Mediterranean and North Africa Intelligence: Contemporary Maritime Security Threats

Conference Proceedings, Research Institute for European and American Studies

Date of Publication: August 2015

http://rieas.gr/images/conferences/rieasexejuly15.pdf

(Photo from L to R: Ms Aya Burweila and Ms Antonia Dimou)

PREFACE

The East Mediterranean and North Africa are geopolitically significant regions which are, however, overwhelmed by security problems considered as vital ranging from interstate conflicts and transnational threats with most prominent illegal migration, human trafficking and terrorism. Equal important, the crisis in Syria and the challenges of a changing Egypt continue to drive regional politics and economics related to energy.

A major area of concern for the majority of regional countries involves the establishment of a maritime security regime that includes peace and security, territorial integrity and security from crimes at sea. No country can cement partnerships that realize its full potential while the regional maritime domain, similar to critical infrastructures, is run the risk of being exploited to cause harm to people and disrupt economic stability and prosperity.

What some of the challenges to stability present, the magnitude of their complexities and whether they can be addressed in the form of coordinated policies, have led to the formation of the agenda of the 2nd training executive seminar of the Research Institute for European and American Studies (RIEAS).

A central topic of the seminar was natural gas cooperation as driver to the securing of energy supply not only for the countries of the East Mediterranean but also for Europe. It is broadly acknowledged that the East Mediterranean is a complicated piece of real estate, thus infrastructure partnerships between countries, that have long-defined themselves in opposition to each other, can provide real incentives to develop a new psychology of normalization.

The development and exploitation of gas resources in Israel and Cyprus, and downstream export economic options have been explicitly addressed in the seminar’s context with special focus on maritime and pipeline security. Equally primary theme has been the presentation of Libya and the likelihood to turn itself into a united state, a failed state, a partitioned state, or non-state. The factionalization that continues to dominate Libyan politics has fueled domestic instability, while the country’s security forces have been easily routed by ISIS which has acquired advanced equipment, financial resources and training camps inside the territory of Libya. The use of Libya by Jihadists, as gateway to the Mediterranean Sea and as a key operating hub for illegal trafficking to Europe, has also been analyzed.

An additional core issue of the seminar was the presentation of policy responses to people trafficking with Greece serving as a case study. Migrants, refugees, asylum seekers, stateless persons and, under specific circumstances, internally displaced persons are usually victims of people trafficking. Thus, the combat of this crime entails on the part of Greece the enforcement of national and European policies alike. In articulating their presentations, instructors provided concrete answers to complicated matters.

As the chairman of the executive seminar noted in his concluding remarks, “instructors successfully managed to enhance our understanding of complex issues”. This precisely has been the goal of RIEAS. In the context of its training activities, RIEAS sustains keen interest in the affairs of the East Mediterranean and North African regions and supports dialogue to identify contemporary risks and provide solutions.

Antonia Dimou,

Editor,

Athens, August 2015

Webster Athens in RIEAS Panel for Book on Security, Intelligence in Greece

Reproduced by Webster University, 

http://news.webster.edu/academics/2015/athens-rieas-security-book.html, 

Date of Publication: December 18, 2015

   (Photo from L to R: Dr. John Nomikos, Amb.Ioannis Korantis, Mr.Costas Papachlimintzos, Dr. Joseph Fitsanakis, Ms Antonia Dimou and Costas Papadopoulos)

Faculty from Webster Athens participated in a book presentation organized by the Research Institute for European and American Studies and featuring a panel of representatives from Webster, Greek news media and the diplomatic and intelligence services.

They discussed concepts from the book, "National Security and Contemporary Intelligence Services in Greece," authored by Joseph Fitsanakis of Coastal Carolina University, who has built the Security and Intelligence Studies program at King University and has conducted extensive research on communications interception, intelligence reform, and transnational criminal networks. 

John Nomikos, head of the History Politics and International Relations department at Webster Athens,  noted that in the current information age, people are constantly bombarded by facts, opinions, speculations, and rumors from every direction. Television carries into homes each night unsettling images of misery and death from around the world. Computers draw people into an interactive sphere where e-mail gives, and expects in return, ever more rapid exchanges of information. The cellular telephone assures that a flow of information will follow everywhere: into a car, the mall, and the meeting place.

He acknowledged that as Fitsanakis suggests, no doubt that since the intelligence community works its way into the 21st century, complex information technology and methodologies need to be mastered and integrated into the intelligence process. He confirmed that cyberattacks against military and political networks have multiplied in frequency and technical complexity.

The head of the Admissions Office at Webster Athens, Antonia Dimou, provided an overall approach to the book, stressing that the relationship between democracy and the character of secret intelligence presents a composite two-sided puzzle. On one side, the very concept of democracy demands that an intelligence agency serves democratic interests by providing one country’s security and preparedness against potential threats both internal and external, she said. The core notion is that a stronger country can turn itself into a heaven where democracy can continue to be practiced. On the other side, intelligence investigative methods in many countries occur outside the context of democratic control and oversight mechanisms, thus surfacing an inherent conflict.

She highlighted the case of Greece noting that the geopolitical upheavals in the East Mediterranean and the wider Middle East especially after  9/11, and the evolving severe economic crisis that Athens undergoes necessitate more than ever before an efficient national intelligence agency to counter multiple threats ranging from criminal networks to terrorism. She voiced that it is no secret that one of the prime challenges to Greece’s national security is the one posed by the continuous flow of refugees and/or migrants as a number of foreign fighters who have joined ISIS pretend to be migrants/refugees with the aim to penetrate the European Union and initiate terrorist attacks on European soil.

The book was also presented by Ambassador Ioannis Corantis, former director of the Greek Intelligence Service, and Costas Papadopoulos, editor of Potamos Publishing Company. The event was moderated by Costas Papachlimintzos, managing editor of ESTIA newspaper.

