European Union

Cecilia Malmstrom, the EU trade commissioner, during a press conference last week

Meet the Miculas: two twin brothers, Ioan and Viorel, whose battle with EU law will be of interest to anyone following Europe’s fitful trade negotiations.

The duo’s battle to save their beer-to-biscuits food empire in northern Romania may not seem an obvious proxy for an increasingly bitter fight over the EU’s trade deals with the US and Canada. But it cuts to the heart of one of the most politically contentious issues surrounding both trade accords: the status of international investment tribunals.

The brothers, who also hold Swedish citizenship, have had a terrible start to the week.

On Monday, the EU said they would have to repay all the subsidies they received to build up their business in the poor northern Romanian county of Bihor, on the Hungarian border. Their factories, which produce brands such as Servus beer and Rony biscuits, depended on what Brussels ruled was illegal state aid. According to their lawyers, the pair had decided to invest in a region as impoverished as Bihor on the understanding that Romania would subsidise them. On that pledge hang some 9,000 jobs.

Their business model, which predated Romania’s accession to the EU, came unstuck when Bucharest decided to join the European club. Competition authorities no longer allowed this kind of state largesse. In 2005, Bucharest cut the funds to the brothers in Bihor. (Romania finally joined in 2007).

This is where things get interesting legally, and the trade aficionados will start to realise something is afoot.

As Swedish citizens, the Miculas took their case to an international tribunal and won. At the end of 2013, the International Centre for Settlement of Investment Disputes awarded a settlement of $250m from the Romanian government because of its suspension of the subsidies. It was one of the largest sums ever awarded by an international investment tribunal. To Brussels, the award of damages meant state aid was now effectively being paid “through the back door”.

Prime Minister Alexis Tsipras at a cabinet meeting Sunday night in the Greek parliament

There has been lots of analysis on a new list of economic reforms that the Greek government sent to its bailout monitors over the weekend, including this incredibly comprehensive report from the Athens-based analytical website Macropolis.

But before everyone goes concluding that this is the final list that eurozone creditors will rule on, remember: nothing has been submitted yet to the eurogroup – the committee of 19 eurozone finance ministers that will ultimately rule on whether the reforms are sufficient to unlock the remaining €7.2bn in bailout funds Athens desperately needs.

And tonight’s “deadline” for bailout monitors to approve a submission, and then forward it onto the eurogroup, is nothing more than a self-imposed one; in reality, there is no deadline other than the date when Athens eventually runs out of cash.

People on both sides of the negotiations say that despite three days of talks, the list is not comprehensive as yet. “There was no such thing as an original list,” insists an official from one of the bailout monitoring institutions. “There were contributions, tables, pieces of paper.”

Indeed, on the Greek side, some involved in the discussions say a fuller, longer, and more detailed document is in the works. They argue the issue is not, as many among the bailout monitors claim, a lack of detail. The issue is getting all the details – some 72 reforms, according to one person in the Athens camp – into a well-organised document, in English, without mistakes in substance or politics.

As part of its wide-ranging digital single market strategy, the European Commission is considering introducing regulations which would bring about major changes for on-demand video providers like Netflix or Amazon Instant Video.

The Commission Vice-President for the Digital Single Market Andrus Ansip has firmly set his sights on the practice of geo-blocking, claiming it’s unfair that citizens across Europe can’t access the same digital services on equal terms. With the European Commission committed to ambitious legal steps in its digital single market strategy, geo-blocking is close to public enemy number one in the eyes of the EU’s executive branch.

Far too often, consumers find themselves redirected to a national website, or blocked. I know this from my own experience. You probably do as well….In the offline world, this would be called discrimination. In the online world, it happens every day.

Andrus Ansip, European Commission Vice-President for the Digital Single Market

The Commission seems to think that distributors, like these on-demand services, are deliberately signing contracts to distribute content selectively across the EU, then using this as a defence for geo-blocking, by claiming they only have the rights to distribute certain content in certain territories or languages (for example, when Netflix launched in Belgium, you could only watch the massively popular House of Cards if you set your language to English, as they’d sold the French-language rights to another channel).

The Commission, considering this an unacceptable situation for consumers, is actively considering banning arrangements like these, which could leave online services with the simple choice of licensing content for all of Europe, or none of it.

Operators like Hulu and Crave TV, or even Singtel have the advantage of watching the situation play out from the outside, even if they won’t be able to ignore the EU market and its 500 million consumers forever.

And when they do enter, they along with those already present, will likely have to deal with a new European-level law governing the sale of digital content, as the Commission looks to update existing rules on e-commerce and introduce new ones. This could even include forcing content providers to strip back their contract terms, presenting consumers with only the most important ones in an easy-to-read format, instead of the 100+ page agreements we are used to seeing.

As the definitive form of the digital single market plan evolves, all eyes will be on the European Commission ahead of the planned release of the strategy on May 6th.

