FT : China’s comeback turbocharges base metal prices

China’s comeback turbocharges base metal prices
Industrial commodities, led by tin, have surged more than 20 per cent in three months

Industrial metals have ripped higher since November on bets that China’s reopening will boost demand for raw materials.

A group of “base metals” led by tin, zinc and copper have surged more than 20 per cent in three months, further supported by the US Federal Reserve signalling a slowdown in the pace of interest rate rises and a softening in the US dollar, which importers use to buy commodities.

Star performer tin has rocketed almost 80 per cent to $32,262 per tonne, the highest level since June, while copper prices have rallied by a tenth this month to $9,329 per tonne on brighter prospects for China’s economy following the easing of its zero-Covid policies.

Investors have largely shrugged off concerns about slowing manufacturing activity in the face of unprecedented coronavirus outbreaks in Asia’s largest economy.

“At the beginning of the year everyone came in very nuanced, saying we were going to have a [global] recession, that copper would dip in the first quarter and then go higher, but we’ve done exactly the opposite,” said Al Munro, a broker at Marex. “Money flow is what has driven metals in 2023 thus far, and that’s about a China reopening story.”

Mining industry executives say the current situation marks a stark reversal from only a few months earlier when sentiment was weak but physical buying from Chinese customers remained strong.

“It has shifted between where we were that perceptions were bad and on-the-ground was good, to now perceptions are better but on-the-ground is uncertain,” said Richard Adkerson, chief executive of Freeport-McMoRan, one of the world’s largest copper producers.

Jeremy Pearce, who leads market intelligence at the International Tin Association, said that much the same could be said of the metal used primarily to solder electronics.

“The issue is all demand indicators are very negative as global manufacturing purchasing managers’ indices have been nosediving,” he said. “The demand picture is the opposite and disconnected from the price.”

Further fuelling the rally for some base metals has been a spate of supply disruptions from protests roiling copper and tin producers in Peru and production snags in Chile, to Indonesia stalling export license renewals for tin smelters ahead of a mooted tin ingot export ban.

The price of tin, which is becoming increasingly strategic because of its use in solar panels and microchips, has also been pushed higher by speculative buying by China, leading to a build in inventories.

Despite weak demand, last year China swung from net exports of 9,000 tonnes in 2021 to net imports of 20,000 tonnes, according to Amalgamated Metal Trading, a metals brokerage.

“To what extent is it traders or governments building the inventories up?” asks Daniel Smith, head of research at AMT. “If it’s the government then they may sit on it longer”, which would keep prices higher longer term.

FT : Kering picks Italian designer as Gucci creative director

Kering picks Italian designer as Gucci creative director
French luxury group appoints Sabato de Sarno to reverse trend of underperformance at its biggest brand

Kering has named Italian designer Sabato de Sarno as the new creative director for its biggest brand Gucci as it seeks new direction after a period of underperformance.

Gucci brings in more than half of Kering’s annual revenue and three-quarters of operating profit, making the appointment a key decision for investors in the French luxury group, which is owned by the billionaire Pinault family.

The Italian brand has increased revenue more slowly than larger rivals like LVMH-owned Louis Vuitton and Hermes in recent years, and it will be up to De Sarno to reverse the trend.

In a statement, Kering said De Sarno, who is now fashion director of men’s and women’s collections at Valentino, would join the group soon, although it did not provide a date. His first show will be in September in Milan.

Kering chief executive François-Henri Pinault welcomed the change. “With Sabato De Sarno at the creative helm, we are confident that the house will continue both to influence fashion and culture through highly desirable products and collections, and to bring a singular and contemporary perspective to modern luxury,” he said in a statement.

Like his predecessor at Gucci when he was named to the post, Alessandro Michele, De Sarno is not a household name in the fashion industry. He has played a key role at Valentino in recent years as the longtime creative director’s right hand and has also worked at Prada and Dolce & Gabbana.