The book presentation was attended by Webster Athens vice-chancellor for Academic Affairs Susie Michaelidis, academic advisor and Special Programs coordinator Ellie Despotaki and intern Nadia Black.

Greece and Sustainable Development Goals (SDGs)

By Antonia Dimou

SUMMARY

The present artifact centers on Greece, a small donor country that despite its severe economic crisis contributes to the realisation of the Sustainable Development Goals (SDGs) by 2030. The challenge for Greece to either sustain or increase its ODA levels to finance the SDGs lies in Domestic Resource Mobilization (DRM). The artifact’s search for DRM centers on the Greek public sector and its ability to increase tax resources through an effective tax administration citing three distinct strategic options for its establishment, namely facilitating compliance, enforcing compliance and improving governance. The artifact is addressed to policy-makers, economists and economic research institutes.

The artifact can be accessed at:

https://docs.google.com/presentation/d/1vA32ElPZi2Q3u0J84tC4mxE8sJOavv3eT4UVIpMExcc/pub?start=false&loop=false&delayms=5000

Mideast Regional Chess Games for Strong Players: The case of ISIL

By Antonia Dimou

Originally published: In-depth Newsletter (Vol. 12, Issue 3), October-November 2015, Cyprus Center for European and International Affairs, University of Nicosia, 
http://www.cceia.unic.ac.cy/index.php?option=com_content&task=view&id=452&Itemid=452

(Photo from: warincontext.org)

The conduct of two separate airstrikes in Syria, led by the United States and Russia respectively, comes as part of a strategy to defeat and degrade the Islamic State of Iraq and the Levant (ISIL) in pursuance of revisiting the international response to the Syrian conflict. The prolonged neglect of the conflict in Syria has admittedly created power vacuums, paving the way for extremist groups to gain and control territory. The prospect of de facto territorial divisions is a reported reality with territory under control of ISIL; territory held by the Assad regime; and territory controlled by enclaves of diverse fighter groups.

ISIL is deemed to be an existential threat to Arab and Muslim states as well as to religious minorities and western countries. In fact, its military victories in Syria and Iraq make it the first Sunni extremist group to control territory, enhancing its ability to recruit fighters, acquire wealth and additional territory, and project a global end-state. ISIL’s declared goals are to defeat Damascus, capture Baghdad, take Mecca, destroy the Kaaba, and ultimately capture Jerusalem. Also, as publicly declared, it plans to turn its attention to Asia, the West, and the United States. According to the ISIL map of the world, as released by British Daily Mail on 30 June 2014, a five-year plan entails the group’s expansion to the Middle East, North Africa, parts of Asia, the Balkans and European countries such as Greece, Austria, Cyprus, Italy and Spain. It is in this context that security services of Arab and European countries compare the current situation to pre-9/11 Afghanistan.

At a time when no one is confident that ISIL will be defeated quickly or easily, a series of questions emerge and are related to the group’s standing with most prevailing the following: What is ISIL’s ideology? Where does the financial support and military equipment come from? Why people join ISIL? What are the main policies of containment?

ISIL’s military inspiration and ideology began with the rise of Wahhabism in Arabia in the late 18th-early 19th century, culminating in 1804 in the destruction of the Shia shrine cities of Karbala and siege of Najaf. The religious promulgations of its leader, Abu Bakr al-Baghdadi, are grounded in legitimate Islamic symbolism, jurisprudence, and Quranic readings, and this is the reason why so far no single religious leader or institution has countered effectively the ideological claims of ISIL.

Notably, ISIL claims that worship of idols and shrines like the Kaaba and Islamic prophet Muhammad’s gravesite have replaced worship of Allah and thus must be destroyed. Evidently, ISIL’s declaration of war is against enemies considered as posing a threat to Sunni Islam, namely the West, Shi’a Muslims including the Assad regime, and the regional monarchs who have failed to defend Sunni Islamic values.

When it comes to ISIL’s military equipment, its weaponry is largely USmanufactured, and the group has also soviet-designed T-72 tanks captured from the Iraqi army, and helicopters, but no pilots. It is noteworthy that the Iraqi military was easily defeated by ISIS because of the military’s poor training, more as a police than a military force, lack of adequate military campaign experience, and the replacement of Sunni officers by untrained and unskilled personnel. ISIL is not a single, unitary force but rather six or seven separate groups operating under a common banner. Its ranks include exBaathists, Naqshbandi fighters, Ansar al-Sunnah, Kataib al-Fateh, and other factions. The group reportedly generates revenues, which contribute to the expansion of recruitment, through exports of unprocessed and often contaminated crude oil at about 30% of the market value for a profit of about $1 million a day, and through the maintenance of a low level of natural gas production from seized fields near Kirkuk.

ISIL’s success in recruitment lies in its ability to create a new “tribe” with common cause and goals. Foreign fighters joining ISIL come from diverse backgrounds, and the majority appears to be well-educated and from middle class backgrounds, not the lowest stratum of society as many suppose. There are multiple reasons people join ISIL, such as the search for affinity, personality qualities or characteristics such as inclination for violence and sadism, adventure, financial motivation, the success in depicting rival groups as too lenient, especially in contrast to Al-Qaeda, and solidarity with Syrians. Social media remains an important means of advertising and recruiting. For example, many foreign fighters use VK.com, the Russian version of Facebook, because it is neither blocked nor censored.

Factors that account for ISIL’s territorial successes lie in frustrated Sunni tribes and politicians who continue to support the group’s efforts to advance through Iraq and Syria, the existence of weak military and civilian institutions, a power vacuum in eastern Syria and western Iraq, and rising sectarianism. It is argued that, in the long-term, ISIL could not sustain its current level of territorial successes given that the group’s 30,000 fighters could not govern 8 million people without being able to provide basic services, such as electricity and water. It is estimated that it is for this reason that the group employs “spectacular violence” as means of boosting its ability to remaining in power.

