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Publisher: OSW Ośrodek Studiów Wschodnich im. Marka Karpia

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Prigozhin’s mutiny as a stress test for the Putin system: events, conclusions, outlook
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Prigozhin’s mutiny as a stress test for the Putin system: events, conclusions, outlook

Prigozhin’s mutiny as a stress test for the Putin system: events, conclusions, outlook

Author(s): Team OSW / Language(s): English

Keywords: Yevgeny Prigozhin; mutiny; Russia; Putin's regime; threat;

Yevgeny Prigozhin’s mutiny came as a shock to the Russian elite. Moreover, the ease with which the Wagner troops seized Rostov-on-Don and started to head towards Moscow without encountering any major resistance provoked panic. Some representatives of the political and business elite, most likely including Vladimir Putin, left the capital in a hurry. The law enforcement bodies behaved passively, which likely resulted from a lack of clear orders and perhaps also from a reluctance to obey them, as well as from the lack of enough forces and equipment to suppress the mutiny effectively. Prigozhin received no signs of support from the federal and regional elites or the law enforcement bodies, all of which maintained their official, albeit passive, loyalty to the Kremlin. The public also remained passive. Although the events took state propaganda by surprise, state media outlets quickly started to report on the revolt, which proves that the Kremlin realised how sensitive this issue was. The propaganda message was that the law enforcement bodies, the elite and the public were opposed to Prigozhin’s initiative and actively supported the president. External actors monitored the developments in Russia with concern, fearing that the Russian state might have become ungovernable. None of Moscow’s formal allies offered it active support; they limited themselves to expressing verbal support, which was often belated. However, the rapid end of the crisis may also have influenced their stance.

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Ukraine in the face of a demographic catastrophe
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Ukraine in the face of a demographic catastrophe

Ukraine in the face of a demographic catastrophe

Author(s): Jadwiga Rogoża / Language(s): English

Keywords: Ukraine; Demographic crisis; Russian-Ukrainian War; Refugees; population decline;

The Russian invasion of Ukraine has aggravated the country’s already extremely difficult demographic situation, creating the prospect of a demographic catastrophe. Over the course of its three decades of independence, Ukraine has experienced a deepening population loss due to negative birth rates and high migration dynamics. Although Ukraine had a population of 51.5 million after gaining independence, in 2019 its estimated population size was a mere37 million. The ongoing war has resulted in a large (although undisclosed) number of both military (mostly men in their prime) and civilian casualties, and has triggered a wave of refugees whose prospects of returning to their former places of residence are unclear. The invasion has worsened the physical and mental health of Ukrainian citizens and contributed to further negative trends in the younger generations’ decisions to procreate, out of uncertainty regarding the economic situation in the near to mid-term future.

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Ukrainian oligarchs and their businesses: their fading importance
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Ukrainian oligarchs and their businesses: their fading importance

Ukrainian oligarchs and their businesses: their fading importance

Author(s): Sławomir Matuszak / Language(s): English

Keywords: Ukrainian oligarchs; War and economy; business during the war; financial performance;

The longer Russia’s full-scale aggression against Ukraine continues, the weaker the oligarchs’ influence on the country’s political and economic life becomes. They have failed to regain control over media coverage and have little to no sway over parliament. Their businesses have suffered heavy losses as a result of the hostilities and the economic crisis. Consequently, the estimated wealth of many oligarchs has more than halved. In addition, the state has taken numerous steps aimed at representatives of big business, including the nationalization of some of their assets. This trend will persist as long as the active phase of the war continues. However, it is too early to say that the decline of the oligarchs is permanent.

