Normally, the circumstances Europe is in now should be fodder for the continent’s left. Low real-wage growth, unhappiness with corporate profits, and a general anti-establishment mood would normally play into their hands. But this, broadly, hasn’t happened, with some notable exceptions, like in France. Instead, the left has in many countries been almost anonymous, or shifted itself beyond recognition.

One of the major issues for Europe’s left is that immigration has emerged as a dominant theme. In Spain, for instance, a recent survey by 40db for El Pais showed that 57% of Spaniards now believe the country has too many migrants. The proportion of people saying they are concerned about immigration is now 41%, 16pp up.

It is especially prevalent amongst younger men, who disproportionately vote for far-right parties. There are enormous gaps too between young men and young women in various attitudes towards immigration, such as whether immigrants receive too much welfare or cause crime. On both questions, the difference in opinion is so large that it is as if, on immigration at least, young Spanish men and women are living in a different world.

The most obvious casualties of this generational, and gender, shift in attitudes are the Spanish left. Divisions and pseudo-anonymity within Pedro Sanchez’s government have not helped. But this new focus on immigration in Spanish politics, thanks to higher numbers of people trying to reach Europe via the Canaries, is also likely to be hurting them. Thanks in part to the old left-wing party Podemos splitting off too, Sumar, labour minister Yolanda Diaz’s party, is now at 8%, compared to 12% in Spain’s recent elections.

But Spain isn’t the only country where this has happened. Ireland is an even more extreme example. Whilst overall attitudes to immigration in Ireland remain positive, according to a report earlier this year from the Irish economic and social research institute, they have declined, in line with other European countries. The proportion of people saying immigration is one of their top two worries in ESRI’s surveys has also increased sharply, from 3% in July 2022 to 14% in June 2023. This possibly dovetails with worries about the pressure immigration places on housing, the number one political issue in Ireland by a significant distance.

It has also hurt the left there. Earlier this year, Sinn Fein were the most popular party in Ireland by quite some distance in most opinion polls. The left-wing party’s support drew a lot from anger about the housing crisis. But over the course of this year, it has fallen significantly. The party now polls well behind Fine Gael, the leading party in Ireland’s government.

Instead, it seems like the only way to make success as a left-wing party is by adopting anti-immigration tropes oneself. Sahra Wagenknecht’s party in Germany is the best example of this. She has managed to buck the slow slide of Die Linke, the party she was once part of, into irrelevance.

Even that, however, is no guarantee of success. Part of the issue for the left in Europe is that parties further to the right have poached many of their ideas on economics, whilst combining it with a tougher line on immigration. Michel Barnier’s government raising taxes on businesses and the ultra-wealthy, whilst appointing a hard-right interior minister, is a case in point.

On 6 October, 2023, the day before the terror attacks, Israel’s government was confident that it brought peace to the Middle East and that it is succeeded in normalising relations with its Arab neighbours. What happened to these assurances? Israel extended its war from Gaza to Lebanon, and it eventually will target Iran. Arab nations offer a two-state solution as precondition to normalisation without finding a partner in Israel’s government. Their societies are split between the elites and their commitments to Israel and empathic solidarity with Palestinians. Peace seems a long way off.

Western allies of Israel have been victims too. Their governments were unable to contain the conflict or press for a solution together with Arab states. Their words and deeds drifted apart, tarnishing their country’s international reputation due to its double standards and inability to solve moral dilemmas.

One domain where this plays out in full is arms deliveries. Last weekend Emmanuel Macron got attacked by Benjamin Netanyahu after suggesting an arms embargo on Israel. Shame on them, is what Israel’s prime minister had to say to Macron and other EU politicians that agree with Macron. Netanyahu's office responded to Macron’s interview by saying that any country that did not stand with Israel was supporting Iran and its allies and proxies. This public admonition, and the expectation from Israel that its allies go along with whatever its strategy is, contains the seed for more troubles to come.

In this interview, Macron did what he usually does, talking frankly about something sensitive without having prepared for action, risking the message backfiring. The political backlash came not only from Israel but also from Macron’s own party. The speaker of the house, Yaël Braun-Pivet, said that Israel should not be disarmed and stay in full capacity to defend itself. Macron’s comments were seized by politicians both on the left and the right, who are finding Netanyahu’s fierce response understandable.