For an effective ISIL ideological containment, Arab and western governments need to work with local communities, local leaders and families towards the same goal which is the cease of the killing of innocents. Educational reform and “people-to-people” contacts are keys for the de-radicalization of people and prevention of jihadist recruitment.

A central role also needs to be played by moderate religious authorities, when it comes to the battle of ideas, to counter ISIL extremist arguments in the media. Additional policies in containing ISIL efforts to recruitment can include (a) the development of a strategy to prevent ISIL from sustaining itself through energy sales by publicizing and sanctioning governments and companies doing business with ISIL; (b) Enforce the legislation that has been passed in 30 countries that bans ISIL; and, (c) Offer education and the right to work for refugees in the region. Notably, a significantly high number of Syrian refugees in camps have not attended school for the last three years, thus creating an eventual pool of young people ripe for recruitment as the next generation of fighters by radical Islamists.

No doubt that a regional and international consortium is the only way to invalidate ISIL’s narrative towards youth, debilitate the group by targeting its financial resources, and retake ISIL-controlled areas. Because as it is aptly highlighted by American former senator John Ashcrof: “If necessity is the mother of invention, it is the father of cooperation”. Time is definitely of essence for the consortium’s players to genuinely cooperate like never before…

Reproduced by:

• Research Institute for European and American Studies, November 1, 2015, http://www.rieas.gr/research-areas/2014-07-30-08-58-27/middle-east-studies/2502-mideast-regional-chess-games-for-strong-players-the-case-of-isil
• Webster University, College of Arts and Sciences, November 17, 2015, https://www.facebook.com/CollegeofArtsSciencesWebsterUniversity/posts/10153778143076204

Jordan as Gateway to Greek Businesses

By Antonia Dimou

Original Publication: April-June 2015, Middle East and Mediterranean Journal, 

http://www.eliamep.gr/wp-content/uploads/2015/11/MiddleEastMediterraneanELIAMEP0402015cccECONOMICS1.pdf

Reproduced: Webster University, College of Arts and Sciences 

https://www.facebook.com/CollegeofArtsSciencesWebsterUniversity/posts/10153768280576204

                 

Greece	Jordan

 (Photo From: https://en.wikipedia.org/wiki/Greece%E2%80%93Jordan_relations)                                            

Jordan is a free market oriented economy that offers a wide range of incentives to international investors. The kingdom’s Investment Promotion Law provides freedoms from customs and duties, unrestricted transfer of capital and profits, and tax income exemptions. Jordan is thus considered as an ideal base of investment braced by its strategic location in the heart of the Middle East that ensures unimpeded access to the markets of Asia and Africa. The growth oriented business environment of the kingdom largely explains the interest of Greek companies either to advance exports or transfer activities and open representation offices for investment security, stability and cash flow reasons

.

The timely interest of Greek companies to establish a presence in Jordan is accelerated by the existence of the Qualified Industrial Zones that give products NAFTA-like free access to the American market, and ensure a duty free entry, no quotas and an exquisite infrastructure. The promotion of Greek products in the Jordanian market is facilitated through a number of agreements signed over the years between the Athens Chamber of Commerce and Industry, the Federation of Greek Industries and the Exporters Association of Northern Greece with the counterpart Jordanian institutions. Also, frequent high-level political visits come to corroborate the constructiveness of interstate relations kindling trade and business partnerships that can yield mutual economic benefits.

The negative trade volume for Greece which exports to Jordan iron wires, plastic, fish, wood, soybean oil, processed petroleum products and foodstuff, can be reversed with the employment of a strategy by Greek companies to tap into rising demand in the kingdom, and breathe life into economic partnerships in the form of joint ventures. Assistive to reinforcing trade is the signing of an agreement on Customs Cooperation and the long-awaited accord on the Avoidance of Double Taxation.

The business performance between Greece and Jordan confirm that agreements lay the legal framework for sustainable transnational cooperation. It is no secret that the two signed agreements on tourism and the protection of investments as well as the accord on scientific and technological cooperation have been instrumental in the expansion of Greek economic presence in the kingdom.

Over the last decade in particular, a number of Greek companies have been active ininfrastructure projects, with most prominent, Aegek that built two dams; J&P/Avax that participated in the operation, maintenance, expansion and rehabilitation project of the Queen Alia International Airport in Amman which consisted the building of a new terminal of a total 90 thousand square meters surface; Eurodrip S.A. that acquired the National Drip Irrigation Company located in Amman to cater to the growing Middle Eastern Markets and introduced "In Line Pressure Compensating Drippers" pipes to Jordan; Exarchou-Nikolopoulos Consulting Engineers Overseas S.A. that provided technical expertise in hydraulics-hydrology and water supply projects; Intracom Jordan that established partnership with Oracle, a leading supplier of software for information management and the world's second largest applications software company; Metka S.A. that provided engineering, procurement and construction services for the expansion of Samra Thermal Power Station; and, Terna Energy that participated as consortium partner in the building of a wind farm at Al-Kamshah in the Irbid region.

Evidently, Jordan is an attractive place for Greek business and investment whose strategic location has turned it into a regional hub and thus a gateway to reaching third markets. Greece, amid recession and a severe cash crunch, is in need of rapidly expanding its regional business presence so that maximization of value, not complexity, is achieved. In such a time of crisis, Jordan offers to Greek businesses the opportunity to escape from the vicious cycle of recession and expand. An opportunity that must not be neglected because, as ancient Greek Demosthenes aptly once said; “Opportunities can often prove to be the beginning of great enterprises”…

GAS DISCOVERIES IN THE EAST MEDITERRANEAN: A CATALYST FOR REGIONAL COOPERATION

By Antonia Dimou

Original Publication: In-depth Newsletter (Vol 12, Issue 3), Cyprus Center for European and International Affairs, University of Nicosia, June 2015, http://www.cceia.unic.ac.cy/index.php?option=com_content&task=view&id=452&Itemid=452

The discovery of natural gas resources in the East Mediterranean promise important benefits of energy security and economic gains. A 2010 US geological survey showed that the Levantine basin - offshore Israel, Gaza, Lebanon, Syria and Cyprus - could hold as much as 120 trillion cubic feet, thus securing supply of energy not only for the countries of the region but also for Europe.

