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'Academics' Devotion to the Socialist Dream Looks More Like Self-Interest

December 3, 2018 in Economics

By Ryan Bourne

Ryan Bourne

Why are intellectuals and academics so hostile to capitalism?
Before the 2017 election, a Times higher education survey poll
found 54pc of higher education employees would vote for the
socialist Labour party. Just 7pc said they would support the more
market-friendly Conservatives. See a writer or poet on BBC Question
Time and you can confidently bet their view on almost any economic
issue will be pro-government intervention.

Twitter is little better. You’re treated to a deluge of
intellectuals carping about our economic system, or
“neoliberalism.” The rapturous intellectual reception
given to economist Thomas Piketty’s 2012 anti-capitalist tome,
Capital in the 21st Century
, was exhibit A of this enmity.

Market economies
overwhelmingly support important cultural norms such as freedom of
speech and association, which one might think intellectuals would
value. Yet this group seems determined to bite the hand that feeds
it.

At one level, this is baffling. As the great mid-century
Austrian economist Joseph Schumpeter noted, capitalism itself
created the modern intellectual class. There’s always been
thinkers and writers, but modern innovation has delivered markets
for books, newspapers, the internet and access to online journals
that give scope for vast additional reach and status.

The spread of capitalism has gone hand in hand with the
expansion of the university sector too. Market economies
overwhelmingly support important cultural norms such as freedom of
speech and association, which one might think intellectuals would
value. Yet this group seems determined to bite the hand that feeds
it.

For years classical liberals have pondered this mystery. Maybe
intellectuals hold different values, putting more weight on poverty
elimination or a more equal society? Markets cannot guarantee these
ambitions are fulfilled, after all. Yet, given the historical
record of planned economies against market ones, and consumption
inequality over time, markets clearly move us in the
“right” direction. Any honest intellectual parsing the
evidence must see this.

Others have mused instead over structural explanations. Perhaps
universities are biased in hiring anti-capitalists or there’s
self-selection into industries less exposed to market forces? Again
though, there’s little reason to believe these mechanisms
would hold across all major countries. If anything, universities
now are relatively more hostile to markets, even when as
institutions they have become more marketised.

No, it seems there is some underlying force that makes
intellectuals more pre-disposed to anti-market feelings. But
what?

American libertarian philosopher Robert Nozick posited a
hypothesis back in 1998. Intellectuals tend to be over-achievers at
school and university, he observed. Schools instill in us the idea
that rewards should be granted according to our intellectual merit,
particularly our ability to talk and write. The intellectual from a
young age not only saw higher grades, but the approval …read more

Source: OP-EDS

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Overhaul CRA? Why Not Eliminate It?

December 3, 2018 in Economics

By Diego Zuluaga

Diego Zuluaga

Sen. Bill Proxmire was no spendthrift. The long-serving
Wisconsin lawmaker, who replaced Joe McCarthy and remained in
office until 1989, was notorious for taking no campaign donations,
refusing reimbursement for business travel and voting against
pork-barrel projects in his own state.

Yet the 1977 Community Reinvestment Act, Proxmire’s signature
legislative achievement, is no example of efficiency. More than
forty years after its passage, policymakers confront a much-changed
U.S. banking landscape — one with which CRA is increasingly
incompatible.

CRA mandates that most depository institutions serve the credit
needs of the communities where they take deposits. Who could oppose
such a mandate? After all, it is undeniable that banks exist to
serve their customers. If they did not add value, their costs would
exceed their revenues and they would eventually go out of business.
So, as CRA intends, banks must serve their communities.

Clinging to an outdated
picture of U.S. banking will neither aid innovation nor safeguard
bank balance sheets.

But Proxmire’s CRA has gone much further than that.

For 41 years, it has instructed bank regulators — the
Office of the Comptroller of the Currency, the Federal Reserve, and
the Federal Deposit Insurance Corporation — to assess banks
on their CRA performance. How to measure whether banks are serving
their communities was never clear, however, and it has evolved over
time. CRA ratings initially focused on banks’ efforts to
bring credit to the places where they took deposits. From the 1990s
onwards, assessments have targeted results — that is, how
much lenders actually do in the places where they have offices,
branches and ATMs.

