How 2017 is going to an end

Since President Trump decisions on status of Jerusalem, most tourists kept away from the occupied West Bank city of Bethlehem: Palestinians have celebrated Christmas amid tensions because of protests across the West Bank and Gaza Strip against the US flagrant violation of the UN Charter, of Internatinal Law and  of the relevant UN Resolutions.
During the last UN general Assembly, 128 countries voted against Trump's recognition of Jerusalem as Israel's capital, and only eight stayed with it. On the one hand,  four of the eight countries that stood with the US are tiny Pacific Islands. On the other hand, US allies, such as France, Britain and Germany voted for the UN resolution.

So to sum up, the last month of 2017 confirms, once again, that the US is no longer credible as mediator in the peace process. That's why so many believe that President Trump has isolated the US. Actually, with regard to climate change he recently did the same.   

Yemen and Syria, in addition to Palestinian people,  are still paying a terrible price for the Saudi-Iranian rivalry. And some expert say that tensions may escalate into a major regional conflict including Lebanon.   

From 10 to 20 December 2017 in the Middle East

During the second decade of December two main events affected the Middle East: the U.S President's decision to recognise Jerusalem as the capital of Israel, and the Houthi rebels' ballistic missile targeting  the Saudi Arabia's Royal Palace in Riyadh. At the same time stock markets rose steadily! It's easy to understand how human rights abuses and violations of international law are strictly related to the increase of stock markets around the world. At first glance, it seems that the two facts contradict each other. But it isn't always the case.

 

Sale of weapons and stock markets booming

It seems that a lot of people, such as investors, individual traders, market experts and columnist have been waiting for a new periodic crisis of the markets. Actually, we could see a "rotation" in terms of money which may flow out from the stock markets. In particular,  technology stocks have been on a all time high for a long time, thanks to the sharp development of networks and nodes both related to the world's system on transactions.       

Unfortunately, there are also some geopolitical uncertainties in the Eastern emisphere which may affect the markets:   

• Saudi Arabia leadership accepts to partially normalise relation with Israel in exchange for an alliance against Iran.
• Rohinjy people are still brutally oppressed while the developed world holds its inaction in the face of genocide and example of ethnic cleasing.
• The EU has been cutting funds allocated to Turkey due to the deteriorating situation in terms of democracy, rule of law and human rights.
• U.S. President is considering recognising Jerusalem as capital of Israel, although 330,000 Palestinians, who make up 37 percent of the city's population, have been living there since Israel captured and annexed the Eastern Sector.
• Conflicts in Yemen and Syria haven't still gone to an end.
• Sale of weapons to Saudi Arabia, Myanmar and Iran has increased sharply since 2016.

It seems that there is a relationship between the rise of stock markets and the frenetic and uncontrolled sale of weapons and munitions in the Asian continent. 

In addition to this, China and Russia call on U.S. to reduce military exercises in East Asia Region of the World. In particular, Russia foreign minister have questioned U.S. tactics on East Asia, considering the U.S. secretary of state pushes diplomatic options on North Korea.

In this perspective, while secretary of State Tillerson was consistently calling for dialogue, Trump responded to North Korea missile tests with insults on Twitter ... He called Kim Jong "Little rocket man" and "Sick puppy".

 

The most prosperous EU's regions claim the right to form a new state

With regard to Catalonia's independence declaration, which was passed by the Parliament of Catalonia on 27 October, most experts say there's no doubt that, on the long term, an independent Catalonia may be a good thing in terms of competition and regulation. Actually, Catalonia is one of the most prosperous of EU's regions.

Catalans only accounts for about 16% of the Spanish population, and 19% of Spain economy comes from Catalonia, which contributes $ 263 Billion a year to the overall Spanish economy.

Although Catalonia is bigger than many EU Member States, a very important condition for independence, to be an economic success, is that it happens peacefully. Unfortunately, Spanish government does not agree with Catalonia independence, and from a political point of view this is very different from the Scottish case, where the British Prime Minister said Scotland would hold a legal referendum. As it is known, in 2014 Scottish people voted to stay in the UK, but against Brexit in 2016. That's why Scotland should hold another referendum in order to leave the UK.

