Journal “Economy of Ukraine”, 2020, N 1, Pages 82-94
L. L. KISTERSKY,
Professor, Doctor of Econ. Sci.,
Professor, Chair of International Economic Relations,
Vasyl’ Stus Donetsk National University,
21, 600-richya St., 21027, Vinnytsya, Ukraine
Cand. of Econ. Sci., Associate Professor,
Associate Professor, Chair of Financial Analysis and Control,
Kyiv National University of Trade and Economics,
19, Kyoto St., Kyiv, 02000, Ukraine
Cand. of Econ. Sci., Associate Professor,
Deputy Director, Institute for International Business Develepment
21/12 Luteranskaya St., of.25, Kyiv, 01024, Ukraine
INSCRUTABLE WAYS OF EUROPE: IN SEARCH OF A SOUL
Motives, actions and consequences of the integration and disintegration actions of European countries and individual politicians over the last seventy years are analyzed. The leading role of France and Germany in the post-war unification of Europe based on Christian values is shown. Important position of French politicians and special role of the Minister of Foreign Affairs of France of post-war Europe Robert Schuman were noted. It has been found that over the last decade Europe has moved away from the value system of initiators of unification processes, which has largely caused the current acute crisis in the European Union. EU absorption potential that do not meet challenges of the modern world is analyzed. Scenarios for further development of the EU are justified, given the possibility of varying degrees of integration, especially of potential new members.
Keywords: European Union, Christian values, integration, disintegration, value system, EU crisis, absorption capacity, degree of integration.
Ideas of uniting territories of the European continent have a long history - from the Roman Empire and ancient philosophers to Christian ideas and modern institutions. However, until the end of World War II, no one had a well-developed philosophy and а functional strategy for such an association. In his speech at the World Congress in Paris, Victor Hugo very representatively voiced expectations of the intellectuals regarding unifying processes in Europe. He expressed the idea that the day will come when all nations of the continent, without losing their distinctive features and identities, will merge into some higher unity and form a European fraternity .
Pros and cons of united Europe
Many outstanding personalities and brilliant intellectuals from various countries reflected and out spoke on the idea of united Europe. Some of them were enthusiastic, others strongly opposed unification. During the WW I Nobel laureate Albert Einstein on many occasions outspokenly favoured the idea of a supranational European Union. He saw in this the prospect of a peaceful and harmonious development of Europe. A highly sceptical position was taken by the leader of the Bolsheviks Vladimir Lenin. In the article “On the slogan of the United States of Europe” dated August 23, 1915 in the same newspaper, Lenin explicitly states that “the United States of Europe, under capitalism, is either impossible or reactionary .
Another prominent Nobel Peace Prize laureate French politician Aristide Briand, who has held the post of the French Prime Minister 11 times, was a staunch supporter of the idea of the United States of Europe. He was in favour of some kind of federal connection between European countries and suggested this concept back in 1926 in the League of Nations. In a document called “the Briand Memorandum”, Briand negatively evaluated the results of the Peace of Versailles and supported the idea of lasting solidarity creation between European governments based on international agreements. Briand also supported free movement of goods, capital and persons in federal Europe. However, the League of Nations did not support Brian's proposal.
Nevertheless, Briand's ideas became so popular in Europe that he became one of the heroes of the famous satirical works of the early 30s of the last century."Pique vests" exclaimed with fervour that Briand with his project is the head .
At the same time, another future Nobel Peace Prize winner Winston Churchill widely spoke and wrote in newspaper articles about the United States of Europe, in which European residents would be able to identify themselves as French, Dutch, Germans, Spaniards, Europeans or citizens of the world. But none of these proposals has taken on a specific form.
Christian basis of United Europe
Almost seventy years have passed since the French Foreign Minister Robert Schuman proposed a plan to unite the peoples of Europe in peace and solidarity. This plan has grown into what we now call the European Union. In 1948 Robert Schuman in the capacity of French foreign minister started promoting the plan to set up the European Coal and Steel Community (ECSC) to regulate their industrial production under a centralised authority, which was legally established in 1951 by the Treaty of Paris. France was the first government to agree to delegate sovereignty to a supranational Community with a purpose of pooling coal and steel of its members in a common market. Another prominent French politician Jean Monnet was one of the key contributors to the text of the plan.