Michele left abruptly in November after seven years. His vintage-infused, colourful designs worn by celebrities like Harry Styles powered several years of double-digit sales growth and nearly tripled revenue at Gucci, putting it on the cusp of reaching €10bn in annual sales before the pandemic.

Michele’s efforts to rekindle the magic that attracted droves of young buyers especially in China foundered despite repeated attempts at a turnround.

Gucci’s woes have led Kering’s share price to lag rivals, despite the two-year luxury boom during which affluent buyers in the US and China drove the industry’s sales to new heights. Its shares have fallen by almost 15 per cent in the past year, compared with a 31 per cent rise for Hermes and 15 per cent for LVMH.

The group’s other brands include Saint Laurent, Bottega Veneta and Balenciaga, and it also has a growing eyewear business. It will report annual results on February 15.

>>> Weekend Papers Summary

Weekend Papers Summary

.NEW YORK TIMES
-Officials released video of the fatal beating of Tyre Nichols, a Black man, by officers who are also Black and now face murder charges. The footage does not show what prompted the officers to pull over Mr. Nichols, who can be heard saying, “I’m just trying to go home.”
-From Sacramento to Memphis, Tyre Nichols Cut His Own Path
Social media posts show that Mr. Nichols did not trust prevailing systems. Yet, a friend says, he also considered trying to change policing from the inside.
-Memphis had avoided most bitter divisions over policing. Until now.
Across the US, the Tyre Nichols video has been met with sorrow, anger and exhaustion.
-Court releases video of Paul Pelosi hammer attack, adding chilling details.
Police body camera footage, surveillance video and other material disproved but could not stop right-wing conspiracy theories about the attack.
-At least 7 people were killed in an attack in Jewish Area of East Jerusalem
The police said a 21-year-old man with a handgun shot people on the street at close range, then fled and was killed himself by police gunfire.
-Republicans re-elect head of the RNC after a heated challenge. Ronna McDaniel won a fourth two-year term to lead the Republican National Committee, fending off a heated challenge after the party’s poor midterm showing.
-The man who pepper-sprayed officer on Jan. 6 gets nearly 7 years in prison. Officer Brian Sicknick died a day after the Capitol riot. Another man initially charged in the assault was sentenced to time served.
-Pro-Trump rioters clashing with the police outside the Capitol on Jan. 6, 2021. Analysis: Tanks alone won’t turn the tide of the war in Ukraine. To ensure the Ukrainian military can use all the Western-provided equipment effectively, the US will have to step up its training program.
-Russia outlawed an independent news site and a rights group, stifling voices critical of its invasion.
-The National Archives does not have the ability to enforce its request that former presidents and vice presidents scour files for classified documents.
-An expert panel votes for stricter rules on risky virus research. The White House will decide whether to adopt the panel’s recommendations on so-called gain of function experiments.
-Crime has diminished in New Yoirk City’s subway after an increased police presence. Gov. Kathy Hochul and Mayor Eric Adams said major crimes fell 16% in the three months since more officers were assigned to the system.
-What will happen when AI makes BuzzFeed quizzes? The site announced plans to use tools from the creator of ChatGPT to create content. Former quiz writers aren’t surprised.

