EU Archives – ITSS Verona

January 18, 2024 — No Comments

AI Regulatory Landscape in the US and the EU: Regulating the Unknown – AI, Cybersecurity, Space Group

Author: Oleg Abdurashitov and Caterina Panzetti - AI, Cyber Security & Space Team

Among other things 2023 was a year of AI regulation in the EU, US and well beyond. The fundamental challenge that policymakers face in the case of AI is that, in essence, they are often dealing with the unknowns resulting from the complexity of the technology itself and the break-neck speed of its development and adoption. Given the incessant debate on whether AI poses an existential risk to humanity that needs to be addressed at the earlier stages or if such existential risks are merely a smoke screen to the far more urgent and practical implications of widespread AI deployment on privacy, copyright, human rights, labor market, setting the regulatory priorities appears to be challenging. Analyzing what the regulators in the US and Europe chose to focus on and how they framed AI regulatory doctrine may help to better understand not just their priorities but the differences in respective institutional, political and economic environments and approaches to dealing with the emerging technologies.

United States

Despite the existential threat narrative peddled by the largest industry players, including at the Senate hearings, thePresidential Order Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence seems to be more grounded in the current reality when assessing AI's potential risks. While the act attempts to address several critical security issues - from AI-enabled cyber operations to the threat of WMD (Weapon of Mass Destruction) development - it can nonetheless be viewed as an effort to prepare the American economy and society for the age of AI use across the numerous (if not all) sectors.

The Order’s approach is based on the unique strength of the US economy and governance model that heavily relies on the enormous capacity of the US tech sector, as well as on the diverse environment of the nation’s civil society, where educational institutions, think tanks, and the legal system all play a role in shaping and implementing regulations. Probably, the most critical aspect of the AI regulatory environment is that in the US the recent AI breakthroughs are funded by private capital as opposed to the state budgets like in China^[1] or, largely, the EU^[2]. This, on the one hand, allows the US to retain the competitive edge in the AI race, with the so-called MAGMA^[3] companies bearing a large share of the R&D costs in developing breakthrough commercial AI products. On the other, this puts the US government in a position where the sectoral regulation shall be balanced against the interests of the commercial players and enable, rather than control, the technology development and adoption.

The Order implicitly acknowledges this complex interplay between the commercial interests, the interests of the state, and American society’s demands. Section 2 (Policy and Principles) in particular broadly outlines the many aspects of AI development - from safety to impact on the workforce - that need to be balanced against each other. Again, given the enormity of such a task, the Order is short on specific details - and when such details are given they often leave the question of whether it will be able to address the long-term security implications of AI development open.

For instance, in Section 4 the Order puts the “dual-use foundation models” that may pose “a serious risk to security, national economic security, national public health or safety” under increased regulatory and technical scrutiny. The definition of such a model as the one containing “at least tens of billions of parameters” covers the leading large language models (LLMs) behind ChatGPT and Google Bard, with each having more than 100 billion parameters. The Order’s approach to regulating such powerful models relies largely on industry guidelines (such as the NIST AI Risk Management Framework^[4]) developed in collaboration with the private sector players themselves complemented by a series of government-funded testbeds for risk assessment.

It is important to note, that while the commonly agreed approach to AI model training can be described as “greater is better”, there is evidence that the output of models with a far smaller number of parameters (1.5B to 2.7B) can be somewhat comparable to that of larger models^[5]. Additionally, while larger models are generally controlled by specific entities, the open-source models (such as Meta’s Llama available in packages of 7B, 13B, and 70B parameters^[6]) may be used by a far wider number of actors developing their own powerful models, potentially falling outside the regulatory scrutiny and export control measures.

More so, the Order explicitly focuses on very large models as subject to regulatory restrictions, like “[a] model that was trained using a quantity of computing power greater than 10²⁶ integer or floating-point operations”. That number, for instance, is significantly higher than the rumoured estimates for the most advanced model in the market today - OpenAI’s GPT-4 - which currently stands around 2.15 x 10²⁵ FLOPs (floating point operations)^[7]. If the field will sustain the current pace of innovation, this threshold may well be crossed shortly. However, there is so far little evidence that such models would indeed represent “potential capabilities that could be used in malicious cyber-enabled activity” since malicious cyber operations of today require far less computing power and the “cyber-enabled” definition may simply be too broad to have meaning in regulatory context.

Of course, the proposed control regime for the large ‘dual-use models’ need not necessarily fully address the issue of AI-powered malicious activity as of today. Instead, the Order directs federal agencies to study the best practices and guidelines of the critical infrastructure sectors to manage “AI-specific cybersecurity risks” and “develop tools to evaluate AI capabilities to generate outputs that may represent nuclear, nonproliferation, biological, chemical, critical infrastructure, and energy-security threats or hazards” as well as assess the risks of AI usage in the critical infrastructure and government systems. From this point of view, the Order implicitly acknowledges the fact that AI models are already largely deployed both in the private and public sectors and calls for measures to discover and reduce the risks of such use.

