Rosa Balfour and Dan Baer discuss how the European Union and the United States can improve transatlantic coordination on Russia, trade, and China.
The transatlantic relationship showcased remarkable unity in 2022, but fissures between the United States and the European Union are appearing with regard to the Russian invasion of Ukraine, economic policy, and China.
Rosa Balfour, director of Carnegie Europe, is joined by Dan Baer, senior vice president for policy research and director at the Carnegie Endowment for International Peace, to discuss how both sides of the Atlantic can strengthen this indispensable partnership.
Rosa Balfour and Dan Baer (January 20, 2022), How the Transatlantic Relationship Has Evolved, One Year Into the Biden Administration, Carnegie Europe.
Gwendolyn Sasse (December 6, 2022), The Risks of Negotiating an End to the War in Ukraine, Carnegie Europe.
Rosa Balfour, ed. (January 26, 2021), Working with the Biden Administration: Opportunities for the EU, Carnegie Europe.
Rosa Balfour (December 1, 2022), Transatlantic Woes: Neither Side Can Have It All, Carnegie Europe.
Stefan Meister (November 29, 2022), A Paradigm Shift: EU-Russia Relations After the War in Ukraine, Carnegie Europe.
Rosa Balfour, Lizza Bomassi, and Marta Martinelli, eds. (June 29, 2022), The Southern Mirror: Reflections on Europe From the Global South, Carnegie Europe.
[00:00:00.540] - Rosa Balfour
No other international alliance rivals the transatlantic relationship between the United States and the European Union. Perhaps it is precisely because of its breadth, depth and history that transatlantic spats are reported with much preoccupation.
The past few weeks have seen anxiety over the midterm elections in the United States, tensions over the West's efforts to support Ukraine against the Russian invasion, mutual accusations of economic protectionism, and shadows looming over how the US. and EU are in sync on China.
Aside from the hype, how strong is the transatlantic relationship? What are the prospects for the next two years of the Biden Administration? And where and why are the allies struggling?
[00:00:50.590] - Rosa Balfour
Hello, and welcome to Europe Inside Out, a monthly podcast from Carnegie Europe about the continent's greatest foreign policy challenges.
My name is Rosa Balfour and I am the Director of Carnegie Europe.
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[00:01:08.360] - Rosa Balfour
This episode of Europe Inside Out is about transatlantic relations.
I'm joined by Dan Baer, Senior Vice President for Policy Research and Director of the Europe Program at the Carnegie Endowment for International Peace. A former US Ambassador to the Organization for Security and Cooperation in Europe, Dan's experience bridges both sides of the Atlantic.
[00:01:26.670] - Rosa Balfour
[00:01:27.730] - Dan Baer
It's great to be with you.
[00:01:29.020] - Rosa Balfour
If we look back at 2022, inevitably our discussion has to start with the Russian invasion of Ukraine. While the degree of collaboration across the two sides of the Atlantic has been truly remarkable, I get the impression that right now, the US and the EU are slightly out of sync on the war. The debates that are taking place within our societies and in the foreign policy communities are slightly different. And just last week, we published a couple of pieces about how Europeans are a little bit worried about how the... the debate is evolving in the US about how to end the war. So, Dan, I'd like to ask you, can you unpack this American debate and what are the implications for Europeans?
[00:02:41.140] - Dan Baer
Yeah, well, I mean, I think first it is important to start with what is truly remarkable about the last year, which is the degree of coordination that there has been between the US and Europe. One could say that the person who has contributed most to strengthening and revitalizing transatlantic relations over the course of the last decade is Vladimir Putin, partly because in 2014, when he first invaded Ukraine, there was also a remarkable spate of... of real coordination between the US and Europe. And actually, I remember at the time, when I was serving overseas, being so struck by how difficult it was to coordinate because we were coordinating on packages of sanctions. And if you... I think when the history books get written, it will be actually that technical coordination on multiple packages of sanctions, we have different legal authorities, and so you can't just copy-paste what we were doing, but we were working very closely across... across the Atlantic to make sure that our policies were coordinated to deliver... deliver impact together. And that, we've seen a repeat of that over the course of the last ten months, and that's really important.
