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21. Mexico’s domestic decay: Implications for the United States and Europe

Author:
Lauri Tahtinen
Publication Date:
01-2023
Content Type:
Policy Brief
Institution:
Finnish Institute of International Affairs
Abstract:
President Andrés Manuel López Obrador (AMLO) has challenged Mexico’s democratic institutions, including the electoral commission INE, and relies on the military to run sectors of the economy and to provide internal security. Recognizing the continuing strategic importance of its southern neighbor, the United States is attempting to “friend-shore” American industry to Mexico despite trade disputes. Mexico’s economic convergence with the US is giving way to ideological divergence. In the past year, Mexico has called NATO’s stance on Ukraine “immoral” and openly aligned with the leftist, anti-US dictators of Cuba, Nicaragua, and Venezuela. Mexico’s internal development and shifting external stance could spark a return to a United States focused on the protection of its 19th-century borders instead of its 20th-century global footprint. European attention to the future of Mexico can help diversify the country’s trade and other partnerships, as well as shine a light on its democratic decay.
Topic:
Security, Defense Policy, Democracy, Europe, and Economic Policy
Political Geography:
Europe, Latin America, North America, Mexico, and United States of America

22. Water diplomacy analysis for Central Asia: Dynamics of insecurity and sources of resilience

Author:
Emma Hakala, Katariina Mustasilta, and Mohammed Hadi
Publication Date:
04-2023
Content Type:
Special Report
Institution:
Finnish Institute of International Affairs
Abstract:
Climate change, geopolitical tensions and other global crises emphasise the need for water diplomacy, which refers to the prevention and resolution of political tensions with the help of water expertise and diplomatic tools. Disputes over water can contribute to instability, but fair and well-governed management of water resources can serve as a platform for cooperation and peacebuilding. In Central Asia, water has a crucial role as a precondition for economic and social development, but also for relations between the countries in the region due to the large­ly transboundary and shared character of resources. Questions about water use have been intertwined in disputes about other unresolved issues between the countries in the past. As the impacts of climate change become increasingly visible and are likely to further reduce water access, it is important to better understand the water conflict and resilience dynamics. This analysis traces the potential for water diplomacy in Central Asia. It identifies major conflict factors, peace enablers, regional dynamics and the role of water resources. The analysis takes an anticipatory, forward-looking approach, particularly focusing on sources of resilience and potential points of cooperation.
Topic:
Climate Change, Water, Governance, Crisis Management, and Resilience
Political Geography:
Central Asia and Asia