CRA focuses on loans to “low- and moderate-income”
communities. The aim is to encourage credit extension to the less
well-off and minorities, communities historically underserved by
the financial system.

How do regulators encourage such lending? CRA does not provide
for sanctions, fines or charter withdrawals in the event of
underperformance. But it does empower regulators to block bank
expansions, including new offices and, critically, mergers. Because
CRA ratings are public, activist groups can use them to extract
lending commitments from depository institutions, often using
heavy-handed tactics. This quid pro quo between banks and community
groups was the norm in the run-up to the financial crisis. Between
1992 and 2007, banks committed $4.6 trillion in CRA loans.

Did CRA contribute to the 2008 crash? That is a matter of
dispute, though activists did flaunt their ability to extract
lenient loan terms, including low down payments and interest-only
mortgages, from eager banks during the boom times. At a minimum,
CRA loans provided an enthusiastic, and ultimately misguided, drive
for more housing loans with the useful cover of “community
investment.”

Now the OCC is …read more

Source: OP-EDS

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Ukraine Isn’t Important for U.S. Security

December 3, 2018 in Economics

By Doug Bandow

Doug Bandow

Russia’s Vladimir Putin is ruthless when dealing with
adversaries — as when his navy shot up a Ukrainian vessel
seeking to enter the nearly enclosed Sea of Azov.

The facts appear to back Kiev, though no one should have any
illusions about Ukraine’s governance. Moscow has become
Washington’s chief bête noire. Yet America is vastly more powerful.
Moreover, the Russian Federation is not the Soviet Union reborn.
The former is neither a global nor an ideological competitor.

Nothing at stake in the
Russia-Ukraine conflict warrants the U.S. confronting a
nuclear-armed power.

Rather, much like a pre-1914 great power, Moscow demands respect
for its borders and interests. It certainly does not want to wage a
war with America, which it would lose.

Europe also is able to defend itself, possessing
10 times the gross domestic product and three times
the population. The fact that Europeans do not spend more —
Germany devotes a bit more than 1 percent of GDP to its military —
demonstrates that the continent really doesn’t fear Moscow.

However, stuck in a bad neighborhood, Ukraine wants on to
America’s defense dole. But Washington already is overburdened,
protecting prosperous and populous Asian, European and Middle
Eastern allies.

Kiev isn’t important for U.S. security: Ukraine was part
of both the Russian Empire and the Soviet Union, without much
effect on America. Ukraine matters no more today.

That sounds cold-hearted, but alliances and wars should be about
security, not charity.

Russia is determined to prevent Ukraine from joining militarily
with Moscow’s adversaries.

Nothing at stake in the Russia-Ukraine conflict warrants the
U.S. confronting a nuclear-armed power.

Washington’s chief responsibility is to protect the
American people, which means remembering John Quincy Adams’
famous admonition: The United States should be “the
well-wisher to the freedom and independence of all. She is the
champion and the vindicator only of her own.”

Doug Bandow is
a senior fellow at the Cato Institute. …read more

Source: OP-EDS

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How the Supreme Court Could Help Stop Police from Seizing Your Property with No Evidence of a Crime

December 1, 2018 in Economics

By Jonathan Blanks

Jonathan Blanks

In the Supreme Court on Wednesday, Indiana’s solicitor general
admitted under skeptical questioning from Justice Stephen Breyer
that his defense of Indiana’s civil forfeiture laws would allow his
state — or any state — in need of revenue to start
seizing the luxury cars of motorists caught speeding just five
miles over the limit if they simply passed a law allowing
themselves to do so.

Thankfully, that argument will not win at the court, but it
aptly illustrates how broadly police and prosecutors view their
prerogative to raise revenue and punish people via civil
forfeiture, often in ways of which the average American is
unaware.

Wednesday’s case, Timbs v. Indiana, isn’t atypical of
how broadly civil forfeiture already plays out, with police seizing
property in furtherance of the continued War on Drugs. Tyson Timbs,
for instance, was convicted of selling a few grams of heroin worth
a few hundred dollars to an undercover police officer.

Police and prosecutors
have a broad view of their right to raise revenue and punish people
via civil forfeiture instead of criminal courts.