In 1946, Robert Schuman became a Minister of Finance and the next year the president of France appointed him a Prime Minister. At that time, access to coal and steel were vital for an economy to be engaged in a war. So, to consolidate relations between France and Germany, which fought against each other in two world wars for the first half of the XXth century, Schuman proposed that production of those two key resources be placed under a common authority within the framework of a supranational organisation. At the same time, Schuman's faith largely determines his subsequent political steps, motivated by the biblical tenets of equality. Practical application of Christian values has helped to transform Europe into a liberal democratic community. It is Christian principles that have become the hallmarks of modern civilization. During his numerous talks with his fellow colleagues Schuman persistently promoted the importance of two things for the success of the United Europe - political aspirations of countries and a supranational union’s framework. Specifically he favoured creation of a fresh ideology for millions of Europeans which would help brining deep changes within people of Europe.
Monet’s proposal led to signing of the Declaration on May 9, 1950, which marked the peak of Schuman's political career. In 1958, Robert Schuman was appointed President of the newly created European Parliamentary Assembly, which was later renamed the European Parliament. In 1960, Schuman ended his political career and was then called by the European Parliament "Father of Europe". The Schuman Declaration of May 9, 1950 was a long-awaited extraordinary breakthrough that actually outlined the conceptual architecture of a new peaceful Europe .
Schuman's proposal was the first bold step towards the creation of today's European Union. He widely known as "Father of Europe", however, few know that Schuman predicted that Europe would be not only a post-war continent, but also a community of peoples with deeply rooted Christian values. In a correspondence with Conrad Adenauer, two believers discussed the opportunity to restore Europe on a Christian basis. Over the last decades, Europe has come a long way from this vision. Historically, the development of the EU has been driven forward largely by French political leaders.
Notwithstanding the crisis, today the European Union continues to attract the states that are members of it and those who seek membership in the future. However, it is hardly possible to say that the current European Union corresponds to Schuman's original idea of a community of peoples with deeply rooted basic Christian values . This particular idea was shared by many European leaders of that time. Specifically, his German colleagues Conrad Adenauer wrote in his letter to Schuman that fellow Catholics were “filled with the desire to build the new edifice of Europe on Christian foundations… and this task was not only a political and economic aim worth striving for, but as a real Christian obligation” . Regretfully, many contemporary pragmatists consider the values irrelevant and over the past years Europe has witnessed a departure from the Schuman's idea.
Thus, the unity of Europe was made possible only by the conventional Christian outlook on life, which was gradually developed and applied before recently. Today, unfortunately, the claim that the roots of Europe are, first and foremost, Christian is being largely ignored.
Equal footing on supranational grounds
For achieving the goal the Schuman government has put forward a specific solution to a longstanding problem. Namely, that national French and German coal and steel production should be brought under supranational authority that stands superior to national jurisdiction and cooperates with other European countries. It stays open for other European countries to cooperate and to join. In this case, economic interdependence would make war between Germany and France practically impossible. It was the first precedent in world history when states, at their own will, decided to subordinate their sovereignty to one another in order to create a supranational community.
This was a significant step towards formation of the EU. Following numerous negotiations and the signing of the Treaty of Paris, the European Coal and Steel Community (ECSC) began its work on 18 April, 1951. Besides France and West Germany, the founding countries were Italy, Belgium, Luxembourg and the Netherlands. The successful activities of the ECSC led to the expansion of cooperation between the six founding States and the creation of the European Economic Community (EEC) after the signing of the Rome Agreement in 1957. These events were largely initiated by France, although its internal policy was unstable at the time, as the three competing powers were active in the country - Christian Democrats, Communists and Holists. By the way, nationalist Charles de Gaulle strongly opposed all European treaties.
Reaching the agreement between France and Germany was largely facilitated by the fact that Prime Minister Robert Schuman and Chancellor Conrad Adenauer professed the same belief and both viewed the restoration of Europe on a strong Christian basis. Adenauer played a crucial role in Germany’s rapprochement with France and other European countries, though details of early stages of his political career are less known than those of his French counterparts – active builders of modern Europe.