Notably, the US DoD’s Data, Analytics, and Artificial Intelligence Adoption Strategy^[8], released months earlier in June 2023 prioritizes speed of deployment over careful risk assessment that the Presidential Order entails. To the military, the “[AI deployment] risks will be managed not by flawless forecasting, but by continuous deployment powered by campaigns of learning”. More so, the DoD calls for mitigation of policy barriers through consensus building and closer relations with vendors, as well as the AI community at large. Despite the risks of AI deployment being no less profound in the military sector than in civilian affairs, the US Government as a customer may well choose the speed of decision-making - and many other benefits that AI can potentially bring to warfighting - to a more careful and balanced approach.

*Source: https://www.pexels.com/photo/blue-bright-lights-373543/*

EU AI Act

2021 has been marked by a race towards gaining normative authority in the field of Artificial Intelligence-enabled services. The European Union has been leading this chase by engaging in an omni comprehensive risk-oriented approach to AI regulation, providing for a broad regulatory framework to ensure securitization and protection of fundamental rights.

The Commission has indeed proposed a model founded on a decreasing scale of risk-based obligations to which providers will have to adhere to be able to continue conducting their business in the European Union, irrespective of their place of establishment[1]. Regarding the service providers which surpass the threshold of what the legislator has referred to as “high risk”, the AI Act imposes a ban upon them, and thus will not be allowed to distribute their services in the Union, as they are deemed to pose an unacceptable risk to the livelihood and safety of the users of such service. Just a tire under the said forbidden services, the providers which have been labelled as “high risk” will have to comply with the most burdensome obligations. Notably, the proposed regulation will not have any impact on AI systems implemented for military purposes.

The high-risk providers are identified with critical infrastructures which deeply affect the users’ daily lives, and which could potentially implement discriminatory or harmful practices. The non-exhaustive list comprises providers that supply technologies applied for transportation or employment purposes, migration management, administration of justice and law enforcement processes[2]. Providers of such services will be asked to supply, among other requirements, adequate risk assessments, and a high level of robustness and security to make sure that “AI systems are resilient against attempts to alter their use, behaviour, performance or compromise their security properties by malicious third parties exploiting the system’s vulnerabilities”[3], and detailed documentation providing all information necessary on the system and its purpose for authorities to assess its compliance[4]. Although the Parliament has included all biometric identification systems as high risk, Italy, Hungary and France have been pushing to implement a more lenient regime for the employment of biometric identification instruments for surveillance purposes. The result of this debate is to be seen at the moment of ratification of the Act.

Despite the praiseworthy effort of the European legislator in setting up standards which prioritize fundamental rights and security for its citizens, endorsed also by the setup of clear enforcement measures and fines directed to the misbehaving providers; it is pivotal to highlight some challenges that regulating AI will pose on future legislative attempts.

Firstly, the main area of concern regards the tug of war between maintaining a firm hold over high-risk service providers and, on the other hand, ensuring the smooth progress of AI innovation in the EU. We will likely be witnessing a certain degree of lobbying practices from what arguably represent the top-tier AI companies based in the US (mainly, META, OpenAI, Google, Deepmind etc.); hence watering down the original scope of the Act. This concern rapidly escalated to a concrete debate over the regulation of foundation models. “The foundation models, such as GPT-3.5 - the large language model that powers OpenAI’s ChatGPT-, are trained on vast amounts of data and are able to carry out a wide range of tasks in a number of use cases. They are some of the most powerful, valuable and potentially risky AI systems in existence”[5]. While the proposed Act was keen on firmly regulating foundation models, a trialogue was initiated between the German, Italian and French governments to loosen the grip over these providers by proposing a self-regulation system, and strongly criticising Brussels for over-regulating service providers’ conduct and hindering innovation in the Union[6]. The leaders of said countries also expressed deep concern about the possibility that smaller European-based companies will not be able to keep up with the obligations raised by the Act[7]. While the Parliament maintains a firm formal position over the impossibility of excluding the foundation models, it is apparent that this opposition could furthermore potentially trigger the stalemate of the legislative iter.

A second criticality was identified by the exclusion from the scope of the Act of AI instruments applied for military, national security and national defence purposes. Civil society organizations have indeed expressed major concern towards the possibility that technologies which would be theoretically labelled as posing an unacceptable risk could be implemented if they fall under the umbrella of the scope of defending national security, but, additionally, that dual-use technology could be employed without any regulatory restriction[8].

Finally, the Act faces issues regarding its coordination with the US Order. Albeit both legislative instruments are based on a risk-based approach, the Senate has been more hesitant to espouse the European hard line. As Alex Engler - associate in governance studies at The Brookings Institution- wrote for Stanford University: “There’s a growing disparity between the U.S. and the EU approach in regulating AI. The EU has moved forward on laws around data privacy, online platforms, and online e-commerce regulation, and more, while similar legislation is absent in the U.S”[9]. Furthermore, the US Order struggles to draw clear-cut enforcement measures against companies which happen to be in breach of their obligations, therefore it is clear that the priority of the American legislator lies mostly in maintaining international competitiveness[10]. Needless to say, the lack of homogeneous standards hinders physical and legal persons, the latter being obliged to change their operativity depending on the country of distribution of services.