23. Enhancing small state preparedness: Risks of foreign ownership, supply disruptions and technological dependencies

Author:
Mikael Mattlin, Shaun Breslin, Elina Sinkkonen, Liisa Kauppila, and Annika Björkdahl
Publication Date:
08-2023
Content Type:
Working Paper
Institution:
Finnish Institute of International Affairs
Abstract:
The post-Cold War liberalist view, according to which interdependences supported a virtuous cycle of mutual gains, has given way to a realist-tinged view that regards economic interdependence as a cause of insecurity and an element in conflicts. In this new environment of increasing great power competition and technological decoupling, all states are not created equal. Major states such as the United States and China can be system shapers, whereas small states tend to be system takers. Unlike smaller states, they have a greater ability to use their investment leverage, supply chain dominance and control of core technologies. For smaller states with open economies, such as Finland and Sweden, these capabilities of major powers create vulnerabilities in the form of security risks of foreign ownership, supply disruptions and critical technological dependencies. The report explores how small states can mitigate such risks. A series of innovative Delphi backcasting exercises in Finland and Sweden brought together 113 sectoral experts and generalists to ponder ways to prevent dystopian scenarios from unfolding. The target years of the scenarios extended from 2027 to 2035, encouraging ideas on both short- and longer-term solutions. Instead of aiming for a consensus of expert views, the process sought to produce a variety of effective means and measures that a small state could choose to adopt. The exercise consisted of nine scenarios, presented as comic art. The narratives on the risks of foreign ownership focused on 1) acquisitions of gaming companies gathering personal data, 2) transfers of real estate ownership in Lapland and 3) venture capital investments in emerging technology start-ups. The scenarios on supply disruptions dealt with 4) discriminatory practices limiting access to antibiotics, 5) political retaliation limiting access to water treatment components and 6) sanctions on wind power materials, components and minerals. As for high technology dependencies, the cases included 7) the maintenance of military technology, 8) the cybersecurity of health technology and 9) the supply of chemicals for research and development activities. According to the report, small states have the least leeway in navigating the risk environments created by technological dependencies, whereas the toolkits to tackle the potential dangers of foreign ownership and supply disruptions are more extensive. Although different issues and insecurities require different bespoke solutions, all the risk categories call for active mitigation efforts. Most of the suggested Finnish and Swedish expert solutions can be clustered into three alternative approaches: protectionist/interventionist, liberal and technologically oriented. Protectionist/interventionist solutions would expand the state’s powers in controlling, guiding and limiting economic activities. Key suggestions included: covering acquisitions and greenfield investments in national foreign direct investment screening screening real estate acquisitions with a wide range of countries of origin imposing country-specific limitations to real estate acquisitions screening venture capital investments in emerging technologies initiating a national security act to limit foreign control rapidly imposing country- and company-specific limitations to bids in critical industries increasing tariffs supporting domestic or EU-level production through subsidies and industrial policy friendshoring the production of critical goods expanding the scope of supply stockpiling in pharmaceuticals and water treatment components The more liberal approach towards national preparedness would focus on solving the challenges primarily through carrots instead of sticks – to avoid limiting entrepreneurial freedoms and interfering with the dynamics of the capitalist market economy. The proposed solutions included: initiating value debates to guide individuals’ choices when accepting investments formulating a national innovation strategy to boost domestic companies’ operating conditions in emerging technology fields teaching “technology literacy” to guide the use of foreign-owned products engaging all stakeholders in making decisions on foreign ownership diversifying the sources of critical goods such as antibiotics enhancing awareness of risks and making “plan Bs” in supply chain management deepening the EU’s single market to offer genuine scalability opportunities for start-ups The third, more technologically oriented approach would rely on new innovations or technical solutions to enhance small state preparedness. Key ideas included: innovating new medicines to replace antibiotics prioritising non-conventional technologies such as small modular reactors (SMRs) enhancing domestic capacity to produce key components with 3D printing researching alternative materials to replace critical chemicals developing the recycling, recovery and transportation of critical chemicals adopting geofencing and coding solutions to enhance cybersecurity designating emerging technologies as focus areas in higher education increasing the adaptability of technical solutions through standardisation These three approaches prioritise different key solutions for enhancing small state preparedness. However, they represent generic policy preferences rather than ready-made policy recommendations. Ideally, states can formulate their own pick-and-mix toolkit by combining elements from the different approaches. The complementary nature of some of the expert views was also suggested by the fact that many – even most – respondents argued for diversification as a solution to various challenges. For example, and regardless of the chosen strategy, tendering rules could be improved by placing quality over price, taking geopolitical risks into account and allowing multiple winners in contrast to the currently dominant winner-takes-it-all logic, which leads to overly concentrated supply chains. Moreover, at least minor legislative tightenings were widely proposed to be made on foreign ownership – especially with regard to that of nationals of authoritarian states. These changes were, however, typically proposed to be complemented with such balancing acts as long-term leases and incentives to develop and acquire domestic products and companies. Ultimately, by highlighting alternative approaches to small state preparedness, this report seeks to encourage democratic discussion on a broader political choice: what type of state and economy do we want in the future? It is not only their identity that guides what states do; adopted policies and means also shape state identities over time.
Topic:
Security, Science and Technology, Supply, and Geoeconomics
Political Geography:
China, Finland, Asia, Sweden, and United States of America