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Too green, too fast, too dear. The AfD is gaining popularity in Germany
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Too green, too fast, too dear. The AfD is gaining popularity in Germany

Too green, too fast, too dear. The AfD is gaining popularity in Germany

Author(s): Kamil Frymark / Language(s): English

Keywords: AfD; Germany; Political parties; SDP; FDP; Climate policy; coalition; Migration crisis; Russia;

The popularity of the Alternative for Germany (Alternative für Deutschland, AfD) is growing, as confirmed by its second place in the latest opinion polls, putting it on a par with Chancellor Olaf Scholz’s SDP, and that is raising great concern in Germany. The factors which have contributed to the AfD’s success include the public dissatisfaction with the incumbent government and the overlapping consequences of the Ukraine war and the inflation, climate and migration crises. The SPD-Green-FDP government coalition has presented different, often inconsistent approaches to these challenges. This has been coupled with Scholz’s deliberate passiveness as he shuns disputes inside the coalition in an attempt to improve his popularity ratings. This strategy has been successful up to a certain point, but is currently failing, and as a result the Chancellor is being blamed for the situation in the coalition. The AfD is benefitting from this, while also capitalizing on the fears most Germans share about the pace of the changes being implemented as part of the government’s climate policy. The party is also an advocate for voters who oppose the excessive influx of migrants to Germany and further support for Ukraine. Residents of the eastern federal states are particularly sensitive to these issues, where the AfD leads the polls with over 30%, and is viewed as a ‘catch-all’ or mass party, and not merely a fringe movement. This is particularly important given the upcoming elections to the parliaments of Saxony, Brandenburg and Thuringia scheduled for autumn 2024, which will be the final electoral test before the Bundestag elections in 2025.

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Russia’s nuclear project in Hungary: France’s growing role
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Russia’s nuclear project in Hungary: France’s growing role

Russia’s nuclear project in Hungary: France’s growing role

Author(s): Andrzej Sadecki,Ilona Gizińska / Language(s): English

Keywords: Russia; Nuclear project; Hungary; France; Russian nuclear energy sector;

Despite the Russian invasion of Ukraine, the Hungarian government has declared it is fully determined to build the Paks II Nuclear Power Plant, the main contractor of which is Russia’s Rosatom. Several important decisions have been taken over recent weeks to remove the barriers to implementing the project. For example, Hungary and Russia have renegotiated the contracts that were signed nearly a decade ago and were initially accepted by the European Commission. When the German government refused to approve Siemens’ participation in the consortium supplying components to the power plant, France’s Framatome began playing a greater role in the project. According to the current plan, the construction of Paks II is set to start this year, and the first of the two units are to be completed in 2032. However, the project is still facing a great deal of technical, financial and political challenges that may hinder or even prevent it from being completed. To this end, Budapest is seeking the support of France; it hopes above all that Paris will keep resisting the proposals to impose EU sanctions on the Russian nuclear sector.

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A EU War Chest: the success and uncertain future of the European Peace Facility
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A EU War Chest: the success and uncertain future of the European Peace Facility

A EU War Chest: the success and uncertain future of the European Peace Facility

Author(s): Łukasz Maślanka / Language(s): English

Keywords: EU; European Peace Facility; Russian aggression; Ukraine; EU’s Defence Technological and Industrial Base;

On 26 June the Council of the EU raised the ceiling for the financing of the European Peace Facility (EPF) for the second time this year, this time by €3.5 billion. It will now total €10.5 billion at 2018 prices or around €12 billion at current prices (adjusted for inflation). The EPF is designed as an off-budget mechanism for financing the common costs of the EU’s offshore military operations and missions as well as assistance to its partners. Since 24 February 2022, it has served predominantly as an instrument for providing indirect military support to Ukraine. This continuing repurposing of the EPF is beginning to raise concern among those member states which are focused on the EU’s southern neighborhood and which used to be the main supporters of the Facility. There is, moreover, a risk that some EU countries will treat support for further increases in EPF funding as a bargaining chip on issues that are important to them, or make it conditional on a stronger link between the EPF and initiatives to strengthen the EU’s Defence Technological and Industrial Base (EDTIB).

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Russia is weaponising food
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Russia is weaponising food

Russia is weaponising food

Author(s): Iwona Wiśniewska / Language(s): English

Keywords: Russia; Black Sea Grain Initiative; Russian exports of agricultural products and mineral fertilisers;

The Kremlin has made further attempts in recent months to use the food market to intensify pressure on the West, primarily in order to ease the sanctions imposed on the Russian Federation. For example, Moscow is again threatening to pull out of the Black Sea Grain Initiative which enables Ukrainian food to be exported through Odesa’s ports. The escalation of the Kremlin’s demands is based on false accusations that the Western coalition is blocking Russian exports of agricultural products and mineral fertilizers. Over the past few months, Russian exports of these goods have grown dynamically and the export volume has returned to the pre-invasion level; in the case of grain it is now definitely higher. Last year, despite the decline in the volume of supplies, their value increased significantly and accounted for 10% of Russia’s export revenues. This not only ensured the inflow of currency to Russia but, given that selected members of the Putin elite are among the direct beneficiaries of these exports, it enabled them to further build their fortunes. The Kremlin’s threats should therefore be seen on the one hand as a test of the West’s unity and determination to continue its sanctions policy towards Russia, and on the other as an attempt to maximize public revenues from the export of agricultural products and mineral fertilizers.