Despite the said shortcomings, the Act will hopefully be the Kickstarter of a broader strategy able to compensate for the strict approach adopted in the regulation, thus attracting investments and levelling the competition with the US.

[1] https://www.lawfaremedia.org/article/a-comparative-perspective-on-ai-regulation

[2] https://digital-strategy.ec.europa.eu/en/policies/regulatory-framework-ai

[3] https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52021PC0206

[4] Ibid.

[5] https://time.com/6338602/eu-ai-regulation-foundation-models/

[6] Ibid.

[7] Ibid.

[8] https://www.stopkillerrobots.org/news/what-are-the-ai-act-and-the-council-of-europe-convention/

[9] https://hai.stanford.edu/news/analyzing-european-union-ai-act-what-works-what-needs-improvement

[10] https://www.oii.ox.ac.uk/news-events/the-eu-and-the-us-two-different-approaches-to-ai-governance/

^[1] https://cset.georgetown.edu/article/in-out-of-china-financial-support-for-ai-development/

^[2] https://digital-strategy.ec.europa.eu/en/policies/european-approach-artificial-intelligence

^[3] https://twitter.com/ylecun/status/1662375684612685825?lang=en

^[4] https://www.nist.gov/itl/ai-risk-management-framework

^[5] https://www.scientificamerican.com/article/when-it-comes-to-ai-models-bigger-isnt-always-better/

^[6] https://ai.meta.com/llama/

^[7] https://hackernoon.com/the-next-era-of-ai-inside-the-breakthrough-gpt-4-model

^[8] https://media.defense.gov/2023/Nov/02/2003333300/-1/-1/1/DOD_DATA_ANALYTICS_AI_ADOPTION_STRATEGY.PDF

January 2, 2024 — No Comments

The fragile unity of Europe after the Russian invasion of Ukraine

Authors: Federico Alistair D'Alessio and Alessandro Spada - UK & European Affairs Team.

EU’s response

The European Union has firmly condemned Russia’s invasion of Ukraine, calling for an immediate ceasefire, military withdrawal and the respect of Ukrainian independence and territorial integrity.

European institutions have repeatedly denounced Russia’s war crimes in Ukraine, especially the indiscriminate attacks towards civilian infrastructures, hence accusing Russia of violating international law. Member states have thus strengthened both individual and economic sanctions against Russia while providing Ukraine with military equipment, humanitarian aid and financial support. For fear of an expansion of the conflict, several European governments have also significantly increased their own military spending.

While the Kremlin’s actions were unanimously condemned, the EU approach was not warmly welcomed by everyone in the European community, including the unconditional military support for Ukraine.

Division within the EU

Three apparent factions have emerged. Northern and post-communist member states fiercely supported Ukraine in the war, fearing a Russian victory that would threaten their national security. Western European countries such as France, Germany and Spain insist on vigorous diplomatic efforts and have adopted a more cautious approach. Lastly, the third bloc is composed of those members who have refused to send weapons and have expressed a rather ambiguous stance on the war, such as Hungary and, to a lesser extent, Bulgaria.

Among the first group, the Baltic states and Poland have been the most loyal partners of Ukraine for obvious historical and geopolitical reasons.

Baltic states

The firm reaction of Lithuania, Estonia and Latvia did not come as a surprise, given their past experiences with invasions and annexations by the Kremlin. Their warnings on the threat posed by Russia in Central and Eastern Europe were mostly ignored or downplayed by their partners and accused of Russophobia by the Kremlin.

The Baltic States substantially increased their military spending and gradually abandoned their dependence on Russian energy after the 2014 Russian annexation of Crimea. Since the 2022 invasion, they have actively supported Kiev with military and humanitarian aid as they feel the fate of their nations is tightly linked to Ukraine.

They believe the only way to achieve peace is to help Ukraine win the war and force Russia back to its borders, as stated by Estonian PM Kaja Kallas. In addition, the Baltics have regularly called for stronger EU and NATO action, fearing that their allies would lose the momentum to stop Russia once and for all. As of December 2023, all three Baltic states rank in the top five GDP contributors of government support to Ukraine.

Poland

Likewise, Poland declared not only full military, financial and humanitarian support for Ukraine, but also the intention of defeating Russia on all fronts as a way to achieve peace. Growing anti-Russian sentiment is evident among Poles, with a peak of 94% viewing Putin as a serious threat post-Ukraine invasion. This sharp rise has consequently brought to more positive attitudes (around 90%) towards the US, NATO and the EU.

In addition to welcoming over 3 million Ukrainian refugees, the Polish government has also mediated between Ukraine and the US, advocating for adequate protection and high-end military equipment. Moreover, their push for Ukraine's EU and NATO integration has significantly reduced EU criticism regarding the rule of law in Poland.

Nevertheless, recent grain embargo disputes have strained relations with Ukraine, leading to a Polish weapons supply halt and a potentially damaging impact on both nations.