Regional countries are currently at various stages of exploration and development which are however fraught by political risks and policy dilemmas. Thus cooperation, conflict resolution and the creation of interdependency structures are prerequisites to unlock the potential of the region and safeguard the unimpeded flow of future gas production.

A leading country for regional energy cooperation is Israel because the preparations to extract gas from its major fields, Leviathan and Tamar, are already at advanced stages. Israel looks into a combination of export options on the basis that gas is a game changer stressing the inevitability between macroeconomics and geopolitics. In this context, priority is given to Jordan as disruptions of energy imports from Egypt have impacted the Kingdom’s public budget and fiscal space for broader development goals. The sale of Israeli gas to Jordan falls within Amman’s broad strategy for transformational change in energy supply, including a diversification of natural gas imports from alternative sources in the region.

Noble Energy, a heavy foreign investor in Israel’s fields, has signed a contract worth $500 million to supply 66 billion cubic feet of gas from Israel’s Tamar field to Jordan’s Arab Potash and its affiliate Jordan Bromine. Leviathan partners Noble and Delek have also signed a non-binding letter of intent with Jordan’s National Power Electric, which will act as buyer of the gas, to supply 1.6tn cubic feet over a fifteen-year period. Other investigated projects focus on the construction of a 25-kilometer pipeline that would connect northern Israel to northern Jordan, facilitating the supply of natural gas to major Jordanian manufacturing plants. It is broadly acknowledged that infrastructure partnerships between Israel and Jordan can provide real incentives to normalize relations, given that the supply of cheap and reliable energy will bolster the kingdom’s economy and that Leviathan partners’ export earnings will increase.

An additional option for the monetization of Israeli gas centers on Egypt. Cairo’s political instability, heavy regulations, and ceiling on onshore prices have transformed over the years the Arab country from a gas exporter into a heavy energy importer. Although Egypt’s total proven reserves are approximately 2.2 trillion cubic meters, its production levels and reserves have not improved despite technological breakthroughs and massive capital expenditures, leaving two major LNG facilities in Damietta and Idku virtually idle.

Thus, pipelines from Israel’s gas reserves to Egypt for liquefaction and re-export has become a real choice, taking into account the close distance between the Egyptian and Israeli coasts. The option for the transport of Israeli gas to Egypt through either reversing the flow in the Egyptian export pipeline that crosses Sinai or the construction of a new undersea pipeline seems to be viable not only because of the royalties and revenues Israel will collect but also because of the potential positive impact on Egypt-Israel bilateral relations.

Already, partners of Israel’s Tamar field have signed a non-binding letter of intent to export up to 2.5 trillion cubic feet of gas over 15 years via the Damietta LNG plant in Egypt operated by Union Fenosa Gas, a joint venture between Spain’s Gas Natural and Italy’s ENI. Similarly, Leviathan partners reached a preliminary agreement with British Gas (BG), a British oil and gas company, to negotiate a deal to export gas to BG’s liquefied natural gas plant in Idku (northern Egypt) via a new undersea pipeline. If agreements are finalized, the benefits that will accrue for both counties will be multifold both geopolitically and economically.

Another export option to immediate neighbors includes a subsea pipeline from Israel’s Leviathan field to Turkey, but this is currently considered politically non-viable. There is widespread consensus in Israel that without a political reconciliation between the two countries, any advancement of an export agreement remains remote. Reservations are also expressed regarding financial security in any future framework energy agreement between Israel and Turkey, with suggestions centering on that financial security can be provided by a third party such as the U.S. Overseas Private Investment Corporation, the U.S. Export-Import Bank, or the German Euler Hermes company.

It is has nonetheless to be noted that the prospects of developing Israel's natural gas fields have been directly challenged since December 2014 by the Israeli Anti-trust Authority commissioner’s recommendation for investing companies to divest from the Tamar and Leviathan fields. The reason is that the Israeli regulatory framework foresees the establishment of a competitive gas market and upon this the anti-trust commissioner has the authority to block any trade agreement perceived as violating competition laws. If investing companies are forced to disengage, the possibility of developing Leviathan will be jeopardized for the coming years. Equal important, the resulting delays in progress on proposed supply projects between Israel and neighboring countries can damage the former's standing and credibility as a reliable supplier of gas resources. Thus, there is urgent need for a policy solution based on considerations that Israel cannot have a truly competitive market as there are two main fields and one meaningful buyer, which is the Israeli Electric Corporation. Practically, a policy solution can satisfy the terms of Israel’s anti-trust legislation which allows exemptions from limitations when a sector is viewed to have a natural monopoly.

No doubt that another significant player for regional energy cooperation is Cyprus given that gas discoveries can turn the island into a net natural gas exporter. The recent declaration of commerciality for the Aphrodite gas field by Noble, Delek and Avner Oil partners confirms the existence of substantial recoverable natural gas reserves in Block 12 of Cyprus’ Exclusive Economic Zone (EEZ). Commerciality of Aphrodite field presents a milestone to Cyprus’ transition from the stage of hydrocarbons exploration to that of exploitation, and a sugnificant step towards the monetization of the island’s indigenous natural gas reserves, both for domestic use, as well as exports.

Cyprus has already signed a Memorandum of Understanding with Egypt on gas cooperation for the downstream exploitation of output from the Aphrodite field by utilizing gas infrastructure existing in the Arab country via a direct subsea pipeline. Additionally, the inauguration of a tripartite partnership between Cyprus, Egypt and Greece with the signing of the Cairo declaration in November 2014 falls on maritime security and energy cooperation, and is currently reinforced by high level political and technical meetings. The Greek dimension in the partnership is important because of Greece’s strategic location at the crossroads of Europe, Asia and Africa that can cuddle Cyprus-Egypt as well as Israel energy cooperation by linking gas pipelines away from war risk zones.