THE FINANCIAL TIMES
-Japan and the Netherlands will restrict exports of chip manufacturing tools to China after reaching a deal with the US designed to make it harder for the Chinese military to develop advanced weapons. Several people familiar with the trilateral agreement said the countries reached an agreement on Friday after a final round of high-level talks at the White House. The accord comes three months after Washington imposed unilateral export controls that barred US companies from selling advanced chip making equipment to Chinese groups.
-With Ukrainian forces having made some decisive advances before winter set in, Ukraine and its allies are now racing to establish the new tank force in time for a possible offensive later this spring. However, it could take several months for the bulk of the force to arrive, and it could be considerably smaller than Kyiv had hoped. Some military analysts fear that western tanks may not prove to be the game changer that many Ukrainians and their supporters imagined — even if the Ukrainians are talking up the potential.
-It is easy to view the US government’s latest legal challenge to the power of Big Tech as a case of too little, too late. Years of almost negligent disregard from the trustbusters has allowed a handful of companies to entrench themselves in the booming digital markets. But as another lawsuit from Washington lands, there is a sense that something significant is shifting, and that even relatively small victories could go a long way.
-A top American air force general has predicted that the US and China will probably go to war in 2025, in the most dramatic warning yet from a senior military officer about the likelihood of a conflict over Taiwan. General Mike Minihan, head of US Air Mobility Command, said the two military powers were likely to end up at war because of a series of circumstances that would embolden Chinese president Xi Jinping.
-A Palestinian gunman killed at least seven Israelis in a shooting outside a synagogue on the outskirts of Jerusalem on Friday, as tensions continued to soar in the wake of the deadliest Israeli raid on the occupied West Bank in years. Police said the gunman, whom they identified as a 21-year-old resident of East Jerusalem, arrived outside the synagogue in Neve Ya’akov around 8.15pm local time as worshippers celebrated the Sabbath.
-US prosecutors have asked a New York judge to prevent Sam Bankman-Fried from contacting his former FTX colleagues and from using encrypted messaging apps, claiming the crypto company founder communicated with potential witnesses in his looming criminal trial.
-The army food scandal broke as Ukraine was pleading with its western partners to supply it with tanks and other critical arms supplies for the fight against Russia’s invasion forces. The country’s bid to become an EU member state will depend on credible rule of law and anti-corruption reforms. It was the first domino in a cascade of stories that would lead to resignations and sackings of senior government officials, as well as the biggest government shake-up since the start of Russia’s full-scale invasion.
-Russia’s president Vladimir Putin is pardoning convicts to allow them to fight in Ukraine as members of the Wagner paramilitary group, the Kremlin has admitted. Russia also dismissed the US Treasury’s move to label Yevgeny Prigozhin’s group, which is playing an increasingly prominent role on the front lines as Putin’s full-scale invasion enters its 12th month, as a “transnational criminal organization”.
-Wall Street banks including JPMorgan and Goldman Sachs are warning that Washington is heading for the riskiest debt ceiling confrontation since 2011, when the US lost its risk-free credit rating. The fight over the debt ceiling could be the most important issue facing the US economy in 2023, according to a JPMorgan note to clients on Friday.
-Salesforce appointed three new directors to its board on Friday as the software giant seeks to fend off criticism from activist investors and turn round a business being hit hard by the broader tech downturn. The San Francisco-based group has appointed Arnold Donald, former chief executive of cruise operator Carnival Corporation, Sachin Mehra, chief financial officer of Mastercard and Mason Morfit, chief executive of ValueAct Capital, an activist fund that is also an investor, according to people familiar with the matter.
-This week Gautam Adani, one of the world’s richest people, and his sprawling eponymous business empire have been in an unwelcome and costly spotlight. Hindenburg Research, a US-based short seller known for targeting Twitter and electric vehicle start-up Nikola, said it had taken positions against listed Adani Group companies such as Adani Enterprises and Adani Green Energy. Hindenburg accused the group of “pulling the largest con in corporate history”.

NY POST
-Protests over the police beating death of Tyre Nichols turned violent in Times Square Friday night as several arrests were made, including of a man who stomped on the windshield of an NYPD police cruiser. At least three people were handcuffed in the Crossroads of the World after getting into some sort of confrontation with police in the street. In another chaotic scene, one of the protesters hopped on the hood of a police car and cracked the windshield with his foot. Several police officers quickly moved in to grab the man and then they led him through the crowd into a police precinct, footage shows. The Times Square protest was one of several that erupted in the Big Apple as the sun went down. Others originated in Union Square and Grand Central Terminal. While the night began peacefully, tensions between protesters and NYPD officers grew as it got later into the night.
-Tesla Chief Executive Elon Musk met two top officials in President Joe Biden’s administration on Friday in Washington to discuss how the car maker and the Democratic president could work together to advance electric vehicle production and speed electrification of US vehicle networks.
Musk met John Podesta, a Democratic stalwart who serves as senior adviser to the president for clean energy innovation, and Mitch Landrieu, who oversees infrastructure spending, a White House spokesperson told Reuters.