Tiernan Kenny

The Algerian government is under increasing pressure, stemming from political and social turmoil in the south of the country. This comes amidst mounting terrorist threats and economic concerns due to low oil prices. The south holds the majority of the country’s oil and gas reserves and is key for Algeria’s security. The area’s wealth and size (it accounts for more than 80 per cent of the national territory) have contributed enormously to Algeria’s economic standing and geostrategic clout.  According to International Monetary Fund 2011 data, hydrocarbons account for over 69 per cent of public revenues and 36 per cent of the Gross Domestic Product.

The vast south was politically and administratively attached to the rest of the country after Algerian independence in 1962. Then the priority was not to foster economic and social integration with the north, but to control and exploit the south’s extensive natural resources. For nearly 50 years, the area worked as a strategic redoubt and a hydrocarbon lifeline underpinning the regime. But after the 2011 Arab uprisings, a host of social imbalances and unresolved ethnic tensions began to affect stability there, alongside an outburst of terrorist attacks.

Three major attacks in less than one year brought Algeria’s south into the eye of the storm: a suicide attack in Tamanrasset in March 2012; an attack against the Algerian National Gendarmerie regional command centre in the town of Ouargla in June 2012; and the dramatic January 2013 terrorist attack at the In Amenas natural gas plant in the southeast Algeria, which was a serious blow to the country’s seemingly invulnerable energy installations.

The Arab uprisings were one of the catalysts of the south’s political ‘awakening’. Protests against social exclusion and high unemployment broke out as early as 2011, and grew in intensity in 2013. Social frustration and tension, caused by the widening gap between citizens’ expectations and the state’s incapacity or unwillingness to deliver, exacerbated feelings of perceived injustice and inequality with regard to the north. The south’s sparse population and its geographical distance from the capital Algiers very much limited the movement of people and social interaction between the Arab and Berber north and the Tuareg and black south, also reducing the latter’s political influence in the halls of power.

Many see protests, sit-ins and riots as the only means to seek and get redress from the state, which exploited Southern resources but invested very little in the region. The formation of various movements and pressure groups unconnected to traditional parties and tribal leaders elevated the plight of the unemployed and low-wage workers in the south into the limelight. Several civic associations began to mobilise, demanding their constituencies’ share from the oil bonanza. The National Committee for the Rights of the Unemployed created in February 2011, for example, garnered much media attention when it mobilised thousands of protesters in Ouargla in 2013. Similar demonstrations also took place in other southern cities like Laghouat and El-Oued, whereby protesters accused the state and national and multinational companies of discriminating against locals when hiring – while thousands of jobs are created in the hydrocarbon industry each year, they are scooped up by migrants from the north, particularly from Algiers, Oran and Constantine.

Social inequality and bad governance are the central themes of the protests. Demonstrations against corruption, perceived manipulation of social housing and public services, and unequal treatment have become a common fixture in much of the south. In early 2015, new demonstrations broke out over environmental concerns about shale gas extraction. In one occasion, as many as 30,000 protesters reportedly took to the streets in the impoverished town of In-Salah, located in the heart of the Sahara Desert.

This fragile social context can become an incubator of security risks. Some, especially the disaffected youth, are already gravitating towards criminal and smuggling networks long established in Algeria’s south and its periphery. The growing spread and interconnectedness of these networks, increasingly enmeshed into drugs trade, stolen cars, illicit cigarette trafficking, weapons smuggling and counterfeit money and goods, are a source of major concern for Algeria, which also fears cross-pollination with extremist actors roaming the Algerian and Sahelian deserts.

So far, protests have been kept under control through cooptation and/ or repression strategies. If social turmoil is not contained, however, there is also a risk that ethnic and sectarian tensions grow more violent. In August 2013, inter-communal clashes erupted in the town of Bordj Badji Mokhtar, on the border with northern Mali, leaving 15 dead. The incident exposed the deep rifts between Tuareg Idnan and Arab Berabiche, raising concerns among tribal leaders and the government alike. In December 2013, the city of Ghardaïa was also enveloped in sectarian violence. Since then, bloody clashes between the Chaamba Arabs (present in most of Algeria’s south) and the Mozabite Berbers of the Muslim Ibadi sect (an insular group with its own system of values, codes of conduct and rules), have occurred intermittently.

Ethnic and social tensions are particularly dangerous for Algeria because they erode loyalty to the central state. In February 2014, Prime Minister Abdelmalek Sellal spoke of a plot to destabilise Algeria’s social cohesion and territorial integrity, articulating deep-rooted fears that social tensions and external threats might exacerbate latent ethnic divisions and even activate separatist tendencies. He blamed small nefarious groups for instigating violence and sowing divisions between communities.

The south of Algeria is no longer a buffer periphery whose principal value lies in its massive natural resources. Maintaining stability in the region is vital for national security and regime survival. It is both a security and a political challenge. The traditional mix of cooptation and repression to manage dissent in the south is showing signs of strain. Plus, the dramatic slide in oil prices will make it difficult for Algeria to stem political grievances through financial largesse. Addressing political and social problems in the south should be a high priority. Failure to do so would undermine an effective response to the growing threat posed by terrorist and criminal networks.

Anouar Boukhars is associate fellow at FRIDE and a non-resident scholar in the Middle East Programme of the Carnegie Endowment for International Peace 

Photo credit: Gwenael Piaser_CC BY-NC-SA 2.0