And so there has been strong coordination across not only sanctions but a range of other activities, including supporting Ukraine militarily. One of my favorite statistics is that on the day before Russia's new invasion of Ukraine, there were three countries that were supporting Ukraine's military directly, and a month later, there were 30. And it shows... It shows a remarkable internationalization of the support, and obviously, most of those were countries in Europe. So I don't want to... I don't want to for a moment call into question the remarkable degree of cooperation.
However, I think, as you would expect, over the course of many months, months that have had consequences where there have been second-order consequences for both the Europeans and the Americans, you start to see conversations evolve, and conversations don't evolve always in sync. And I think one of the things that you've pointed out that I hadn't, that actually I'm not sure I would have realized myself is that in some ways, it's counterintuitive the way it's evolved because you start to see conversations in the United States about calling into question the degree of support for Ukraine or starting to talk about whether or not Ukraine should be encouraged to negotiate with Russia in a way that... that usually, I think we would have associated with Europeans. And so, I think part of that is driven by US politics, domestic politics. The midterm elections that we just had, you saw some voices in the Republican Party... starting to call into question the degree of economic investment in military support for Ukraine. I hope that is... remains a minority. It was a minority certainly, to begin with, and I hope it remains a minority. But you know, you definitely do see the slight decrease in kind of the complete unanimity that there was in the opening months of the conflict.
[00:05:48.040] - Rosa Balfour
Yeah. Whereas in Europe, at the beginning of the conflict, there was a lot more skepticism about the need to support Ukraine, especially militarily. Whereas now as... First of all, as Ukraine has also made some military victories on the battlefield, Europeans seem to be very focused on continuing this support and on avoiding that any cracks in the alliance emerge. And I think there are several reasons for this. The first is morale. Of course, morale is absolutely critical in Ukraine. The response of Ukrainian citizens and of the army has surprised the rest of the world. And a lot of it is boosted by the degree to which the President manages to put out messages of strength and solidarity. He stayed in the country. And it's due to... Thanks to this morale that Ukraine has probably managed to reach some successes on the battlefield. So the first point is that Europeans do not want to create a dent in this morale in Ukraine, but also in Europe. Because of course, aside from the financial, military and humanitarian assistance that Western Europe is providing Ukraine, western Europe is also suffering the economic costs of the war in terms of spiraling prices, energy costs, etc. And so in order to keep Europeans focused on the goal, on the reasons for which Western Europe needs to support Ukraine, it is important that doubts about the war are not sown in public opinion. And we all know how brittle and diverse public opinion can be in Europe when it comes to Russia.
[00:08:10.010] - Dan Baer
Rosa, I have to say from the US perspective, as I said, I hope that the American debate will remain solid. It is today solidly behind Ukraine. I hope it will remain that way. There have been some voices creeping up, some of them on the far right wing of the Republican Party. I hope it will remain an isolated group. But I think from the US perspective, broadly speaking, the... the big story out of this is the continuing, broadly speaking, European unity on this. Even with some elections that maybe cause people concern at first, etc. There has been, broadly speaking, a solid European voice, a consistent European voice on this. And I think that is actually the story to take away.
[00:08:57.790] - Rosa Balfour
I think what we're seeing is how complicated it is to keep the short-term focus and at the same time work on longer term prospects. And I think, you know, in the short-term we have prevention of nuclear escalation, which is, for instance, something that is more present in the American debates than it is in the European debate. There is a focus on making sure that military supplies can be delivered to Ukraine. There is a focus on making sure that the Ukrainian state doesn't go bankrupt during the war.
But also looking further, with the EU agreeing that Ukraine is a candidate country for EU accession, in Brussels the debate on how to make sure that the future enlargement actually works has already started. And that is quite a futuristic vision if you think about it, for a country that is in the middle of a war, and this has multiple consequences. It means that the debate that again has already started on reconstructing Ukraine, really needs to focus on key issues such as procurement, transparency, public-private partnerships, on how to make sure that Ukraine becomes a successful country, but also that all that effort, that international efforts towards reconstruction feeds into the process of political and economic reform that joining the European Union entails. And then in addition to this and moving, stepping out of Ukraine, also making sure that the other countries in the wider region are... are... benefit from these initiatives. The first, of course, is Moldova, which has also been accepted as a candidate country. Georgia has a process that is conditional to satisfying certain requirements. But then of course, you mustn't forget the Western Balkans. Some countries are already negotiating their accession track, but the process there has been terribly slow and stagnant and demoralizing for the countries in the Balkans. So it's really important that the EU is thinking through this longer term prospect of how to make sure that these countries and regions eventually join the EU in a credible way, that the EU needs to also work on both fronts.