WSJ : Trump Kicks Off 2024 Campaign Travel With New Hampshire, South Carolina Vi

Trump Kicks Off 2024 Campaign Travel With New Hampshire, South Carolina Visits
Former president is hitting early primary states as the GOP ponders whether to move on

WEST PALM BEACH, Fla.— Donald Trump will embark Saturday on his first campaign trip of the 2024 presidential race, visiting two early primary voting states as he seeks to brush back calls from some GOP insiders and voters for a new party leader.

In Salem, N.H., the former president is scheduled to speak to hundreds of Republicans attending the state party’s annual meeting. In the afternoon, he will appear with supporters in Columbia, S.C., a state that is home to a pair of possible rivals for the nomination.

The trip amounts to the first test of Mr. Trump’s campaign, which he launched more than two months ago—earlier than some Republicans thought was wise—only to stay largely out of public view since. It also comes as a handful of national polls show him recapturing some ground he lost in recent months, though new polls this week in South Carolina and New Hampshire showed a healthy lead for Florida Gov. Ron DeSantis. The governor hasn’t entered the race, but is widely expected to do so after the state legislative session ends in May.

Mr. Trump is also set to regain access to Facebook, a potent fundraising and messaging tool he harnessed in past elections, though it remains to be seen how he will use the platform this time around. His Facebook and Instagram accounts were suspended in the wake of the Jan. 6 Capitol riot. He was also recently invited back on Twitter but has yet to use it, preferring his Truth Social platform.

Many Republican leaders across the country continue to urge Mr. Trump to step aside, citing the controversies and legal problems he has faced and disappointing results in recent elections—including losses in November by Trump-endorsed candidates in some key Senate and governor races. That sentiment was felt at a Republican National Committee meeting in California this week, where Ronna McDaniel was re-elected as party chair after a race that featured a heated debate over the party’s direction.

Bill Palatucci, a longtime RNC member from New Jersey, said he wants to see the party move past Mr. Trump and thinks that is already in the process of happening. But he added the party needs to retain the voters Mr. Trump attracted and “convince the former president to be constructive, rather than destructive” as the 2024 presidential field takes shape.

“His influence is fading, but it’s unclear if it’s fading fast enough,” said Mr. Palatucci, an ally of former New Jersey Gov. Chris Christie, who has suggested Mr. Christie could enter the race.

“I think a lot of us want to see him be the nominee,” Carrie Almond, an RNC member from Missouri, said of Mr. Trump. “But we also want to see who else is out there.”

Rep. Russell Fry (R., S.C.), who last year defeated an incumbent Republican who had voted to impeach Mr. Trump over the Capitol riot, said voters are craving a return of the former president’s policies. “He’s got an incredibly loyal following,” said Mr. Fry, recalling a rally Mr. Trump held in the state last March that attracted thousands of people despite inclement weather. “He’s going to continue to see that level of enthusiasm.”

Mr. Trump, 76 years old, is the only declared candidate but is expected to get competition in the coming weeks and months. Mr. DeSantis has come closest in hypothetical matchups and has attracted the most party leaders and major donors wanting to turn the page.

New Hampshire Gov. Chris Sununu is another potential contender and has been critical of the former president. In an interview, he said Mr. Trump shouldn’t expect to dominate his state as he did in the 2016 primary, following a loss in the Iowa caucuses, noting other hopefuls have already visited.

“They’re coming to New Hampshire because they know the first-in-the-nation primary has to be earned. You can’t take anything for granted,” Mr. Sununu said.

A University of New Hampshire poll released this week showed Mr. DeSantis getting 42% of likely GOP primary voters, vs. 30% for Mr. Trump. Others lagged well behind. A South Carolina poll also showed Mr. DeSantis with a large advantage.