As a result, he received a six-year suspended sentence
(including a year of home confinement) and five years of probation.
In addition to the sentence levied by the court, the state of
Indiana seized his 2012 Land Rover, worth an estimated $42,000, in
a separate action under the state’s civil forfeiture law.
Timbs challenged the seizure as a violation of the Eighth
Amendment’s prohibition on excessive fines, as the value of his
vehicle was about four times the amount of the maximum fine the
trial court could have levied against him (but it did not).

Although Timbs’ lawsuit prevailed in two lower state
courts, the Indiana Supreme Court noted that the U.S. Supreme Court
had never explicitly applied the constitution’s prohibition
of excessive fines to the states and, therefore, he didn’t
have a right to sue. Oral arguments made clear that Timbs will
likely win – but only on the question of whether the law applies to
the states, rather than on whether or not civil asset forfeiture
violates the constitution.

Nevertheless, the case is notable because it may provide an
eventual avenue of relief for other individuals to challenge local
governments when they seize property by means of civil forfeiture.
Local governments and police departments have used civil forfeiture
— as well as other fines and fees — to raise billions
of dollars in revenue via law enforcement, leading to what some
have dubbed “policing for profit.”

And, while Timbs had been convicted of a crime, the law does not
require a criminal conviction or even an arrest to …read more

Source: OP-EDS

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The 3 Things Trump and Xi Must Focus on at the G20

December 1, 2018 in Economics

By Ted Galen Carpenter

Ted Galen Carpenter

The much-anticipated bilateral session between President Donald
Trump and Chinese president Xi Jinping at the G-20 meeting in
Buenos Aires has created a rather unique situation. There appears
to be more attention to that “sideline”
encounter than to the G-20 event itself. The prevailing assumption
is that the bilateral encounter is more significant, and
may represent the last opportunity to head off a full-blown trade
war between the United States and China that threatens to derail
the global economy.

There is no question that the trade issue is important, and that
both countries have engaged in dangerous posturing by implementing
escalating rounds of tariffs. However, there are two problems with
focusing so heavily on the trade issue as the central topic for
discussion between the two leaders. First, the bilateral economic
relationship is extremely complex, involving not only obvious
issues such as tariffs, but related matters including China’s
currency policies and Beijing’s stance regarding intellectual
property rights. Although a summit meeting might result in modest
progress on such differences, a true breakthrough on those issues
is unlikely from a single meeting, no matter how high level.
Observers may be investing too much hope in the outcome of the
summit despite the growing trade confrontation between the two
economic giants.

Second, the trade issue (and even the broader economic
relationship) is not the only worrisome source of trouble in the
bilateral relationship. The two leaders need to address their
differences on at least three important security matters: North
Korea, the South China Sea and Taiwan. Trends on all three topics
are increasingly troubling, if not alarming.

The widespread optimism that prevailed following President
Trump’s June 2018 summit with North Korean leader Kim Jong-un
in Singapore has faded markedly. Washington still insists that
North Korea must embrace complete denuclearization as the outcome of the
diplomatic process. A growing number of experts in the United
States and elsewhere conclude that such an objective is unrealistic , and that if Washington clings
to that position, a peaceful solution is not possible. Trump and Xi
should have a candid discussion about how to avoid such a
disastrous impasse.

The United States needs to exhibit more realism about the
denuclearization issue and display a greater willingness to proceed
toward more limited goals, such as negotiating a peace treaty
formally ending the Korean War, establishing diplomatic relations
with Pyongyang and extending the informal mutual moratorium on
North Korean nuclear and missile tests and U.S.-South Korean
military exercises. China needs to make clear what measures it is
willing to take to leash its North Korean client if America pursues
such conciliatory initiatives. Beyond that …read more

Source: OP-EDS

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Both Trump and John Roberts Are Wrong About Politicized Judges

November 30, 2018 in Economics

By Ilya Shapiro

Ilya Shapiro

President Trump’s pre-Thanksgiving rant about an
“Obama judge” who had ruled against the
administration’s new asylum rule set off an argument about
the judiciary that has lasted into the post-prandial moment.