Conrad Adenauer was an active opponent of National Socialism. As the burgomaster of Cologne, he prohibited displaying Nazi flags in the city. Twice, in 1934 and 1944, he was arrested by the Gestapo as an implacable opponent of the regime. After the end of World War II, Adenauer was among the founders of the Christian Democratic Party, and from 1950 became its chairman. From September 1949 to October 1963 Conrad Adenauer was a Chancellor of the Federal Republic of Germany. Adenauer’s policy was based on two “pillars” - a social market economy and “a new Germany in a new Europe”. Adenauer's achievements in the economic reconstruction of the post-war Germany were called the "economic miracle", since it was him who initiated radical reforms in the country, attracting a prominent economist - an honorary professor at the University of Munich, Ludwig Erhard, who will subsequently replace him as Federal Chancellor .
Another founding father of the European Union is the French businessman (cognac producer) and statesman Jean Monnet, who fervently believed in a full-scale European union. To this end, in his opinion, one must go step by step, following the so-called functionalism, which is, gradually transferring more and more spheres of activity to the bodies of supranational control. Together with Robert Schumann, Monnet initiated formation of the European Coal and Steel Community and became the first chairman of its board.
Jean Monnet was an active supporter of the functional methods of establishing the European Federation. He always supported the view that a political union in Europe must be formed step by step, as well as economic integration and favoured solving problems systematically, and the European Coal and Steel Union was to become a testing field for the development of supranational governance mechanisms. Both Schuman and Monnet believed that lasting peace should be built on equality since the main principles in the post- First World War years were discrimination and humiliation of Germany which led to a new war.
Nationalism versus European soul
Politicians often propose far-reaching plans, but they do not work without far-reaching changes in human minds. All efforts to embody the idea of a united Europe seemed futile since many people contrapose nationalist and traditional approaches to non-trivial proposals based on Christian values. And precisely because of these values, Schuman felt dissatisfied with de Gaulle's nationalism in his country .
However, having become a president in 1959, de Gaulle began supporting European agreements. The logic behind this turn in de Gaulle's policy was that the best way to contain France's "traditional enemy" was to keep it in its grip.
De Gaulle continued to amaze his European counterparts, acting both as a pro and anti-European politician. Colleagues who have never shared Schuman's Christian values have been hostile to any form of supranational integration or loss of French sovereignty. Despite long-term aspiration to see Europe strong and un-controlled by America, de Gaulle feared growing strength and influence of the European institutions.
De Gaulle has always been distrustful of NATO's organizational principles, where the US played a dominant role. France was among the 12 founding members of NATO when signed a baseline agreement in Washington. De Gaulle actively advocated reorganization of the Alliance in order to limit the role of Americans and strengthen French positions. As a result, in February 1966 he declared a break with NATO, and only in 2009 France did return to the ranks of this military-political alliance.
However, voices of reputable euro sceptics were challenging the idea of European”suprastate” creation. British Prime Minister Margaret Thatcher, for instance, believed that Europe should not become the United States of Europe on the model of the United States. In her opinion, Europe did not have two important components that impeded the achievement of this goal. Firstly, there was no single European identity and, secondly, Western Europe did not have the key functions of a nation-state . Moreover, many British politicians considered the pound sterling a symbol of the country’s sovereignty.
Great Britain has always held a different opinion from other European countries. During the negotiations over the preparation of the Maastricht Treaty, a serious contradiction emerged between the proponents of the EU's "federal entity" protection and the consistent proponents of maintaining national sovereignty. The spokesman for the last position was British Prime Minister John Major.
France's leadership in shaping modern Europe
Still, France and its politicians continued to play a leading role in creating a united Europe. In 1985, the longest serving and the most successful at advancing integration President of the European Commission Jacques Delors announced the White Paper - a blueprint for accelerating European integration - the concept of creating a common European market. It was noted there that Europe was at a crossroads; either she is determined to go forward, or she will slip into mediocrity. “Either we push further economic integration, or we capitulate to the greatness of the challenges due to the lack of political will. The choice is crucial» . It was a truly large-scale program for strategic development of European integration.
Soon enough, ideas from the Delors Plan began to be put into practice. On June 14, 1985, in the Luxembourg’s village of Schengen, five countries, including France and Germany, signed an agreement of the same name regarding free movement of citizens of their countries across common borders. After ratification in 1995, the Schengen agreements entered into force. So, the European Commission, led by Jacques Delors, persisted in pursuing a policy of economic and social cohesion in Europe.
