Turkey is slowly repositioning itself geopolitically. Within the past weeks Turkey filed an application with the Brics+ and concluded a historic deal with Egypt. Turkey is hedging its bets, which could allow the country to play the west against its opponents and could thus carve itself out a space to leverage power over both.

The Brics are an inter-governmental organisation formally founded by Russia, China, India and Brazil in 2009. Since Russia invaded Ukraine and the West imposed its sanctions on Russia, the Brics+ has become increasingly active and attractive to those countries that did not want to join the western sanctions regime, those that want to challenge the US-dollar dominated financial international system or, as it is in Turkey’s case, are seeking an alternative to the EU. The Brics+ currently counts 9 members including South Africa, Iran and Egypt. Economically it is a giant representing 35% of world GDP compared with 14.5% for the EU. The gap is even stronger if you measure it on a purchasing-power basis. But new members also could add more conflicting relationships, like the ones between Saudi Arabia and Iran or Egypt and Ethiopia, thus making common decision-making more difficult. Its importance is not only in the economic sphere, be it on trade or an alternative international payment system. Their influence could also matter in the UN, the World Trade Organisation or the IMF and World Bank. They also have a very different take to the EU when it comes to security.

The second move is a historic deal with Egypt, opening a new chapter for Recep Tayip Erdogan after he cut off relations with Egypt’s president Abdel Fattah al-Sisi 13 years ago over the ouster of Egypt’s Muslim Brotherhood-led government at the time. Both presidents signed 17 cooperation agreements on economic, technological and strategic cooperation. Egypt could even buy drones and patrol ships from Turkey. Their strategic high-level consortium starts to meet as of next week.

This alliance with Egypt is part of Turkey’s goal to repair broken ties with regional players. For Egypt, this alliance is of strategic importance in light of Israel’s war in Gaza. Egypt is increasingly fed up with Israel’s accusations that it is allowing Hamas to smuggle in weapons. Benjamin Netanyahu’s order to the IDF that they are to prepare for taking over delivering humanitarian aid also suggests to them that they are in Gaza for the long haul. This brings many problems for Egypt not only at the border crossings with Israel. Egypt is thus looking for new partners and found one in Turkey.

We reported recently on a story that Poland, under its new government, has taken a much more nuanced position towards weapons deliveries to Ukraine. Now, Donald Tusk threatens to veto Ukrainian membership after feeling offended by Dmytro Kuleba, the Ukrainian foreign minister. Kuleba said that the 1947 operation Vistula – the resettlement of 150,000 Ukrainians from Poland after the second world war – had been conducted from Ukrainian lands. He called on the Polish government to honoured misdeeds against Ukrainians, as Visegrad Insight reports. The Polish president, and government minister, have also re-opened the issue of German war reparations.

These intruding events are a reminder that the tri-lateral relationship between Germany, Poland and Ukraine is likely to be a big obstacle to Ukraine’s accession. It is about a lot of money, not just reparation claims. Ukraine’s accession would require treaty change, and in particular a reform of the EU’s cohesion funding. It would turn Poland from a net recipient of EU funds into a net contributor. If Poland resists, as it surely will, existing net contributors like Germany and the Netherlands would have to agree to bankroll both Ukraine and existing members who are net recipients like Poland. We see no room for manoeuvre given current fiscal trajectories, and no political willingness to shift the boundaries.

In other words, we struggle to see even scenarios in which a Ukrainian accession is possible. It would require all of the following: treaty change, involving the EU’s budget and voting laws; readiness by current net recipients of EU funds to forego subsidies; readiness by fiscally conservative countries to expand the EU’s own resources. You cannot fund Ukraine's access through bilateral transfers, the mechanism used for the recovery fund. The EU requires a proper federal-level funding source.

Christian Lindner will not always be the German finance minister. Poland may one day have a prime minister not as thin-skinned as Tusk, and not as nationalist as the previous lot. Or maybe they will. What we struggle to see is the readiness to accept treaty change. That requires a level of trust the EU has lost over the years.

On this subject, Andrew Duff has produced an excellent paper in which he outlines the minimum reforms necessary. It really is a minimum.

The cohesion funding mechanism needs to change. But so much else needs to change along with it. The way the EU functions right now is not suitable for a union as large as it would be if Ukraine were to join, along with Moldova and countries of the western Balkans that are waiting in the EU’s antechamber. The voting procedures would not be suited to a union that large, the European Parliament needs to be able to propose legislation, and, most importantly, the procedure which the EU can use to abandon the unanimity principle that still prevails in several policy areas like foreign policy needs to change. The existing mechanism, the so-called passerelle clause, has not worked because it requires unanimity to abandon unanimity. Once unanimity is gone, it never comes back. You cannot run a union with 35 member states, or thereabouts, with everybody using their veto rights for rent extraction, an art Viktor Orbán has perfected.