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NATO Summit in Vilnius: breakthroughs and unfulfilled hopes
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NATO Summit in Vilnius: breakthroughs and unfulfilled hopes

NATO Summit in Vilnius: breakthroughs and unfulfilled hopes

Author(s): Jakub Graca,Justyna Gotkowska,Marek Menkiszak,Krzysztof Nieczypor,Tadeusz Iwański / Language(s): English

Keywords: NATO Summit in Vilnius; Regional Defence Policy; Ukraine; Russia; China;

The main topics of the NATO Vilnius Summit held on 11–12 July were deterrence and defense, Ukraine’s future membership of NATO, and deepening relations with partners in the Indo-Pacific. The Alliance is partly returning to the defense planning processes and structures that were in place during the Cold War, but which NATO abandoned in the 1990s. The adoption of three regional defense plans constitutes a structural change in NATO’s approach to collective defense, but will require implementation and funding in the years to come.

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Russia: funding the war eases the consequences of sanctions
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Russia: funding the war eases the consequences of sanctions

Russia: funding the war eases the consequences of sanctions

Author(s): Iwona Wiśniewska / Language(s): English

Keywords: Funding the war; Russia; GDP; Economic statistics; Rosstat; Vladimir Putin; federal budget; unemployment rate;

Preliminary estimates by Rosstat indicate that in Q1 2023 Russia’s GDP decreased by 1.9% y/y, although earlier in its report the Central Bank of the Russian Federation (CBR) estimated the decrease at 2.3%. In this context, it is worth noting that statistics published in Russia should always be taken with a grain of salt (for more see ‘The credibility of Russian economic statistics is a growing problem’). The CBR estimates that as a whole Russia’s economic growth rate in 2023 will be 0.5–2%of GDP. The CBR analysts expect to see particularly positive macroeconomic indicators in Q2 2023 figures, due to the low comparative base. Russia’s economic growth in 2023 has also been announced by some international institutions; for example, the International Monetary Fund says that this rate will be 0.7% of GDP. However, some international forecasts expect recession to continue in Russia: the OECD predicts that Russia’s GDP will decline by 2.5%, and the European Commission spells a decrease of 0.9%.

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Unfulfilled ambitions: Russia’s LNG sector in the grip of sanctions
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Unfulfilled ambitions: Russia’s LNG sector in the grip of sanctions

Unfulfilled ambitions: Russia’s LNG sector in the grip of sanctions

Author(s): Filip Rudnik / Language(s): English

Keywords: Russia’s LNG sector; Global LNG market; global LNG exports; sanctions;

The technological sanctions which the West has imposed on Russia’s LNG sector have drastically reduced the opportunities for the industry’s expansion, and made it less likely that Russia can increase its share on the global LNG market. Moreover, the Russian Federation’s ambitious targets for LNG production capacity have not been formally revised, which means that it is now virtually impossible to achieve them. The slim chances of Russia’s LNG production capacity increasing over the coming years have a negative impact on the country’s overall gas exports. In view of Moscow’s political decision to slash pipeline supplies to Europe, liquefied gas could help Russia to mitigate the consequences of this reduction as long as there are no formal restrictions on its imports to the EU; it could also ensure that European consumers remain partly dependent on Russian gas. However, the tough restrictions on technology exports to Russia have significantly reduced the likelihood of this scenario becoming a reality.