In February 1988, the European Council adopted the Delors Plan, which included the following substantive provisions: creating a common market, structural alignment of backward regions, coordination of economic, budgetary and tax policies, and creation of a supranational European Monetary Institute composed of central bank managers to coordinate monetary policies.
Probably the key and far-reaching idea of the Plan was formation of a single currency policy and introduction of fixed exchange rates and collective currency, which will lead to a gradual formation of the monetary and economic union. In February 1992 in Maastricht, on the basis of the Delors Plan, twelve countries signed an Agreement to set up the European Union, which entered into force in November 1993.
Undoubtedly, the political merit of Delors is intensification of the European integration process. In 1988, Delors was re-elected President of the European Commission by common consensus of the member states. Speaking about pan-European activities in various spheres of interaction, he emphasized that they “have absolutely no desire for unification. By and large, every country has the right to inherit its own history, its traditions, customs and specific features. Our Europe will only be united if its diversity is preserved” . Delors became an icon of Euro-federalists and widely disliked by Euro sceptics, especially in Britain.
So, the Delors Commission gave a new momentum to the process of European integration. It 'completed' the internal market and laid foundations for the single European currency. European Economic and Monetary Union was based on the three stage plan drawn up by the Delors committee which led to the signing of the Single European Act (SEA) in February 1986 and the Treaty of Maastricht in 1992 . The Treaty of Maastricht was signed by Delors and in November 1993 the Community officially became known as the European Union.
Like Robert Schuman, Jacques Delors sought to persuade European citizens and European religious leaders to seek the "soul of Europe". On many occasions he argued that if Brussels could not develop a spiritual dimension, it would fail. Reiterating Schuman's warnings, he stressed that the EU would not succeed only on the basis of legal systems and economy.
The Issue of EU Enlargement
Jacques Delors was an active and successful Euro-integrator, but he always kept in mind absorptive capacities of the European Economic Community in relation to potential member countries. Delors admitted the idea of multilevel integration and gradual levelling of the development of districts and regions of individual countries.
In February 1992, Delors published a report called "The Consequences of Enlargement," warning that "the admission of new members would increase the diversity and heterogeneity of the Community. In this case, the expansion should not be carried out due to the deepening of integration” .
In June1993, at the European Council meeting in Copenhagen on the initiative of Delors, the basic parameters of EU relations with the candidate countries were determined. The so-called "Copenhagen criteria" provide for the adequacy of candidate countries to meet the requirements of political, economic and functional criteria for EU membership. Speaking to the European Parliament in January 1995, European Commission President Jacques Delors proposed the model for the European Federation. In order to reduce costs for less developed economies, the project envisaged creation of different areas of co-operation around the consolidated European Union with different integration depths .
At the end of 1995, Jacques Delors resigned as chairman of the European Commission. Later, in his speeches at various forums, Delors repeatedly drew attention of EU leaders to the fact that there should be observes a principle of so called “many integration speeds”, since full functional integration, which could be acceptable for 15 EU Members, cannot be a realistic goal for 30 EU Member States in the future. After the Iron Curtain fall in November 1989, completely different European political arena has emerged. A dozen of former Communist states appeared on the world map, seeking values and high leaving standards of the European Community, thus challenging the absorptive capacity of the Community. In 2004, the Commission carried out the largest EU enlargement when eight new countries gained membership and further events of the enlargement have proved the Delors’ fears. “These additions were widely criticised for risking serious dilution of the European ideals, and moving too fast. Fears were expressed that the project would fail under the weight of its own success” .
Questions have also existed for years on whether EU "deepening" (i.e., further integration) is compatible with EU "widening" (i.e., further enlargement). In the 1990s and 2000s, the EU engaged in several efforts to reform its institutions, simplify often cumbersome decision-making processes, and thereby allow a bigger EU to function more effectively. These efforts culminated with the entrance into force of the Lisbon Treaty in 2009 (which also sought to enhance the EU's global role and increase democratic accountability within the EU). Nevertheless, critics charge that EU decision-making processes remain extremely complex, lack transparency, and are still too slow and unwieldy. Others note that differences in viewpoint are inevitable among so many countries and that decisions thus take time in what remains a largely consensus-based institution.