With Ukraine, a large country would join. This would change the dynamics of EU voting procedures in many ways. Population size plays an important role in the current procedures. What currently protects the interests of Germany in particular is the clause that a qualified majority needs to surpass a threshold of 65% of member states’ population share. Germany plus one other big country and a couple of small-to-medium sized countries constitutes a blocking minority. That would shift dramatically with enlargement. It would also shift the delicate political balance between the east and the west. The UK is gone. The east enlarges.

Duff also notes that unanimity needs to go for the accession process, except the final decision. None of this can conceivably work with the current size of the EU budget at 1% of European GDP. It is legitimate to express a desire for enlargement, or some other political project, without knowledge of how to fund it. What you cannot do is be generally in favour of EU enlargement to Ukraine, and at the same time insist on EU fiscal red lines. Fudging your way through is not going to work. This is why any serious debate on Ukrainian accession would have to be accompanied by an equally serious debate on treaty change. But we see no appetite for such a debate in the EU institutions. Which leaves us to conclude that they are not serious about Ukrainian accession, and that this is largely an exercise in virtue-signalling.

It’s difficult to deny that the EU has a China problem. The union’s most important outside trading partner has turned into an existential problem for some of the key industries of the future, like cars or renewable energy infrastructure. At the same time, the EU has deepened its own import dependency on China, according to recent research from the Peterson institute.

But it would be an equally serious mistake to see this as all about China, as opposed to economic and industrial policy decisions the EU has made too. There is, we think, a risk of this happening. We noted, for instance, a recent interview in Het Financieele Dagblad with Wopke Hoekstra, where the China issue was a major theme. Hoekstra is the outgoing climate commissioner. He will likely return to the European Commission this year as the Dutch nominee. Hoekstra is also part of the centre-right EPP. His own views, to a certain extent, reflect those of the EU's biggest political group.

In the interview, Hoekstra acknowledged what he regarded as internal failings of the EU: labyrinthine bureaucracy, and the lack of a single, functional capital market. We would agree these are both problems. But if dealing with these internal problems is the expressed preference, the revealed preference is more to go after China. Progress on the capital markets union has been crawling along. Tariffs on Chinese electric cars have been swift by comparison.

One way of seeing it is that the fixation on the China problem is a mirror image of our fixation on immigration. When we have difficult issues that need resolving, it is easier to blame foreigners, or some other outside force, than acknowledge our own failings. Even if, like Germany, you might be worried about the implications of angering such an important partner, pointing the finger at China beats singling out someone who might vote for you. Or yourself.

Instead, the real core problem is that we have fallen behind, and done so because our economic and industrial system is stuck in the past. The Chinese electric car, battery, and solar companies that now dominate these markets are relatively new, and there are a lot of them. The US’s tech giants are more consolidated, but have also sprung up quite recently.

If you look at the largest European firms, in contrast, it really is the old continent. Most either date back more than 50 years themselves, or were derived from other firms that do. The trifecta of corporations, unions, and governments we have built does not easily allow for new entrants. This is not sustainable when you need them to gain a foothold in new technologies.

Konjunktur, as the Germans call it, is not the problem. Konjunktur is the notion of various external economic factors descending upon the business cycle. Conjunctural downturns are normal, and are usually addressed by monetary and fiscal policy. Structural slumps are much rarer. They fall into the category of the over-predicted. We often find out, to our surprise, that tomorrow we are sober after all. Most slumps are not structural.

But the one Germany is experiencing is, because of two irreversible shifts – in technology, and global demand. Germany’s economic system is too dependent on manufacturing industry, and its political system never knew anything else than to feed it. In our lead story, we wrote about the meltdown of the government coalition in the east German state elections. Last week we wrote about the fall and decline of ThyssenKrupp. The two issues are indirectly linked. As FAZ wrote on Saturday, in the steel industry, everybody sits in the board room: politics, works councils and trade unions. The steel industry is the embodiment of a system known as Rhenish capitalism. It is a system where politics runs business.

This is no longer working at ThyssenKrupp, and increasingly less so elsewhere. ThyssenKrupp’s future will be as a slimmed-down producer of highly specialised steel, a market segment that requires deep technological know-how. We will find this will happen to cars, to machine tools and to chemicals as well. It is means fewer, more specialised companies. In the absence of diversification, it means a structural slump. The decline of the SPD, visible in this weekend's results in Saxony and Thuringia, is the mirror image of that shift.