[00:11:59.290] - Dan Baer
Absolutely. And I think the promise of European integration for all of those countries is the promise of the future. And I think you're quite right to point out that keeping the future in mind is part of how you build the morale and sustain the morale to survive the difficulties of the moment. And I think it's absolutely critical that the EU continues to articulate that vision and move in practical way toward that vision in partnership with those countries.
I think, you know, to return to the earlier question also about the US... people in the US, and there are people, obviously, we should say in Europe, who are also bringing up the conversation around negotiation and suggesting that there might be, in the near term that it might make sense for Ukraine to start negotiating. I think it's also important that as we keep a focus on the longer-term future of these countries, we also don't become unrealistic about what's possible in the near term. Of course, all of us want diplomacy to work more than war, but those who are suggesting negotiations right now, I have no way to understand what they think is possible in this moment with negotiations.
There's no indication that there is a political settlement that is available and in sight in this moment. And they forget that Zelensky offered so much in the lead up when we thought the war was imminent. He offered so much. He put so much on the table at that moment, and Russia didn't take it. We all understand that there's going to be a political settlement at the end of... at the end of wars, but we shouldn't be pollyannaish or unrealistic about the prospects for success in a given moment. And I think the burden is on those who are starting to suggest that, including President Macron when he was visiting the US last week, to explain why they think this moment is different from the moments over the last ten months, and why they think there's something possible. Why they think that could actually deliver something in this moment. Because it's hard for me to see what the rationale would be.
[00:15:03.560] - Rosa Balfour
I agree 100% with you, Dan. At the same time, I think Macron, I think what's also at the back of his mind is how to imagine a future relationship with Russia, whatever, regardless of the outcome of the war, whatever is going to happen with respect to Ukraine. And this is exceedingly difficult in European quarters at the moment precisely because it is so divisive and so traumatic to think about, to imagine a different type of relationship with Russia. But Carnegie Europe certainly feel that we should start thinking about it. And we published a paper very recently by Stefan Meister, who is arguing that even though the time is not ripe for diplomacy, we should start thinking about other initiatives, such as engaging civil society. We should diplomatically make it very clear that Europe's policy is a Ukraine first policy. But, you know, just start thinking about the building blocks of what might become a relationship with Russia is important, even if perhaps it should be done privately rather than publicly. What do you think?
[00:16:28.390] - Dan Baer
I thought Stefan's paper was really provocative and good in advancing thinking, partly because ... It was not a call to kind of isolate or... or completely pull back from Russia. It was not ignorant of geography, the fact that Russia will remain there, but it also... It was a call for Europeans who have not yet woken up to the fact that Russia is in an antagonistic relationship with Europe right now. And there is no evidence that there is going to be a near term change in that, and that Europeans need to acknowledge that Russia is a revanchist power and European security policy needs to reflect that. And I think part of the of course this goes back to what I was saying before. Of course everybody would prefer to have a friendly relationship, but actually what's more realistic is to have a sustainable relationship with a country that has revealed itself, not just once, but time and time again, to be a threat to the European security order. Russia is a threat, a menace, and European security policy needs to reflect that.
[00:17:54.] - Rosa Balfour
It's not just over Russia's war in Ukraine that Europeans and Americans have appeared to have a few fallouts recently. So first we had the midterm elections and then these discussions in the United States about... about ending the war and how to end the war. And then we had another event which was the approval of the Inflation Reduction Act. And this caused quite a bit of a fuss in European countries.
[00:18:41.610] - Dan Baer
Yes, of course. The Inflation Reduction Act was a significant piece of legislation that was signed into law in August. It was the most significant climate legislation that the United States has ever passed and probably the largest piece of climate legislation that has ever been passed in the world. it includes appropriations for $500 billion of spending, about $400 billion of which is focused on the energy transition and dramatically reducing US emissions over the course of this decade. And of that, of that 400 billion, about 200 and I think $15 billion of tax incentives for businesses. And that has caused concern in Europe because tax credits for businesses obviously are a form of subsidizing or incentivizing them to take certain actions, in this case to invest in clean energy and in clean energy technologies. And obviously for any other entities or economic competitors, those tax incentives changed the structure of the game for their companies. And so there has been strong pushback, I know from European partners on that and I think that raises a real challenge because it is obviously dedicated at reducing emissions in one of the largest historical emitters. And at the same time it obviously in a moment when, as we said in the previous segment, Europeans are feeling the pinch economically much more than Americans are from the second order effects of the war, European governments are obviously concerned to look after the economic well being of their own citizens.
