The Administration of President Donald Trump has adopted an “America First” strategy, and taken a number of aggressive stands including NATO burden sharing and trade. Regarding the issue of security and defense, at least some European security experts talk about the United States as it was backing away from the NATO alliance, and a split between the United States and Europe that will force Europe to create its own approach to creating military and other security forces.
Many European security and defence analysts adamantly argued that it high time for Europe to grow up and defend itself. To this effect, the European Union will present its new 13 billion Euro Defence Fund, but conditions for taking part will shut out “third countries” including post-Brexit United Kingdom and the United States.
President Donald Trump has been treated in Europe as a figure of fun and disrespect, if not one deserving outright contempt. The United States President is certainly determined on refashioning United States defense policy as well as the country’s trade policy. As recently reported by Wall Street Journal and Financial Times, in pursuing those twin goals, President Trump enjoys a level of popular support that extends well beyond his base in the Republican Party. Understandably, the idea that the United States will no longer be forever generous with spending its own money for Europe’s defense sits uneasily with the Europeans.
Denis Ewing of the Washington Centre for Strategic and International Studies stated that the Germans cut a particularly unfortunate picture in this regard. Denis Ewing explained that while they boast record-breaking trade surpluses, they claim poverty when it comes to establishing a proper level of defense spending. This is all the more astounding as the basic readiness level of the German military’s equipment borders on the ridiculous at this stage. A nation generally so proud of its infrastructure and maintaining machinery ought to be embarrassed.
And yet, even Heiko Maas, the otherwise very courageous new German Foreign Minister, clings to spending 1.5% of German GDP on defense as a big challenge and a real stretch. Apparently, his party, the Social Democratic Party (SPD), wouldn’t allow him to say anything else.
In his own simple, but effective way, President Donald Trump ranks countries by the size of their trade surplus with the United States and he wants to settle the score bilaterally with each of them. Generosity vis-a-vis the EU is out. By the same token, President Trump is not worried about Russia as its meagre trade balance with United States is not worrying for him. The only saving grace for Europe is that President Trump’s top priority is if course China.
Meghnad Desai, a member of the British House of Lords and an emeritus professor of economics at the London School of Economics stated that, given all these, therefore, Europe must reassess the redesigned geopolitical order. According to him, the redesigned geopolitical order thus needs careful reassessment as far as Europe is concerned. The end of the cold war almost 30 years ago has made the North Atlantic Treaty Organization basically obsolete.
Meghnad Desai further noted that most conflicts involving the United States over the past 25 years, mainly in the Middle East, have been fought with minimal if any help from its NATO partners, with the exception of the UK. The free-riding Western European members apparently do not think that the region’s security is their concern, which is downright bizarre. Or they continue to believe the United States will take care of it.
As it stands, Western European countries were so elated by the Franco-German rapprochement after 1945 that they have the delusion of living in some sort of post-Kantian era of Universal Peace. This is why they have neglected their own defense and decided to free ride on the United States. However, the much-prolonged United States largesse is about to end. President Donald Trump will definitely reduce United States spending on NATO, if he does not dismantle it altogether.
Sergey Latyshev of the Katehom, an independent Think-Thank argued that Europe’s military weakness has been obvious to everyone else except the leaders of the EU themselves. They couldn’t tackle the Yugoslavia crisis without the help of the United States. Next, the UK and France mishandled Libya, and the United States quite rightly refused to bail them out.
According to Sergey Latyshev the new situation facing Europe is the crisis of mass immigration across the Mediterranean and from further East. Therefore, Europe’s defense challenges will not come so much from Russia as from the Mediterranean and the Middle East. As a consequence, much as Europe’s current political establishment tries to deny it, it will now have to spend serious money on defense.
That is made all the more difficult as, apart from France, Western Europe will have no capable army now, given that the UK is about to Brexit. That is only one reason why the EU will need to sign a formal security pact with the UK. Germany for sure needs to make up the huge backlog of defense underspending over the decades. This move has to happen not to please the United States, but in Germany’s own self-interest.
Meghnad Desai argued that beyond the challenge that is the Middle East and beyond, much as Germans may wish otherwise, the Russia problem may not disappear. From the way President Putin of Russia has behaved over Ukraine, one can guess that he just wants to consolidate the old borders of Russia.
This puts the Baltic countries at possible risk. They are the only European countries that can credibly claim still needing the protection of the United States. President Donald Trump should therefore be dissuaded from doing anything rash in this area. The rest of Europe will have to grow up and defend itself. About time, too.
Europe’s quest to defend itself
FOREX scarcity close to claiming another victim
South Korean based company, Ekos Steel Plc which started selling bars and wires to customers last Wednesday may stop production and close the company after one month due to a shortage of hard currency which is needed to import raw material.
Ekos, located on ten hectares of land in Dukem, asked government banks for USD 70 million to buy raw material from global steel companies like POSCO in South Korea and Arcelor Mittal in Ukraine and Turkey. Currently it only has enough material in reserve to produce steel for one month.
Ekos, which has worked for three decades in South Korea, obtained an investment license in June 2014 and. Their plan was to produce 210,000 tons rebar and wire rod products to substitute imports and to enhance this capacity to 500,000 tons per year during the second phase.
The company makes galvanized steel sheets, hot and cold rolling mills, and steel tubes. They also operate a steel coil service center, and provide steel manufacturing management and engineering work.
Shell H. Choo CEO of Ekos told Capital that the company may not continue to operate in Ethiopia if they don’t get the hard currency.
“The construction completion has been delayed for two years because of the hard currency shortage and we have built the factory yet we face another currency shortage, we are tirelessly working to get the hard currency but if we can’t we will have to stop production and lay off employees.”