The political choices in Germany are between a left that is still stuck in the industrial past, and a right that blames foreigners. The FDP and the Greens at one point offered competing versions of a politics that looked to the future, but both reverted to bad old habits whilst in government. All politics exists inside the system. There is no debate whatsoever about resilience, robustness, diversification, renewal. No one there is thriving on chaos.

A gridlocked political system is an integral part of a structural slump. Germany is not a country where a Javier Milei could get elected and succeed. The constitutional court would stop him. Nor do we see cross-party support for reform as in 2003, when the German political system agreed the beggar-thy-neighbour policies that have now run their course.

In other words, it’s not conjunctural. It is a historical phase, like the early modern period. It will play out.

Europe’s response to Israel’s war in Gaza is mindbogglingly weak compared to its strong position it took with Ukraine. The Jewish community is such an integral part of European politics and the media, yet European states seem to be of no help to end this war, but lost in the either-you-are-with-us-or-against-us polarity of the conflict.

Instead of normalisation, the Middle East is now bracing for a war that has no ending and a significant risk of escalation. The fighting in Lebanon and in Gaza continues and the West Bank is rapidly approaching boiling point. Ceasefire talks between Israel and Hamas are going nowhere. This week, Israel’s military started a campaign in the West Bank.

Where is the prospect for peace? The two-state solution, the only thing European states agreed on, has disappeared into the background. Inaction and apathy best describes what we see in Europe, diverted with other things closer to home. The US remains the main arbiter, yet Joe Biden’s team is weak, and elections are looming. Prospects for anything dramatically different from the status quo are slim. Donald Trump's top foreign policy advisors warned that the strategic relationship between the US and the UK would be at risk should the Labour government ban arms exports to Israel in protest of its conduct in the Gaza war. In other words, Europe, you are on your own. Germany probably never questioned its military support to Israel.

Yet, the war-mongering continues. Statements and actions of Israel's national security minister Itamar Ben-Gvir and finance minister Bezalel Smotrich received worldwide condemnation, but to what effect?

Europe is hopelessly divided over how to respond. Josep Borrell proposed sanctioning Israeli ministers for hate speech and incitement to war crimes. But there is no majority of member states to back such a proposal. Euronews reported that the Irish and Slovenian foreign ministers have so far backed the proposal, with Spain and Belgium also calling for more stringent sanctions against violent settlers.

At yesterday’s meeting of EU foreign ministers in Brussels, Ireland insisted that the EU must rethink its relationship with Israel. This war is against Palestinians, not Hamas, Micheal Martin told the press. The International Court of Justice ruling that Israel’s occupation of Gaza and the West Bank is unlawful obliges the EU to take action. This cannot mean business as usual, Martin insists. Ireland and Spain have been pressing for reviewing the association agreement between the EU and Israel. But disunity prevails. To some EU countries this may come as a relief and a fig-leaf to hide behind inaction. What a frail position to be in for a union that was built to cement peace between former warring countries in Europe. Somehow Europe seems to be missing out on exporting its expertise on this most precious of all public goods.

Syriza is no longer what it used to be. This party rose to power under the charismatic Alexis Tsirpas, who led the country through the Greek debt crisis and various bailout programmes. They managed to replace the traditional Socialists as the main opposition party but already lost support under Tsipras, who then resigned to give way for a new leader. But so far the new leader, Stephanos Kassalakis, only accelerated the downhill trend, due to internal power struggles. The first poll after the summer break gave them 8.3%, putting them into fifth place.

The party is engulfed in its own version of a Greek drama. The old guard of Syriza politicians has either left to form a new party, or challenged Kassalakis over his unilateral decisions. Kassalakis is from Florida and won the leadership contest with a blitz social media campaign and a promise of reform. He reshuffled power relations inside the party, which has been contested by the old guard. But Kassalakis plays the party against its grass roots, insisting that he was voted into the leadership position by party members, not the leadership. So far he succeeded to avert a successful confidence vote against him. But for how long?

Macropolis writes that support for Kassalakis is at an all-time low in all organs of the party. His surprise move to replace the head of Syriza’s parliamentary party, Sokratis Famellos, with his close ally Nikos Pappas, did not go down well. Famellos has been standing in for Kassalakis, since the party leader does not hold a seat in parliament. Famellos insisted to put Kassalakis proposal to a vote, which he then won but only with 17 out of 35 votes.

