender
Who emerge as the real winners from the bloody Nagorno-Karabakh conflict?
Below average 2020 wine production destined for volatile and uncertain global market
Iran calls on Saudis to limit $67bn defence spending to Tehran’s $10bn
Iranian prosecutors pledge to pursue Trump for Soleimani killing even after he leaves White House
No reaction from Kazakh elites as bombshell FT report says Nazarbayev’s son in law siphoned millions from pipeline scheme
UK court freezes $5bn in assets connected to fugitive Kazakh banker Ablyazov
Attack of the Debt Tsunami: global debt soars to a new all-time high
Kyrgyzstan's proposed new constitution provokes widespread revulsion
Kyrgyzstan's China debt: Between crowdfunding and austerity
CFC joins RWC in assessing KAZ Minerals buyout offer as under-valuation
China business briefing: Not happy with Kyrgyzstan
Mongolian coal exports to China paralysed as Beijing demands virus testing of truck drivers
Mongolia fears economic damage as country faces up to its first local transmissions of coronavirus
Mongolia in lockdown after suffering first local coronavirus transmissions
Mongolia’s wrestling culture: From the grasslands to the cage
No surprises in Tajikistan as Rahmon retains presidency with 91% of vote
A Tajikistan poised on verge of economic calamity set for vote
Tajikistan revives on-off dispute with Iran
Turkmenistan: The dammed united
Turkmenistan: Everybody yurts, sometimes
Dirty money investigation reviews identified payments worth $1.4bn linked to Turkmenistan
Uzbekistan unveils extensive privatisation programme
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Germany just celebrated the 29th anniversary of its unification and the 30th anniversary of the fall of the Berlin Wall. The end of the Cold War was supposed to usher in a new era of peace and prosperity, don’t you recall. Indeed, after the initial chaos of the 1990s following the collapse of the Soviet Union there was a decade-long boom and a time of optimism as all the emerging markets began to grow strongly lifting the standard of living of nearly half of the world’s population.
But this decade has been a disaster. The old rivalries have reappeared. The US and Europe have faced off against an increasingly aggressive Russia that has turned to China for support. Russia has rearmed and China is engaged in an escalating trade war with the US and is now also rearming. Beijing shares the Kremlin’s criticism of a “unipolar” world led by the US. The world is breaking into two again; a bipolar geopolitics is emerging that has been characterised as “the decline of the West and the rise of the rest.”
How did we get here?
The opening panel of the Dialogue of Civilisations Research Institute (DOC) conference, an annual conference on the Greek island of Rhodes, tackled this problem and surprisingly came up with a fairly coherent analysis and several concrete potential solutions to the problems – tellingly expounded by the women on the panel.
The collapse of the communist ideology wasn't limited to the European theatre and the end of the showdown between the USSR and Nato members, but led to a fundamental change in mentality around the world.
Communism was rejected, but the change was not limited to the abandonment of political ideologies; there was a change in the economic model used by all countries. The forces of globalisation and the ‘shrinking size’ of the world, driven by the advent of the internet, also led to a rapid transformation of emerging markets like India, Brazil and the emerging markets in general, which were nominally capitalist societies before. As all these new countries begin to come into their own, tensions have risen, as personified by US President Donald Trump and manifested in the clash between Russia and the Transatlantic allies.
“We are living in turbulent times and the most worrying development is the behaviour of the president of the United States. Never before has a president of such an important country behaved in such an unpredictable way and made the world uncertain,” Martin Schulz, former president of the European Parliament from 2012 to 2017, said.
Schultz pointed to the decision by Trump to withdraw US support that was provided to the Kurds in Syria as they were comrades-in-arms who’d fought with the Americans to destroy Islamic State (IS). He observed that the move, even opposed by leading lights in the Republican party, was symptomatic of what is going on. “This development could lead to war,” warned Schultz, adding that the events in Syria are only an example of the increasing unpredictability in the world.
“After the fall of the Iron Curtain we hoped that we would live in a more stable world and what is going on now, in my eyes, is without precedent,” said Schultz.
The panel concluded that these tensions are at root caused by failures of the model that was driving the world 30 years ago. Schultz argued that the consensus was that the political and economic model had been settled, that growing international trade was going to deliver all the goods needed for everyone, that markets should be open and that globalisation was an unstoppable force. Greta Thunberg referred to this problem in her controversial “How dare you” speech during September’s UN Climate Week, lambasting the “fairy tales of eternal economic growth.”
“Where we are now is that this growth model that just focused on just GDP and GDP per capita did not deliver. We have a clear challenge of inequality – even in in the developed markets. The top 10% wealthiest people in OECD countries have 50% of the wealth. Almost half the population have not seen their situation improve and that is fuelling populism. We are not for dogmas. We are for results,” said Gabriella Ramos, a Mexican who lives in Paris where she is the OECD chief of staff and sherpa to the G20.
The rising inequality is a function of the failures of the economic model, and that same inequality is a corrosive agent on politics that is preventing solutions. Ramos went on to highlight the climate crisis, which is another aspect of the same problem and why the failure of the economic model is also on the agenda of activists like Thunberg.
