Perspectives on Global Risks: the 2nd JEF Global Risk Symposium 2

Author Sir Graham Fry

By Sir Graham Fry

International affairs today are strongly influenced by two factors.
The first is geopolitical: the economic and strategic relationshipbetween the United States and China is now the most important in
the world and increasingly characterised by rivalry rather thancooperation. The second is ideological: in a range of countries we areseeing a backlash against globalization and the rise of a newnationalism: this is, for example, expressed by the administration of
US President Donald Trump as putting “America first”. These factors
have created heightened risks for Europe as well as other regions.

nuclear power stations. But more recently awareness of security
risks has risen in Western Europe: examples are the growing
concerns about China’s moves to obtain advanced technology, e.g.
by acquiring European high-tech companies, and about the potential
security threat from the supply of 5G telecoms equipment by
Huawei. The European Union shares many of the concerns
expressed by the US about China’s industrial and trade policies. If
the US had been looking for allies in its struggle with China, it could
have probably have obtained support from the EU, but it was not.

Europe/China

Russia: China’s Best Friend …

Japan was much quicker than Europe to see that the growth of
China’s economy was changing the global strategic balance. The
strategic “pivot” to the Asia-Pacific region by the administration offormer President Barack Obama was one wake-up call. President
Trump’s more aggressive approach to China has broad backing in
the US. European policymakers may grasp the importance of China
intellectually, but on a day-to-day basis they tend to be more
preoccupied by their own neighborhood, including Russia and the
Middle East.
For many years, they have seen China in commercial terms as a
growing market for European firms and a source of infrastructure
investment. As part of the Belt and Road Initiative, 16 countries
participate in a partnership called “Cooperation between China andCentral and Eastern European Countries”, and even in the United
Kingdom, Chinese companies participate in plans to build new

A different context is provided by the alliance of convenience
between China and Russia. For 20 years they have been the leading
partners in the Shanghai Cooperation Organization and its
predecessors, and they now engage in bilateral military exercises onland and sea. This has echoes of the Sino-Soviet relationship, but thebalance of forces has been reversed. China’s economy is now eighttimes bigger than Russia’s and growing faster. In 2017 Russia was
the top supplier of crude oil to China, and it has dropped its
inhibitions about selling its latest military equipment, as shown by
the supply of Sukhoi Su-35 fighter jets.
But what draws the two countries together is not so muchpractical considerations of this kind as shared objectives. Both ofthem see the US as their principal adversary, constraining their own
exercise of power and influence. They both aim to weaken
Washington’s international alliances and challenge the international
order, which was largely created by the US and its allies in the
postwar era. Both resist international efforts to promote democracy
and human rights. The leaders of both countries see such policies asadvantageous in defending their own internal legitimacy and gaining
popular support. No wonder Chinese President Xi Jinping has called
Russian President Putin his “best, most intimate friend”. If China
aspires in the long term to become the dominant force on theEurasian landmass, then Russia is an essential partner.

Photo: http://kremlin.ru… But Poses a Strategic Threat to Europe

Chinese President Xi Jinping and Russian President Vladimir Putin, July 26, 201838 Japan SPOTLIGHT • March / April 2019

It is not, however, inevitable that Russia should be drawn soclosely into China’s orbit. From a European perspective, it is wellunderstood that Russia is an important neighbor, a major energy
supplier and a large potential market for trade and investment.
https://www.jef.or.jp/journal/

