There’s a change coming up in Europe that will dictate the next five years of policymaking in the region.
Four of the highest-ranking jobs at the EU will be vacant before the end of the year, and the race to fill them has already begun. Europe will have a new president of its Parliament (its legislative arm), of its European Council (the heads of state), of the European Central Bank and of the Commission (the executive arm). Arguably, the attention is now more on the latter, given that she or he will determine which direction Europe will take.
What’s the European Commission?
It proposes new laws and is generally seen as the government of the European Union.
It is formed by one commissioner from every member state plus its president. The different policy areas, from finance, migration and foreign policy, are divided across the 28 officials.
European Union (EU) flags fly from flag poles outside the Berlaymont building.
Bloomberg | Bloomberg | Getty Images
How is the president chosen?
The European Union is still battling over how this actually happens.
There is one process available called Spitzenkandidaten — which chooses the next president of the Commission based on the number of votes that each European political party receives. This means that the political family with the highest number of seats at the European Parliament nominates one of their members to take the role.
This happened at the last election in 2014, which saw the largest political party in the European Parliament — the conservative EPP (European People’s Party) — appointing Jean-Claude Juncker as European Commission president.
However, some countries believe this process is a “democratic anomaly.” The heads of state want to have the final say on who gets the most senior job in Brussels.
“The idea that the Spitzenkandidaten process is somehow more democratic is wrong,” Donald Tusk, president of the European Council, said last year.
Who are the candidates?
Despite the row over the selection process, some European parties have put forward their leading candidates.
EPP – the conservative right-wing party, has chosen Manfred Weber. He’s a German national and has been a lawmaker in Brussels for 10 years. Speaking on the section process back in April, he told CNBC: “It’s not a competition between institutions. People outside of Brussels don’t care about this institution perspective.” He added that he has the support of nine EU member states, which he described as a “good start.”
The pick for next president of the European Commission will be made by a formal decision by the EU heads of state. This means that the U.K. will also have a say, if it wants, in this process. Otherwise, given that the country is scheduled to leave the European Union this year, Prime Minister Theresa May may decide to abstain. Either way, the next Commission president will be chosen by a reinforced qualified majority — which means they have to gain a certain amounts of votes from leaders who account for a specified amount of the region’s population of 500 million.
S&D (Progressive Alliance of Socialists and Democrats) — the socialist party has nominated Frans Timmermans, a Dutch man, currently serving as a vice-president of the European Commission. In his job, he has challenged Poland, Hungary and Romania on their attitude toward the rule of law.
ECR – the Alliance of European Conservatives and Reformists has selected Jan Zahradil, a Czech lawmaker in the European Parliament.
EFA – the European Free Alliance, which brings together various regional political parties, from Scotland to Spain, nominated Oriol Junqueras, who is currently in prison. He was a member of the Catalonian Parliament and supportive of the region’s independence from the rest of Spain. He told CNBC via email that he put himself forward despite being in prison to “to denounce and fight repression by Spain.”
Other parties have decided to put forward more than one candidate, giving more leeway to European leaders when voting on the next president.
ALDE (Alliance of Liberals and Democrats for Europe group) – the Liberal party at the European Parliament nominated seven candidates, dubbing them “Team Europe.” In this group, there’s the influential Margrethe Vestager, the Danish official currently serving as EU competition commissioner.
She told CNBC that the next European Commission should focus on climate change, cybersecurity and providing a good future for the younger generations.
Meanwhile, The Green Party decided to nominate two people: the German lawmaker Ska Keller and the Dutch politician Bas Eickhout. The European Left Party also elected two members as potential leaders of the Commission: Violeta Tomic from Slovenia, and Nico Cue, a former Belgian trade union leader.
Any non-official candidates?
Michel Barnier during a news conference after a meeting of EU finance ministers at the European Council headquarters in Brussels, Belgium.
Jasper Juinen | Bloomberg | Getty Images
Given the ambiguity of the process, there are non-official names floating around in the corridors of Brussels. These include: Michel Barnier, the EU’s Brexit negotiator; Christine Lagarde, the managing director of the International Monetary Fund; and Mark Rutte, the Dutch prime minister. But ultimately, the next European Commission president could also be someone who’s not currently in the list.
OECD cuts growth outlook to post-crisis low
The trade war between the United States and China has plunged global growth to its lowest levels in a decade, the OECD said on Thursday as it slashed its forecasts.
The Organisation for Economic Cooperation and Development said that the global economy risked entering a new, lasting low-growth phase if governments continued to dither over how to respond.
The global economy will see its weakest growth since the 2008-2009 financial crisis this year, slowing from 3.6% last year to 2.9% this year before a predicted 3.0% in 2020, the OECD said.
The Paris-based policy forum said the outlook had taken a turn for the worse since it last updated its forecasts in May, when it estimated the global economy would grow 3.2% this year and 3.4% in 2020.
“What looked like temporary trade tensions are turning into a long-lasting new state of trade relationships,” OECD chief economist Laurence Boone told Reuters.