Since then there are rumours of a confidence vote against the leader. Kassalakis warned any potential defectors that they would commit a major crime against democracy if they were to deny Syriza its democratically given place as the main opposition party. It is not the only incident. There had been walkouts in a recent meeting of the party’s political secretariat and only 34 out of 300 backed Kassalakis’ reform proposals on a recent meeting of the central committee. The next meeting on September 7-8 is likely to be the scene of another showdown, as former minister Pavlos Polakis, who was suspended from the team after an outburst in a parliamentary committee, has signalled that he will be considering a leadership challenge.

Kassalakis, meanwhile, seems to be enjoying this, saying that these frictions are part of the process of fundamental party reform. Further deflections look inevitable. The drama continues.

Migration to Europe from the Middle East and Africa may move around, but it is impossible to stop completely. This summer, migrant arrivals to Italy from northern Africa are down sharply compared to last year, having dropped by 66%. It is a political boon there for Giorgia Meloni. But it is now a political headache for Pedro Sánchez in Spain.

Arrivals to the Canary Islands have increased sharply, rising by 154% year-on-year. The islands’ regional president warned that as many as 150,000 could arrive, after 20,000 already did this year. It is now the fastest-growing irregular migration route from northern Africa into Europe. Along with Spain’s African exclaves of Ceuta and Melilla, the Canaries offer a relatively direct, but perilous, route to Europe, via Mauritania, Senegal, and the Gambia.

It becomes a source of pressure for Sánchez from both the Spanish opposition and some of his putative allies. Recently, he narrowly avoided a summons to appear in front of parliament to explain the situation. This was after a tied vote in the Spanish Congress of Deputies’ Permanent Deputation. It saw Carles Puidgemont’s Together for Catalonia side with the opposition PP and Vox parties. Sánchez also received criticism from the left-wing Podemos for the opposite reason of intimating irregular migrants. 

Both the PP and Together for Catalonia have their reasons to go after Sánchez on migration. The PP has to head off the far-right Vox party, as well as new entrant Se Acabo La Fiesta, or Salf in its short form. Vox and Salf have both adopted harder-line rhetoric on the issue. Blaming Sánchez also diverts attention from an inter-regional dispute over distribution of unaccompanied migrant minors. This issue is pitting the Canaries and Ceuta, regions where the PP are in government, against other PP-governed regions on the Spanish mainland. In Together for Catalonia’s case, they have to deal with the Catalan Alliance, a new far-right and strongly anti-immigration Catalan separatist party.

What this also goes to show is the futility of the approach we have taken in Europe so far. Sánchez has decided to respond by getting in on the act. He was recently in Mauritania, the Gambia, and Senegal. His objective was to try and find ways to work with countries and block these routes.

To be fair to Sánchez, these countries probably don’t want to be a base for organised crime either. But from a Europe-wide perspective, this, or the earlier Tunisia, Libya, and Turkey deals, are not sustainable solutions. There are simply too many routes from the Middle East and northern Africa to Europe to close all of them permanently, especially with conflict and political instability.

In Spain’s case, renewed fighting in Mali has worsened the situation. We could have a widening conflict in the Middle East next, another flare-up in Libya’s civil war, or worsening climate-related disasters in the Sahel. These of course also drive wars and migration towards Europe.

Germany’s centrist political parties have essentially given up on fighting the three east German state election, of which two are held this coming Sunday. They are focused on the terror attack that took place in the west German town of Solingen last week. A Syrian refugee is accused of committing the murder of three members of the public during a street festival on Friday night. Olaf Scholz and Friedrich Merz, the opposition leader, will get together to see whether they can agree on a tightening of immigration laws, something Scholz has so far resisted.

What happened in the Solingen was not a problem with the existing laws, but a failure by the CDU-led government of North-Rhine Westphalia to implement them. The alleged killer was on the list of refugees earmarked for expulsion, but as happens in so many cases, bureaucratic and legal delays got in the way.

Merz is demanding the following: permanent border controls, in other words an end to the Schengen free-movement, no permanent residence rights for refugees that enter from safe third countries, an end of fast-track naturalisation, and an end to dual citizenship. We know that Merz’s ideal would the abolition of the right to asylum, which would of course be a breach of the Geneva convention.

Tagesschau makes the point that the only way for Merz to implement any of this is if he went into a coalition with the AfD. Since he has ruled this out, we consider Merz’s initiative to be idle posturing.

Scholz is offering a crackdown on gun laws, which is fine, but not the reason why these attacks keep on happening. At the very least, they would need to invest in the police, another part of the public sector that has been a victim of debt brake-inspired public spending cuts.

In the meantime, the AfD and especially the Wagenknecht party are making gains in the opinion polls. The latest Insa poll has their joint support at 27.5%. These are two parties outside the political firewall. To get anything done would require all the other parties to work together.

