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Italy

If Italy Crashes, Germany And The Whole EU Will Pay The Price

Ominous Rome
Ominous Rome
Christoph B. Schiltz

-Analysis-

BERLIN — While Brussels is palavering over a plastic tax that will never materialize, dark clouds are gathering over Europe. Right now, in plain view, the European Union is sliding straight into the next (and potentially deeper) euro crisis.

The chaos in Italy — which holds the world's third-largest public debt, totaling 2.3 trillion euros — continues to escalate: Yields on ten-year bonds have risen to their highest level in three-and-a-half years, and credit rating agency Moody's said it was considering downgrading the country, bringing its rating closer to the so-called "junk" level.

The appointment of financial expert Carlo Cottarelli, and the formation of a technocrat government, won't change anything about the "malattia italiana" (the Italian illness). No, there is no reason anybody should be breathing any sighs of relief about Cottarelli, who is effectively a general without troops. The Italian Parliament won't follow his legislative proposals or recovery plans, and new elections are expected to take place in the autumn at the latest. There is little doubt that the right-wing populists of Matteo Salvini's League party, in particular, will emerge stronger.

Italy could drag the euro into the abyss.

We shouldn't fool ourselves: Italy has the potential to drag the euro into the abyss. The cynical twist is that the populist anti-EU parties in Italy, and all the spending and debt-fueling policies they are now proposing, can ultimately count on the rest of Europe to save their country from bankruptcy.

Italy simply cannot go bankrupt: The fourth largest European economy is far too important for the eurozone. The years of necessary rescue measures that such an outcome would require could be very expensive for the German taxpayers. Exaggerations, you say? Hardly.

But we're not there yet. Cottarelli, "Signor Scissors," will now rule for a few months and his caretaker government will have little room for maneuver and will not be able to take any far-reaching decisions in Brussels.

This does not bode well for the European Union. The reforms of the eurozone, the negotiations on a new EU budget and decisions on the future asylum system will thus be further delayed. Ironically, perhaps, even ratifying Brexit may now become even more complicated than before.

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Geopolitics

Smaller Allies Matter: Afghanistan Offers Hard Lessons For Ukraine's Future

Despite controversies at home, Nordic countries were heavily involved in the NATO-led war in Afghanistan. As the Ukraine war grinds on, lessons from that conflict are more relevant than ever.

Photo of Finnish Defence Forces in Afghanistan

Finnish Defence Forces in Afghanistan

Johannes Jauhiainen

-Analysis-

HELSINKI — In May 2021, the Taliban took back power in Afghanistan after 20 years of international presence, astronomical sums of development aid and casualties on all warring sides.

As Kabul fell, a chaotic evacuation prompted comparisons to the fall of Saigon — and most of the attention was on the U.S., which had led the original war to unseat the Taliban after 9/11 and remained by far the largest foreign force on the ground. Yet, the fall of Kabul was also a tumultuous and troubling experience for a number of other smaller foreign countries who had been presented for years in Afghanistan.

In an interview at the time, Antti Kaikkonen, the Finnish Minister of Defense, tried to explain what went wrong during the evacuation.

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“Originally we anticipated that the smaller countries would withdraw before the Americans. Then it became clear that getting people to the airport had become more difficult," Kaikkonen said. "So we decided last night to bring home our last soldiers who were helping with the evacuation.”

During the 20-year-long Afghan war, the foreign troop presence included many countries:Finland committed around 2,500 soldiers,Sweden 8,000,Denmark 12,000 and Norway 9,000. And in the nearly two years since the end of the war, Finland,Belgium and theNetherlands have commissioned investigations into their engagements in Afghanistan.

As the number of fragile or failed states around the world increases, it’s important to understand how to best organize international development aid and the security of such countries. Twenty years of international engagement in Afghanistan offers valuable lessons.

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