“The global order that regulated trade is gone and we are in a new era of less certain, more bilateral and sometimes assertive trade relations,” she added.
Trade growth, which had been the motor of the global recovery after the financial crisis had fallen from 5% in 2017 into negative territory now, Boone said.
Meanwhile, trade tensions have weighed on business confidence, knocking investment growth down from 4% two years ago to only 1%.
Boone said that there was evidence that the trade standoff was taking its toll on the U.S. economy, hitting some manufactured products and triggering farm bankruptcies.
The world’s biggest economy would grow 2.4% this year and 2.0% next year instead of the 2.8% and 2.3% respectively that the OECD had forecast in May.
Global Economy Screen with world map and man
Stephen Morton | Bloomberg | Getty Images
China would also feel the pain with the second-biggest economy growing 6.1% in 2019 and 5.7% in 2020, outlooks the OECD cut from 6.2% and 6.0% previously.
The OECD estimated that a sustained decline in Chinese domestic demand of about 2 percentage points annually could trigger a significant knock-on effect on the global economy.
If accompanied with a deterioration in financial conditions and more uncertainty, such a scenario would mean global growth would be cut by 0.7 percentage points per year in the first two years of the shock.
Meanwhile, uncertainty over government policies was also hitting the outlook for Britain as it lurches towards leaving the European Union.
The OECD forecast British growth of 1% in 2019 and 0.9% in 2020, but only if it left the EU smoothly with a transition period, a far from certain conclusion at this stage. The OECD had forecast in May growth of 1.2% and 1.0%.
If Britain leaves without a deal, its economy will be 2% lower than otherwise in 2020-2021 even if its exit is relatively smooth with fully operational infrastructure in place, the OECD said.
The euro area would not be spared from negative spillovers under such a scenario and would see its gross domestic product cut by half a percentage point over 2020-2021.
The OECD trimmed its forecast for the shared currency block, largely due to the slowdown in its biggest economy, Germany, which was estimated to be in a technical recession.
Euro zone growth was seen at 1.0% – down from 1.2% in May – this year and 1.0% in 2020 – down from 1.4% in May.
Boone said Germany’s economy had probably shrunk in the second and third quarters with a slump in car manufacturing, which accounts for 4.7% of German GDP, knocking three-fourths of a percentage point off German growth.
Netanyahu urges rival Gantz to form unity government
Israeli Prime Minister Benjamin Netanyahu delivers a speech to supporters of his Likud party after polls closed in the Israeli parliamentary elections.
Ilia Yefimovich | picture alliance | Getty Images
Prime Minister Benjamin Netanyahu called on Thursday on his main rival, former general Benny Gantz, to join him in a broad, governing coalition after Israel’s election ended with no clear winner.
A spokeswoman for Gantz, leader of the centrist Blue and White party, had no immediate response to the surprise offer from Netanyahu, head of the right-wing Likud party.
The change of strategy reflected Netanyahu’s weakened position after he failed again in Tuesday’s election, which followed an inconclusive ballot in April, to secure a parliamentary majority.
“During the election campaign, I called for the establishment of a right-wing government but to my regret, the election results show that this is impossible,” Netanyahu said.
“Benny, we must set up a broad unity government, as soon as today. The nation expects us, both of us, to demonstrate responsibility and that we pursue cooperation.”
On Wednesday, Gantz said he hoped for a “good, desirable unity government”. But he has also ruled out forming one with a Netanyahu-led Likud, citing looming corruption charges against the prime minister. Netanyahu denies any wrongdoing.
How Saudi Arabia failed to protect itself from drones, missile attacks
Smoke is seen following a fire at Aramco facility in the eastern city of Abqaiq, Saudi Arabia, September 14, 2019.
Stringer | Stringer
DUBAI — Questions have abounded all week as to how Saudi Arabia, the planet’s third-highest defense spender and steward of the world’s largest oil facility, allowed itself to fall victim to a drone and missile attack that wiped out half of its crude production in a day.
“The Saudi leadership has a great deal of explaining to do that a country that ranks third in terms of total defense spending … was not able to defend its most critical oil facility from these kinds of attacks,” former U.S. diplomat Gary Grappo told CNBC on Tuesday.
The stakes for the future of Saudi Arabia’s ability to defend itself are global. Brent crude saw its largest price jump ever as markets opened this week, and the commodity’s next moves depend heavily on Saudi oil giant Aramco’s ability to recover its production capacity and defend itself from similar attacks.
Investors are likely asking themselves how the kingdom could have left itself so vulnerable and what that means for the future of oil, global markets and the long-awaited Aramco public stock offering.
So how did the Saudis, who in 2018 spent an estimated $67.6 billion on arms — second only to the U.S. and China — fail to defend their economic jugular vein?
A target like ‘a Christmas tree’
It also doesn’t help that massive oil plants are just easy targets.
“Saudi oil assets are vulnerable for the simple reason that when flying over them at night, they stick out against the desert background like a Christmas tree,” Michael Rubin, a former Pentagon official and Middle East expert at the American Enterprise Institute, told CNBC in an email.
