NATO and the War in Ukraine

A general view of a session at the NATO Foreign Ministers’ meeting in Bucharest, Romania, on November 30, 2022. Reuters
A general view of a session at the NATO Foreign Ministers’ meeting in Bucharest, Romania, on November 30, 2022. Reuters
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NATO and the War in Ukraine

A general view of a session at the NATO Foreign Ministers’ meeting in Bucharest, Romania, on November 30, 2022. Reuters
A general view of a session at the NATO Foreign Ministers’ meeting in Bucharest, Romania, on November 30, 2022. Reuters

The end of the cold war in 1991 brought along questions as regards NATO’s future. It has been more than 30 years and NATO’s ability to adopt itself to “the most complex security environment since the end of the Cold War” has preserved it as the strongest military alliance able to maintain its relevance and more.

After the demise of the Soviet Union, NATO and Russia were able to establish a structural relationship. But throughout the years, relations have been far from stable.

Russia has been concerned with NATO’s eastward expansion and NATO has been troubled by Russia’s assertive and aggressive policies in particular in former Soviet geography, the so-called near abroad.

At the NATO Bucharest Summit in 2008, it was declared that Ukraine and Georgia will (eventually) become members.

Russia responded by military intervention in Georgia, leading to the break up of South Ossetia and Abkhazia.

A few years later in 2014 Russia intervened in Ukraine and annexed Crimea.

NATO’s response was strongly worded, coupled with certain sanctions and suspension of cooperation (even then, political and military channels of communication remained open) but Russia was unaffected and even further emboldened with the soft reaction of the West.

This time around, when Russia invaded, NATO sided with Ukraine actively. In March 2022 Heads of State and Government of NATO countries held an extraordinary summit in Brussels and declared Russia’s invasion of Ukraine as the “gravest threat to Euro-Atlantic security in decades”. All ties between NATO and Russia were severed.

From a military point of view, there are two things which took almost everyone by surprise in Ukraine. One is the poor performance of the Russian military and the other is the performance of the Ukrainian army beyond expectations.

The Ukrainians have been able to inflict heavy damage on the Russians and NATO now has a battered Russia on its eastern flank.

Ukraine owes a lot to NATO and the Allies. After the annexation of Crimea in 2014, NATO engaged in strengthening and transforming Ukraine’s security and defence. At the 2016 NATO Summit in Warsaw, the Alliance efforts were structured under what is called the Comprehensive Assistance Package.

Russia has long sighted NATO’s eastward expansion as a threat. Its invasion of Ukraine has brought Russia’s worst dreams to life. In the heat of the war, Ukraine has formally applied for NATO membership and so have Sweden and Finland.

NATO rejects Russia’s objections as an unacceptable interference in its affairs and has reiterated its policy of “open door”. That means, every European nation has the right to apply for membership and whether or when it is accepted is NATO’s business and nobody else’s.

But having made the principle clear, NATO would not be in a rush to do that. NATO was not very pleased when Ukraine handed in its formal application for membership. To admit Ukraine as a member would carry things to another level, where Ukraine would come under the umbrella of article 5 of the Washington Treaty and bring NATO in direct confrontation with Russia.

As to Sweden and Finland, in May 2022, they submitted their official letter of application to become a NATO member. Once all Allies have ratified the Accession Protocol according to their national procedures, they will accede to the Washington Treaty.

The alliance has welcomed the two countries with open arms. There is a problem stemming from Türkiye but it is not an objection to the actual membership and the problem is expected to be solved. With Finland and Sweden as formal NATO members, the Alliance’s military capacity will be further strengthened and NATO will have a 1,340-km-long common border with Russia.

At its 2022 Summit in Madrid, NATO leaders agreed to the Alliance’s eight Strategic Concept. This is the core reference document of the Alliance and it is revised/updated about every ten years. The Concept outlines the Alliance’s purpose and nature, lays out challenges it faces and provides guidelines. The last concept was adopted in 2010 when Russia was a partner and the global strategic environment was different.

The Strategic Concept of 2022 has been prepared at a time of war and has reflected the sentiments, concerns and reactions surrounding it.

Russia has been declared the culprit as article 8 of the document states that “The Russian Federation is the most significant and direct threat to Allies security and to peace and stability in the Euro-Atlantic area”. It is also emphasized that “Russia seeks to establish spheres of influence and direct control through coercion, subversion, aggression and annexation.”

In recent years, ups and downs in transatlantic ties, the idea of “Europe taking the lead in European security” and a sort of fatigue of involvement in places such as Iraq, Afghanistan, Libya, Syria, and Sahel were visible within NATO.