24. US-China geoeconomic rivalry intensifies: A risk or an opportunity for European companies?

Author:
Jana Titievskaia
Publication Date:
11-2022
Content Type:
Policy Brief
Institution:
Finnish Institute of International Affairs
Abstract:
As the US and China balance between the pursuit of strategic security interests and ambitions to attain economic growth, novel sources of risk are emerging for globally active businesses, ranging from sanctions to export controls. The Biden presidency will offer only moderate respite from the escalation of this geoeconomic rivalry, even as US-China trade recovers in the aftermath of the pandemic. In the face of US-China rivalry, the EU and its member states have opted for the third way of “open strategic autonomy”, including a range of trade instruments that will allow the EU to support the competitiveness of its companies more effectively. European companies need to closely monitor their risk exposure in various transmission channels and stay attuned to unexpected opportunities that can materialise in the form of market entry possibilities and the development of new niches.
Topic:
Hegemony, Rivalry, Strategic Interests, and Competition
Political Geography:
China, Europe, Asia, North America, and United States of America

25. Turkey in Central Asia: Possibilities and limits of a greater role

Author:
Toni Alaranta and Kristiina Silvan
Publication Date:
01-2022
Content Type:
Policy Brief
Institution:
Finnish Institute of International Affairs
Abstract:
Turkey’s long-term search for strategic autonomy, shifting global power relations, and Central Asian governments’ desire to foster multi-vector foreign policies have prompted Turkey to successfully intensify its activities in Central Asia. From the 1990s onwards, Turkey’s activism in Central Asia has strengthened cultural, trade, and diplomatic relations. Its multilateral coordinating body, the Cooperation Council of Turkic Speaking States, is being further institutionalized into the Organization of Turkic States. Turkey’s potential for acquiring a greater role in the region is limited. Its economic engagement remains modest, and Central Asian states’ responses to the Taliban takeover in Afghanistan indicate that Russia and China remain the region’s preferred security partners. Although Turkey, China, Russia, and other external actors compete in Central Asia, no full-fledged confrontation has taken place in the region so far. Turkey’s new initiatives are unlikely to change this dynamic, as long as they are conducted in the spirit of inclusive multipolarity.
Topic:
Security, Foreign Policy, Strategic Interests, and Power
Political Geography:
Europe, Central Asia, Turkey, and Asia

26. Central Bank Digital Currencies and the implications for the global financial infrastructure: The transformational potential of Russia’s digital rouble and China’s digital renminbi

Author:
Maria Shagina
Publication Date:
01-2022
Content Type:
Policy Brief
Institution:
Finnish Institute of International Affairs
Abstract:
The launch of Central Bank Digital Currencies (CBDC) not only revolutionizes the international financial system, it also represents an opportunity to minimize the exposure to the US dollar transactions and avoid US oversight. China enjoys a first-mover advantage, as it became the first major economy to launch a CBDC. Following in Beijing’s footsteps, Russia is at the forefront of advancing its digital currency project. As US-sanctioned countries, Russia’s and China’s motivation extends beyond transaction costs reduction and financial inclusion: the governments seek to reduce their dependence on the US dollar and mitigate sanctions risks. In the short term, the US dollar’s international status remains unrivalled. No currency is well-positioned to displace the greenback as a reserve currency. In the long term, CBDCs could eliminate the need for third-party intermediaries and allow cross-border transactions that take place outside of the US-led financial system. This would hamper the US’s ability to use sanctions as a geoeconomic tool and oversee their extraterritorial enforcement.
Topic:
Finance, Digital Economy, Central Bank, and Banking
Political Geography:
China and Asia

27. Russia’s shifting foreign and security policy in Northern Europe: The new geopolitical meaning of ‘good neighbourliness’