“This means that enemies don’t need high-tech GPS-guided drones, even though they might have them, but can also use relatively lower technology drones.”
Drone wreckage including one described as an Iranian Delta Wave UAV, foreground, from the attack on the Aramco Abqaiq oil refinery, sits on display during a Ministry of Defense news conference in Riyadh, Saudi Arabia, on Wednesday, Sept. 18, 2019. Saudi Arabia on Wednesday said the weekend attacks on the kingdoms critical oil infrastructure were “unquestionably sponsored by Iran.” Photographer: Vivian Nereim/Bloomberg via Getty Images
Vivian Nereim | Bloomberg | Getty Images
Twenty-five drones and missiles were used in the Saturday strikes on state oil giant Saudi Aramco facilities Abqaiq and Kurais, Saudi’s defense ministry said. While claimed by Yemen’s Houthi rebels, Saudi and U.S. officials say Iran was responsible, a charge Tehran has denied.
Dave DesRoches, an associate professor and senior military fellow at the National Defense University in Washington, D.C., told CNBC: “If an attack is of a different threat than the system was designed for — that is a low-altitude cruise missile instead of a high-altitude ballistic missile — then the system will not intercept it.”
Saudi Arabia’s current air defenses are ‘irrelevant’
Saudi Arabia boasts an arsenal of sophisticated and expensive air defense equipment. They have the American-made Patriot missile defense system, German-made Skyguard air defense cannons and France’s Shahine mobile anti-aircraft system, and they’ll soon have Lockheed Martin’s highly advanced THAAD (terminal high altitude area defense) interceptors.
But these are basically inconsequential, says Jack Watling, a land warfare expert at the Royal United Services Institute who advises Gulf militaries.
“The Patriots are kind of irrelevant,” Watling told CNBC in a phone interview. “The track record of Patriot engaging missiles of any kind is pretty awful, they very rarely hit the target.” The other issue, he says, is that it’s designed for shooting down high-altitude ballistic missiles, not the cruise missiles and drones used in Saturday’s attack.
“These were low-flying cruise missiles. They were coming in far below the engagement zone for Patriot. So you wouldn’t have tried to hit them with Patriot.” In its primary role of shooting down aircraft, Watling noted, the system does perform “very well.”
Aerial photographs found on open-source platforms show three Skyguard batteries placed around the targeted Abqaiq oil facility, which are slow-firing large caliber anti-aircraft guns, as well as French-made Shahine batteries from the 1980s.
Despite being permanently placed to protect these facilities, they Skyguards were not of much use either, Watling says: “The batteries around the site are firstly not the appropriate systems to engage cruise missiles, and there is no evidence that the Saudis have trained using their equipment.”
‘The Saudis… are largely inattentive’
To add to the Saudis’ weapon woes, their military personnel may not be up to the task either, according to Watling and several other experts who spoke to CNBC anonymously.
“The Saudis have a lot of sophisticated air defense equipment. Given their general conduct of operations in Yemen, it is highly unlikely that their soldiers know how to use it,” Watling said. He added that the kingdom’s forces have “low readiness, low competence, and are largely inattentive.”
“So if you’re a battery commander protecting against an oilfield which you never believed was going to come under attack, how carefully are you watching your radar? I’d be surprised if they’d even turned their radar on.”
Even those that do have the technical knowledge, Watling added, “are unlikely to be attentive enough to pick up small unmanned aerial vehicles or low flying missiles on their radar… quickly enough to coordinate countermeasures.”
The Saudi Defense Ministry did not respond to a CNBC request for comment.
In the Saudi military’s defense, oil infrastructure in the kingdom falls under the Ministry of Interior (MOI), military, noted Becca Wasser, a security analyst and war gaming expert at RAND Corp in Washington, D.C.
“Most of U.S. arms sales to KSA, particularly in air defense, have been to the military,” she wrote on Twitter on Monday. “The MOI, to my knowledge, isn’t well kitted out for this role as they tend to focus on domestic threats.”
So what does the kingdom need to do?
Barely a month has gone by since 2016 without Yemen’s Houthis firing rockets or missiles into the kingdom, which has been mired in a bloody war with the rebels since 2015. The Saudi-led offensive in Yemen has led to tens of thousands of deaths, according to the United Nations.
But to achieve the kind of point defense that could counter future attacks like Saturday’s, the Saudis need better short-range air defense systems and lower level search-and-track radar, experts say. “More importantly,” RUSI’s Watling added, “they would need soldiers who were competent at using them, and attentive.”
“If the Trump Administration is serious about confronting Iran in the region, it’s doing an abysmal job preparing for the small and big fights where the IRGC and its proxies can bring asymmetric weapons to bear,” Miguel Miranda, founder of website the 21st Century Arms Race, wrote last year in an op-ed for RealClearDefense.com.
“Genuine layered anti-ballistic missile defenses are needed to protect U.S. bases against hundreds of potential missile and rocket attacks by Iran in a future war.”
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