Catalans are not alone in the desire to form a new independent state and there are longstanding independence claims in other EU's regions, such as Wallonia, South Tyrol and Silesia, where people want more flexibility.  

This shows why populist movements in Europe are able to give an answer to the feel people are losing control of their own fate. As we have seen, during the last twenty-five years some countries grew enormously after they had become independent. Take for example the huge economic development of Slovakia, which split from Czech Republic in 1993.

In this perspective, Switzerland political system, in the hearth of Europe and outside the European economic area, may be a model: the Confoederatio Helvetica's decentralised entities, the Cantons, are allowed to be flexible in terms of taxation. Actually, Switzerland's federal legislation leaves a respectable amount of self-determination to the 26 Cantons, which may collect income taxes to finance their affairs, such as education system, universities, armed police forces and hospitals. And this helps to keep the country togheter.  

View of a pedestrian area in Barcelona (Catalonia)

Catalonia, Galicia and Basque country

After the higest court had declared the secession vote incostitutional, the Spanish government triggered article 155, which allows for direct control. It means, firstly, the replacement of Catalonia's senior government officials with his ministers and, secondly, the control of the region's police force, finances and public media. The Spanish Senate will decide this week.
Meanwhile the situation may deteriorate as Catalan government have declared: "use of article 155 would be see as a rejection of talks. And if talks are suspended, we will push ahead with independence". Most Catalans have been pushing for independence from Spain for decades: they have a distincs culture and language from Spain, and Spanish government marginalises them.

In addition, Galician and Basque nationalists may follow the Catalan model.

Suspension of the Catalan Parliament

The Article 155 of the Spanish Constitution says that "If a self-governing community" does not fulfill the obligations imposed on by the Constitution, or acts in a way that is seriously prejuditial to the general interest of Spain, the Government may, following Senate approval, take all measures necessary  to compel the community to meet said obbligations".

This article is never be used in the Spanish parliamentary system with its self-governing provinces. And similar provisions in other European countries have also never been invoked. It could be the natural reaction of the Spanish central government to the unilateral declaration of independence.

If the Spanish government were to invoke the article 155, it would be unclear exactly what would follow from it. We will probably see a suspension of the Catalan Parliament and Catalan Government, possibly with the arrest of members of the Catalan Government who made this proclamation, and the imposition of direct rules and administrative control of Catalonia. 

View of Barcelona, Capital and largest city of Catalonia

Catalan independence. Who will be the next in the EU?

People hang up the Catalan flag

Last Sunday, on 1st October 2017, 2.26 Million people voted  the Catalan referendum showing 90% in favour of indipendence. 1996 polling stations out of 2315 weren't closed although the Spanish government had declared the poll to be illegal. Unfortunately, police battled their way into voting stations to confiscate ballot boxes.

Catalan referendum was deemed illegal by the Spanish Supreme Court. On the one hand, section 2 of the Spanish Constitutional law says that the unity of Spanish people is indissoluble. On the other hand, Spanish Constitutional law indicates Spanish people, and Catalans think they are different from Spanish people. Catalan culture in past has experienced many challenges in efforts to maintain its distinct identity. 

In this perspective, other EU countries, which are structurated in a federal state pattern, are afraid the escalating conflict, between the Spanish government and Catalan separatists, may affect their political systems. That's why EU leaders haven't denounced the brutal police crackdown on Catalan independence referendum. They would like to think the dispute is an internal Spanish matter. It's easy to see that other people in the EU may begin to follow the Catalan independence path. 

"Alternative für deutschland" will be the third biggest party in Parliament

Just to say that after German people voted on Sunday, 24th September, the "Alternative für deutschland" party was set to enter the Bundestag for the first time. With its 80 seats, it will be the third biggest party in Parliament.

In 2013 an economics professor founded "Alternative für deutschland" party, which was soon known as eurosceptic and liberal. The new political group increased sharply since 2015 to 2016, after Ms Merkel had decided to let in more than one Million refugees.