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The Czech nuclear showdown enters the final straight
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The Czech nuclear showdown enters the final straight

The Czech nuclear showdown enters the final straight

Author(s): Krzysztof Dębiec / Language(s): English

Keywords: Czech Republic; Nuclear power plants; Temelín; Russia; China; Dukovany; Czech energy sector;

The repeatedly delayed expansion of the Czech Republic’s nuclear power plants has recently started to take concrete shape. The next two years should see the signature of a binding contract for the construction of the fifth unit at the Dukovany nuclear power plant (NPP), which is expected to cover around 10% of the country’s electricity demand. There are long-term plans to build another unit at this plant, as well as two additional units at the other Czech nuclear power plant at Temelín. The US-Canadian company Westinghouse, France’s Framatome (EDF Group) and South Korea’s KHNP are bidding for the Dukovany contract. This line-up of potential contractors results from a decision by the previous government to exclude Russian and Chinese bidders from the tender. The Czech Republic has also taken other steps to wean itself off its dependence on Russia in the nuclear power sector: it has decided to replace the Russian supplier of nuclear fuel for the NPP Temelín and regained control of the key Czech nuclear company Škoda JS from a Kremlin-linked company.

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Israel and the Arab states: between conflict and interdependence
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Israel and the Arab states: between conflict and interdependence

Israel and the Arab states: between conflict and interdependence

Author(s): Karolina Zielińska / Language(s): English

Keywords: Israel; Arab states; conflict; diplomacy; UAE; US; Foreign policy;

In late 2020 and early 2021, Israel established official diplomatic relations with the United Arab Emirates and Bahrain (the Abraham Accords), renewed its relations with Morocco, and took steps towards establishing relations with Sudan, in a series of developments that occurred with extensive US involvement. These were Israel’s first normalisation deals since the agreements with Egypt (1979), the Palestine Liberation Organisation (PLO, 1993) and Jordan (1994). The following factors paved the way for this process: changes in the region related to the aftermath of the Arab Spring (the desire of Arab regimes to consolidate power, also by countering radical Islam that feeds on the struggle against Israel), the growing Iranian threat, US policy, as well as economic and energy transitions.

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A crisis rather than a disaster. The Belarusian economy a year into Russia’s war against Ukraine
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A crisis rather than a disaster. The Belarusian economy a year into Russia’s war against Ukraine

A crisis rather than a disaster. The Belarusian economy a year into Russia’s war against Ukraine

Author(s): Kamil Kłysiński / Language(s): English

Keywords: Belarusian economy; Russia-Ukraine War; Western sanctions; foreign trade policy; The (post-)Soviet management style;

The stability of the Belarusian economy has come under threat from the new Western sanctions, imposed on the country in 2022 for its complicity in the Russian invasion of Ukraine, and the loss of the Ukrainian market. According to the most pessimistic forecasts, the country will probably face a deep economic recession, involving a decline in its GDP of more than 10%, and a slump in its most profitable exports. However, official statistics for 2022 indicate that Belarus was hit by a moderate crisis during which its GDP shrank by a mere 4.7%, its industrial production by 5.4%and its total foreign trade by just 6%. Belarus has adapted to the new situation, and has been partly able to make up for these losses. The main factor that helped Minsk to ease the severity of the restrictions involved support from Russia. In exchange for Alyaksandr Lukashenka’s loyalty, Russia has made its transport and port infrastructure available for the transit of Belarusian goods and introduced preferential conditions for Belarusian exports onto its market. In addition, the magnitude of the economic crisis is being limited by certain ‘manual steering’ strategies applied by the Belarusian authorities, such as keeping industrial production at a high level (which has led to more and more goods being stored in warehouses), introducing administrative measures to block price increases, and attempting to circumvent the EU’s embargo on road freight from Belarus. However, neither the assistance from Moscow (which is also subject to sanctions) nor the ‘manual control’ of the economy are sufficient to guarantee the country’s economic stability. Moreover, with Poland and Lithuania closing more and more of their border crossing points as of February 2023, an aggravation of the crisis should be expected in the short term.