Perspectives on Global Risks: the 2nd JEF Global Risk Symposium 2

Russia’s position as a permanent member of the UN Security Council
and its influence in international affairs should make it an important
strategic partner. From Russia’s perspective, Europe can provide
much of the investment and technology which is needed to create amodern, industrial economy. There is a strong mutual interest in
developing dialogue and cooperation.
The problem is that Putin has made a different choice. There ismuch debate about the reasons for this; but Russia’s behavior inrecent years has made it virtually impossible for European nations tohave a constructive relationship with it.
One after another, Russia has used their internal divisions todestabilize neighboring countries and to take over part of theirterritories by force. Ever since the war with Georgia in 2008, it hasexerted effective control over two regions of that country, Abkhazia
and South Ossetia, which it claims are independent states. A similar
situation obtains in Moldova. In 2014 Russia responded to unrest in
Ukraine by sending troops without official uniforms into Crimea andannexing it. This amounted to the first forcible annexation ofEuropean territory, and the first forcible re-drawing of a frontier,since 1945. The vast majority of the international community
condemned it, and the EU and US imposed sanctions on Russia, but
its illegal occupation of Crimea continues. Russia followed this byintervening with similar methods to support separatist movements ineastern Ukraine, where the war, which has probably claimed over
10,000 lives, continues: a significant part of Ukraine’s territory
remains outside government control. Although Russia’s attention has
recently been diverted to its intervention in Syria, its seizure of three
Ukrainian naval vessels last November shows that it is keeping up
the pressure.
Not surprisingly, this pattern of Russian behavior has caused
anxiety that it could be repeated in other neighboring countries with
Russian-speaking minorities, including the Baltic States, which are
NATO and EU members. Since the Georgian war, Russia hasembarked on a sustained program to modernize its forces andimprove their capacity for joint operations. This includes annual
large-scale exercises on a rotating basis in each of its five MilitaryDistricts, plus a series of no-notice “snap” exercises. These can be,
and have been, used as a cover for military intervention. In addition,
Russia has increased its incursions into the airspace of NATOmembers. In response, NATO has been improving its own capability
for rapid reaction. It has, for example, stationed four allied battlegroups in the Baltic States and Poland on a rotating basis, andincreased the size and speed of the NATO Response Force. This is
not a return to the dark days of the Cold War since conditions in
Europe have changed in numerous ways, but it is striking that,
whereas 15 years ago NATO felt confident enough to launch
operations outside its Treaty area (e.g. in Afghanistan), its attention
is now focused back on the direct threat to its members from a moreaggressive Russia.
That threat is not just a conventional military one: it is a form of
hybrid warfare, involving the deployment of conventional andirregular forces in conjunction with psychological, political and cyber

Photo: https://mail.ex.ua/76677715

Unidentified soldiers at Perevalne military base in Ukraine in 2014assaults. Russian media outlets have become channels not merely
for putting forward Russia’s point of view but for advancing
conspiracy theories and throwing doubt in the public mind aboutinconvenient facts. This in turn is amplified by Russian activity onsocial media, which has been shown to be extensive and mainly
designed to stir up anger and division in Western societies. Last
year, for example, US prosecutors published considerable detailabout how the Internet Research Agency, a troll factory in St.
Petersburg, used social media to interfere in the 2016 US
presidential election.
The Russian government is also widely using its capability forcyber-attacks and doing so in a way which blurs the boundaries
between criminal and state activity. A few examples have been
publicized. In February 2018, the US and the UK identified Russia as
the source of the NotPetya ransomware attack, which originallytargeted Ukraine but is estimated to have caused over a billion
dollars of damage to companies in Europe, the Americas and Asia. In
October, the UK identified Russia’s military intelligence agency, the
GRU, as responsible for a number of other specific hacking andransomware attacks and listed 12 aliases which it had used. Amongits targets were the Organisation for the Prohibition of Chemical
Weapons (OPCW) and the World Anti-Doping Agency (WADA). At
the same time, Dutch authorities revealed how they had caught GRU
operatives in the act of spying on the OPCW in The Hague and how
one of their laptops linked them to a WADA conference in
Switzerland. Their interest in WADA derives from the revelation in2014 that the Russian state had been involved in systematic dopetaking by Russian athletes, and the subsequent investigations.
Their interest in the OPCW had an even more sinister origin – theattempted murder of Sergei Skripal and his daughter in the UK in
March 2018. The OPCW confirmed that a rare nerve agent of a typecalled Novichok had been used. Later, a British woman unrelated to
the Skripals found the residue of the Novichok poison in a waste bin
and was killed by it. All the evidence points to the GRU as having
been responsible for this too. The leaders of France, Germany, theUS and UK jointly condemned “the first offensive use of a nerve
Japan SPOTLIGHT • March / April 201939

Perspectives on Global Risks: the 2nd JEF Global Risk Symposium 2

agent in Europe since the Second World War”, and 30 nations andinternational organizations together expelled over 150 Russian
diplomats in protest. The incident recalled the murder of Alexander
Litvinenko in London in 2006 with a radioactive substance calledpolonium.
This European experience of Russian behavior may well havelessons for Japan’s leaders in their relations with Putin and his
government.