Although it is said that the party may be considered in an extreme rightwing position, Germany's election results haven't been affecting European stock markets.

2017 Gulf countries' crisis

With regard to the ongoing crisis of Middle East countries, most international experts, diplomats and politicians are talking about mediation as a good process where disputing parties may resolve the conflict. What actually the word "mediation" means in this conflict?

As it is known, four Middle East countries have certain things against Qatar's policy, and three of them are members of the GCC political and economic alliance. Those countries say that Qatar doesn't respect the 2014 Agreement, and they would like a regime change in Qatar. In 2014 Qatar agreed to make a number of changes to its foreign policies, such as restricting Al Jazeera criticism of Egypt, Saudi Arabia and other countries. Qatar also agreed to prevent Doha-based Muslim Brotherhod leaders from appearing on Al Jazeera network. Since Muslim Brotherhood rose to power in Egypt in 2012, conservative monarchies in the Middle East have been dedicating huge resources to prevent the spread of reformist ideologies. It's easy to see that those countries who want to close Al Jazeera and its comprehensive and impartial coverage of events around the world, would like to keep Middle East frozen, in a state of crude oil autocracy.

As above mentioned, this conflict may be resolved through dialogue between disputing parties and diplomatic intevention on the part of UN and perhaps other countries like Kwait. They have to sit down and talk in rational concrete realistic terms about what could be done. Qatar agrees about mediation, but Saudi Arabia, Egypt, UAE and Bahrain insist there will be no solution unless an Agreement on their thirteen demands. Those four countries, which have been severing ties with Qatar since 5th June, mainly have demanded to cut off ties with Iran and stop financing terrorist organizations. That's why  experts, diplomats and politicians are talking about mediation. 

Qatar is not only home of the largest US military base, it also hosts Turkish soldiers. The blockading countries have demanded  Qatar to expelling Turkish troops and shut down Al Jazeera. The Shiite Arab world, and some Middle East countries, such as Turkey, say that Gulf states are violating Qatar's sovereignity. 
In this perspective, the US are in a unconfortable position, considering that, on a one hand, Qatar hosts the largest US military base. On the other hand, the US has recently approved the sale to Saudi Arabia of up to 153 tanks, hundreds of machine guns and other military gear in a deal Worth 1.15 billion Dollar. That's why we have recently seen some changes in the US position: since the last meeting with Kwait's Emir, President Trump has begun to talk about the unity of Gulf countries. And once again we have heard the word "mediation", a process where a neutral third party, such as Kwait or the US, assists others to mediate dispute in the aim to encourage a more equal balance of power in the Middle East, between the Sunny Arab world and the community of Shiites.

New Bundestag on 24th September

This year, on 24th September, Federal elections will be held in Germany in the aim to elect the new 598 members of the Bundestag. Consequently, the new German Parliament will have to elect a Chancellor with an absolute majority of its members.

According to most surveys, Mrs Merkel is likely to be re-elected, although the populist "Alternative for Germany" party looks set to enter the Bundestag for the first time.
As reported by uk.investing.com on 14th August, if she weren't to win the election, it would be the blackest of black swan". And it's easy to think how the market would be affected by the political shift.

The only religion with a doctrine of warfare

In 2015 during a coordinated suicide bomb-attack 130 people were killed in Paris and St. Denis, and a suicide bombing in Belgium killed 32 civilians. On 14th July, 2016, 86 people were killed in Nice while they were celebrating Bastille day. And this year attackers in London, Manchester, Berlin and Barcelona killed 62 people.

 

Considering the amount of people  killed in Western countries by Islamist  extremists, we may argue that those bomb-Attacks can't be categorized as terrorism. The use of violence, which we have seen in the last three year in Paris, Brussels, Manchester, Barcelona, London and Berlin, isn't in order to achieve political aims or to force  the government to do something. It's really a war. According to Robert Spencer, "Islam is not  moderate or peaceful. It's the only religion with a doctrine  of warfare".

Markets are always right

After President Trump had took place at the White House, he began to use social networks in the aim to create a negative impact on some companies listed on the stock markets. Unfortunately, he was able to affect the markets by leaving statements through twitter.