In South Carolina, Mr. Trump will be received by some of his staunchest backers, including Gov. Henry McMaster and Sen. Lindsey Graham. The state’s other Republican senator, Tim Scott, has been mulling a possible presidential bid. So, too, has former Gov. Nikki Haley, who has said she is close to making a decision. Neither is expected to attend the Trump event, held at the State House with about 500 people invited.

“President Trump will unveil his leadership teams, which will show the significant support he has from grass roots leaders to elected officials,” his spokesman, Steven Cheung, said. “He has continued to dominate in the polls and there is no one else who can generate the type of enthusiasm and excitement like President Trump.”

FT : Football’s multi-club owners start to feel growing pains

Football’s multi-club owners start to feel growing pains
Investors attracted to running a network of teams must win over fans and sporting regulators

Bill Foley’s budding football network is in expansion mode. The US billionaire made his first move into the sport in December, buying English Premier League club AFC Bournemouth for £120mn. Less than a month later, he added a stake in French team FC Lorient, a decision he said would help turn his new venture, Black Knight Football Entertainment, into a “leading multi-club football operator”.

Foley is just one among a host of US investors seeking to tap into the football boom by snapping up stakes in several clubs. The model was pioneered more than 15 years ago by energy drinks maker Red Bull but has recently become a mainstream investment play, with half the clubs in the Premier League now linked to counterparts elsewhere through their owners.

But as the multi-club structure gains traction, it is also beginning to ruffle feathers among fans and regulators. Foley’s arrival as a shareholder at Lorient was met with an open letter from one of the club’s fan groups, warning the club’s heritage was at risk.

“FC Lorient has boasted for years that it’s a family club with a strong identity,” they wrote. “Why then would an American, who knows nothing of our history, be allowed to buy shares?”

Days later, the mood worsened with the transfer of Dango Ouattara, Lorient’s star player, to Bournemouth.

Other investors are also encountering some pushback. John Textor, whose Eagle Football Holdings owns a 40 per cent stake in Crystal Palace, was greeted with protest banners at one recent home game following a report in the Financial Times that he was planning to list the group in New York.

“Multi-club ownership. Stock market gambling. Textor, we don’t trust you,” the message read. Eagle Football also owns Brazil’s Botafogos, Belgian tier-two club Molenbeek and acquired French team Olympique Lyonnais in December for €800mn.

Football clubs have increasingly turned to investors for capital since the coronavirus pandemic battered balance sheets. European governing body Uefa estimated that top-division clubs lost €7bn due to the pandemic over the 2019/20 and 2020/21 seasons.

Around 200 football teams belong to a wider ownership group operating a multi-club model, according to CIES Sports Intelligence, an increase from 111 before the pandemic.


That number is growing fast. Qatar Sports Investment, which has owned Paris Saint-Germain since 2011, recently bought a 22 per cent stake in Portuguese title challengers SC Braga, and has its sights on an ambitious move into multi-club ownership this year.

Miami-based 777 Partners is awaiting approval for its acquisition of a majority stake in Hertha Berlin. It also has a minority stake in Sevilla FC and Melbourne Victory, and owns Genoa, Standard Liège, Red Star FC in Paris and the Rio club Vasco da Gama.

Advocates of the multi-club model say it can bring financial stability, with benefits including shared central costs and a broader platform of teams across markets to attract sponsors.

“It is possible that global brands would be more attracted to a global club network even if [the clubs] are individual brands,” said 777 managing partner Joshua Wander. “We do believe that the overall multi-club strategy will help these clubs prevent long periods of distress.”

However, fans of Red Star FC protested against the 777 takeover. Wander said: “It’s really a small percentage of fans that are opposed to us [and] in most cases we’ve been welcomed with open arms.”

Some investors have looked to implement a joined-up game philosophy so that players and young coaches can easily move from one club to another within the group as they develop. At youth level, clubs can also share data and any insights into talent development.