United Kingdom

Despite the UK leaving the EU, it is crucial to also analyse the reaction of the British government given its historical role as a security guarantor in Europe. On November 16, 2023, Foreign Secretary David Cameron reaffirmed support for Ukraine against Putin's aggression. The UK, a leading supporter, provides significant military, humanitarian, and financial aid, ranking as the third-largest donor behind the US and Germany. It was the first to supply cruise missilesand depleted uranium munitions to Kyiv and additionally implemented a series of sanctions against Moscow. The British Government advocates for a shorter Ukraine's path to NATO membership by removing the need for a Membership Action Plan, as a result of the summit held in Vilnius last July. Furthermore, secret talks between UK officials and key Russian representatives have reportedly taken place, discussing security matters such as grain shortages and nuclear safety.

France

While President Macron has supported Ukraine since the outbreak of the conflict, he has kept a more diplomatic stance in comparison to other European leaders. A few weeks before Russia's invasion, he attempted to dissuade Putin and emphasised avoiding humiliation for diplomatic solutions. During an April visit to China, Macron urged Xi Jinping for a mediation in favour of a return to the “negotiating table”. Despite fewer arms transfers (data from Sept. 26, 2022, to Nov. 30, 2023) to Ukraine compared to some NATO allies, France ultimately backs Ukraine's NATO accession to increase pressure on Russia and pave the way for post-war negotiations.

Germany

The full-scale invasion of Ukraine forced Germany to reassess its role in the world, shifting from "chequebook diplomacy" to increased military involvement. As the second-largest arms supplier (commitments Jan. 24, 2022, to Oct. 31, 2023) of Ukraine after the US, Germany has invested €100 billion in a military fund for modern weapons and committed to meeting NATO's 2% GDP defence spending target. Chancellor Olaf Scholz also encouraged China to use its influence to promote diplomatic solutions. Germany opposes immediate NATO membership for Ukraine, fearing direct conflict with Russia and citing unresolved border conflicts as a hindrance. Additionally, Germany is pushing for a reform plan where the conditions listed must be met in order to initiate a discussion on the membership.

Hungary

As previously mentioned, Hungary has condemned Russian aggression while adopting a questionable approach to dealing with the Kremlin.

Firstly, PM Viktor Orbán decided to abstain from sending military support to Kiev and even agreed on a new gas deal with Moscow a few months after the invasion started. In addition, state-controlled media outlets have continued to spread pro-Russian propaganda, including criticism against the sanctions imposed on Russia. Orban has also recently requested the EU to reassess their strategy in the war while threatening to halt all support to Ukraine.

This peculiar reaction to the Russian invasion reflects the local population as well. According to a recent poll, only 33% of Hungarians consider Russia a major military threat. Another vital figure to mention is the Hungarian perception of the US and Russia: only 17% believe the United States are an important partner, comparable to the 11% that think Russia is. This data openly displays how divergent Budapest’s attitude is from the rest of the EU.

Conclusion

The EU’s unified reaction was initially seen as an opportunity to create a new and common geopolitical strategy. Despite claims of unity, the EU is increasingly divided between those prioritising peace diplomatically and those insisting on justice achieved solely through a Russian military defeat.

This crisis has also exposed the union’s reliance on the US and NATO in terms of defence and intelligence. This is mainly due to the fact that the EU was conceived as a political and economic institution, rather than a military power. However, given that European cohesion has also emerged thanks to continuous information provided by Washington, this poses the risk of condemning Europe to political and military irrelevance. Historical security leaders, such as the UK and France, face several challenges - with Germany expected to play a pivotal role.

Moreover, debates on EU military independence versus complementarity with NATO face growing divisions among member states, evident in recent controversies and wavering support for Ukraine - such as the case of neighbouring Slovakia. The question remains whether the EU can establish an independent defence system amid increasing uncertainties.

December 13, 2023 — No Comments

Human rights protection towards the increasing need of critical raw materials: the EU’s challenge

Author: Simona Sagone - Human Rights Team

Introduction

Critical raw materials are crucial for achieving the goals of the green transition, but their supply chain poses challenges. In fact, materials such as gallium, lithium, boron, titanium, and cobalt are and will be necessary for constructing green technologies, including solar panels, batteries, electric vehicles, and wind turbines, respectively. At the same time, this high priority creates problems for their supply, leading to a dramatic increase in demand, precarious supply, and the risk of potential future shortages. The establishment of value chains, including the extraction, refining, and processing of these materials, is also a sensitive issue concerning human rights in the territories where these activities take place, making it necessary to balance different needs in these contexts^[1].

In this sense, 2023 was a pivotal year for the EU: since the conflict in Ukraine started, it has become evident the EU's dependency on imports of raw materials for the climate transition and the importance of this supply in an increasingly complex and globalized environment. The European Union responded by proposing the Critical Raw Materials Act (CRMA), relying on bilateral Strategic Partnerships to ensure diversified and advantageous reciprocal supply terms, preventing new dependencies in the future. On this matter, the EU has already initiated political dialogues with several countries to create mutually beneficial agreements^[2].