For instance, last year on 23rd December Lockeed Martin's stocks fell by 5 per cent  after the U.S. President had written a tweet about the cost of the F-35 jet program. And when President Trump wrote that  Obama's Air Force One 747 was too expensive, "Boeing Co" lost about two Billion of its capitalization on the stock market. As many of the Presidents before him, Obama had maden numerous comments about his affinity for  Air Force One.

On the contrary,  since this month investors haven't been taking seriously Trump's statements left on social networks. Last Wednesday, after the President had written bad news about Amazon.com, the stocks of the most valuable retailer in the U.S. surprisingly rose. it seems that Trump's tweets don't affect the markets any more.

As it is known, most investors, such as hedge fund money managers, are analyzing all the time world news. In this perspective, since U.S. President was elected in 2016 they have been thinking what Trump's tweets mean for the market. At the moment, Donald Trump's statements are not able to influence the markets, as we have seen with regard to invocation of "fire and fury" in response to North Korea's nuclear weapon program. It's easy to see how the markets ignore President Trump's statements. 

U.S. stock markets' Record highs

I still don't understand why the U.S. stock markets keep smashing records. The all-time high, which Dow Jones, S & P 500 and Nasdaq have hit since Trump victory, may be related to President's promises of tax reform, deregulation and infrastructure spending. Moreover, European economy has started to gather momentum.

From another point of view, with an unemployment rate of at 4%, low interest rates and steady economic growth, the U.S. stock markets managed record highs. Moreover, European Union has started to gather momentum, and reports about the second quarter 2017 may elicit solid number better than expected.

As a result, We may find that we don't really need to listen to all those  analysts  and columnists who like to explain why the markets did what they did during the last nine months. A former technical analyst for CNBC, John J. Murphy, reminds us that a lot of experts didn't see the housing bubble bursting in 2007 until it was too late. That's why it's better looking at the markets instead of listening to the experts. All that really matters is what the markets are actually doing.   

A little air is coming out of the balloon

It seems that since 9th June a lot of people, such as investors, individual traders, market experts and columnists have been waiting for a new periodic crisis of the markets. As we saw in the first decade of last month, after major Wall Street indexes had touched new highs, the money began to flow out from the U.S. Stock Markets. Somebody said "a little air is coming out of the balloon".

For instance, U.S. chipmakers are aware that technology stocks have been on a all time high for a very long time. Actually, we could see "a rotation" as money may go out of  Stock Markets into other sectors.

Middle East Snapshot

Three weeks ago, on 5th June, Saudi Arabia, Egypt, UAE and Bahrain decided to completely sever ties with Qatar. And some experts have been calling this the biggest political crisis to hit the Middle East in years.

In the aim to end the Qatar's crisis with Saudi Arabia and Gulf neighbors, last week the four Arab countries, that imposed a regional embargo on Qatar, issued list of demands which included shutting down the Al Jazeera, the Qatar's state-backed media network.

In my opinion, everybody who wants to keep Middle East frozen, in a state of crude oil autocracy, would like to close Al Jazeera and its usual comprehensive and impartial coverage of events around the world.

"Europe will not be made all at once" (Robert Shuman)

On May 7th the result of the French Presidential elections showed that we will not see the "Frexit" in the next years. America's plan is aimed at breaking the EU into smaller pieces, and it didn't work in France. And since June 2016 most people in Scotland and Northern Ireland, who  voted to remain in the EU, have been valuating the bill which has to be paid for exiting the EU. 

According to the terms of the negotiations, which were framed by the EU in  a paper published on March 29th, Britain must pay price for leaving the EU. It  would amount to about US $ 60 billion, including negotiation costs, such as the hire of facilities for the talks, meals and other subsistence allowances.

It's easy to see why Scotland and Northern Ireland are trying  to become two independent states of the EU in their own right.

Anti-EU election in France

In the first round of the 2017 French Presidential election no candidate won a majority. As a result, a run-off between the top two candidate will be held on May 7th, 2017.