Macron’s suggestion of an arms embargo also does little to deter Israel from its military actions in Gaza or Lebanon. Nor will it stop the US supplying Israel with more weapons. It even emboldens Netanyahu politically at home, as Israel’s leader who can admonish a French president in public the way he did, and get away with it. How did Macron allow himself to be talked to like this? Dignity and humiliation is a big thing in the Middle East, it seems to have little value in western democracies.

Macron could have chosen a different time and way to deliver his message. Other EU states changed their arms delivery strategies much more quietly. None of them would go as far as talking about a broad arms ban like Macron did. The UK chose to suspend some 30 arms deliveries that it found that could be used for violations against international law. Germany also quietly shifted its deliveries to Israel to include more non-ambiguous defence items. Regardless, the biggest arms support come from the US, where support in Congress remains strong and a stop to arms deliveries looks unlikely under either of the two presidential candidates.

Over this war, Europe is risking not only its reputation but also partners in its closest neighbourhood, the Middle East. Will Arab states want to do business with partners like these? Even before 7 October, European businesses had a hard time getting deals off the grounds there. Prepare for the economic impact of the political ineptitude demonstrated by European leaders during this war. And the one nation that stands to benefit from all this is China.

One lesson from the EU’s experience with the recovery fund should be that there are no shortcuts to fiscal union. The much-vaunted Hamiltonian part of the plan was directly issuing EU debt. This was supposed to command a sovereign-like yield. But it has not transpired that way. Instead, yields are considerably higher than for German bunds, the most sought-after euro-denominated sovereign bonds.

The problem is a basic one - these bonds are not sovereign. The premium sovereign borrowers, especially those in the developed world, can get for their debt derives from their taxation powers. In countries that are too weak and unstable to do this, you do not see such a premium. Moreover, unlike many other debtors, a sovereign state usually won’t disappear, even if it runs into financial trouble.

This is not the character of the EU’s own bonds at all. They are paid for out of the EU’s own multi-annual budget. It has to be negotiated by its member states, via unanimity. If the EU runs into difficulties making repayments because the member states don’t agree on the budget, it is the EU itself which would experience the consequences and not them. This is because the bonds are not jointly and severally guaranteed.

But this non-sovereign character is causing another problem: liquidity. As Eva Schram, writing for Het Financieele Dagblad, reports, this has been a major issue for the EU’s bonds. One problem is the small issuance, meaning that the market for them is less like Germany’s, and more like the Netherlands.

A bigger practical issue, however, is that the programme the EU’s debt is linked to is temporary. The recovery programme will not be running beyond 2026, despite the ambitions of more than a few people to make it permanent. Being able to roll over the debt then depends on what countries decide to do in these budgetary negotiations. You then have uncertainty over what happens to the entire market: will it actually exist, and for how long?

This is a fundamental reason why, in our opinion, the recovery plan itself is not a template for a future fiscal union. To set up something serious would require investor certainty that there will still be supply and demand for the assets they are holding further into the future. This kind of certainty is antithetical to the temporary nature of these programmes. Reforming this would require a change to the EU’s own political decision-making structures, something there is no appetite for now.

If Donald Trump were to win the US elections and become president in January, he could strike a deal with Vladimir Putin over Ukraine and Iran. This may be the scenario that Benjamin Netanyahu is hoping for. It may not be what the US voters decide, nor what the Europeans had in mind.

Geopolitics is about spheres of influence and relative power amongst nations. Proxy wars allow large powers like the US and Russia to measure their relative strengths in parts of the world far away from their voters. China has chosen economic rather than military engagements abroad as their way to convey power internationally. This may change if they decide to invade Taiwan.

Not only are international powers striving for influence. Regional powers are demonstrating their prowess by interfering in affairs of neighbouring countries either politically, economically or militarily as part of a quest for regional dominance. Lebanon is a prime example where Saudi Arabia, Iran and Syria all play their role. Thanks to Israel at its border, it also offered some international leverage with western powers.

One of the regions that is about to grow in strategic importance for such geopolitical power battles is the Arctic. We have been writing about the significance of the Arctic for Russia’s sphere of influence already years before its war in Ukraine. The melting of the ice and the new power balance since Russia’s invasion has increased its significance.

Liselotte Odgaard, a senior fellow at Hudson Institute, gave us a reminder of what is at stake in her article for Politico. She warns that China and Russia have been working on a strategic foothold in the region for more than a decade and that the US and European states are ill prepared for the security implications.