“The government should understand our problem because of our project, this country will be able to save USD 50 million annually. This will facilitate the work of the construction sector. We are also considering exporting to neighboring countries which will bring in foreign currency,” he said.
Currently the company has 100 workers and nine of them are South Koreans.
Solomon Mulugeta from the Ethiopian Steel and Metals Producers Association said that most of the steel companies are performing below 15 percent of capacity due to the hard currency shortage.
“With the right amount of hard currency in loans, the sector can produce three million pieces of rebar and wires per year. However, because of the hard currency shortage the sector is performing below 15 percent and the wide gap between supply and demand is affecting the price of bars and wires and preventing buildings from being built on time.”
“Even the dollar that is available in the banks are not properly given to the sectors due to nepotism and corruption. As an association we have asked the National Bank of Ethiopia for assistance but they have not responded.”
Currently the steel industry needs USD six billion but they have only gotten around 25 percent of this.
The sector employs 50,000 people and if the hard currency problem continues it may start firing workers.
The country annually imports 70 million tons of steel and the local capacity is around three million tons. Currently, there are around 241 small, medium and large factories involved in steel and iron production.
Recently, prominent aluminum cookware manufacturer Kaluworks Ethiopia Plc, shut their doors. Despite being in business for two decades they were recently doomed by lack of inputs.
No Shame
Dubai company offers lowest price in wheat re-bid after failing to live up to promises
They say if you don’t succeed once try and try again. That apparently is the motto of Dubai based Promising International Trading Co, which despite failing to live up to their end of the bargain when they won a bid to deliver wheat this past June, returned and offered the lowest price during the Public Procurement and Property Disposal Service (PPPDS) re-bid early last week.
Last June the company, which is not new to the Ethiopian market, agreed to supply 200,000 metric tons of wheat but because of what they said were technical reasons like a delay in the Letter of Credit or disagreements with ESLSE did not deliver. This contributed to a wheat shortage over the past few months forcing the Service to float another bid this month.
Last Tuesday when the bid documents were opened eight companies participated and seven of them met the requirements to supply wheat.
Promising International offered USD 272.05 per metric ton for lot 1 (a unit of measurement) and USD 284.8 for lot 2 or USD 55.68 million in total. In this bid PPPDS specified that the wheat be transported via ESLSE vessels.
This time their bid increased by USD 20.75 and USD 30 for lot 1 and 2 respectively compared with their previous offer, which in June was USD 258.05 per metric ton for lot 1 and USD 262.05 for lot 2, both lots consist of 100,000 metric tons each, for the shipment via Ethiopian Shipping and Logistics Services Enterprise (ESLSE) vessels or USD 251.3 for lot 1 and USD 254.8 for the shipment on other vessels up to the port of Djibouti.
US based Bunge Limited, had the second lowest offer at USD 298.25 and USD 288.25 per ton for the 1st and second lot respectively, which is 58.65 million for the total. Hakan Agro DMCC, a Dubai company which offered the second lowest price in June, offered USD 296.33 and 290.33 per ton for each lot for USD 58.66 million in total making their bid the third lowest.
The fact that the company was allowed to re-bid after failing the first time has confused professionals Capital spoke with. The sector actors said that the Service reported the previous default to the Public Procurement and Property Administration Agency (PPPAA), but since the Agency did not take action in time the company was able to take part in another round of bidding.
Jonse Gedefa, Deputy Director General of PPPAA, told Capital that these types of conditions will occur until the Agency gives a final decision. “Companies will participate in open bids until the Agency gives feedback or blacklists some of them,” he added.
He said that this decision may be delayed since the claim came recently.
Yigezu Daba, head of PPPDS, told Capital that the Board for Review and Resolution of Complaints at the Agency is responsible for deciding whether a company should be banned. Until the decision is given the company can participate in the bid, he said.
Yigezu added that the company claimed they faced problems preventing them from fulfilling their contract because ESLSE revised their cost for freight after they made the agreement with Promising. Wheat is one of Ethiopia’s most imported agriculture products. The Ministry of Trade has attempted to stabilize the local market by allocating hundreds of millions of USD.
PM Abiy, Netanyahu to meet at UN General Assembly
Prime Minister Abiy Ahmed (PhD) and Israeli Prime Minister Benjamin Netanyahu are scheduled to meet on the sidelines of the 73rd session of the United Nations General Assembly (UNGA 73) that will be held from September 18 to October 5 in New York.
Raphael Morav, Ambassador of Israel to Ethiopia, told Capital that the two leaders will discuss bilateral issues.
During his visit to Capital’s office, the ambassador said that his government is also working to invite the PM to Israel in the coming few months.
The ambassador said he appreciated the recent actions of the PM especially the attempt to implement democracy and open up more space to opposition parties. In terms of economic cooperation he noted that the two countries are collaborating in various projects such as the effective implementation of the first of its kind solar power pump project in Bahir Dar.
Ambassador Morav said that during his meeting with Abiy, the PM stressed that his government is keen in getting expertise in agro-technology from Israel. “In our discussions Abiy told me that his government is very interested in working with the Israeli government to expand irrigation based agricultural activity from the current five percent of the total agricultural production,” Ambassador Morav said.
He also stated that the Israel Agency for International Development Cooperation (MASHAV) has assisted in developing agribusinesses, sharing its expertise. For instance avocado production is one such success story that MASHAV supported in Ethiopia. In terms of strengthening the economic ties between the two countries, the Ambassador was positive that Israeli investment would be expanding. Israeli contractors and equipment suppliers are already engaged in developmental projects in Ethiopia, according to Ambassador Morav, who noted the drip irrigation at Wolqite Sugar Factory and the construction of the toll road at Mojo-Hawassa as some of the developmental projects that Israeli companies are participating in.