Chief Justice John Roberts, in an unusual public statement, felt the need to come to the
defense of “an extraordinary group of dedicated judges doing
their level best to do equal right to those appearing before
them.” Trump took to Twitter to correct Roberts and assail
his old bugaboo, the U.S. Court of Appeals for the Ninth
Circuit.

In the feud between
President Trump and Supreme Court Chief Justice John Roberts, both
are wrong. Judges aren’t partisan hacks, but they do have different
approaches to jurisprudence.

Never mind that the judge was technically correct, that the
executive branch can’t change plain statutory text to disallow
asylum applications filed outside a port of entry. This president
has faced plenty of adverse rulings—by judges appointed by
both Republican and Democratic presidents, including his own
nominee, who recently ruled against him regarding Jim Acosta’s
press pass. But that’s no different than any president, including
especially Barack Obama, who lost more (and more unanimously) at the Supreme Court than any of his predecessors.

Never mind too that the Ninth Circuit should indeed be split up,
but not because it’s liberal. The west-coast
federal appellate court generally is the most-reversed court,
although not by much and not every year. In the travel-ban
litigation, it was the mid-Atlantic Fourth Circuit that was
most vociferously against President Trump,
while the Ninth Circuit engaged in methodical statutory
interpretation that was measured even if ultimately ruling the same
way.

No, the larger point is that, even as Roberts is right that
(nearly all) judges approach their trade in good faith, there are
stark jurisprudential differences that, in the most controversial
cases, do map onto partisan divisions.

The chief justice should be commended for trying to reduce the
politicization of the courts. The president too easily conflates
judicial philosophy with political bias. But there’s no escaping
the fact that, if there’s a case with ideological salience, the
party of the president who appointed the judge deciding it
matters.

That’s why we’ve seen the ever-escalating battles over judicial
confirmations. Otherwise, why would Republicans have held up
Merrick Garland’s nomination to the Supreme Court? Why would
Democrats have pulled out all the stops against Brett Kavanaugh
(who voted with Garland more than 90 percent of the time)?

The selection of judges has become one of the most
hyper-partisan issues in American public life. That’s why voters
consistently say that judicial appointments are …read more

Source: OP-EDS

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Does It Really Matter If North Korea Denuclearizes?

November 29, 2018 in Economics

By Doug Bandow

Doug Bandow

Despite the June summit between President Donald Trump and North
Korean Supreme Leader Kim Jong-un, Pyongyang has yet to allow
America to dispose of its nuclear arsenal. As a result, a rising
chorus of policymakers are declaring the prospective
denuclearization deal to be dead, merely a smokescreen for the
North’s continued nuclear development. Weirdly, among the
most fervent critics have been liberals who a year ago were
excoriating the president for threatening war.

In fact, convincing the Democratic People’s Republic of
Korea to disarm, after all three ruling Kims devoted so many
resources to developing nuclear weapons—and based their
political legitimacy on defending their nation from dangerous
enemies—was always a long-shot.

Even if Kim is in principle prepared to disarm, as President
Trump and South Korea’s President Moon Jae-in insist, he
won’t do so without receiving benefits and assurances in
return. President Trump styles himself a master negotiator; surely
he realizes that giving away one’s leverage at the start is
no way to get a good deal. Had Kim done so, he could have found
himself in the position of Star Wars’ Lando Calrissian when
Darth Vader announced: “I am altering the deal. Pray that I
don’t alter it any further.”

Either way it isn’t
America’s problem. Our goal should be to bring the troops
home.

Indeed, Kim and his officials have clearly and consistently
insisted that denuclearization is the culmination of a process.
First must come improved relations. Second, a peace regime on the
peninsula. Third, disarmament. Many analysts, like me, remain
skeptical that Kim will ultimately yield his nukes. But if he is
willing, the process laid out in the joint summit statement makes
sense. The North is saying: if you want our bombs, we want to know
you won’t take advantage of us. Why should Kim trust the
mercurial leader of an aggressive superpower ever ready to impose
regime change?

For this reason, South Korean national security advisor Chung
Eui-yong has argued that steps toward denuclearization “must
come after concrete measures are taken to build up trust by both
sides.” Seoul and Washington have clashed over sanctions
relief for the North and the Inter-Korean Military Pact, which
reduces military activities around the Demilitarized Zone.
Unfortunately, the Trump administration has done nothing to
increase trust. Chung quoted Kim as saying that providing a nuclear
inventory, as desired by Washington, “is the same as telling
us to submit a list of targets for attack.”