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Erosion of the post-Soviet system in Central Asia
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Erosion of the post-Soviet system in Central Asia

Erosion of the post-Soviet system in Central Asia

Author(s): Krzysztof Strachota,Miłosz Szymański / Language(s): English

Keywords: post-Soviet system; Russia; Economic partnership; Central Asia; socio-political system;

In 2022, post-Soviet Central Asia experienced a number of fundamental challenges that undermine and redefine the systemic foundations of order and stability that have been in place in the region over the past decades. Some of these challenges are typical for the region and have been particularly evident in the protests held in Kazakhstan, Tajikistan and Uzbekistan, but also in other cases. They are manifestations of a violent (in Kazakhstan) or evolutionary (in Uzbekistan) transition of these states’ political systems and, to no lesser degree, of a social transformation and increased popular aspirations, especially in the region’s two largest countries.

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A struggle to survive. Ukraine’s economy in wartime
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A struggle to survive. Ukraine’s economy in wartime

A struggle to survive. Ukraine’s economy in wartime

Author(s): Sławomir Matuszak / Language(s): English

Keywords: Ukraine's economy; Russia's invasion in Ukraine; Budget; Economic crisis; external trade;

The ongoing war in Ukraine has had a disastrous impact on the country’s economy. Its GDP has fallen by approximately a third, and material losses due to the destruction of infrastructure have exceeded US$100 billion and are rising every day. The high inflation rate, the weakened currency and the very high unemployment rate are taking an increasing toll on Ukrainian society. The functioning of the country, including the disbursement of social benefits, salaries and pensions, depends almost entirely on foreign financial assistance. Even though international support for Ukraine has been growing, it remains insufficient, which has forced the government to radically increase public debt. Despite the observed positive trends, such as increased exports (in particular agricultural goods) and the stabilised fuels market, no substantial improvement in the economic situation should be expected before the end of the war. In fact, it seems more likely that it will deteriorate further, given that Russia will most likely continue its attacks on Ukrainian infrastructure, and the future of maritime food exports is open to question.

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A dangerous resemblance. Moves to revise Germany’s China policy
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A dangerous resemblance. Moves to revise Germany’s China policy

A dangerous resemblance. Moves to revise Germany’s China policy

Author(s): Lidia Gibadło / Language(s): English

Keywords: Russia’s invasion of Ukraine; Germany; China; Economic policy and dependence;

Russia’s invasion of Ukraine has revived the ongoing discussion in Germany regarding the need to revise its policy towards China. Until recently, the course Berlin adopted towards Beijing and Moscow was not only convergent in many aspects, but also enjoyed a consensus among the Christian Democrats and the Social Democrats, who co-formed three government coalitions from 2005–2021. This resulted in the emergence of a dependence that was unfavourable for Germany. With Russia this involved the import of fuels and with China it involved supplies of components and also major investments carried out by German companies in China. Both states were viewed as priority partners, frequently at the cost of relations with other countries in Central and Eastern Europe and the Indo-Pacific, respectively. Berlin’s approach to Beijing and Moscow sparked disputes with its closest allies as well as dilemmas regarding Germany’s economic and security interests. In addition, cooperation with authoritarian regimes that violate human rights was a blot on Germany’s image in the context of its foreign policy.

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Growing pains. Montenegro after 16 years of independence
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Growing pains. Montenegro after 16 years of independence

Growing pains. Montenegro after 16 years of independence

Author(s): Łukasz Kobeszko / Language(s): English

Keywords: Montenegro; Serbia; sovereignty; Independence; Difficult economic development;

After 16 years of independence, there are no significant political forces in Montenegro that could openly challenge this status and seek to re-establish a federation with Serbia. However, the relationship with Serbia continues to be among the key issues shaping the young state’s politics. Its relations with Belgrade are the source of a protracted dispute between the Democratic Party of Socialists of Montenegro (DPS), which had spent over three decades in power until 2020,and a Church-backed alliance of more than a dozen parties, mostly with a centre-right profile, united in their intention to remove DPS from power. The legacy of DPS, who view themselves as the founding fathers of Montenegrin independence, is associated with certain successes (the launch of accession talks with the EU, Montenegro joining NATO, the country’s economic development), but also has major drawbacks, such as the reduction of democratic standards, the concentration of economic and financial resources in the hands of the ruling elite, increased financial dependence on China and a rise in corruption and organised crime. Although a centre-right coalition has been in power in Montenegro since 2020, it is affected by instability resulting in high social polarization and by a conflict over the status of the Serbian Orthodox Church operating in the country, which is viewed as an instrument of leverage used by Serbia and as a regional centre of cultural influence associated with the “Serbian world”.