The EU’s supply: the Critical Raw Materials Act

According to the Critical Raw Materials Act, strategic partnerships should adapt to the features of the supplier country, especially if it has unstable governance, lacks protection of citizens' human rights, and has precarious sustainable development policies. The discrepancy in values is also a key issue in the supply of critical raw materials: although strategic partnerships with countries sharing similar values to the EU are the best way to secure access to them, they cover only a small part of the supply since many of the world's richest sources are in emerging markets and developing economies. Recent data indicate that supply is largely dependent on countries with a low level of governance, taking into account factors such as political stability, rule of law, and control of corruption. One example is the Democratic Republic of Congo, whose governance indicators rank among the lowest in the world and with whom the EU aims to conclude an agreement by the end of 2023. The country supplies 63% of the EU's cobalt, essential for the production of batteries for electric vehicles^[3].

Many countries potentially supplying the EU raise concerns about the effects on local communities and the possible exploitation of natural resources, as they are not in line with European ideals. Theoretically, the same draft regulation stipulates that strategic EU projects to increase supply should be evaluated considering all aspects of sustainability, including respect for human and labor rights, and specifically, the rights of women and children. However, the mining, refining, and processing of minerals have a long track record of human rights abuses, taking various forms such as discrimination of vulnerable groups, lack of stakeholder inclusion and respect for indigenous peoples, human rights abuse, and impact on cultural and aesthetic resources. In addition to the mentioned issues, the mining sector in developing countries is characterized by a high degree of informality and small-scale/artisanal extraction.

*Source: https://it.freepik.com/foto-gratuito/campi-di-parchi-eolici_20082585.htm#query=pale%20eoliche&position=7&from_view=search&track=ais&uuid=c5349af6-71bb-4c75-b4e3-81904f544971*

Which risks for human rights?

To prevent human rights violations, the European Union must document potential risks to the human rights of indigenous populations and local communities, recognizing their right to free, informed, and consented mining operations. The growing awareness of human rights and environmental risks in mining approval processes has led to the proliferation of voluntary audit and certification initiatives. These initiatives aim to assess and certify businesses' respect for human rights and the environment by confirming adherence to voluntary standards. While some projects concentrate on auditing the sourcing practices of businesses that purchase raw materials, others perform on-the-ground audits of mines and other facilities in mineral supply chains. Several initiatives do both. The Critical Raw Materials Act relies on audits and certifications to determine whether new mining, refining, and other projects are sufficiently sustainable to warrant government support. However, research has shown that third-party audits have inherent limitations: voluntary initiatives frequently lack the detailed criteria and rigorous methodology required to accurately assess an organization's compliance with human rights or environmental standards^[4]. This means that standards are often developed by mining companies and industrial groups and do not require adequate participation from labor unions, communities, or non-governmental organizations. Furthermore, as voluntary initiatives, many businesses do not reduce any kind of sustainability ratio^[5].

In terms of the partnerships with resource-rich countries, these should be based on domestic business processes, supporting national production and transformation industries to add value at the local level. In this regard, it could be helpful to involve environmental organizations and human rights organisations as tools to track the effectiveness of strategic partnerships and assess their impact not only for the European Union but also for third-party countries.

Conclusion

In light of the different strategies that the EU intends to pursue in concluding and developing bilateral strategic partnerships, it is still unclear which policies can effectively ensure that extractive activities are in harmony with the sustainable development needs of partner countries. These needs are particularly felt in the creation of supply chains that entail significant environmental and human rights risks, especially in developing countries. Finally, it should be considered that the protection of human rights should be a key factor for a just climate transition.

^[1] European Commission, Critical Raw Materials: ensuring secure and sustainable supply chains for EU's green and digital future, Brussels, 2023.

^[2] European Commission, Proposal for a Regulation of the European Parliament and of the Council establishing a framework for ensuring a secure and sustainable supply of critical raw materials and amending Regulations (EU) 168/2013, (EU) 2018/858, 2018/1724 and (EU) 2019/1020, Brussels, 2023.

^[3] https://it.euronews.com/my-europe/2023/09/28/lue-deve-chiudere-accordi-commerciali-per-le-materie-prime-dice-thierry-breton.

^[4] https://asvis.it/notizie/2-17726/lestrazione-di-materie-prime-critiche-puo-diventare-sostenibile

^[5] https://altreconomia.it/che-cosa-non-va-nella-strategia-europea-sulle-materie-prime-critiche/

March 8, 2022 — No Comments

Taras Kuzio on the Russia-Ukraine Crisis and the War in Donbass

Professor Taras Kuzio from Henry Jackson Society and Kyiv Mohyla Academy shares his insights on the Russo-Ukraine crisis, Russian invasion of Ukraine, the conflict in Donbass and Ukraine’s membership of NATO and EU.

Interviewers: Igor Shchubetun, Fabrizio Napoli and Davide Gobbicchi.

February 17, 2022 — No Comments

Economic Security in Western Balkans: Challenges and Perspectives

By: Eleonora Shehu and Rosa Maria Torraco

*Image Source*: https://www.eesc.europa.eu/en/news-media/eesc-info/052021/articles/88044

In general, when we think of security we consider the fields of conflict resolution and prevention, crisis and catastrophe management, espionage, and military. However, this concept can be interpreted in a variety of ways, including economic security. Although there is not a unique definition of Economic Security, it can be described as individuals, households, and communities' ability to meet their basic needs in a sustainable and dignified manner. The notion is crucial when it comes to Western Balkans (Albania, Bosnia and Herzegovina, Kosovo, North Macedonia, Montenegro and Serbia), as it is one of the greatest issues the region is currently facing. Organized crime, unemployment, poverty and democratic deficits have been threatening the stability of the area for many years.