The Arctic is important for Russia to credibly threaten the US with nuclear weapons. In a nuclear exchange, Russia could fire missiles from its submarine bases near the Kola Peninsula into the poorly surveyed airspace of Greenland. Low visibility also makes those missiles hard for Nato and the US to detect and counter those strikes. Since its invasion of Crimea, Russia has been building up its military but also economic capacities there. Arctic states in Europe have their priorities elsewhere, however.

A recent joint venture between Russia’s state-owned nuclear energy firm Rosatom and China’s Hainan Yangpu NewNew Shipping company means that the two countries will now cooperate on building infrastructure and ice-class container vessels to operate a year-round Arctic route. Their cooperation could challenge Nato forces, whose infrastructure in the Arctic is not prepared for hybrid warfare.

The only Arctic-adjacent Nato states that are sharing significantly in the security burden are Canada, Norway and Denmark. Iceland completely relies on the US for its security, Finland and Sweden have their focus on the Baltic sea, and the UK already struggles to fulfil its AUKUS obligations under the nuclear submarine contracts with the US and Australia. Most of them are small countries with a defence budget that is not up for the challenge.

All those investments into icebreakers, submarines, unmanned vehicles, and communications and data infrastructure cost money. It comes while many defence budgets are focused on bolstering Ukraine against Russia. A strategic rethink for the Arctic does not have the urgency of the war in Ukraine, but it too needs long-term planning.

One of the most effective ways you can deal with illegal migration is to open up more channels for migration of the legal kind. Whether it’s more work visas or asylum programmes, giving people better odds of finding their way to your country safely and legitimately reducing the chance of them doing it otherwise. It acts as a way to regularise people who might have arrived illegally before, bolstering integration. For Europe’s ageing populations, bringing in migrants is also a necessity, as is ensuring they are integrated properly.

This is the theory at least behind the approach Giorgia Meloni’s government has taken so far. A tougher approach to boat crossings, and third-country deals, has been balanced with attempts to open up legal migration. The Italian government has already increased its annual quota for non-EU work permits. Now it wants to pass a new law that will simplify other elements of the process.

The new decree, approved in cabinet yesterday, aims to alleviate the bureaucratic nightmare that can accompany the process of applying for work permits. It used to be that there was one day of the year where an employer could apply for a work permit online: click day, in Italian. You can imagine what this does to the IT system tasked with handling the requests.

Now the idea is to open up multiple application points through the year. According to Alfredo Mantovano, the Italian Cabinet Secretary, the eventual aim is to get rid of them altogether: going from a beaten-up old car to a Maserati, in his words. Another major change is giving workers already in Italy another 60 days in the country to find a new job once the contract they entered Italy under expires.

The question, however, is whether the Italian government has done enough. Simplification is helpful. So is increasing quotas. But Italian work permits are still massively oversubscribed. Meloni’s government has made 425,000 work permits available for the 2023-2025 period. That is about two-and-a-half times the previous period’s figure. But, at the time, the government estimated that there would be almost two applicants for each permit. For the first year alone, about 600,000 employers signed up early.

This suggests that the carrot side of the carrot-and-stick approach is not quite generous enough. It is also a problem for Italy’s wider economy, which is practically screaming for labour in some places. Istat’s latest unemployment figure, for the month of August, is 6.2%, the lowest it has been since 2007. Italy’s labour force participation rate is now well above pre-pandemic levels too. This is, of course, the national average. In several regions of northern and central Italy, including Lombardy, Veneto, Tuscany, and Emilio-Romagna, unemployment has dropped to full-employment levels.   

After Israel killed Hassan Nasrallah, Hezbollah's leader, last week, Iran retaliated by sending 180 missiles towards Israel last night. Most missiles were intercepted by various air defence systems and in cooperation with allied forces. Only a few were reportedly injured by falling shrapnel.

By attacking Israel directly, Iran gave in to the pressure to act, and abandoned its principle of getting directly involved in Israel’s war. Up to this point, it has preferred to leave this to militias it backs in Lebanon, Iraq, Yemen, and Gaza. With Hezbollah seriously incapacitated by Israel’s attacks, however, Iran stepped in at last to preserve their alliance. Now they stand front-and-centre against Israel and the US. Where will this conflict go from here?