However, there is an easy way for Washington to resolve its role
in the North Korean nuclear standoff. President Trump should follow
his instincts and bring home the 28,500 American troops stationed
in the ROK. South Korea doesn’t …read more

Source: OP-EDS

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Ukraine Doesn't Deserve America’s Blind Support

November 29, 2018 in Economics

By Ted Galen Carpenter

Ted Galen Carpenter

The recent clash between Russian and Ukrainian naval vessels in
the Kerch Strait has generated a flurry of alarm. NATO was
compelled to call an emergency meeting with Ukraine and the UN
Security Council convened an urgent session to discuss the crisis.
Exercising their usual tendency to oversimplify murky geopolitical
rivalries, Western officials and journalists embraced the knee-jerk
narrative that the incident is yet another case of Vladimir
Putin’s blatant aggression and “outlaw behavior” against its
peace-loving, democratic neighbor. Right on cue, CNN, MSNBC, and
other media outlets dispatched stridently anti-Russian editorials masquerading as news stories.

In reality, the Kerch Strait incident involves a complex mixture
of factors. They include the tense Russian-Ukrainian bilateral
relationship, Kiev’s broader foreign policy objectives, and
Ukraine’s volatile domestic politics.

Ukrainian President Petro Poroshenko had to know that a decision
to send three naval vessels through the Kerch Strait would be
disruptive. The strait, which connects the Black Sea and the Sea of
Azov, separates Russia’s Taman Peninsula from the Crimea
Peninsula. Despite Moscow’s annexation of the latter in 2014,
Kiev still considers Crimea to be Ukrainian territory, a position
that the United States and its allies back emphatically. Moreover,
passage through the strait is the only oceanic link between
Ukraine’s Black Sea ports and those on the Azov. Kiev, not
surprisingly, views the strait as international waters. Russia,
however, regards the waterway as its own territorial waters and
viewed the attempted transit by the three Ukrainian ships as a
violation.

The Kerch Strait incident has Westerners once again antagonizing
Russia. But the truth is far more complicated.[/pullquite]

Whatever the legal merits of the competing positions regarding
sovereignty over Crimea and the status of the Kerch Strait, the
reality is that Russia controls that peninsula and is unlikely to ever restore it to Ukraine, despite
Western demands. Poroshenko had to know that his attempt to send
warships through a narrow passage between what the Kremlin insists
are two portions of Russian territory was certain to cause an
incident. Why did Kiev risk (if not avidly seek) such a
confrontation? And why now? There are several likely motives.

Kiev wants to increase pressure on NATO, and especially the
United States, to take a harder stance against Moscow. Despite
their official position that the Kremlin must disgorge Crimea and
end support for pro-Russian separatists in eastern Ukraine, Western
policy looks increasingly stale and ineffectual. Some European
officials even muse that it may be time to reconsider (weaken) the economic sanctions that
the West imposed on Russia. President Trump has stated that Russia should be re-admitted to …read more

Source: OP-EDS

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If You Value Privacy, Resist Any Form of National ID Cards

November 28, 2018 in Economics

By Matthew Feeney

Matthew Feeney

The Chinese telecom company ZTE is helping the Venezuelan
government build a network for its “Fatherland Card,”
an ID card that is being increasingly linked to government
services. The Fatherland Card provides access to troves of personal
information including political affiliation, medical history,
employment status, and much more. What was ostensibly designed to
provide millions of Venezuelans with documentation required for
opening a bank account or voting has morphed into an ID card
program ideal for authoritarian government.

It’s distressing, but not surprising, that the Chinese and
Venezuelan governments are colluding to further erode their
citizens’ privacy.

Defenders of E-Verify and
REAL ID may claim that worries that these systems will develop into
a national ID are overblown and that civil libertarians are being
hyperbolic. But history is on the side of those sounding the
alarm.