Author:
Sinikukka Saari and Jyri Lavikainen
Publication Date:
02-2022
Content Type:
Policy Brief
Institution:
Finnish Institute of International Affairs
Abstract:
Since the start of Putin’s third presidential term in 2012, geopolitical competition has also become rooted in the Nordic region, and small states’ room for manoeuvre in security policy has shrunk. In Russia’s view, maintaining ‘good neighbourly relations’ is primarily the responsibility of small states that always need to negotiate the limits of their sovereignty with great powers, such as Russia. From the Nordic point of view, the relations may require walking on eggshells. Prior to 2014, Norway was often mentioned among Russia’s ‘good neighbours’, but now Russia regularly calls off its policy of ‘reassurance and deterrence’. There are increasing signs that, in Russia’s view, a ‘good neighbour’ should refrain from extensive security collaboration and training with NATO and the US. Hence, Finland and Sweden cannot wholly avoid political tension with Russia merely by staying outside of the Alliance.
Topic:
Security, Foreign Policy, Military Strategy, and Strategic Interests
Political Geography:
Russia and Europe

28. Iraq’s state of democracy: A self-perpetuating cycle against reform in favour of the political elite

Author:
Mariette Hagglund
Publication Date:
02-2022
Content Type:
Policy Brief
Institution:
Finnish Institute of International Affairs
Abstract:
In addition to Afghanistan, Iraq has been one of the US’s major state-building projects in the 21st century. The recent events in Afghanistan have again highlighted criticism against large-scale interventions. The changes in Iraq’s electoral law have brought about some positive changes, but did not address the root causes of the problems in the political system. Institutions in Iraq are weak and marred by politicization and pressure from powerful parties. Hence, their independence is highly questionable. While improving democracy in Iraq would require radical change, taking minor steps forward remains a more attractive and doable option for the Iraqi and international leadership. However, by working with established political players, the very barriers to more significant reform are simultaneously being strengthened.
Topic:
Reform, Democracy, Elites, and Social Order
Political Geography:
Iraq and Middle East

29. Schengen reform and the instrumentalisation of asylum-seekers: New Commission proposals legitimate states’ existing practices

Author:
Saila Heinikoski
Publication Date:
02-2022
Content Type:
Policy Brief
Institution:
Finnish Institute of International Affairs
Abstract:
The European Union lacks a consistent asylum and migration policy, which makes it vulnerable to the instrumentalisation of asylum-seekers, most recently visible in the Belarusian actions at its borders with EU countries. In December 2021, the European Commission published proposals on tackling the instrumentalisation of migrants and reforming Schengen rules, but they appear to miss their targets. Instead of addressing the hostile third country, the instrumentalisation proposal weakens the rights of asylum-seekers at the border. Schengen reform proposes the possibility of an indeterminate period of reintroduced internal border controls, legitimating the years-long border controls in six Schengen countries (France, Germany, Denmark, Austria, Sweden and Norway). Asylum and migration policy is also progressing, as the 18-month-old proposal for the New Pact on Migration and Asylum is expected to move forward, contributing to the badly needed harmonisation of policies.
Topic:
Migration, Reform, Asylum, and Humanitarian Crisis
Political Geography:
Europe

30. The EU´s quest for geoeconomic power: Pursuing open strategic autonomy

Author:
Niklas Helwig and Mikael Wigell
Publication Date:
03-2022
Content Type:
Policy Brief
Institution:
Finnish Institute of International Affairs
Abstract:
The EU is adapting its policy toolkit under the heading of ‘open strategic autonomy’, which combines the Union’s market-liberal preferences with more assertive economic policies. While the EU is largely deploying defensive measures to protect itself from unfair trade practices and economic coercion, it is also increasingly moving towards a more strategic use of economic tools. The EU’s economic defence capabilities include initiatives to improve competitiveness in key strategic sectors (such as cloud computing, semi-conductors, and pharmaceuticals) as well as instruments to deter, block or retaliate against distortive or coercive measures by other powers. The strategic policies of the EU include trade and investment instruments for economic ‘binding’, such as the new ‘Global Gateway’ initiative, as well as means for leveraging the attractiveness of access to the single market to promote the EU’s norms and interests. The EU’s recent sanctions against Russia demonstrates the Union’s coercive capabilities in the economic domain, and its potential as a geoeconomic power.
Topic:
Regional Cooperation, European Union, Strategic Interests, and Strategic Autonomy
Political Geography:
Europe