For owners, the multi-club model also hedges the risk of relegation, the practice of demoting teams for poor sporting performance over a season. In the US, leagues are typically closed and the same teams play against each other every year, whereas European clubs fight to avoid dropping to a lower division with greatly reduced income. Genoa was relegated to Italy’s second tier soon after being bought by 777.

“When you think about why not to invest in a football club, it’s relegation,” said Patrick Massey, a partner at Portas Consulting. “[But] if you invest in six clubs and one gets relegated, you still have five that haven’t.”

The same works in reverse — owning a handful of lower leagues clubs gives an investor a number of shots at promotion each year.

While there are few restrictions on investing in or owning clubs in different countries, there are rules on whether clubs controlled by the same entity can participate in the same European competition, such as the Champions League.

Industry executives say Uefa, which runs these competitions, is closely monitoring the trend.

Uefa’s latest report on the European club landscape found that multi-club ownership “is becoming more and more of an issue”. At a convention in November, Uefa said “regulation of multi-club investment [was] intensively discussed” . . . “with the aim to strengthen the protection of integrity and competitiveness of domestic and European club competitions”.

“I definitely think that the regulators will be considering this, because fundamentally how they consider the multi-club model is imperative — not just to protect sporting integrity, but also to keep the European football market free and open,” said Tim Bridge, head of Deloitte’s sport business group.

Some investors recognise that regulation is likely to rise up the agenda as more and more clubs join multi-club groups.

Wander of 777 Partners said: “My sense is in the coming year or two there’ll be a lot of engagement with global football governing bodies about what multi-club ownership should look like.”

Others, meanwhile, question whether clubs and sporting officials can afford to rebel against the model.

Jeff Luhnow, the former baseball executive who led the buyout of Spanish second division team Leganés through his investment firm Blue Crow Sports Group, said: “The multi-club model is drawing a lot of money and attention and interest into the game. I don’t see why any governing body would want to do anything to stop that.”

FT : Top US air force general predicts China conflict in 2025

Top US air force general predicts China conflict in 2025
Leaked memo from General Mike Minihan comes as tension remains high over Taiwan

A top American air force general has predicted that the US and China will probably go to war in 2025, in the most dramatic warning yet from a senior military officer about the likelihood of a conflict over Taiwan.

General Mike Minihan, head of US Air Mobility Command, said the two military powers were likely to end up at war because of a series of circumstances that would embolden Chinese president Xi Jinping.

“I hope I am wrong. My gut tells me we will fight in 2025,” Minihan wrote in a private memo to his top commanders obtained by NBC news and seen by the Financial Times.

“Xi secured his third term [as Communist party general secretary] and set [sic] his war council in October 2022. Taiwan’s presidential elections are in 2024 and will offer Xi a reason,” Minihan wrote. Minihan added that the 2024 presidential elections in the US would create a “distracted America” that would benefit the Chinese president.

“Xi’s team, reason, and opportunity are all aligned for 2025,” he concluded.

The memo comes as tensions remain very high over Taiwan, a democratically ruled country over which China has long claimed sovereignty. Minihan’s comments are the starkest prediction from a senior military commander and a rare instance of a top officer suggesting so clearly that the US would respond to a Chinese attack on Taiwan.

The comments come one week before secretary of state Antony Blinken is due to become the first cabinet secretary from President Joe Biden’s administration to visit China.

China has over the past two years been flying larger sorties of warplanes near Taiwan. Last August, the Chinese military conducted large-scale exercises that included firing missiles over Taiwan in response to then US House Speaker Nancy Pelosi visiting Taipei.

Underscoring the tension, Biden has on four occasions said he would order the US military to intervene if China attacked Taiwan. His warnings appeared to change a longstanding policy known as “strategic ambiguity” under which Washington does not say whether the US military would intervene in a conflict over Taiwan.