“And we are not even growing, which was the basis of our model!” exclaimed Ramos. “We have this idea that markets will always balance themselves, but it is not working.”
“The inequalities of wealth and income have led to inequalities of access to politics. We are democratic? But who pays for elections? Where does the money come from? We need to understand that even if the elections are based on a democratic system, they are sometimes skewed towards economic interests,” said Ramos.
Ramos followed up by pointing to an OECD study that found economic mobility has rapidly declined in recent years: a child born into a poor family has only a 15% chance of improving their social standing, whereas one born into a family where both parents have been to university has a 65% chance.
There is a stratification of society into haves and have-nots where average incomes have gradually sunk in real terms over the last 20 years. It has led to anger and frustration that are driving the rise of populism and the far-right.
Whose values count most?
The answer to all these problems is to return to our fundamental values, which have got lost in the fog along the way. What those values actually are and how they should be implemented is itself a fraught question.
Vyacheslav Nikonov, chairman of the Committee on Education of Russia’s State Duma and dean of Moscow State University School of Public Administration took a confrontational view, but voiced many of the complaints coming from Moscow about the way the world is run.
“Trump is a symptom of the problems and not a cause,” said Nikonov, who also is chairman of the Russian BRIC research institute. “He is doing exactly what he said he would do during the elections. In fact the world is getting more and more predictable. Since the fall of the Berlin Wall we have seen the relative decline of the West. On the day the Berlin Wall fell the West accounted for 80% of the global economy. Now it’s closer to 40%. The rise of the rest is clear. China and India account for 60% of growth.”
Ironically these countries adopted the very same economic model that the West has been using and have driven the rise of the rest. Moreover, that rise has been aided by active investment and help from the West: the term BRIC, for Brazil, Russia, India and China, was itself coined by Goldman Sach’s chief economist Jim O’Neil to sell investments in emerging markets to its clients.
But Nikonov went on to criticise the West for its arrogance in trying to impose its values on Russia, which is a sovereign nation that will act in its own interests.
“You describe the Western values, but always as if they are superior. The values are fine. Who is against freedom of speech or democracy? But we in the East do not buy the superiority. We also know anti-Semitism, racism, colonialism, fascism, Nazism, communism – these are all Western ideas. They were not invented in India, Russia or China,” Nikonov said.
“If we are to write new rules they would have to reflect the decline of the West, but I can’t image Trump or the EU negotiating anything. That means we are moving into a rule-less world where the old factors of power matter. And we are moving into a world there is a new bipolarity emerging. And it is not just America and China: it’s broader. It's the West vs the Greater Eurasia,” says Nikonov, who followed up by pointing out that Western values didn't prevent the West attacking Iraq, Afghanistan and Libya.
Visibly angered, Schultz shot back: “What is the decline of the West? What is the West? It is not only a geographical topic. [Author Francis] Fukiyama talked about values as the definition of “the West.” The freedom of the individual and human rights, and so on. The West is an idea. The war in Iraq was a US project and rejected by the UN and my country Germany. But part of the values is countries have to have their own sovereign right to decide their own policy,” said Schultz, who missed the irony of his own statement as it is precisely this right to make up its own mind that Russia cites in objecting to the Western criticism of its actions.
This outbreak of fencing highlighted the misunderstandings and resentments on both sides in what have become prickly relations between Europe and Russia in particular. Nikonov says the West is hard to negotiate with as there is an presumption that its position is a priori the correct one, but that Russia was willing to negotiate and on the basis of shared values, as Russia remains a European country.
Shada Islam, director for Europe and Geopolitics at Friends of Europe, an influential NGO in Brussels, came to the rescue with a pragmatic solution: “The important point in this debate is that the European values are actually universal values. They are the fundamental rights values. Europe has adopted them particularly forcefully, but all the countries of the world have signed up to the Declaration of Human Rights. We all have these values in common.”
Islam went on to point out that Europe is splintered at the moment. It’s not a question of binary choices, but a multiple vector choice with lots of moving parts.
Islam suggested that we get rid of the G7 as it has “passed its sell-by date”. “We need to reinvigorate the G20 and make it into something more substantial than it is at the moment as it is just some sort of crisis mechanism at the moment,” Islam observed.
She also suggested that we need to “abandon the arrogance” that Europe “owns” the job of head of the IMF while the US “gets the World Bank.”
“And most important we have to abandon this unreliable partner, the transatlantic alliance, and commit ourselves to Asia – and beyond that to Afro-Eurasia,” said Islam. “Actually I am energised. Moments of transition lead to change. It’s not the decline of the West but the rise of the rest and it could be that we are on the verge of reorganising the world. But it is important that we in Europe don't hold power. We have to share it with the rest of the world.”
Ramos concluded that the challenge faced by the world, and the West in particular, is not the issue of there being a binary world or ideological clashes, but the fundamental problem of a model that does not deliver on its promises to people and thus drives the rise of the right and populism.
“We need to rethink our priorities. We need a new model that doesn't only embrace economic growth, but also the needs of the people and the planet, a model that is inclusive and not exclusive of everyone,” said Ramos.
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