Europe’s Ideological Challenge
Meanwhile, within Europe itself, there has been a rapid increase insupport for nationalist parties in recent years. In Hungary and Poland
such parties form the government; in other countries including
Austria, Italy and Slovakia, they are part of a government coalition;and in many others they have increased their share of the votes inelections. The history, policies and leaders of these parties vary, butthere are some clear common themes:• Hostility to the “elites”, who are seen as pursuing their own
interests at the expense of ordinary people;• Support for the nation-state, and hostility to internationalorganizations, including the EU;• Hostility to immigration and multiculturalism (and in some cases
to Islam), which are seen as threatening national identity.
Such parties and such attitudes have existed for many years. Whatis new is the upsurge in support for them, and there have been many
attempts to analyse what lies behind it. I suspect that there are threefactors above all.
a) The first is economic. Globalization has benefitted many people
around the world, but some in developed countries who lackadvanced education and skills feel it has brought rapid change andinsecurity but little, if any, improvement in living standards. Theirdissatisfaction with their prospects and their sense of having beenleft behind seem to have come to a head when the financial crisis of
2008, followed by the euro crisis, brought a period of economic
stagnation. Strongman leaders offering simple solutions and a return
Photo: EPP Summit, Brussels, March 2017

Hungarian Prime Minister Viktor Orban and German Chancellor Angela Merkel

40 Japan SPOTLIGHT • March / April 2019

to some of the certainties of the past appear attractive.
b) The second is cultural. During my lifetime the UK and other
European countries have gone through rapid social change. New,
more liberal attitudes towards gender, race, religion etc. havebecome accepted in the media and enshrined in laws, but not
everyone is comfortable with these changes, particularly outside thelarge cities. The nationalist parties claim to be defending traditional
values (and in some cases Christian ones), and often win greater
support in rural areas and small towns and among older people.
c) Both these strands come together on the issue of immigration,and if there is one thing which has boosted the far right, this is it.
The large inflow of immigrants from the Middle East in 2015 was adefining moment. In Germany, the Alternative fur Deutschland (AfD)began as a party opposing government policy on the euro but only
really took off when it switched in 2015 to focus more on
immigration: it is now the leading opposition party in the Bundestag.
The Hungarian government built a fence along its southern borderand continues to play on fears of immigration. In Italy, Matteo
Salvini, the interior minister, has increased his party’s poll ratings
through his tough line on immigrants coming by boat across theMediterranean. And there are plenty of other examples.

European Integration at Risk?
There is, therefore, a strong challenge to the established politicalorder in Europe, and in some ways that may be no bad thing. Thereseem to me two aspects, however, which could pose fundamental
problems for the EU. The first is the hostility of the nationalists to the
EU itself as a supranational organization, and the second is that insome instances they challenge the basic democratic values on which
the EU is built.
On the first of these, the evidence so far is reasonably reassuring
for the EU. The UK is the only country which is seriously thinking ofleaving. Even at the height of the euro crisis Greece decided not to
do so. Across Europe there continues to be widespread support inopinion polls for EU membership. In some countries nationalist
parties have even decided to tone down their anti-EU rhetoric when it
appeared to be a vote-loser. The central European countries whichhave rejected some EU policies, such as fixed quotas of refugees,
derive substantial benefits from the EU single market and its
structural funds. The present Italian government which initially talked
up its determination to challenge the EU’s limits for national budget
deficits has in the end compromised.
Moreover, it would be wrong to believe that the nationalist wave
will continue unabated. It is in the nature of the democratic processthat parties wax and wane, and there appears to be a limit at least inWestern Europe to the share of voters who are willing to support the
far right. The situation varies considerably from country to country,
and by their nature nationalist parties do not naturally cooperate witheach other. Although they are expected to increase their number ofseats in the European Parliament elections next May, they do not sit
as a united bloc but belong to four different groupings. If the key toPerspectives on Global Risks: the 2nd JEF Global Risk Symposium 2