Over the past two years, several US military commanders have given rough timelines for possible Chinese military action against Taiwan. In March 2021 Admiral Philip Davidson, then head of US Indo-Pacific command, said China could attack Taiwan by 2027, in comments that elevated concern in the US and around the Indo-Pacific about a threat to Taiwan.

Last October Admiral Michael Gilday, head of the US navy, said the Pentagon had to be prepared for military action at any time.

“When we talk about the 2027 window, in my mind that has to be a 2022 window or potentially a 2023 window,” Gilday told the Atlantic Council, in comments dismissed by some as a clumsy effort to remind the military that it always had to be prepared to fight at any time.

As head of Air Mobility Command, Minihan oversees air-related logistics across the US military. The four-star general previously served as deputy head of Indo-Pacific Command, which would be directly responsible for commanding US forces in any conflict with China.

Eric Sayers, a former Indo-Pacific command adviser, said Minihan had been at the “tip of the spear” in the Pacific for more than a decade and understood the China threat “better than almost anyone in uniform”.

“The language in the memo is stark and will make some uncomfortable, but memos of this sort are neither drafted for public consumption or as a sophisticated intelligence assessment of the potential for conflict,” said Sayers.

He said people should interpret the document as “controlled correspondence to Minihan’s subordinates that he expects them to act with a sense of urgency to enhance the command’s readiness”.

The Pentagon and White House did not comment.

FT : EU and US step up pressure for a Kosovo-Serbia settlement

EU and US step up pressure for a Kosovo-Serbia settlement
War is waking up western governments to the need for more vigorous diplomacy in the Balkans

The post-communist history of the Balkans shows that no regional quarrel, whether over territory, minority rights or national identity, lends itself to an easy solution. No sooner had Greece and North Macedonia overcome their differences over the latter state’s name than long-simmering problems erupted between North Macedonia and Bulgaria — and they are by no means fully solved.


To the north, Bosnia and Herzegovina is Europe’s most dysfunctional state, torn by differences between Muslim Bosniaks, Croats and Serbs. But the Balkan dispute to which the EU and US are devoting most diplomatic energy at the moment is that between Serbia and Kosovo, where tensions have been running high for months. Kosovo, pictured in the map above, is not recognised by Serbia as an independent state.

The impulse for this renewed effort comes from the recognition that Russia’s invasion of Ukraine, coupled with intensifying frictions between western governments and China, are raising the security stakes for the US and its allies in south-eastern Europe. Some countries in the region are, after all, already Nato members.

Democracy and authoritarianism
Michael Roth, chair of the Bundestag’s foreign affairs committee, summed up matters well in an article for Internationale Politik Quarterly, a German foreign affairs magazine. He wrote:

Russia’s war of aggression against Ukraine has woken up the EU from its geopolitical slumber . . . The return of war to Europe has made clear to us all that the stabilisation and integration of our neighbours to the east and south-east is first and foremost in our own interest . . . Meanwhile, in the western Balkans a clash of systems is raging between the liberal democracies and the authoritarian regimes of Russia and China.

In the view of Roth and like-minded European politicians, the EU has dithered for too long about helping western Balkan states on their path towards joining the 27-member bloc.

You could say, we’ve heard all this before — and it’s true, the region’s countries seem to be hardly any closer to full EU membership than when they first received the promise of entry in 2003. However, something may be changing.

Consider the French-German declaration issued last Sunday to mark the 60th anniversary of the Elysée Treaty that formalised reconciliation between the two countries. It expressed their “full and unequivocal commitment” to EU membership for western Balkan states, and also voiced a determination “to reach a comprehensive normalisation agreement between Kosovo and Serbia”.

Italy, too, is redoubling its efforts. On Tuesday Giorgia Meloni, who took over as prime minister in October, attended a western Balkans conference in Trieste. The EU must “develop a new vision of this region and place enlargement to the western Balkans among its priorities”, she said. “We cannot allow this strategic quadrant for our continent to remain outside the European common house for much longer.”