In monetizing natural gas resources, Cyprus also needs to face a prime challenge associated with one of the multiple regional export options that are on the table, which is the pipeline project that would connect Israel’s Leviathan field to the Turkish coast. For the Cypriot side, the prerequisite to this export option is the resolution of the Cyprus conflict since the pipeline would have to cross Cyprus’s EEZ.

It is in any case noticeable that a vote of confidence related to the island’s regional energy standing is conceded by major oilfield services companies, such as Halliburton and Schlumberger that have based operations for the East Mediterranean in Cyprus.

No doubt that Cyprus’s natural gas discoveries present a game changer that poses all kinds of risks and opportunities for the island’s economic recovery. It is in this context that policies need to center on the creation of a Cypriot sovereign wealth fund, preferably based on the Norwegian model, to recycle revenues, and the establishment of a regional sponsor-supported non-governmental organization or council that would include energy companies, energy industry service providers, energy industry associations, and other related stakeholders in the region. Once established, the council could seek government participation from the littoral states of the Eastern Mediterranean. It could then become a point of reference and also an avenue of communication between governments and industry, as well as a clearinghouse for ideas and plans for mutually beneficial energy development in the region.

Evidently, the East Mediterranean discoveries provide a golden opportunity for energy security and cooperation, an opportunity that must not be neglected because as it is aptly highlighted in a famous Arabian proverb “three things come not back; the spoken word, the sped arrow, and the neglected opportunity”. It is in this spirit that regional countries coordinate policies and share best practices so that the opportunity is not neglected…

Reproduced by:

• Worldpress Magazine, June 16, 2015, http://www.worldpress.org/article.cfm/Gas-Discoveries-in-the-East-Mediterranean
• Research Institute for European and American Studies, June21, 2015, http://www.rieas.gr/research-areas/2014-07-30-08-58-27/balkan-studies-5/2438-gas-discoveries-in-the-east-mediterranean-a-catalyst-for-regional-cooperation
• International Affairs Forum, Washington DC, June 26, 2015, http://www.ia-forum.org/Content/ViewInternalDocument.cfm?ContentID=8346
• Energy International Risk Assessment, June 14, 2015, http://eiranews.com/index.php/en/open-forum/1794-antonia-dimou-gas-discoveries-in-the-east-med-a-catalyst-for-regional-cooperation

SECURITY JAM REPORT (2015): Reappraising Global Security

Photo from: http://www.friendsofeurope.org

Reproduced by RIEAS, 6 March 2015

The Security Jam Report was officially launched on March 4, 2015 at a debate with General Philip Breedlove, NATO Supreme Allied Commander in Europe and Ambassador Alain Le Roy, incoming Secretary General of the European External Action Service. RIEAS has been coalition partner and Antonia Dimou's, senior RIEAS adviser, recommendations were included in the final report. 

The report comes at a time of heightened tension including Russia's confrontation with the West over Ukraine and the new threat posed by the so-called Islamic State. European Union and NATO leaders must act urgently to set up a security organisation in the Middle East, create an EU consensus on immigration, asylum and human trafficking, and open up jobs for women in intelligence operations, according to the 2,300-strong Jam community. The experts also urged the creation of an international ‘Cyberpol’ agency. 

Read more at:
http://www.friendsofeurope.org/media/uploads/2015/02/SecurityJamReport2014-finalLR.pdf

THE DAY AFTER THE ELECTIONS IN GREECE: EMERGING CHALLENGES AND OPPORTUNITIES

By Antonia Dimou 

Senior Advisor, Research institute for European and American Studies, Greece, and Associate at the Center for Strategic Studies, University of Jordan

Photo from Deviant Art Magazine 

Copyright: Cyprus Center for European and International Affairs, Nicosia, Cyprus

The national parliamentary elections in Greece highlighted the victory for the first time ever of left-wing Syriza party which gained 36.3 percent of the voter turnout securing 149 seats out of 300, short of an absolute majority. The election outcome prompted the formation of a coalition government with The Independent Greeks far-right party that supports an end to austerity. On the other side of the political spectrum, until recently ruling conservative New Democracy lost 2.1 percent of its vote share as compared to the 2012 national elections, a percentage that when converted into numbers represents a loss of 53 seats. Social democratic party Pasok continued to shrink and became the last political force that surpassed the 3 percent threshold with seats being reduced to merely 13 from 33 in 2012. 

The ruling party managed to attract moderate voters with the adoption of a dual strategy of citizen-central and anti-austerity dimensions. In a country where citizens are perpetually squeezed in the middle of depression and the economy is in freefall with a loss of a quarter of Greek GDP from 2008 to 2014 and a phenomenal high public debt of approximately 175 percent of GDP, Syriza pledged to ditch austerity, deal with the evolving humanitarian crisis, proceed with structural reforms, disengage from the IMF-EU memoranda, and proceed with debt renegotiation either in the form of direct haircut or restructuring. 

Concrete declared coalition government policies include the increase of the minimum wage to €751; the reintroduction of a bonus pension for those who receive less than €700 per month; the provision of free medical care for unemployed; the abolition of the annual levy on private property introduced initially in 2011 as an emergency measure; the promotion of household debt restructuring; the connection of the public debt’s repayment not to the Greek budget but to economic growth; and, the inclusion of the country in the Outright Monetary Transactions (OMT) program of the European Central Bank that will purchase Greek sovereign bonds valued €60bn on secondary markets as means to defeat deflation and strengthen investment without new government debt. 