[00:21:12.790] - Rosa Balfour
Yeah, I mean, there's one element, especially on the climate front, that is a little bit paradoxical because the EU had been complaining that it was a global leader in the fight against climate change with the US being left behind with Donald Trump stepping out of the Paris agreement. And now that at long last the US agrees to invest on a green economy, Europeans are complaining that it's to the detriment of the EU.
But I'd like to unpack a little bit the various criticisms that we saw in Brussels and in other European capitals because there are different kinds. I mean there were some pretty heavy remarks that were reported in the press about the US profiting from the war and I quote here because of course the US has been supporting Europe and weaning itself off Russian fossil fuels by selling LNG. So some are saying well, you know, with the war you're making money by selling energy to Europeans. And then of course the Americans say that Europeans are whining, they want the luxury of security then they want you know, they want to be treated as if they had a trade agreement with the US. Which as we know does not exist.
And then there are those who pit buy American versus by European. And of course, all these concerns do feed into preoccupations, serious preoccupations about the respect of the rules of the World Trade Organization, the degree to which it is possible to have in the transatlantic space an equal level playing field, and the degree to which it is possible to avoid competition among democracies that are also rules-based free market economies.
But I would say I think we also need to point out that there are other discussions that are taking place in Europe including in the private sector that is really looking at the reality of Europe's economy that has been lagging behind in technology, in innovation, it's been a surplus economy that has done very well with trading. But now the... The whole way in which we approach a sort of post neoliberal world is changing. So if the Inflation Reduction Act manages to jerk the EU into action and to scale up its green and tech industry then maybe there is a silver lining to it.
[00:24:24.490] - Rosa Balfour
So it's a very interesting debate and evolution from my perspective. The big question is whether the US. and Europe as a whole, not just the European Union, but also other European countries will find themselves in the same landing page when it comes to the role of the state in regulating the economy. And in particular, the role of the state in making sure that industrial policy focuses on technology and on the green transition.
[00:25:32.960] - Dan Baer
If I could just pick up on a couple of those things, those issues that you've raised. First of all, I think we should set aside the accusations that the US. Is profiting from the war. The US. doesn't want the war to exist. And the US... To the extent that the US. is exporting LNG to Europe it's in order to support European partners. And yes, we have a capitalist system and a market economy and so there are prices for the things that we're exporting. But the intention of that is not to make money. The intention of that is to support our European partners in a time of need. And European countries have made their own choices about where they get their energy supply. And the United States is on record for many years at having encouraged Europe to think more about diversifying its energy supplies and be careful of being dependent on Russian gas.
But I do think there are some broader issues and you pointed out that this could be a catalyst for rethinking and transformation on a broader scale.
And one of the ones that really is a legitimate complaint from the Europeans about the Inflation Reduction Act is that, again, not because we Americans intended to cut Europe out of this in some kind of sneaky way, but the sausage gets made in the legislative process where there are negotiations and trade offs and a bunch of things. And then at the end, you get what you get. And it has implications for our partners, our closest partners. And one of the points that Europeans have made that I think is important going forward is that if we're going to tackle the climate crisis together, which is going to require investment in new technologies and mobilizing various actors in a society to effectuate a green transition, we should at least make sure that we're not working at cross purposes with each other.
And I think this has opened a conversation to get more technical about what kinds of supports or tax breaks can be mutually reinforcing and which ones might work at cross purposes. Obviously, the Trade and Technology Council offers one platform for that, but probably not the entire platform.
And the other piece is trade more generally. You mentioned that there is no effective free trade agreement between the United States and Europe. Obviously, there's been discussion of that in the past. And one question going forward is in the coming years, will there be discussion about that? Again, I would point out that some of the provisions of the Inflation Reduction Act offer that buy America provisions that have caused some heartburn in Europe. Buy America provisions apply to things that are made in America or in countries in which the United States has a free trade agreement.
