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February 8, 2023

Between Obama and ‘eurogeddon’

Last week was dominated by two events with an undutiful systemic impact: the historic visit of American President Barack Obama to the Mideast (Israel, Palestinian territories and Jordan) and the developments of the European financial crisis now focussed on clawing Cyprus out of bankruptcy. During two days, March 21 and 22, Obama was on his first visit to Israel, setting landmarks for the US policy in the Mideast with ample reverberations in the future. While in his firsts speech on the Ben Gurion Airport near Tel Aviv, he pointed out that the American guarantee for the existence of the state of Israel was ‘eternal’ and would be there for as long as the USA existed, when he reached the Palestinian territories he reiterated his belief in the ‘two states’ solution to the long-standing Israeli-Palestinian conflict.

Cyprus, a small South-Eastern European island, last week was in the focus of the entire world. Europe was not the only one who feared the reverberations of a possible financial crash of the small state, the entire world economy ‘breathed’ on global stock exchanges according to the decisions of the Cypriot Parliament.

The German alternative to the default of the small state – a EUR 10 bn loan against a compulsory taxation of Cypriot bank deposits by 6 to 10 per cent, standing for a participation of the beneficiaries of the Cypriot tax heaven in the effort to save the island’s economy – would have set a line of conduct for similar future cases or, if dismissed, would have deepened the EU existential crisis.

Which of these two events deserves to be presented as the ‘highlight’ of last week?

Obama’s visit remains a historic one not just because it has probably re-launched the Israeli-Palestinian peace process which seemed already badly compromised due to the fact that the ‘two states’ solution has really become obsolete, with mutual conditions put by the parties being quite irreconcilable. This visit also highlighted a new approach taken by Obama to settling this very intricate situation. He deemed it necessary to address his message first of all to Israeli young people, which he also did in front of an audience of over 1,000 people gathered at the Jerusalem Convention Center, mostly students: ‘Put yourself in their shoes – look at the world through their eyes,’ he said. ‘It is not fair that a Palestinian child cannot grow up in a state of her own, and lives with the presence of a foreign army that controls the movements of her parents every single day./…/.’ He added that ‘neither occupation nor expulsion is the answer,’ saying “just as Israelis built a state in their homeland, Palestinians have a right to be a free people in their own land.’ So Obama addressed to the youth, calling upon them to put pressure on politicians to push through their own solutions for their own future, which, no doubt, stands for a new way of doing politics as well as of tackling a highly complicated dossier. For Obama also addressed to Palestinians in the same spirit when, on the same occasion, he said: ‘those who adhere to the ideology of rejecting Israel’s right to exist might as well reject the Earth beneath them and the sky above, because Israel is not going anywhere.’It is beyond doubt that Obama’s words lay down the foundation for a new approach to the Mideastern situation, one where denying a state’s right to exist is no longer acceptable by the system and that will come against the opposition of the biggest state on the planet, just as the construction of a security future means negotiation and good faith, under consecrated systemic rules. A reader’s comment on the numerous articles written on the subject in the international press will hopefully be contradicted: ‘Israel has been ready for a very long time for a two states solution, if it indeed really ends the conflict, but the Arab Muslim side is not and probably never will be. So the status quo will continue for years and decades and probably centuries into the future.’Obama has brought in a new breath not just in this complex dossier. His various approaches – to the Iranian nuclear situation, the dynamic of the Syrian conflict or Israeli-Turkish relations (all clearly interwoven) – will definitely generate a long series of comments as well as ample efforts to identify policies of a nature to strengthen the security of that volatile region. It was during his visit and most certainly thanks to his role and influence, relations between Turkey and Israel, frozen three years ago, suddenly warmed up. Israeli’s PM Binyamin Netanyahu phoned his Turkish counterpart Recep Tayyip Erdogan to apologise for the 2010 incident when several Turkish nationals were killed, the interlocutors reassuring one another about the reposting of their respective ambassadors and the bilateral relations finally entering a normal track.

The episode was a brilliant demonstration of the fact that the US is still the leader of the system of state and also obeyed when it acts using that prerogative based on just on power, but also on geopolitical foresight.In Cyprus, the Parliament declined the request of EU finance ministers developed by the German finance head and the ‘Eurogeddon’ seemed irreversible. Nicosia’s counter-proposal is now pending after a delay on Monday, Cypriot decision-makers looking for solutions in Moscow or elsewhere in order to prevent a capital drain. Waiting for Cyprus’ proposal, the Central European Bank, following the Cypriot Parliament’s decision, moved to a plan B to avoid default. Meanwhile, the dissatisfaction is growing in the EU Parliament, denouncing a lack of transparency of EU finance ministers’ decision who made the requirement to Cyprus without considering short and medium term consequences. One of the several existing proposals – that Russian banks should buy part of the Cypriot financial system – is deemed by experts unviable not necessarily for the EU, but moistly for Russia (whose billionaires are already fleeing Cyprus to other tax havens, including the British financial market). There are quite a few observers who denounce the German intransigence in the Cypriot affair, Chancellor Angela Merkel looking at a legislative election in September. International press articles and Cypriot protesters are slamming Germany over its propensity to dominate the continent.Two major events happened last week, on which the commentator is tempted to dwell exclusively due to their short and medium term systemic impact. The consequences of Obama’s visit to Israel, given the complexity of the dossier and also that the US’ president’s call for a ‘two state’ solution will take time to materialise, place themselves on a medium term on a medium term. On the other hand, if the episode of Israeli-Turkish reconciliation is an indication, then the Mideast as a whole will follow the American political will. But there is also a direct connection between these two events, legitimised not just by globalisation, but also, or especially, by the geographic proximity of their array of development. Which can only cause one to think about the high volatility in the Eastern Mediterranean seen as a part of the broader Middle East.

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