PISM Bulletin

Virtual currencies (“cryptocurrencies”) rely on decentralised payment systems independent of the control of state institutions. However, some countries are interested in creating their own cryptocurrencies, citing low costs and speed of transactions. National digital currencies could stabilise a financial system that uses private cryptocurrency. Their use, however, may challenge, for example, the effectiveness of economic sanctions or combating terrorism financing.

Recent progress in negotiations between representatives of the U.S. and the Taliban gives an opportunity to end the 17-year war in Afghanistan and the NATO mission there. The breakthrough comes at a time when the Taliban are the strongest since 2001, and the administration of President Donald Trump is seeking to withdraw troops from Afghanistan as soon as possible. This gives the negotiating advantage to the Taliban and risks breaking the talks. Withdrawal of foreign forces before an agreement on an intra-Afghan political deal can be reached could lead to the escalation of the civil war and the Taliban taking full power.

The exit from the nuclear agreement with Iran (JCPOA) deprived the U.S. of the possibility to use UN-legitimised means of pressure. Instead, the U.S. is building pressure through unilateral sanctions that also affect non-American entities. The agreement, however, remains in force. As long as the other participants believe Iran respects it, it is unlikely that the suspended UN sanctions on Iran will be re-imposed. In the long run, the unilateral sanctions will lead to tensions between the U.S. and the EU. The deficit of confidence, also on the part of Iran, will make it difficult to find a way out of the situation.

In the last 10 years, Russia and South Korea developed several cooperation strategies, most of which have not been implemented. Among them, the most important were ambitious energy and transport projects. However, the need to involve North Korea, and U.S. sanctions against Russia, presented obstacles to their implementation. Thus, cooperation between Russia and South Korea is currently limited, and will not weaken the close South Korean-NATO relations.

The U.S. federal government shutdown in December-January ended but that does not mean the end of the political dispute between President Donald Trump and the opposition Democrats in Congress. The crux of the conflict remains the president’s demand to build a wall on the southern border with Mexico. If the president, with the Republicans (GOP), and the Democrats want to avoid another shutdown, they must reach a compromise before 15 February. The Republicans’ scepticism of another shutdown makes the Trump administration more likely to reach an agreement with the Democrats in time. If not, the president may seek to bypass Congress to get wall funding. 

President Donald Trump’s decision to withdraw the U.S. from the nuclear agreement (JCPOA) with Iran has impacted the Iranian economy, contributing to the weakening of the currency and the decline in GDP. However, the most important challenges for Iran’s economy are structural problems, including bad governance, corruption, and excessive public sector participation. Attempts to solve these issues have been criticised by ultra-conservatives in Iran who are interested in maintaining the status quo. If reforms were to be successful though, that would create an opportunity for the EU to implement a wider trade mechanism with Iran while stifling the U.S. objections. 

Disputes between Russia and Belarus have grown in recent months, caused by the deadlock in agreeing the price of energy sources and the negative consequences this will have for the Belarusian economy. Moreover, Russia will use political and propaganda tools to maintain Belarus’ dependence. The Belarusian authorities have limited possibilities to oppose such activities. One option could be to seek support, especially economic, from European Union countries.

Germany’s response to challenges in relations with Russia and partners from Central Europe is the broad vision of the new European Eastern policy. This policy indicates a combination of dialogue with criticism in relations with Russia, reviving relations with the Eastern Partnership (EaP) countries, and deepening cooperation with the countries of Central Europe. Yet this initiative lacks concrete proposals and contains internal contradictions, which, combined with the current state of European and international policy, call its success into question.

In December 2018, the Spanish conservative party Vox unexpectedly received 10.97% of the votes in regional elections in Andalusia. It allowed the establishment of a centre-right government in the region. The polls show that the party also has the chance to introduce representatives to the European Parliament (EP). Also, their support could be necessary to create a centre-right coalition after the parliamentary elections that will take place at the latest in 2020. This coalition may implement some of Vox’s demands, which would create new areas of collaboration between the governments of Poland and Spain.

The Missile Defence Review assumes the continuity of U.S. and allied missile defence systems, including within NATO. Studies on new, ambitious and costly technologies, are the most controversial elements of report. The shape and schedule of these projects are unclear, which risks causing disputes in NATO on arms control and the development of more advanced offensive systems by Russia and China.

In the months before the March presidential and May European Parliamentary (EP) elections, Smer–Social Democracy party in Slovakia maintains the greatest support in the polls. Its position will not be harmed by the departure from politics of its chairman, long-standing prime minister Robert Fico, who has applied to be a judge on the Constitutional Court. The party can be strengthened by the victory of Maroš Šefčovič, vice-president of the European Commission (EC) in the presidential election. He openly criticises Russia's activities, including the construction of the Nord Stream 2 gas pipeline.