And so the progress on trade between the US and Europe might actually open up some of those incentives to European... to things that European workers are participating in as well. And I think going forward, the important thing is for the two sides to make sure that we are coordinating because we have a shared interest in making the energy transition.
[00:30:19.840] - Rosa Balfour
As we mentioned at the beginning, no other relationship is as close as the transatlantic relationship. And so it is absolutely vital that these conversations continue to take place and that the spaces for discussing differences are maintained. Something that, for instance, during the Trump Administration didn't really happen.
But I think if you combine the economic challenge of meeting the climate crisis goals with the China challenge, this is where Americans and Europeans do not always see eye to eye and where perhaps some room for maneuvering, some room to agree to disagree ought to be found. What do you think, Dan?
[00:31:13.010] - Dan Baer
I think there's sometimes misunderstanding when I talk to European partners on what the United States needs or wants from Europe vis a vis China. I think it's important to recognize, first of all, that the US relationship with China has evolved dramatically over the last decade, going from a relationship that was, you know, largely aimed at facilitating cooperation with a few areas of competition to a relationship that is largely confrontational with a few remaining areas of competition. And I think European partners have increasingly shared the diagnosis that the Chinese Communist Party does present a challenge to all of us who are committed to a rules based order because of its assertiveness in revising certain foundational principles of that... of that order, not least of which is the principles of human rights and human dignity. There has not been the same move in terms of the shared prescription of what to do about it. And the United States doesn't need Europe to have a policy towards China that is identical to the American policy. But what we do need is to have coordination. And there have been moments in the last couple of years where it has appeared that Europeans have not only not coordinated, but also tried to do things purposefully without coordinating. And I think that doesn't help either of us.
And I have great sympathy for the perspective from Berlin or Paris or Brussels or London even about the fact that Europe is dealing with a revanchist neighbor in Russia that has caused the largest land war in Europe since World War II and continues to prosecute that war with enormous effects on the European continent. And Europe doesn't have an appetite to have also any kind of escalation of challenges with China. And the idea of having to manage challenges from a revanchist neighbor and a revisionist large power in Asia that is crucial to the European economy, I understand why that's not appealing.
We don't get to choose the moment in which we live. And I think managing the challenge from China in a constructive way is more likely to happen if the United States and Europe are working together than if we are trying to do our separate China policies apart.
[00:34:08.440] - Dan Baer
And so I think there remains a structural incentive for those of us who are committed to a world that is safe for democracies to working together on that front.
[00:34:41.140] - Rosa Balfour
Yes, well, you talk about transatlantic coordination, but on China, the reality is that Europeans really struggle to coordinate among themselves. I mean, the latest trip that the Chancellor of Germany, Olaf Scholz, paid to Beijing was with a group of German business leaders. But without any European colleagues. If EU countries are competing with each other to get the best business deals with China, then it's going to be difficult to pursue an industrial, green and tech industrial policy for the whole of the EU. So there are systemic problems for Europeans to have a coordinated policy on China, let alone to have a coordinated policy with the United States.
[00:36:18.190] - Dan Baer
Yeah, in addition to the trip last week, there was news that Germany would not be taking action to excise Huawei from its infrastructure on 5G, which other European countries have seen fit to do because of the security risks. And so there is a mixed picture in that respect. I would say, as an American, one of the things that the US policy should be aimed at is trying to support the European diversification of economic relationships, including by enhancing the relationship with the United States so that there is less dependency for European exports on China. Because right now that is driving a significant portion of the policy behavior, I think particularly of the Germans who are very export dependent on the Chinese. And there are things that we can do working together to alleviate some of the pressure, not all of it, but to alleviate some of the pressure of that export dependency.
[00:37:19.460] - Rosa Balfour
Now, that's interesting what you say about the US supporting European diversification, because there's one observation that I've been thinking about recently. If you listen to the American narrative about international relations, it's very much a binary narrative. The US-China rivalry. Democracy versus autocracy. If you listen to European leaders, the narrative is different. It's not about bipolarity or the bifurcation of global politics. It's actually about multipolarity. And it seems to me that all the debates about Europe's global role these days are really a sort of existential anxiety as to where to place Europe in a multipolar world. And so the idea of diversification would play to this idea of multipolarity. But on the other hand, the rhetoric coming from the White House is very much focusing on bipolarity framed by the US-China rivalry.
