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Primakov Readings

Western Societies’ Transformations: Foreign Policy Implications

Primakov Readings

9.6.2021

Cataclysmic events have always wide-ranging implications, which ultimately also touch foreign policy. It is too early in the day for predictions, but there are at least three areas that will rock our societies — both in the west and the east with foreign policy implications. I mean health, energy, and digitalization. The implications will be enormous. Let me just look at some of them with telling examples.

Health

Much has been said about the pandemic that is ravaging the world. The first thing that comes to mind is the fact that we – and I mean all – were unprepared although a future pandemic was predicted. The second thing is the exceptional speed vaccines were developed. 

Harsh criteria will be applied in assessing individual governments’ handling of the pandemic. Failure to protect the elderly and the vulnerable is one criterion, — excessive mortality rates speak for themselves. A second one is the organization of vaccinating the whole population, which does not only mean the roll-out of vaccines but also convincing people that only vaccination can stop the pandemic. The jury is still out, but not all developed countries can be proud of their report card. In the case of Finland 90 % of the population is willing to be vaccinated. It should be clear by now that vaccinating one’s own population is not enough. It is a truly global challenge.

As for the European Union it remains an achievement to have been able to order vaccines for all 27 countries proportionate to the population. This was both politically wise and the only tenable decision. Smaller countries could never have secured needed amounts of vaccines on their own. This is a case in point for European solidarity. 

But did Europe fail in the process of ordering and securing the timely delivery of needed amounts of vaccines? In comparison to the UK and Israel the answer is yes. The EU negotiated bureaucratically with a budget in mind. This probably slowed the process and consequently the delivery of vaccines. But it should be noted that the EU has recently concluded the world’s largest supply deal so far for 1.8 billion more BioNTech-Pfizer vaccines. I will be needed, because already now the probability of the need of a booster vaccination – that is a third jab — is discussed.

Lessons learnt. It seems evident that there is a need to increase the role of the EU in health care. The President of the European Commission Ursula von der Leyen has even spoken about a future Health Union. 

Energy and climate

The revolution-in-coming will be both swift and unprecedented. A green transformation will require a radical restructuring of the industry to meet net-zero emissions targets by 2050. A case in point is the wildly reported developments concerning Shell and Exxon Mobile. A court in the Netherlands has ruled in a landmark case that the oil giant Shell must reduce its emissions. By 2030, Shell must cut its CO2 emissions by 45% compared to 2019 levels, the civil court ruled.

The other remarkable case concerns the appointment of three board members against the will of the CEO of Exxon Mobile. One of the new board members is an executive versed in renewable fuels. She hails from Finland. Ms. Kaisa Hietala is the person who got the Finnish refiner Neste into renewables. 

Neste is not an unknown player in Russia. It is the single largest refinery outside Russia specialized in the Urals brand of crude. But it is more and more a company that today is the world’s largest producer of renewable diesel and renewable jet fuel refined from waste and residues plus introducing renewable solutions also to the polymers and chemicals industries.

As an Arctic country, Finland is particularly concerned about the Arctic region, which now is warming three times faster than the global average. Finland is committed to maintaining climate issues at the core of Arctic cooperation. In a recent presentation President Niinistö of Finland noted that “Reducing black carbon and methane emissions is essential – both regionally and globally.” Finland aims to reach carbon neutrality in 2035 and go carbon negative soon after.

The whole world is buzzing about green hydrogen, the ultimate fuel. In a sensational report from Irkutsk, we learnt a couple of months ago about lovkie rebjata as the Russians call streetwise youngsters, who are mining bitcoins on a semi-industrial base profiting from the low electricity tariffs of the region. Wouldn’t it be better that this abundant resource of hydropower would be used to produce green hydrogen?

A robust carbon pricing framework with anti-carbon-leakage measures is needed to support deep decarbonization of industry on the pathway to net-zero greenhouse gas emissions. The EU has announced that a Carbon Border Adjustment Mechanism (CBAM) will be operational by the end of 2022. This will be a daunting challenge for the Russian industry. This is yet another example of the EU as the leader in defining norms and standards in the world.

As to nuclear power there are not many countries left that build NPPs and even less countries that master the technology of building them. Finland will see its fifth reactor go on-line next winter after delays of more than a decade. The 1600 MW French built Areva – Framatome reactor will be the single largest one in Europe. The sixth NPP will be a Rosatom’s pressurized water reactor, which should be finished by 2028-29. The share of electricity produced by nuclear power in Finland is now 30 % and will rise considerably.

Meeting the ever-increasing demand for emission-free electricity without nuclear energy will be a daunting challenge for most industrial countries as the recently published net-zero road map of the IAE demonstrates.

It seems that the future of nuclear power will be in small modular nuclear reactors under 300 MW, which are inherently stable and easier to build. Today, due partly to the high capital cost of large power reactors generating electricity via the steam cycle there is a move to develop smaller units. These may be built independently or as modules in a larger complex, with capacity added incrementally as required. Although the trend seems clear it will still take some time before these types of reactors will go on-line because revisions of the regulatory framework are needed, too.

Digitalization 

The undeniable up-side of the pandemic is the forced quantum leap in digitalization. Not only distant learning and the ubiquitous home-office, but the need rapidly to rethink and adopt new procedures and technology. AI will be everywhere. All of this is possible and has worked rather smoothly in countries, which have the required infrastructure and digital culture. And there is no way back. Of course, seminars and conferences will return to participators being present, but not on a scale we were used to. The same applies for office work and to a certain degree to schools and universities, too. Time will show.

Trends which were visible before the pandemic have been accelerated. The use of cash has dropped dramatically, and it is only a question of time when cash – as we know it – will disappear to be replace by electronic money etc.

A case in point is the EU vaccination certificate to be introduced in July. These digital Green Certificates will be valid in all EU Member States. But before that all member states must digitalize their own vaccination records, and that will be quite an effort. My case in point is Germany, where the proof of vaccination is still provided manually and the case of Finland, where in a week after receiving the jab, I have received my national digital certificate, which is valid until the introduction of an EU-wide certificate. 

But the most daunting task in the rapid digitalization of all walks of life is twofold. It is data security and fighting cybercrime, especially the so-called ransomware groups and the task to manage the sheer and constantly growing amount of data. This is a challenge for the industry, but it is an even bigger one for the governments. It will probably figure prominently on the agenda of the upcoming summit in Geneva between presidents Biden and Putin.