Relations with Russia and how to react to Russian policies have always been an issue where there have been different approaches. Allies from eastern and central Europe and the Baltics have traditionally taken a tougher position, whereas, western and southern European allies including Germany, France and Italy have preferred a more cooperative approach, with doors and communication channels open.

It has never been an easy process, but Allies have always been able to reach consensus and move forward.

The war in Ukraine had implications on NATO-China relations as well. China made it into NATO Strategic Concept in 2022 for the first time in history where its stated ambitions and coercive policies are said to challenge NATO’s interests, security and values. The war in Ukraine has changed focus of attention away from China.

On the defense side, NATO military planners have reviewed plans in light of the war in Ukraine. At the Madrid Summit in June 2022, Allies agreed the biggest revision of collective defense and deterrence since the Cold War.

NATO has increased the number of its forces on its eastern flank. Eight battlegroups at the level of brigade in Estonia, Latvia, Lithuania, Poland. Slovakia, Hungary, Romania and Bulgaria are in place along NATO’s eastern flank, from the Baltic Sea in the north to the Black Sea in the south. High readiness forces are structured to deter and protect alliance territory and populations.

Defense spending had become a major issue in the Alliance. President Trump argued that the US bears the burden in a most unfair way and threatened to reexamine its NATO policies unless steps were taken. The agreed solution was a pledge by each ally to increase its defense spending to at least two percent of its gross domestic product by 2024.

The process was slow. Before the war, only a few NATO members had fulfilled their pledge. The war in Ukraine had an accelerating effect and as of today, 20 NATO countries are above the threshold.

In this context, Germany came in as a major booster. The European industrial giant committed 100 billion Euros for its defense spending. It also began sending weapons and supplies to Ukraine to fight off Russians. These are all a first since the second world war.

In face of the war in Ukraine and the new geopolitical environment, NATO seems to be united against the common threat in this new generation cold war. But there is room for concern that the war may have a backlash as it is costly in many ways also for NATO members.



Borderless Europe Fights Brain Drain as Talent Heads North

Eszter Czovek, 45, packs up her house as she moves to Austria, in Budapest, Hungary, October 28, 2024. REUTERS/Bernadett Szabo
Eszter Czovek, 45, packs up her house as she moves to Austria, in Budapest, Hungary, October 28, 2024. REUTERS/Bernadett Szabo
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Borderless Europe Fights Brain Drain as Talent Heads North

Eszter Czovek, 45, packs up her house as she moves to Austria, in Budapest, Hungary, October 28, 2024. REUTERS/Bernadett Szabo
Eszter Czovek, 45, packs up her house as she moves to Austria, in Budapest, Hungary, October 28, 2024. REUTERS/Bernadett Szabo