Marine Le Pen's Politics is focused on immigration, as she want to protect French workers. She is less open market than Emmanuel Macron, who is more open borders.

In other words, on May 7th,  2017 French people will vote to leave or remain in the EU. And if France will leave the EU, who will be the next? As it is known, the UK will leave the UE in two years and Czech Republic has just announced to leave the Euro system.  

Cloud of uncertainty over Scotland which leaves the EU

After the UK's Prime Minister had triggered Article 50 of EU Treaty on March 29th, 2017, some Scottish policy makers explained once again how is important to leave the UK through a new independence referendum. And since June 2016 most Irish people have been thinking what happens if Scotland remains in the EU by leaving the UK. Like Scotland, the majority in Northern Ireland voted to remain in the EU. Not surprisingly, Northern Ireland may become an independent state of the EU in its own right, considering that its territory is larger than some existing EU members states, such as Luxembourg and Malta, It may become an independent state of the EU in its own right.

Most economist had assumed that after the vote to leave the EU the British economy will slow sharply. Of course, the UK will pay tariffs on goods and services it will export into the EU. And British business leaders are already afraid the UK will not be an attractive place to do business. 

According to figures, half of British exports are to the EU. As consequence, it is easy to know the impact of Brexit on the UK. For instance, British car makers, who are the UK's biggest exporters, have warned that the UK's departure from the European Union poses the “biggest threat in a generation”.

With regard to Scotland, three out of four its international trading markets are in the EU (France, Germany, Netherland, and USA). With food and drink exports reaching over £ 5 Billions, Scotland products are in demand in the world over.  As a matter of fact, Scotland is the third largest producer of farmed Atlantic salmon in the world, and Scotch whisky account for almost 80% of Scotland's food and beverages export market.

In this perspective, Scottish Prime Minister  recently said she is "fairly certain"  there will be a second referendum on Scottish independence, considering the cloud of uncertainty  over Scotland's future.

Post-Brexit

It isn't easy to understand why some British Ministers are still so optimistic about Brexit. While the UK's Prime Minister triggers Article 50 later this month, the Irish republican party's leader says that "We must defend the democratic mandate of the people to remain in the EU". That's why Northern Ireland should hold a referendum on leaving the United Kingdom and joining the Republic of Ireland. In addition, as it is already known, a decision on calling a new Scottish independence referendum could be made within weeks: the first minister of Scotland, Nicola Sturgeon, recently said that plans to take the UK out of the EU's Single market have brought a second Scottish independence referendum "undoubtedly" closer.

Actually, it seems that the British Government is now on an unpleasantly difficult situation: on the one hand, Mrs. May says that British people would have truly left the EU when they would be in control of their own laws. On the other hand, she is still looking for the "Greatest possible access" to EU's Single market after leaving it.

According to an article published in "The Economist" on March 4th, 2017, The European Court of Justice will probably control any transitional arrangement which will be made between post-Brexit UK and EU. If the UK were to need trading relationships with the EU, it wouldn't be free from the shackles of the Luxembourg's Court of Justice. 

Since the 1960s European Court of Justice have been supervising any trade deal signed by the EU. And all non-EU countries that seek close access to the EU's Single Market, such as Switzerland, Iceland and Norway,  have been following the Luxembourg's rules. 

As a result, notwithstanding the country has voted to leave the EU, Britain will not reach the aim to take the UK out of the European Court of Justice. Moreover, Scotland and Northern Ireland will try to leave the UK, and refugees and immigrates will be probably allowed to remain in Britain. It isn't easy to understand why someone is optimistic about Brexit.

Scottish people are debating about the future of the UK

Last week I was in Edinburgh, the capital of Scotland, where I didn't see any flag of the UK. There were only flags with St. Andrew's cross everywhere. I could read Scottish newspapers and magazines, which reported politicians' points of view about the economic consequences of Brexit and Scotland independence.
A very meaningful heading at the top of a newspaper's page reported a piece of a Scottish politician's speech: "We have been under the heel of foreign influence and power for 300 years".
As it is known, in 1707 the Act of Union brought Scotland even closer to Britain by creating a single parliament. In 1999 the Scottish Parliament reconvened for the first time in nearly 300 years, ushering in a new era for the Scottish people. Scotland voted to stay in the UK in 2014, but against Brexit in 2016, and will probably be driven out of the EU against its will. As a result, Scottish people should hold another referendum in order lo leave the UK. 