In this article, we are going to highlight which are the main challenges in the Western Balkans’ Economic Security, in order to understand the security perspectives of the region.

One of the major threats the Western Balkans are currently facing concerns the labor market, at the point that also in times of economic growth of the region, the recovery is often jobless. In fact, all countries of the area have high unemployment rates, especially when it comes to women employment. Nonetheless, the most challenging issue in Western Balkans’ labor market is the youth unemployment rate, which is one of the highest in the world. There are several reasons for the soaring unemployment rates in the area, among which the inadequacy of the supply of skilled labor, as many people, especially the youths, lack an appropriate education, and political instability..Consequently,decision-makers are prevented from implementing medium-terms strategies and foreign investments are not encouraged.

Another obstacle that threatens the Western Balkans’ economic security is the democratic deficit that characterizes the area. As stressed by the outcomes of the 140th session of the European Committee of the Regions, democracy in Western Balkans is currently facing several challenges, including a limitation of press freedom, a refusal to recognize genocide and war crimes, unsettled territorial disputes, leaders' and ruling parties' authoritarian tendencies and a fragile democratic culture. In particular, one of the greatest dangers of local democracy is the “local state capture”. In other words, Western Balkans are affected by influential individuals or groups that use corruption to manipulate a country's policies, rules, and economy for their personal gain.

Unfortunately, corruption plays an unfortunate role in the governments of the majority of Western Balkans’ states affecting the everyday life of peoples. Albania and North Macedonia, however, have earned the title of frontrunners in the fight against corruption, registering the fastest progress in this field and thus giving hope for a future in the EU. In fact, countries wishing to join the EU need to have firstly stable institutions that guarantee democracy, the rule of law, human rights and the respect for and protection of minorities; secondly, a functioning market economy and the capacity to cope with competition and market forces in the EU; lastly, the ability to take on and implement effectively the obligations of membership, including adherence to the aims of political, economic and monetary union.

Albania has yielded great results in the fight against corruption through a vast vetting process of the members of the judiciary and administrative bodies. This process thus shows to be pivotal to the restoring of public trust in law enforcement bodies of the State. North Macedonia has continued to consolidate its track record on investigating, prosecuting, and trying several corruption cases, including high-level cases. Moreover, the country has been strengthening its institutional frameworks in the fight against corruption, particularly the SCPC and the Prosecutor for Organized Crime and Corruption (OCCPO). Other countries, on the other hand, such as Bosnia and Herzegovina and Montenegro have not delivered as expected, and corruption even at the highest echelons of power still remains a large-scale problem.

In conclusion,''Considering all the information above, what can be done to further reinforce the Western Balkans' economic Security?'' The countries in the Western Balkans region welcome investments needed to improve their infrastructure projects and this eagerness makes them vulnerable to regulatory capture via Foreign Direct Investment (FDI), loans and grant money. Shoud the EU not provide what the Western Balkans have long asked for, they will likely turn to non-EU actors for investment funds, such as Russia, Turkey, China and even the United Arab Emirates (UAE). These influences by non-EU actors have been more so influential during the COVID-19 pandemic and the consequent need for medical supplies and vaccines.

Dr. Valbona Zeneli trusts in regional cooperation between Western Balkans and the European Union as a beneficial tool for the stability of the region.This is because it would cease the perplexities of foreign investors but the prolonged accession process and the critical convergence with richer EU countries have contributed to a plunge of public support for the EU. It is important to remember the geostrategic position and role of the Western Balkans for the EU: in fact, as integral part of the natural European continent, any destabilization in the Western Balkans can quickly become a problem for Europe. With this key factor in mind the EU has two choices, according to Dr. Valbona Zeneli: treat the Western Balkans as the key strategic asset the region represents, or let Moscow, Beijing or the Gulf Countries influence domestic and regional relations.

December 22, 2021 — No Comments

AUKUS and its Consequences for the EU: Strategic Autonomy and the Future of Transatlantic Relations

By: Eleonora Shehu and Alessandro Spada.

*Image Source*: https://www.asianews.it/notizie-it/Aukus,-le-paure-delle-isole-del-Pacifico-54123.html

On 15th September 2021, a trilateral security agreement, AUKUS, was announced by the United States, United Kingdom, and Australia, as part of a broader US foreign policy effort in the Indo-Pacific. Although not explicitly specified in the text, the agreement seems to be directed as a wider strategy to counter China’s growing influence in the region. Despite AUKUS being a standard security agreement and apparently harmless for the EU, it has caused the biggest diplomatic crisis in transatlantic relations since the Iraq War in 2003, as it came as a surprise package to the European Union and France in particular. As written in the text, AUKUS will contribute to build eight nuclear-powered submarines in Australia and “will focus specifically on deepening integration in defense-related science, technology, industrial bases and supply chains, with particular emphasis on cyber capabilities, artificial intelligence, quantum technologies and new undersea capabilities”.