Until recently aerospace engineer Pedro Monteiro figured he'd join many of his peers moving from Portugal to its richer European neighbors in the quest for a better-paid job once he completes his master's degree in Lisbon.
But tax breaks proposed by Portugal's government for young workers - up to a temporary 100% income tax exemption in some cases - plus help with housing are making him think twice.
"Previous governments left young people behind," said Monteiro, 23, who is studying engineering and industrial management at the Higher Technical Institute in the Portuguese capital. "The country needs us and we want to stay but we need to see signs from the government that they are implementing policies that will help."
Monteiro cites in particular the cost of buying or renting a home amid a housing crisis aggravated by the arrival of wealthy foreigners lured by easy residency rights and tax breaks, Reuters said.
He is doubtful the government's new measures will be enough.
"Some of my friends are now working abroad and earn substantially more money... and have better career development opportunities," he said. "I'm a little bit skeptical concerning my job opportunities here in Portugal."
Portugal is the latest country in Europe to seek to tackle a brain drain holding back its economy. Tax breaks for young workers in the budget currently going through parliament will take effect next year and could benefit as many as 400,000 young people at an annual cost of 525 million euros.
Talent flight to wealthier countries of the north is a problem Portugal shares with several others in southern and central Europe, as workers take advantage of freedom of movement rules within the trade bloc. Countries including Italy have tried other schemes to counter the flight, with mixed results.
By exacerbating regional labor shortages and depriving poorer countries of tax revenues, it is yet another hurdle for the EU as it tries to improve its ebbing economic growth while addressing population decline and lagging labor productivity.
Donald Trump's victory in US elections this month raises the stakes, with the risk of across-the-board trade tariffs on European exports of at least 10% - a move that economists say could turn Europe's anaemic growth into outright recession.
About 2.3 million people born in Portugal, or 23% of its population, currently live abroad, according to Portugal's Emigration Observatory. That includes 850,000 Portuguese nationals aged 15-39, or about 30% of young Portuguese and 12.6% of its working-age population.
More concerning still is that about 40% of 50,000 people who graduate from universities or technical colleges emigrate each year, according to a study by Business Roundtable Portugal and Deloitte based on official statistics, costing Portugal billions of euros in lost income tax revenue and social security contributions.
DEMOGRAPHIC HELL
"This is not a country for young people," said Pedro Ginjeira do Nascimento, executive director of Business Roundtable Portugal, which represents 43 of the largest companies in the nation of 10 million people. "Portugal is experiencing a true demographic hell because the country is unable to create conditions to retain and attract young talent."
Internal migration within the EU is partly driven by the disparity in wages between its member states. Some economic migrants also say they are looking for better benefits such as pensions and healthcare and less rigid, hierarchichal structures that give more responsibility to those in junior roles.
Concerns are mounting over the long-term viability of Europe's economic model with its rapidly ageing population and failure to win substantial shares of high-growth markets of the future, from tech to renewable energy.
Presenting a raft of reform proposals aimed at boosting local innovation and investment, former European Central Bank chief Mario Draghi said in September the region faced a "slow agony" of decline if it did not compete more effectively.
Eszter Czovek, 45, and her husband are moving from Hungary to Austria, where workers earn an average 40.9 euros ($29.95) per hour compared to 12.8 euros per hour in Hungary, the largest wage gap between neighboring countries in the EU.
The number of Hungarians living in Austria increased to 107,264 by the beginning of 2024 from just 14,151 when Hungary joined the EU.
Czovek's husband, who works in construction, was offered a job in Austria, while she has worked in media and accounting at various multinationals. She cited better pay, pensions, work conditions and healthcare as motives for moving. She also mentioned her concern over the political situation in Hungary, which she fears might join Britain in leaving the EU.
"There was a change of regime here in 1989 and 30 years later we are still waiting for the miracle that will see us catch up with Austria," Czovek said of the revolution over three decades ago that ended communist rule in Hungary.
Since Brexit, the Netherlands has replaced Britain as a preferred destination for Portuguese talent while Germany and Scandinavian countries are also popular.
Many Europeans still head to the United States in search of better jobs - about 4.7 million were living there in 2022, according to the Washington-based Migration Policy Institute, which nonetheless notes a long-term decline since the 1960s.
In 2023, 4,892 Portuguese emigrated to the Netherlands, surpassing Britain for the first time, which in 2019 received 24,500 Portuguese.
At home, they face the eighth-highest tax burden in the Organization for Economic Co-operation and Development (OECD) even as house prices rose 186% and rents by 94% since 2015, according to property specialists Confidencial Imobiliario.
A single person in Portugal without children earned an average of 16,943 euros after tax in 2023 compared to 45,429 euros in the Netherlands, according to Eurostat.
Portugal will offer under 35s earning up to 28,000 euros a year a 100% tax exemption during their first year of work, gradually reducing the benefit to a 25% deduction between the eighth and tenth years.
Young people would also be exempted from transaction taxes and stamp duty when buying their first home as well as access to loans guaranteed by the state and rent subsidies.
"We are designing a solid package that tries to solve the main reasons why the young leave," Cabinet Minister Antonio Leitao Amaro said in an interview with Reuters.
'THINGS WON'T CHANGE'
Leitao Amaro said he did not know for sure if the tax breaks would work but that his government, which came into office in April, had to try something new.
"If we don't act ambitiously, things won't change and Portugal will continue down this path," he said.
The Italian government has already found that tax breaks used as incentives are costly and open to fraud.
In January, Italy abruptly curtailed its own scheme that was costing 1.3 billion euros in lost tax revenue, even as it lured tech workers such as Alessandra Mariani back home.
Before 2024, returners were offered a 70% tax break for five years, extendable for another five years in certain circumstances. Now, it plans to offer a slimmed-down scheme targeting specific skills after it attracted only 1,200 teachers or researchers - areas where Italy has a particular shortage.
Mariani said the incentives were key to persuading her to return to Milan in 2021 by allowing her to maintain the same standard of living she enjoyed in London.
"Had the opportunity been the same without the scheme, I would not have done it at all," said Mariani, now working at the Italian arm of the same large tech company.
With her tax breaks poised to be phased out by 2026 unless she buys a house or has a child, Mariani faces a drop in salary and she said she's once again eyeing the exit door.