In this perspective, the UK Prime Minister is proposing a free trade agreement for goods and services between Britain and EU Member States, which will give to British companies the maximum freedom  to trade with and operate in the European market.  With regard to Britain's imminent departure from the EU, Theresa May specifies that the agreement doesn't mean membership of single market, but she is seeking the greatest possible access to it through an ambitious free trade agreement.   

How could British companies get access to the single market while the UK is still ready to leave the EU? European decision makers will likely disagree with Mrs. May's free trade agreement, because it may be a dangerous starting point.
According to the domino theory, other Member States would follow the UK and would leave the EU. And, not surprisingly, things in the EU may get a little out of hand, considering that  many anti-europeanism leaders face important election in the course of this year.

A Federal Europe would be disadvantageous to American interests

In 1942 Nicholas J. Spykman, a Dutch-American geostrategist,  argued that a United Europe will be disadvantageous under any circumstances. He preferred a fragmentation of power among states within Europe as more advantageous to American interests.

Therefore, Spykman was opposed strongly to the development of a European Federation, even it to came about peacefully or democratically. Of course, he also opposed to both German and Russian domination of Europe. In his book, "America's strategy in world politics: the United States and the balance of power", which gives us a framework to understand Post Cold War world, he wrote "A Federal Europe would constitute an agglomeration that would completely alter our significance as an Atlantic power and greatly weaken our position in the Western Hemisphere".

Since 1970s it has been easy to see that the more united Europe become, the greater its tensions with the U.S.. And in the early 1990s America policymakers were so happy so see the fragmentation of both the Soviet empire and the former Yugoslavia. They also agreed with the split of Czechoslovakia, which occurred in 1993.

Nowadays Americans are still fearing a European Super-State with its single foreign policy, as it would be a competitor of the U.S.. In this perspective, the President elected Donald Trump said that Brexit will be a great thing for U.K., and he hopes other E.U. countries will do the same. Although  Spykman opposed to the development of a Federation of states within the old  continent more than 70 years ago, the U.S. is still trying to fragment Europe.

In the meanwhile,  encouraged by the U.S. presidential election and U.K.'s Brexit  referendum results, Europe's far right leaders get together in Germany this month. Many of those anti-europeanism leaders face important election in the course of this year.

  

E.U. trade is vital to Scottish companies

Since British people voted to leave the E.U., by 52% to 48%, the unity of the U.K. has been under strain. On June 23, Scotland voted "Remain" by 62 % to 38 %, while 55,8 % in Northern Ireland voted to stay in the E.U. and 44,2 % "Leave". In particular, people who live in those two peripheral countries of the U.K. disagree with the exit from the custom union, as traders fear Brexit will see Scotland and Northern Ireland lose access to the E.U.'s single market.

In reality, according to the UK Government economic service, imports from Europe to the U.K. account for only 7 % of E.U. exports, whereas the exports Britain sends from its territory to Europe account 44 % of the total exports.

British Government's plans call for U.K. to officially leave the E.U. by May 2018, and underline that the U.K. "is leaving the E.U.", not Europe. And the U.K. will not sign easily new partnerships with E.U. members, considering that, since June 23, European policy makers have been underlining that whoever decides to leave "that family" cannot expect all obligations to be omitted while keeping its privileges. On the one hand, Brexit allows the U.K. to implement a better control along its borders in terms of immigration. On the other hand, that referendum means the exit from a successfully trading area.

In this perspective, it's easy to see that Scotland and Northern Ireland will behave on the basis of their self interest. Scotland's Prime Minister, Nicola Sturgeon, plans to stay in the single market, as the European association of countries trading with each other without restrictions or tariffs  is vital to Scottish companies.