On the face of it, the attack was about restoring Iran’s image of power. Iran sent more ballistic missiles than in its attack on Israel in April. According to the Iranians, it also included hypersonic missiles for the first time. As was the case in the April attack, it is not necessary for those missiles to hit their targets in Israel. Just the demonstration of their capacities alone is enough for its supporters to cheer. It is intended as a signal that the axis of resistance, or ring of fire as they call Iran and its proxy militias in the region, that they are not deterred by Israel’s military superiority.

But behind the scenes, the relationship between Iran and its militias is changing. Nasrallah mismanaged the conflict and Hezbollah paid a high price for it. Iran had to step in, even if they wanted to stay out. The rules of the game are changing as the conflict evolves. It is now up to Israel to decide on the next step. 

In Lebanon, the crucial question is whether the people will rise against Hezbollah or side with them. The more Israel’s operations resembles previous invasions on their land, the more Lebanese people will see Hezbollah as on their side too. Striking a cease-fire deal with Lebanon would prevent further radicalisation, but that would have to involve some recalibration of power between the different sectarian groups in Lebanon as a precondition. 

Israel promised a significant retaliation against Iran for last night’s missile attack in the coming days. All options are on the table, but Israeli officials said that it will be more significant than Israel’s limited response to Iran’s attack in April. They may aim for some oil refineries, or even Iran’s nuclear facilities or targeted assassinations. Iran promised to escalate its response if Israel were to attack.

How far could this escalation go? There is a bigger conflict on the horizon. Russia may enter the scene, due to its shared interests with Iran. Or China. For both Russia and China, the conflict represents an opportunity to enter the region, especially if western allies make a mess of it.

The IDF has started its ground invasion of Lebanon. Israel's stated objective is ensuring that 65,000 Israeli citizens can return to their homes and live in safety close to the Lebanese border. This is a crucial moment of escalation in Israel’s military operations. Neither the UN nor the Biden administration in the US seem to have any leverage to stop the escalation and violation of international law.

Over the past week, air strikes killed over 1200 in Lebanon, including the head of Hezbollah and several of its senior commanders and many civilians. Israel sent text messages and flyers to people in South Lebanon telling them to evacuate their homes. There are now over 1m people displaced inside Lebanon. Depending on how long Israel’s invasion last and what its ultimate goal is, those people will have nothing to return to.

Israel widened its war goals from Gaza to Lebanon, with Iran looming next. Over 24 hours, there have been simultaneous strikes in Gaza, Syria, Yemen, and Lebanon. At display is Israel’s technological superiority and highly sophisticated infiltration of Hezbollah, intended to send a message to every resistance organisation in the region: don’t even dare to attack us again. This is Israel’s deterrence strategy, using force as the first and ultimate response.

Israel may achieve a military victory by destroying Hezbollah’s capacities to strike. But how can this lead to a different future than past invasions? As it always is with the all-powerful and the powerless, the latter will find other ways to compensate for their lack of power to defend their land. As long as Israel is not ready to acknowledge their borders and sovereign rights, terrorists will have a cause to fight for, and Hezbollah will have a reason why it cannot disarm. 

Nearly one year after the 7 October terror attack, Israel seems determined to continue its war against all militia groups in the region. Benjamin Netanyahu’s war rhetoric and military campaigns are incensing, humiliating, and provocative to its adversaries, with all blame pointing to Iran. Iran is refraining from retaliation for now, out of weakness, but perhaps also strategically. But for how long? Russia has entered the scene and could come to help Iran. What if there is a nuclear weapons deal that turns Iran into another North Korea? It is not such a far-fetched scenario.

Not only are there geopolitical implications, it could also affect US itself. The US is sending a few thousand troops to the Middle East to defend Israel if necessary. With the upcoming elections there in about 5 weeks, the military escalation could boost the chances of Donald Trump over Kamala Harris. Will Israel decide on the outcome of US elections? If Trump were to win those elections, we are likely to enter a larger geopolitical game of power and influence, with Russia and China on the other side.

A trial starts today against Marine Le Pen over an EU parliament assistants affair. Le Pen and 26 other former and current French politicians and MEPs stand accused of embezzling EU funds to finance assistants who worked for Le Pen’s party in France rather than on EU affairs which they were paid for. The allegations cover payroll finances over the 2004-2016 period. Le Pen has repeatedly denied any wrongdoing. In its defence, the Rassemblement National argues that there are cultural differences between France and the EU at play: in French political parties being paid is the exception, and voluntary work is the norm. Being an assistant and party member are thus not a muddled affair but should also not be incompatible as such.