Red lines between Greece and its creditors as evidenced in the first days of Syriza’s governance have centered on the rejection of pursuing extra talks with the Troika of lenders’ inspectors, notably unpopular in Greece, and disallowance of the bailout’s protraction that has become politically and economically toxic, by alternatively proposing the forging of a newagreement with all major creditors. As estimated, the first Greek red line is expected to be respected given that the European Commission has already been involved in a process of searching substitutes to Troika in accordance with the 14th January 2015 verdict by Advocate General Cruz Villalón of the European Union Court of Justice on “the European Central Bank’s OMT program”, which explicitly declares that the European Central Bank has to refrain from any direct involvement in the monitoring of financial assistance programmes that apply to States concerned. That is to say, the European Central Bank is evidently prohibited by the European Court of Justice’s Advocate General to remain member of the Troika. 

When it comes to the second Greek red line, a chicken game, a situation where there is competition for a shared resource and the contestants can choose either conciliation or conflict, seems to currently evolve between Greece and Northern European creditor governments headed by Germany. The ruling party of Syriza has opted for a strategy which scopes to transform it into a political force initiating a European debate for the inception of a coalition that struggles against austerity and longs for growth plans. The recent tours of the Greek Prime Minister and the Finance Minister in certain European capitals fall in the context of forming a new European wide likeminded block that opposes the prevailing austerity orthodoxy. Emerging questions related to a series of challenges are recorded as follows: Given the Greek repudiation of the logic of austerity, what are the Greek intentions and how much room is there for stratagem? Does Greece opt for a direct debt haircut or restructuring? Is a Greek exit from the eurozone possible and what is the most likely scenario? 

The Greek economy has ameliorated since 2012 given that a persisting recession ended in 2014, public finances improved, and in the third quarter of 2014 a growth of 0.7 percent has placed the country among the best performers in the Eurozone. Despite progress, the Greek economy remains delicate due to large-scale bank withdrawals amounting to €15 billion since December 2014 according to data released by the Bank of Greece with institutional inverstors and individuals being the first to heave deposits. Additionally, the pressing liquidity conditions, as consequence of the growing outflow of deposits and the issue of treasury bills (T-bills) imposed by the State, have driven the country’s systemic banks to request cash from the Bank of Greece through the emergency liquidity system (ELA). It is no secret that the country’s payment obligations in 2015 amount to €22.5 billion including the repayment of €6.7 billion to the European Central Bank in July and August for sovereign bonds purchased after Greece’s first bail-out in 2010. This reality pressurizes Greece to reach a new agreement with its creditors containing components of growth and goals that focus on a combination of primary budget surplus and a reform agenda to tackle chronic fundamental problems, such as tax evasion, bureaucracy and corruption. 

Growth plans however are directly linked to debt relief that can happen in the form of either a direct write-off widely known as direct haircut, or restructuring. It is appreciated that outright debt forgiveness, a direct haircut, is not an option for creditors for multiple reasons with most prevailing the domestic pressures that Eurozone countries such as Germany undergoes on the matter. In particular, Germany holds approximately €50 billion in Greek debt and decisively rejects a direct haircut because of domestic politics and public positions. According to an opinion poll conducted recently for public service broadcaster ZDF, 76 percent of the German public opposes any direct Greek debt reduction. Concurrently, across the German political spectrum the challenges for the ruling Christian Democratic Union are multifold in the sense that on the one side, the Left party with provenance from East Germany perceives Greek Syriza as an ideological ally and thus any concession would be viewed as a defeat of German hegemony over economic policies in the 19- country currency block. On the other side, populist far right the “Alternative for Germany” party, which supports the dissolution of the euro, yearns for the failure of any Greek debt negotiations hoping for a Grexit. 

The option of debt restructuring is considered appealing in the context of Greek debt negotiations given that it provides reallocation of resources or change in the terms of loan extension that enable the debtor repay the loan to creditors. Debt restructuring is essentially an adjustment of both the debtor and the creditor to normalize troubles in the manner of loan repayment. That said, in conformity with the eurozone procedures, a Greek debt restructuring can occur by means of extending maturities and reducing interest rates, a process equaling to a cut that would permit Greece rebound to a rational debt to GDP ratio, thus favoring the execution of a public spending program to boost gross domestic product. Greek debt restructuring can also transpire with the swap technique, as means of easing the Greek debt burden, which foresees the issue of a complex mix of two types of new bonds. The first type, indexed to nominal economic growth, would replace European rescue loans, while the second type presents perpetual bonds that would replace sovereign Greek bonds owned by the European Central Bank. Dept swap, as part of smart debt engineering, conduces to debt reduction thus paving the way for the implementation of a growth strategy that perforce needs to advance hand in hand with fiscal prudence and structural reforms. 

When it comes to the possibility of a Greek exit from the eurozone, the challenges that may accrue can prove multifold. Although a Greek exit will not be a systemic event causing a simultaneous breakdown in global confidence and trade as evidenced in the wake of the Lehman Brothers collapse, the travails of Europe will unquestionably impact the global stock markets and will send waves of shock to countries and investors owing to the breach of the principle that euro membership is irrevocable. Equal important, the risk of contagion will increase, despite the various rescue mechanisms, and European policy makers will have to “circle the wagons” around the other periphery countries to cease occurrence. Concurrently, the consequences for Greece would be acutely distressing for the reason that domestic assets and liabilities will be converted into a national currency which will forthwith depreciate. Currency depreciation will automatically preserve at unsustainable levels the country’s foreign debts which will continue unchanged in euro, a fact that would make Greece default and lock it out of global capital markets for long time. In other words, the likelihood of a Greek euro exit could create a massive shock for financial markets, force Greece default and result in contagion because financial investors would unquestionably try to test other Eurozone countries. 