their growth has indeed been immigration, mainstream parties aredeveloping new policies in response, and action by key governments
has already produced a sharp drop in arrivals on the two main routes
into Europe. Indeed the main impact of the nationalists in the longterm may turn out to be changes made, for better or worse, to thepolicies of mainstream conservative parties.
None of this is intended to minimize the importance of this trend.
There will be more tough arguments and difficult elections, andfurther progress in developing EU integration may be slowed down.
But the main reason at present for blockages in EU reforms is not somuch the rise of the nationalists as more traditional policy
disagreements, such as in the eurozone.
In the long term the challenge to fundamental EU values may be
more serious. The Hungarian government, for example, has taken aseries of measures to limit the independence of the media and the
judicial system and to restrict the activities of civil society. A
particular target has been the Central European University foundedby George Soros, which had to move most of its courses out of
Hungary last December. Attacks on Soros have sometimes had antiSemitic overtones. The Polish government has also carried out aseries of judicial “reforms”, which have been criticized for reducing
the independence of the judiciary. Such developments challenge thevery basis of the EU as an association of democratic countries
committed to the rule of law and human rights. Nor are they only an
issue in countries with right-wing governments: recent actions by
the Romanian authorities to weaken anti-corruption institutions havealso caused concern.
Such issues are not easy for the EU to tackle. Under Article 7 of
the Treaty on European Union a member state can be deprived of its
EU voting rights by a unanimous decision of EU leaders if there is aserious and persistent breach of EU values, but the process islengthy, and Hungary and Poland are likely to defend each other.
Moreover, this is a highly political issue, and a punitive approach
may only serve to strengthen nationalist feeling. Skilful tactics andstrong political will are required, and it may well be hard for the EU
to obtain clear-cut results.

The American Angle
The two issues I have highlighted – the Russian threat and theupsurge of nationalism – converge. Putin likes to claim that he isdefending Christian civilization and values, and many (but not all) of
Europe’s nationalist leaders have close links with him and oppose theEU’s sanctions on Russia. The risk is therefore that Europe’s
response to Russia becomes divided and ineffective.
In such circumstances Europe has often benefitted from a strong
lead provided by the US. Moreover, in military terms, although
European governments are promising to spend more on defence andthere is even talk of a European army, the reality is that NATOdepends heavily on American military might. It is therefore aproblem that Trump shares almost all the attitudes of thenationalists. He has been highly critical of mainstream European

Photo: https://www.flickr.com/photos/whitehouse/42444673425/in/album-72157697284924301/

US President Donald Trump with NATO Secretary-General Jens Stoltenberg, July 11, 2018

leaders, seems to admire Putin, is a big fan of Brexit and has evensometimes sounded doubtful about NATO. The US Congress hastaken a harder line than the president against Russia and in defenceof NATO, but perhaps the biggest risk that Europe faces is outside its
own control – the unpredictability of the present US administration.

Brexit: an Error, But Not the End of the UK
In the midst of all this, the British people have decided to leave theEU. I believe that this is a historic mistake. All the factors I identified
earlier as being behind the rise of nationalist parties in Europe
contributed to it. As I write this, I have no idea on what terms Brexit
will happen or even whether there will be a second referendum.
Even so, it is possible to exaggerate the negative impacts.
Economically, the British economy (the fifth or sixth largest in theworld) will suffer slower growth in the transition to new trading andregulatory arrangements. But UK business has many strengths and it
will adapt: the City of London, for example, will continue to be one of
the two largest financial centers in the world. A quick look atinternational comparisons shows that the UK has four of the top 10
universities in the world, the second-highest total of Nobel Prizes,
the second-largest exports of services, the third-largest ODA
spending and the seventh-highest defense spending. Even outside
the EU, it will continue to be an active participant in world affairs, asa permanent member of the Security Council, a leading member ofNATO and other international organizations, and one of the larger
countries in Europe. Moreover, when the excitement about Brexit has
calmed, the UK will still need to cooperate closely with its European
neighbors, and they with it. That is an unchanging geopolitical fact.


Sir Graham Fry was British ambassador to Japan (2004-8) and Malaysia(1998-2001), and is now an advisor to international companies.

Japan SPOTLIGHT • March / April 201941