This partnership however, unleashed the anger of Emmanuel Macron, who called AUKUS a betrayal vis-à-vis Paris and the EU as a whole, describing it as a “stab in the back” from Australia and a “brutal and unilateral decision” from Washington by the French foreign minister, Jean-Yves Le Drian. As a sign of protest against the signing of this agreement, on the 17th September President Macron immediately recalled his ambassadors to the U.S and Australia.

The reasons for France's discontent are numerous. The first one is that Australia unexpectedly scrapped France from a A$90bn (£48bn) submarine contract, signed with the contractor Naval Group in 2016, to purchase 12 conventional attack submarines and to replace its old six conventionally powered Collins-class submarines. Moreover, Paris was not informed by Canberra beforehand and found out about the agreement together with the rest of the world, showing a serious breach of trust between the two countries. Last, but not least, this agreement also had an unfortunate timing: AUKUS was announced to the public the same day the EU published its own strategy for the Indo-Pacific, putting the EU in a disadvantageous position compared to the other Western powers and reviving the discussions on the EU’s strategic autonomy.

In fact, “strategic autonomy” has been taking increasingly more space in the EU discourse since the almost back-to-back events of Afghanistan first and the creation of AUKUS next. Strategic autonomy for the EU means the ability of the union to achieve its foreign policy objectives cooperating with its allies when possible, but also acting alone when it is necessary. This was made also clear in the 2021 State of the Union annual speech by the European Commission President Von der Leyen, in which she emphasized the importance of the creation of the long-overdue European Defense Union, because, as she argued, “t here will be missions where NATO or the UN will not be present, but where the E.U should be” because “Europe knows better than anyone that if you don’t deal in time with the crisis abroad, the crisis comes to you”.

Even though the submarine contract between France and Australia was a bilateral issue only with no other EU member state being affected, the AUKUS deal resulted in a serious breach of trust with deep consequences not only for France but for the EU in general: this agreement raises, first of all, serious doubts within the EU about Biden’s administration pledge to multilateralism, demonstrating de facto that this administration is still acting unilaterally, continuing to carry on what is becoming an American trait. Secondly, and most importantly, this strategic agreement relegates the EU to a secondary player position with no real say in decisions concerning the Indo-Pacific, highly contradicting what was written in Biden’s administration Interim National Security Strategic Guidance, in which it is clearly stated that in order to deal with an increasingly assertive China, the US pledged to restore and further strengthen its alliances both in Europe and in the Indo-Pacific region.

With that being said, both the events of Afghanistan and AUKUS have forced EU officials to seriously think about a common European defense strategy, which will come to a head with the definition of a Strategic Compass intended for adoption in March 2022. A newly found strength behind the implementation is likely to come as France will hold the EU’s rotating Presidency for the first half of 2022. France has not only been the most affected by the agreement but it has also been a strong advocate of a European defense strategy especially in the Indo-Pacific, where almost 2 million French citizens live, thus making France the biggest European player in the region.

In conclusion, this diplomatic incident entails serious consequences for transatlantic relations: although a European strategic autonomy never entailed a separation from the US, it is also increasingly widespread a feeling in Europe that something is broken in our trans-Atlantic relations", says Thierry Breton, Internal Market Commissioner, who is proposing for a "pause" and a "reset" between the EU and the US.

December 17, 2021 — No Comments

Prof. David Burigana on the EU Defence Strategy

Prof. David Burigana, Professor in International History of Science and Technology and History of International Organizations at the University of Padua, shares his insights on the European Union (EU)'s Defence Strategy. He talks about the main issues regarding a common European army, the historical precedents of European cooperation at the strategic and militarly level, and the development of a coherent procurement and defence policy at the European level.

Interviewer: Danilo delle Fave.

This is ITSS Verona Member Series Video Podcast by the Military Strategy and Intelligence Team.

ITSS Verona - The International Team for the Study of Security Verona is a not-for-profit, apolitical, international cultural association dedicated to the study of international security, ranging from terrorism to climate change, from artificial intelligence to pandemics, from great power competition to energy security.

December 10, 2021 — No Comments

Geopolitical Implications of Finland’s H-X Program

By: Arnaud Sobrero and Romain Gallix

*Image Source:* https://www.flickr.com/photos/77821971@N07/48909659726/

Finland is currently seeking to replace its aging F-18 with a global competition dubbed H-X worth $11 billion. It is expected that a decision will be made public before the end of 2021. Arguably, fighter jets represent a crucial component of States’ security and a decisive hard power asset in every conflictual context. This article aims at uncovering the underlying dynamics of the Western defense industry implied by the evolution of the Finnish tender.

As of December 2021, the Finnish Ministry of Defense has received responses for its request for information from the European Eurofighter Typhoon, the Swedish Saab Gripen, the French Dassault Rafale, and the American Boeing F/A-18E/F Super Hornet and Lockheed Martin F-35.