No doubt that a propulsive synthesis of negotiating tools can bring Greece and its European partners close with an eye on a fast-track growth agenda as envisaged by the EU Commission’s pan-European investment plan which can burst the bubbles around economies and whole societies. The ruling party of Greece is offered a golden opportunity to constructively contribute to a new contract in the context of an enigmatic, composite and rapidly changing European landscape. Because in essence, the lure of the distant and the difficult can prove deceptive, but the grasp of small opportunities can signal the beginning of a great enterprise, that is the European enterprise. 

First Published on February 11, 2015
http://www.cceia.unic.ac.cy/index.php?option=com_content&task=view&id=435&Itemid=435

Greece at the National Elections’ Crossroads: A Step Towards Left or Right?

By

Antonia Dimou

RIEAS Senior advisor based in Athens, Greece and Associate at the Centre for Strategic Studies, University of Jordan

John Nomikos

Director of the Research Institute for European and American Studies based in Athens, Greece
Copyright: Russian International Affairs Council (RIAC); http://russiancouncil.ru/en/inner/?id_4=5136#top
First Published: 23 January 2015

Photo: Michael Kappeler / picture alliance / dpa /Vostock Photo

A supporter of Alexis Tsipras, leader ofthe Greek radical left main opposition partySYRIZA, displays a poster reading "ChangeGreece - Change Europe" during the lastpreelection rally of the party in Athens,22 January 2015

The upcoming January 25, 2015 national elections in Greece highlight a major challenge as they present a struggle between anger against austerity and fear of euro exit. The apparent reason that led to early national elections is the failure of the coalition government to obtain a parliamentary majority to appoint a candidate as president of the Republic [1] . The hidden motive behind the declaration of early elections however was the volatile political landscape that made strenuous coalition government’s compliance with the Troika’s tough agenda thus postponing structural policy reforms by fear of the social effects that could be translated into high political cost. The Greek Prime Minister was between Scylla and Charybdis in terms of sustaining the coalition government and meeting Troika’s demands for unimpeded economic support.

The majority of polls show that SYRIZA, the main opposition party that has engulfed supporters from radical leftists to socialists in an effort to broaden its electoral base, will maintain a clear lead with percentages ranging from 28 to 31, while the ruling New Democracy’s performance ranges from 23 to 28 % [2]. The coalition partner PASOK continues to shrink from the 2009 voter turnout of 43.92 % to 12.28 % in the 2012 national elections. A progressive shrinkage is recorded for center-left DIMAR, formerly coalition partner, with limited chances to enter parliament because of the alibi it offered to the coalition government’s strict austerity policies [3]. Polls also suggest that the Communist party of KKE, the liberal party of The River, and the nationalist Golden Dawn are certain to enter parliament.

The formation of a majority government is a spinous matter because of the partisan fragmentation and the existent electoral law which although awards a 50 bonus seat to the winning party, it simultaneously conditions the ability to form a majority on the voter turnout of political parties that remain outside parliament [4]. In case that no party forms a majority government, the Greek President will have to give order to the winning party’s leader to form a coalition within three days, and if he fails the same process will be followed with the second and third parties’ leaders. In the event of a failure, a second round of elections has to be held within a month [5].

The prospect of political instability has generated a cataract of reactions that have directly affected the country’s economy with most prominent investors’ selling Greek bonds and stocks. Greek stocks have fallen 24 % since early December 2014 when national elections were declared for early 2015 instead of 2016 as originally scheduled. The Athens Stock Exchange slipped on January 5, 2015 to its lowest level since November 2012. Greek bonds have lost 7.4 % over the same period presenting the worst performance of 34 sovereign securities tracked by Bloomberg's World Bond Index [6].

instamun.org/greeces-political-crisis-might-
force-it-out-of-the-euro
Greek elections results and opinion polls,
Jan 2, 2015

Election campaigns’ intensity to affect voting intention differs significantly from one another and differences are meant to have far-reaching consequences for the cognitive strategies used by Greek voters. Throughout the election campaign, the essence is that the ruling party centers on a “roadmap” of measures for a “post-bailout Greece” concurrently using fear factors such as default and euro exit, while the major opposition relies on anti-austerity whilst unfolding a citizen-centric tactics.

The ruling party highlights that Greece has emerged from a six-year recession with the achievement of primary surplus and that the focus has already shifted on a growth plan for post-crisis which entails gradual tax reduction across middle-class households, support of the shipping, energy, pharmaceuticals and technology sectors, introduction of additional reforms to restrict bureaucracy and of an investment incentives’ package that foresees reduction of production costs and social security contributions. At the same time, the ruling party bases its campaign on fear factors with the aim to moderate austerity-produced public anger, with most protrusive an argument that Greece would be led to default and exit from the European single currency by the declared policies of the major opposition.

A chain reaction was almost instantly triggered in the form of large-scale bank withdrawals amounting to €7 billion since December 2014 ahead of the January 25, 2015 elections according to data published by the Bank of Greece with large companies and individuals being the first to heave deposits [7]. The pressing liquidity conditions, as consequence of the growing outflow of deposits and the issue of treasury bills (T-bills) imposed by the State, have driven the country’s systemic banks to request cash from the Bank of Greece through the emergency liquidity system (ELA) [8].

Reuters
Prime Minister of Greece and leader of New
Democracy Antonis Samaras

SYRIZA for its part attempts to display a strategy of image normalization prescribing a political program advertised as a viable alternative without endangering euro membership, in a country where unemployment has reached almost 1.5 million of a labor force of 4.5 million, incomes have declined to an approximate average of 50 %, hospitals are understaffed with lack of nurses and medical doctors, and working conditions are governed not only by three or five month temporary contracts but also by rented employees who receive freelancing rather than regular payments. The major opposition’s political proposals revolve around debt renegotiation aiming at partial debt relief, the fight against austerity with the gradual reintroduction of the minimum wage of €751 [9] , income redistribution through a radical tax system, debt restructuring for the most vulnerable households, and restoration of market liquidity by means of state control of the banking system. In a calculated attempt to broaden its electoral base, the major opposition has appealed to reluctant conservative social groups and devout Christians with the conduct of its leader’s visit to Mount Athos in summer 2014 and his participation in the public ritual of Epiphany in early January 2015 [10].