[00:40:06.340] - Dan Baer
I think there's two things to draw out there. One is that I get quite frustrated when Europeans or others ask, please don't make us choose between the United States and China in terms of geopolitics. I mean, there ought to be no choice if you are committed to a rules based order. There's only one of those actors that is committed to a rules based order that is grounded in human dignity and that can protect the space and security and prosperity of free and open societies. And so if that's a hard choice to make, then I think there are bigger problems between us. I don't think that's actually what people mean. I think what they mean is, please don't create a world in which we are bifurcated along those lines and please continue to reach out to people, even if their governments are challenging or nefarious. And I think one of the things that's incumbent upon any of us who believe in a rules based order and on the free societies that that rules based order can protect, which is really what we care about, because we care about people at the end of the day, it's important for us to recognize that you have to engage the rest of the world. And I think the United States has tried to. Certainly I've seen the Biden administration make an effort along those lines. If you look at the events that the Biden administration hosted, they were focused on food security and on the climate transition. And issues that affect what gets called the Global South, which is actually a diverse group of countries, but issues that affect those who sometimes feel pinched in the contest that great power politics has created in its resurgence. And so I think it is important that we all continue to reach out and I guess in this picture, I think the European and US relationship should be one of reaching out together to engage the world in the importance of protecting a world order that allows for free societies that protect human dignity. And when people in Europe or elsewhere say, please don't make us choose, we should make sure that they're saying, please don't make us necessarily follow a particular practical agenda. But there should be no tolerance for people who have trouble choosing between the different moral visions represented by the Chinese Communist Party on the one hand, and by free, democratic societies on the other.
[00:43:06.260] - Rosa Balfour
We've done a bit of a health check, really, on the transatlantic relationship and put the magnifying glass on those issues where there might be some differences. But looking at the transatlantic relationship from the outside and looking at what's happened over the past year, I think probably it looks a lot healthier than it does from the inside. And in particular, I'm thinking what lessons China will take from the transatlantic unity over Ukraine. What do you think?
[00:43:40.610] - Dan Baer
Absolutely. I mean, I think Beijing is watching very closely the response that the United States and Europe together have mustered to Russia's invasion of Ukraine. And I think if they were to take one lesson away, it is that it was stronger, more aligned, more united than they would have expected beforehand. And by the way, they're not alone in that analysis. I think if we remember the first months of this war, one of the reactions on both sides of the Atlantic was, frankly, being impressed with ourselves because we couldn't have predicted how coordinated and strong and united the US and European response was. And I think that that message or that alignment combined with Russia's military failure to perform at the levels that it was expected, both of those have to be giving Beijing caution and having a deterrent effect on certainly on any kinetic opportunism that Beijing might be contemplating. And so I think that's a real positive impact of US-European coordination.
[00:44:54.340] - Rosa Balfour
Thank you, Dan. I think these final words also set the tone for what is to come in 2023 and 2024, the next couple of years before the next US Presidential election. Dan, it was great to talk with you and just have some sort of end f the year free thinking on the state of the world and the state of the transatlantic relationship. I look forward to talking with you again soon.
[00:45:20.590] - Dan Baer
I look forward to talking with you again soon as well, and I look forward to future episodes of the podcast.
[00:45:32.430] - Rosa Balfour
For those of you who are interested in learning more about transatlantic relations, I encourage you to follow Dan's work on Twitter @Danbbaer. That is D-A-N-B-B-B-A-E-R. You can find me @RosaBalfour.
Thank you for listening to Europe Inside Out, a podcast by Carnegie Europe. Please join us again next month when Sinan Ülgen and Marc Pierini chat about Turkey and the upcoming presidential and parliamentary elections. Let us know what you think of the show by reaching out to us on Twitter @carnegie_europe or by email at firstname.lastname@example.org. If you liked the show, leave us a rating and subscribe wherever you get your podcast.
[00:46:20.160] - Rosa
This episode of Europe Inside Out was produced with the support from the US Mission to the European Union. Our producer is Midori Tanaka. Our editor is Alexander Damiano Ricci of Bulle Media. Sound Engineering and original music by Jeremy Bocquet.
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