One of the more Kafkaesque features of European politics is the profusion of bureaucracy to try and reduce the previous bureaucracy. Cutting red tape is an idea everyone likes in theory. But it is one which runs into political obstacles in practice. You come to realise that almost every rule has someone who has lobbied for it, or at the very least someone lobbying against it. Much easier to keep the red tape-cutting theoretical by setting up a committee to identify what is to be cut at some unspecified point in the future.

This is what has happened with one of Italy’s latest attempts to sort out its Byzantine administrative system. Ease of doing business is a serious problem for Italy, a fact widely recognised in Italian politics. During Mario Draghi’s premiership, the government passed a law with the intention of identifying and eliminating unnecessary duplication in the system.

No prizes for guessing what happened next. As Sabino Cassese says, the law from Draghi’s time in office delegated responsibility for doing this to the government. Giorgia Meloni’s government has subsequently kicked the can down the road to the individual administrations, who are supposed to publish reports every three years.

It’s hard to tell who this exercise really benefits on its own terms, except for the Italian paper industry. Worse yet, without action, it’s actively counterproductive. Instead of using their resources to do what they are supposed to do, now you have an extra task on top of all the other tasks.

But it also lays bare why cutting administrative burdens goes beyond just identifying it as a problem. It is a misalignment of costs and benefits. The benefits are long-term, diffuse, and in the aggregate. Costs fall on individual people and groups harder. Genuinely trying to get rid of the laws that ultimately cause bureaucratic deadlock almost always produces people, in the system or outside of it, who find some essential reason for doing something. It is easier to make it cosmetic.

Unfortunately, numerous politicians promising a simpler state, only not to deliver it, won’t just have an economically corrosive effect. It will contribute more to a feeling of disillusionment with politics. Italy is already relatively far along that process.

It will be the case elsewhere in Europe too, as this reflex is not limited to Italy. One FDP minister in the current German government, for instance, decided that his big red tape-cutting drive would involve not requiring hotels to take customers’ identification details. Aside from the fact that there are obvious reasons why this particular rule exists, it is completely trivial.

This has been an extra-ordinary election year in Europe, where election results deviated from what used to be or what had been expected by the polls. In the UK, power was handed over to Labour after 14 years of Tories. In France, Emmanuel Macron surprised everyone with his decision to dissolve the National Assembly, ending up with three large groups and no majority in the assembly. Complicated multi-party coalition talks are the norm in many European countries, but it is a first for the French Fifth republic. In Belgium, which holds the record for lengthy federal government formation talks, this year’s elections also produced some surprises. To us the most notable one is that for the first time in some 40 years, the Socialists did not win in Wallonia.

The political landscape has changed everywhere in Europe. There is a general drift towards the right in all member states. The worst fears of the far-right winning elections did not materialise neither in the European elections, nor in France or Belgium, though only just. The Rassemblement National won the European elections in France but failed to win the legislative snap elections due to tactical voting. In Belgium, Vlaams Belang came second in Flanders, despite polls predicting that it would come first. The European elections in June did see the ID and the eurosceptic ECR group advancing, though not enough to secure a majority for a coalition on the right. In Portugal where the far-right was quasi-non-existent before, it achieved a remarkable third place, jumping up 10pp from the previous election results to achieve 18% in March legislative elections. And in Austria, the upcoming elections promise the far-right Freedom party with their zero-migrant policy a victory. If all those anti-immigrant parties come to power with zero-migrant policies, this could be the end of Schengen as we know it.

But there are limits to what far-right parties can do politically. How hard it is for a far-right party to form a coalition government? Geert Wilders found out in the Netherlands, where he had to retreat into the background of the four-party coalition he managed to form, despite having won those elections. Jordan Bardella also has to revise his plan to become prime minister after an alliance between the left and the centrists prevented him from winning this summer's French legislative elections.

Germany separates between eastern states and western states, divided over the war in Ukraine. The far-right AfD and the Sahra Wagenknecht party on the left are now likely to win most votes in the upcoming local elections in Eastern Germany.

We also have seen some parties at the risk of disappearing as fast as they emerged. In Greece the left Syriza is falling apart after a new leader took over from Alexis Tsipras. The Five Star movement in Italy could face the same fate, while Ciudadanos has already been decimated in Spain. Will the same happen to Emmanuel Macron’s centrists once he is gone in 2027?

All those first-ever moments show a political landscape on the move and a volatile electorate. Welcome to turbulent times in a geopolitically challenging world. Bob Dylan's song the times they are a changin' is the closest to describe what we are about to witness.