On the ground, the push for a Serbia-Kosovo settlement is being led by Miroslav Lajčák, a Slovak diplomat representing the EU, and Gabriel Escobar, the US state department official responsible for western Balkans policy. These two men have enormous experience of the region.

The 1972 West German-East German treaty: a model?
What are they proposing? The exact details are being kept under wraps. But according to Radio Free Europe/Radio Liberty, the initiative — sometimes known as “the French-German proposal”, because Paris and Berlin last year drafted its early version — does not go so far as to require that Serbia and Kosovo extend official recognition to each other.

In this sense it bears a certain resemblance to the 1972 treaty between West Germany and East Germany, which likewise didn’t include full mutual diplomatic recognition. In practice, however, the two German states did accept each other’s independence, and they set up what were embassies in all but name in each other’s capital cities.

Just as West Germany and East Germany agreed that neither could represent the other on the international stage, so a similar arrangement would apply to Serbia and Kosovo. Serbia would be required not to object to Kosovo’s membership of international organisations, such as the Council of Europe or Interpol, from which it has been excluded since it declared independence from Serbia in 2008.

As Shqipe Mjekiqi, a political science lecturer and former Kosovo government official, explains in this piece for the European Council on Foreign Relations, Serbia ought to welcome Kosovo’s entry into the Council of Europe, the continent’s leading intergovernmental human rights watchdog. In principle, it would strengthen guarantees of the rights of the Serbian minority who make up under 10 per cent of Kosovo’s mostly ethnic Albanian 1.8mn people.

Obstacles to a settlement
The reality, however, is that the EU-US initiative faces formidable hurdles. One is that Kosovo would be required to accept the establishment of an Association of Serbian Municipalities to provide for a degree of self-government in areas where Serbs form a majority.

Kosovo’s political classes have long resisted taking this step, claiming it would create a secession-minded monster akin to Republika Srpska, the autonomous Bosnian Serb entity in Bosnia and Herzegovina. However, US officials are making it plain to Kosovo’s negotiators that they regard this fear as exaggerated and that it is high time to give the Association the green light.

A second obstacle is that few Serbian politicians — including the one who matters most, President Aleksandar Vučić — show much willingness to make the key compromise needed for a deal: de facto acceptance that Kosovo is an independent state, never again to be under Serbian rule.

Tomislav Marković, a Belgrade-based writer, offers this explanation:

Serbia has never renounced the Greater Serbia nationalist ideology that led to the wars of former Yugoslavia. The one exception was the short premiership of Zoran Đinđić, but that was cut short by his assassination in 2003.

Would an offer of a faster track to EU membership be enough to sway the minds of Serbia’s leaders? Maybe not — public enthusiasm in Serbia for joining the EU has been slowly fading over the years.

A western stick instead of a carrot for Serbia
What about if the EU and US applied the stick, rather than the carrot, to Serbia? Western governments are deeply frustrated with Belgrade’s refusal to join them in imposing sanctions on Russia, and it is striking that some Serbian leaders sounded tougher this week in their criticisms of Moscow’s aggression in Ukraine.

Undoubtedly, they sense that EU membership might be withheld from Serbia as long as they maintain strong ties with Moscow and do not budge on Kosovo.

However, much of the Serbian public has a favourable view of Russian foreign policy, if only because of “the crude fact that Russia is simply not the west”, as Maxim Samorukov and Vuk Vuksanović write for the Carnegie Endowment for International Peace.

The argument that the prospect of EU membership can serve as an incentive for a deal for both Serbia and Kosovo runs into a serious problem. Each falls well short of the necessary EU standards on matters ranging from the quality of democracy and freedom of expression to corruption and organised crime. This is made crystal-clear in the European Commission’s most recent reports on Serbia and Kosovo.

A final difficulty is that five EU countries — Cyprus, Greece, Romania, Slovakia and Spain — have never recognised Kosovo’s independence, for reasons connected to territorial and ethnic disputes in their own countries.

Perhaps a Serbia-Kosovo settlement would help to overcome their reservations. But a long, hard road lies ahead.