A guilty verdict could be a game changer for the party. If Le Pen is found guilty after a two month trial, it could jeopardise her presidential election bid in 2027. She could face a maximum sentence of 10 years behind bars and €1m in fines. She also could be barred from public office for five years, which would prevent her from running in the presidential elections.

Le Pen counts on using this trial to her advantage. Could what worked for Donald Trump work for her in Europe? Le Pen is a former attorney, and counts on being present as much as possible during the trial. She will get maximum media coverage, and a free opportunity to stylise the trial as an attempt to shut herself and her party out of power. Even in a case of a guilty verdict, the consequences are considered manageable according to the party and herself. No one is irreplaceable, and Jordan Bardella has what it takes to take over, Le Pen assures.

Those trials, as justified as they may be, can backfire politically at the national level. We have seen in the case of Trump how he gathered strength and support through all his trials. It can also pitch national interests against European ones. The base of staunch Le Pen supporters could grow. And, if found guilty, it might prepare the path for Bardella to run in the next presidential elections. What it will most certainly not do is to shrink the support for the far-right in France or in Europe.

Volodymyr Zelensky did not get what he came for - a victory plan. He got some glide bombs and another battery of Patriot missiles, and some $5.5bn in security assistance by the end of the year, plus a further $2.4bn beyond.

The political reality is that neither the US nor Germany, Ukraine’s two largest supporters, are willing to risk an all-out war against Russia by giving Ukraine what it would need to achieve a Russian retreat from its occupied territories. But for now they will be supporting Ukraine in the attempt to stem against Russia’s advance. The US elections are probably not going to be the pivotal moment that people expect. The big shift already happened some time ago.

We agree with Timothy Garten Ash’s assessment it would take a big immediate shift in western support for Ukraine to achieve any outcome that can plausibly be called victory. We concluded some time ago that this big shift is not going to happen. We also agree with his assessment that Kyiv will probably be forced to agree to unfavourable terms to end the hostilities at some point next year. 

But we think it is wrong to frame this debate in terms of victory and defeat as if no other options exist. Victory for Ukraine is defined in terms of Russia retreating from all occupied territories. Defeat is framed as a complete Ukrainian surrender: Russia's annexation of four oblasts, the military disarmament of the Ukrainian state, and no Nato membership. Virtually every realistic option sits between the two.

What can stop a war in Lebanon? Israel’s military is getting ready for a ground invasion after a pager and walkie talkie attack targeting Hezbollah members last week and an intense three-day bombing this week that has killed at least 600 people. Hezbollah launched in response a projectile at Tel Aviv, the first time it has ever done so. More than 90,000 have been displaced within Lebanon already. The US and the UK have sent troops to Cyprus, where the UK maintains a large airbase, to prepare for an emergency evacuation from Lebanon.

A ground invasion may only be one of those credible threats used by Israel as part of ongoing negotiations. Entering Lebanon would be madness for Israel and play into the hands of Hezbollah, which has been training for this kind of guerrilla-type war. It would get the Lebanese army involved too, as well as external powers like Iran. Iran so far refrained from retaliating against Israel for the killings of senior commanders. But a war in Lebanon could force them to enter the conflict more directly.

Over the past several days, Israel demanded that Lebanese living in the south evacuate as they extended their operation in that part of the country. Israel wants to secure a corridor inside Lebanon across the border so that around 65,000 Israeli citizens can safely return to their homes near the border. Hezbollah has said it will stop its strikes if Hamas agrees to a Gaza ceasefire. But it is not only about that. The borders between Lebanon and Israel has never been properly settled even after Israel stopped its occupation of southern Lebanon in 2000. The idea that the Lebanese are to give up their land to ensure that Israelis can live close to the border was repeatedly rejected by Lebanon. So was Israel’s grip on a small piece of land, the Shebaa farms, which it occupies and claims as part of the Golan Heights. 

Yesterday at the UN General Assembly, France and the US gathered support behind their call for a 21-day ceasefire with a plan to settle the Lebanon-Israel border issue. Their plan is supported by the EU, Saudi Arabia, Qatar, the UAE, Australia, and Japan. No details have emerged about those plans, so it is impossible to judge how serious they are. It is likely to be rejected by Hezbollah if it infringes on the sovereignty of Lebanon. We are still in the upping the ante phase, driving up the price for any settlement. And the west looks too weak to make an offer none of the sides can refuse. The least they could to to map out a path forward of what can be done rather than focussing on all those red lines.