Divided European contenders open the way for American offers

The Finnish request for information received answers from all major Western fighter jets producers; hence the comparison of contenders allows us to identify several factors shaping the evolutions of the industry. The very fact that Finland launched its fleet’s renewing process very close to the expected decommission date for its current Hornets, as their “structural fatigue” denounces, exemplifies how procurement programs are not at the top of policy-makers agenda (Finnish Ministry of Defense).

The cost borne by single states with limited expenditure margins is becoming increasingly untenable, especially where political pressure on taxpayers’ spending is large (e.g., the United Kingdom). Moreover, countries may not dispose of design and production capacity over the entire technological spectrum, such as Italy and Spain. The relative political frenzy generated in recent decades made transnational fighter jets’ fleets a common feature of Western air forces. However, the pan-European Eurofighter Typhoon underwent difficulties showcasing the complexity of such projects, with reluctant transfers, unclear directions, and soaring costs due to fragmented production.

Meanwhile, the individual offers from France and Sweden do not seem greatly superior. The Dassault Rafaleand the Saab Gripen offer suffer from their limited interoperability and relatively isolated stance in the current geopolitical equilibrium. Indeed, the political logic of defense procurement programs vastly supersedes the economic aspects of the choice. Was Finland to purchase the Saab Gripen underdog from its neighbor, its strategic prospects would be very limited and centered on Russian containment. The Rafale, in turn, would signify Finland’s alignment on the French posture of European strategic autonomy from the U.S. The 1,340km-long border Helsinki shares with Russia makes this perspective impossible. Therefore, although the Rafale has recently been sold to Croatia and Greece, Dassault’s offer seems compromised.

The American bidders consequently benefit from the lack of unity of European actors and put forward the geopolitical continuity they represent as a sales’ argument. The Boeing F/A-18 E/F Super Hornet proposal would minimize the H-X program costs due to pre-existing maintenance and operating capacities while selecting the F-35 would guarantee the acquisition of new, cutting-edge capacities.

A degrading security environment

In recent years, we have witnessed a degradation of the international security environment with Russia’s resurgence and the growing assertiveness of China’s behavior. Primarily concerned with Russia, Finland finds itself in a delicate position as it is the E.U. member that shares the largest border with Russia. Russia has been particularly active in recent years by bolstering its military, as demonstrated by its intervention in the Syrian front, its attempts to upset the status quo, and its destabilization of NATO from within. Growing tensions between Russia and Ukraine are fueling a sense of regional insecurity with a Russian troop buildup as well as creating some levels of uncertainty regarding Russia’s intentions. Amid a large scale rearmament program, Russia has been able to field the SU-57, a modern stealth fighter aircraft, and develop lighter fifth-generation aircraft, the Checkmate, focused on export markets and somewhat reminiscent of the F-35.

Given the growing insecurity of its regional environment, Finland may be looking to maintain its strategic relationship with the U.S. and reinforce its indirect relationships with NATO. A critical political and strategic factor to consider is the interoperability of weapon systems within the North Atlantic Treaty Organization (NATO). Although Finland is not a member of the Alliance, the Lockheed Martin’s F-35 and Boeing’s F-18 Super Hornet would expand the reach of NATO and its ability to share data, engage in secure communication, and increase interoperability capabilities between the U.S. and other U.S.-allied European assets. Thus, beyond the interoperability aspect of those deals, acquiring the F-35 or the F-18 does bring diplomatic benefits and strengthen relationships with the United States.

The case of buying a strategic relationship with the U.S.

When it comes to large military hardware procurement, countries’ decisions are influenced by the prospect of a future strategic relationship with the procuring country. Buying U.S. material implies future interoperability, a valuable prospect in a world of growing tensions. In addition, the Foreign Military Sales (FMS) framework is largely seen as a political instrument by Washington to deepen relationships with key allies. As such, the F-35 initially developed to replace aging F-16s, is poised to become one of America’s biggest exports. By strengthening military interoperability with U.S. allies across the globe and elevating their airpower capabilities, the F-35 is instrumental to America’s containment military strategies. Furthermore, some experts argue that the F-35 program acts as America’s Belt and Road Initiative, at least from a strategic and military standpoint. It provides a network and a platform acting as ‘a generator of wealth and peaceful co-existence on a global scale.’

Even soaring costs do not prevent countries from buying the F-35. Small players such as the Netherlands, Belgium, Poland have already chosen to buy the F-35 jets, notwithstanding questionable financial dispositions. This perfectly illustrates the underpinning political challenge at stake. For example, Switzerland agreed to buy 36 F-35As in July 2021 and Patriot air defense systems, even though the decision was controversial and considered overkill.

Thus, buying American-made fighter jets does bring significant commercial, industrial, and geopolitical benefits. Indeed, by buying American fighter jets, Finland would essentially strengthen its strategic relationship with the U.S.

Conclusively, given the degrading security environment Finland finds itself in and the growing importance of the U.S. strategic relationship, Finland is more likely to acquire U.S. technologies to replace its aging F-18s. Arguably, the F-35 appears better suited to meet Finland’s short and long-term requirements by strengthening its military and political relationship with the U.S. and acquiring an aircraft that could address the existing and emerging military threat as Russia deploys additional advanced stealth combat airborne platforms.