9 December 2016   Leave a comment

Europe is beginning to debate the strategic implications of the election of Donald Trump.  His campaign remarks about demanding greater financial contributions from NATO allies led to serious questions about his commitment to the NATO alliance.  It is likely that some European states will increase their defense spending but there is also the risk that these increases will be made in an uncoordinated manner.  If the American commitment to European defense is viewed as problematic, the alliance faces a serious likelihood of significant deterioration.

The European Central Bank (ECB) has refused to give the Italian bank, Monte dei Paschi di Siena (MPS), any more time to recapitalize.  The decision means that Italy will have to bail out the bank to keep it from going bankrupt.  Under the rules of the European Union, no state money can be used to recapitalize a bank until bondholders take losses first.  The Italian government is currently so fragile after the resignation of its Prime Minister, Renzi, that it fears the political repercussions of forcing losses on the depositors of Monte dei Paschi.  The insolvency of MPS, however, poses serious risks to the Italian economy and other European banks.

American European allies are warning President-elect Trump not to align with Russia in supporting Syrian President Assad.  On several occasions, Mr. Trump has stated that Russia and the US have similar aims in defeating Daesh (the Islamic State) in Syria and Iraq.  The allies suspect that if President Assad remains in power, he will not ficus on defeating Daesh, but will rather use his power to put down any opposition to his regime.

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Posted December 10, 2016 by vferraro1971 in World Politics

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