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China after the 20th CCP Congress: a new stage in Xi Jinping’s revolution
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China after the 20th CCP Congress: a new stage in Xi Jinping’s revolution

China after the 20th CCP Congress: a new stage in Xi Jinping’s revolution

Author(s): Michał Bogusz / Language(s): English

Keywords: China; Xi Jinping; The 20th Congress of the Chinese Communist Party (CCP); China's GDP; PRC’s socio-political system;

The 20th Congress of the Chinese Communist Party (CCP) ended with the complete triumph of Xi Jinping and marks the culmination of a process of radical overhaul of the political system created in the 1980s and 1990s. It marks not only the end of collective leadership in the party, but also a redefinition of the relationship between the party and the state and the relationship between the CCP and society. The transformation of the CCP carried out by Xi Jinping over the past decade provides him with the tools to overcome institutional inertia and the resistance of middle and lower-level party-state cadres – factors that are among the elements holding back the changes in the socio-economic development model of the People’s Republic of China(PRC) that were first announced 15 years ago. Therefore, radical and rapid decisions in this sphere are to be expected in the coming years. They will bring further the Marxist-nationalist ideologisation of the PRC, the introduction of a mechanism of mass redistribution and an increase in the role of the party and the state in all aspects of the social and private life of the population. This, in turn, heralds an increase in totalitarian tendencies.

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Bromance. Turkey’s activity in the Western Balkans
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Bromance. Turkey’s activity in the Western Balkans

Bromance. Turkey’s activity in the Western Balkans

Author(s): Marta Szpala,Adam Michalski / Language(s): English

Keywords: Turkey; Western Balkans; diplomatic activity; Economic impact of Turkish business; Trade partners;

At the beginning of September 2022, Turkey’s President Recep Tayyip Erdoğan paid a visit to Bosnia and Herzegovina (BiH), Serbia and Croatia. The trip was the culmination of Turkish diplomatic activity towards the region in recent months. Earlier, in June 2022, Turkish Foreign Minister Mevlüt Çavuşoğlu visited Serbia, Croatia, BiH and Kosovo, in August 2022 he attempted to act as a mediator during the escalation of the Serbian-Kosovan conflict, and on 2 September2022 he attended the summit of the Serbian-led Open Balkan initiative held in Belgrade. These activities are consistent with Ankara’s policy that involves fostering its image as both an influential actor, and at the same time a neutral mediator in the Western Balkans – one that is able to contribute to a resolution of bilateral disputes and to the region’s stabilization. Turkey has pursued this policy for more than a decade. In addition, it has been consistently expanding economic influence in the Balkans, accompanied by the development of its retinue of soft power instruments based on shared religious and historical background. However, Turkey’s cooperation with the region’s states is also riddled with challenges. These include Ankara’s close collaboration with Moscow, which raises concern in some Balkan capitals; increasing tension in its relations with the EU and the US; as well as multi-faceted intra-regional disputes.

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A tactical pause in relations with the West: China plays on hopes for peace
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A tactical pause in relations with the West: China plays on hopes for peace

A tactical pause in relations with the West: China plays on hopes for peace

Author(s): Michał Bogusz / Language(s): English

Keywords: China’s political system; Peace; XI Jinping; EU policy towards China; Kremlin;

In November 2022, China’s leader Xi Jinping embarked on a wide-ranging diplomatic campaign to prevent an uncontrolled breakdown of relations with the West, which should be considered a short-term success, at least in terms of reopening channels of communication with Western countries. This move has succeeded owing to Beijing’s instrumental use of the West’s hopes that it can secure China’s opposition to Russia’s possible use of weapons of mass destruction, and belief that China might be willing to mediate peace in Ukraine. The PRC’s actions have also met the expectations of its Western partners as they look for ways to stabilise relations with Beijing in the face of a looming global economic crisis. At present, we can say that the escalation has been halted, although the negative trend in China’s relations with the West –in particular with the United States – has not been reversed. Faced with economic and social challenges at home, the PRC will make further efforts to avoid economic confrontation with the West in the immediate future, by using more or less veiled suggestions of possible mediation in the Russian-Ukrainian conflict.

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