In the U.S., we’re nowhere close to living under the
degree of surveillance seen in Venezuela or China. Nonetheless, we
must remain vigilant for calls for increased data gathering and
national ID systems that put our privacy at risk, especially those
calls that are couched in the name of immigration enforcement and
anti-terrorism efforts. These ID proposals, if left unchecked, will
diminish the freedom to travel and work, and expose more details of
our private lives to the authorities.

Americans have historically been resistant to the kind of
compulsory ID card schemes seen around the world. Yet before
Trump’s presidency there were bipartisan calls for ID cards as a
tool of immigration enforcement. In March, 2010 Sens. Chuck
Schumer, D-N.Y., and Lindsey Graham, R-S.C., took to the pages of

The Washington Post
to argue for a national biometric
ID card as a means to tackle illegal immigration. Fortunately,
Sens. Schumer and Graham failed to get their proposed mandated ID
passed into law.

Yet ID schemes already exist in the U.S., and proposals for
government data-gathering only add to a growing identity
infrastructure framework.

One such scheme the current administration supports is E-Verify,
a voluntary Department of Homeland Security system designed to
allow employers to check the employment eligibility of new hires.
E-Verify is an
inefficient and expensive
system that should be scrapped.

Yet despite the problems associated with E-Verify, many of those
calling for crackdowns on illegal immigration are also pushing to
mandate the system nationwide. Such calls pose a significant risk
to our privacy. To fix E-Verify, DHS would need more information,
perhaps including biometrics such as fingerprints and facial images
related to U.S. citizens.

ID systems are not only discussed in the context of immigration
enforcement. The threat of terrorism also provides fertile ground
for national ID proposals. REAL ID, created in …read more

Source: OP-EDS

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Ukraine Should Not Be a Member of NATO

November 27, 2018 in Economics

By Doug Bandow

Doug Bandow

Another day, another crisis in the relationship between Russia
and Ukraine—and another powerful reminder why the latter
should not be inducted into NATO. Washington has nothing at stake
worth going to war over who has access to the Sea of Azov.

The latest confrontation between Moscow and Kiev occurred when
Russian vessels blocked Ukrainian vessels from moving into the
shallow body of water between the two nations through the Kerch
Strait. Kiev charged that Russia prevented lawful passage of its
ships and instituted an illegal blockade. Moscow, in turn, claimed
that the Ukrainians entered illegally and engaged in
“aggressive” maneuvers. A Russian gunboat shot up a
Ukrainian vessel, injuring several sailors.

Washington should stop
adding to the Alliance new members who are security
liabilities.

Full-scale war is possible. Both sides had been increasing
military forces in the region. Although Russian president Vladimir
Putin does not appear to be stoking nationalist fires at home,
Ukrainian president Petro Poroshenko is an underdog for reelection
and might benefit from a crisis. The latter called a war cabinet
meeting, warned of possible conflict, and instituted martial law
(which would allow postponing the election). The Rada is
considering declaring a state of war with Russia. Demonstrators
have taken to Kiev’s streets.

The Putin government, which has harassed Ukrainian marine
traffic entering what is essentially an enclosed sea, looks mostly
to blame. Moscow’s aggressiveness might be a negotiating
tactic or part of a campaign to turn the Sea of Azov into de facto
territorial waters.

Still, Moscow is not without security concerns. The Kerch Strait
Bridge is a possible target. Indeed, in May Washington Examiner
columnist Tom Rogan argued that “Ukraine should now destroy
elements of the bridge. While that course of action would be an
escalation against Putin and one that would almost certainly spark
Russian retaliation, this bridge is an outrageous affront to
Ukraine’s very credibility as a nation.” Worse, Rogan
declared: “The U.S. could and should support Ukraine here
with confidence in our own military power.” Even if an
election-minded Poroshenko eschews taking such a risk, nationalist
and neo-fascist militias might not be so restrained.

So far the crisis is contained. The UN Security Council met but
will take no action with Russia as a member. Poroshenko requested
support via tweet: “We appeal to the partner countries under
the Budapest Memorandum, to the EU countries, to participants of
the Normandy format in order to coordinate effective measures to
protect Ukraine. We appeal to the whole pro-Ukrainian coalition: we
must stand united!”

That’s quite a list. It includes, respectively, the United
States and United Kingdom, most of Europe, and France and Germany.
However, if one thing is certain, …read more

Source: OP-EDS