At a time when Southern European countries and France oppose the German-led austerity orthodoxy, a series of questions emerge and are related to the next Greek government’s strategy vis-à-vis Troika to secure ''trade-offs'' among issues that currently appear to be uncompromised with most prevailing the following: Does Greece really need debt relief? Is a euro exit possible? Can the vicious cycle of deflation that Greece faces be defeated and how?

There is little doubt that the country’s debt-servicing bill declined because private financial investors have been replaced by Eurozone countries which currently own 60 % of Greece’s €322 billion government debt that equals to 179% of GDP [11]. The concluded extension of the country’s repayments to 2054 and the cut in interest payments is considered by many as equivalent to a haircut. Scepticism, however, seems to prevail when it comes to the feasibility of the country’s debt, in accordance with the official Eurozone projection, to fall as share of its GDP below 124 % in coming years [12] for three main reasons: First, growth forecasts are considered overly optimistic given that they predict nominal GDP growth of approximately 5 % annually from 2016 till 2020. Second, the hypothesis that Greece will achieve annual primary budget surplus equivalent to 4 % of the GDP is viewed as unrealized. Third, the crisis has migrated to the real economy in the form of deflation that makes Greece unsustainable given that, in 2014 alone, real interest rates exceeded 3 % due to the prices’ fall by 2.6 %[13].

Statista.com

That said, any debt restructuring process needs to maximize benefits based on a mutual agreement between Greece, the EU and the IMF so that a new deal renders Greece sustainable thus creating a precedent for sorting out Eurozone’s problems. The Outright Monetary Transactions (OMT) program of the European Central Bank (ECB) endorsed recently by the European Court [14] , which provides the purchase of hundreds of billions of Eurozone countries’ sovereign bonds on secondary markets, presents an enhancement in the bargaining power of any new elected Greek government and also advances the ECB’s plans for significant quantitative easing against the forces of deflation [15]. Specifically, the OMT program is appropriate to reduce interest rates on government bonds restoring significantly financial normality to states concerned, thus permitting the ECB to exert monetary policies in an environment of greater stability [16]. When it comes to the possibility of a Greek exit from the Eurozone, the challenges that may accrue can prove multifold. Although a Greek exit will not be a systemic event causing a simultaneous breakdown in global confidence and trade as evidenced in the wake of the Lehman Brothers collapse, the travails of Europe will unquestionably impact the global stock markets and will send waves of shock to global confidence. Equally important, the risk of contagion will increase, despite the various rescue mechanisms, and European policy makers will have to “circle the wagons” around the other periphery countries to cease occurrence. In other words, Greece could create a massive shock for financial markets and despite the fact that an exit from the eurozone is complicated technically, it could result in contagion because financial investors would try to test other Eurozone countries.

A way out of the crisis, which has penetrated the European foundations, entails a debate on the kind of Europe that all member states envision. Greece and its new-to-be-elected government could play a vital role in shaping the European debate away from populist slogans by fostering partnerships for a universally beneficial deal that could make European countries and their economies sustainable. In essence, at the end of the day, Europe is offered the chance to “write her injuries in dust, but her benefits in marble” [17].

References:

1. Stavros Dimas was appointed as presidential candidate and attracted the support of 168 MPs out of the 300, short of the 180 required votes. In accordance with the Greek constitution, the parliament was dissolved and January 25, 2015 was set as date for the conduct of national elections.

2. “Seven Party Parliament with No Majority”, Proto Thema (Daily) , 19 January 2015

3. F. Chatzistavrou and S. Michalaki, “Reshaping Politics of the Left and Centre in Greece after the 2014 EP Election”, EPIN Commentary, No.21, 110 September 2014.

4. Paris Ayiomamitis, “Greek Election Math and Scenarios: A Handy Guide”, The Press Project, 8 January 2015

5. Ibid. The Greek president will have to appoint the head of the Supreme Court as prime minister, the parliament will dissolve and a caretaker government will be established so that the second round of elections takes place.

6. Jonathan Stearns and Nikos Chrysoloras. “Samaras Faces Greek Voters Skeptical of His Euro-Exit Warnings”, Washington Post (Daily), January 5, 2015

7. “Seven Billion Euro in Outflows after the Declaration of Elections”, Proto Thema (Daily), January 19, 2015

8. The repeated issue of T-bills has caused a major blow to the Greek banking system’s liquidity as it is evidenced by the State raise of €2.7 billion in November 2014, the secure of €3.2 billion in December 2014 and the reserve of €2.7 billion in January 2015. Yiannis Papadoyiannis, “Greek Banks Make Requests for ELA Funding”, Kathimerini (Daily), January 16, 2015.

9. “Syriza’s First Act in Office: Raise Minimum Wage”, The Times of Change (News and Media Network), January 16, 2015

10. “Epiphany for the Greek Left: Spreading His Wings”, The Economist, January 6, 2015.

11. Dimitra Defotis, “Greek Victor: Debt Relief”, Barron’s (Magazine Weekly Edition), January 17, 2015.

12. Stephen Fidler, “Politics Risk Tripping Up Greece on Debt Relief”, Wall Street Journal, January 16, 2015

13. Ibid.

14. Court of Justice of the European Union, Press Release No 2/15 Luxembourg, 14 January 2015.

15. Jana Randow, “Europe’s QE Quandary”, Bloomberg, December 30, 2015.

16. Yanis Varoufakis, “On the ECB’s Latest Contradiction (And How It Helps Greece)”, January 15, 2015. Accessed at: http://yanisvaroufakis.eu/2015/01/15/on-the-ecbs-great-contradiction-and-how-it-helps-greece/

17. Paraphrase of a quote by Benjamin Franklin.