At the same time, some European leaders and publics worry about the implications of additional EU expansion on the EU's institutional capacities, its finances, and its overall identity. This is especially true with respect to large, culturally distinct countries, such as Turkey, or the poorer countries of "wider Europe" (usually considered to include Ukraine, Moldova, Georgia, Armenia, and Azerbaijan) that may harbour EU aspirations in a longer term.
Ongoing Challenges and Future Prospects
The European Union is a unique partnership in which member states have pooled sovereignty in certain policy areas and harmonized laws on a wide range of economic and political issues. The EU is the latest stage in a process of European integration begun after World War II, initially by six Western European countries, to promote peace, security, and economic development. The EU currently consists of 28 member states, including most of the formerly communist countries of Central and Eastern Europe.
For several years now, Germany has been actively lobbying for the construction of a gas pipeline from Russia, bypassing Ukraine. Construction of Russia's new Nord Stream-2 (NS-2) gas pipeline is declared to be completed in 2020. Through it, RF plans to pump to Europe annually up to 55 billion cubic meters of gas. It is expected that after the launch of the NS-2, the existing Russian gas transit routes through Ukraine will be minimized and the country’s annual financial loses may total about $ 3 billion.
The project is clearly beneficial to Germany, which receives a straight pipe and cheaply becomes the largest gas hub in Europe. Therefore, Berlin is imperatively promoting the Russian project, having already secured support of some allies. NS-2 is publicly supported by Austria, slightly less openly by the Netherlands and Belgium, friendly neutrality was taken by the French and Czechs. All of them are getting a piece of cake from the Russian “gas pie”.
Although the core Christian values were indeed the basis of many European institutions, Schuman would be deeply concerned about Europe's future because of the overriding of materialistic values and the desire for immediate results. ”Having stated that ‘the European Movement would only be successful if future generations managed to tear themselves away from the temptation of materialism which corrupted society by cutting it off from its spiritual roots’, what would he conclude today?” .
Thus, capitalism was concerned with raising capital in the first place, socialism focused on the role of a collective, and Christian values gave importance to the quality of life in a wide sense. In other words, society should not be judged by the GDP or productivity of its markets, but by how it promotes healthy relationships and comfort of life .
After a heavy economic crisis of 2008, the EU experiences economic difficulties again. Seasonally adjusted GDP rose by only 0.2% in both the euro area (EA19) and the EU28 during the second quarter of 2019, compared with the previous quarter, according to an estimate published by Eurostat, the statistical office of the European Union. In the first quarter of 2019, GDP had grown by 0.4% in the euro area and by 0.5% in the EU28 .
Economic difficulties have complicated the EU's ability to deal with multiple internal and external challenges. Among the most prominent challenges are:
pending departure of the United Kingdom from the EU ("Brexit");
democracy and rule-of-law concerns in Poland, Hungary, and other EU members;
migration and related societal integration concerns.
Perhaps the most prominent challenge for the EU is the United Kingdom's expected exit from the EU.
Thus, never before since the Second World War has Europe been in such an acute crisis as it was after the June 23, 2016 referendum, when the United Kingdom decided to leave the EU. UK voters decided in favour of a British exit from the EU (or "Brexit") by a relatively narrow margin of 51.9% to 48.1%. The UK has since been engaged in withdrawal negotiations with the EU but remains a member of the EU until it formally leaves the organization. Several factors heavily influenced this outcome, including economic dissatisfaction (especially among older and middle- to lower-income voters), fears about globalization and immigration, and antiestablishment sentiments. Since that, Brexit has become a symbol of the crisis of Europe, which was unable to meet the challenges of the modern world.
The UK has long been considered one of the most euroskeptic members of the EU, with many British leaders and citizens traditionally cautious of handing over too much sovereignty to Brussels. As a result, the UK chose to remain outside the euro zone and the Schengen free movement area, and it negotiated the right to participate in only selected justice and home affairs policies.
The "leave" campaign appears to have successfully capitalized on arguments that the UK would be better off if it were free from EU regulations and from the EU principle of free movement, which had led to high levels of immigration to the UK from other EU countries and from developing ones.
Following the 2017 election of French President Emmanuel Macron, EU supporters hoped that France would resume its traditional role as a strong leader of the EU alongside Germany. Many viewed this as crucial for the EU's future, especially in light of Brexit. Although Macron is a committed European integrationist and reformist, Merkel's tenure is drawing to a close. Now in her fourth term of office, Chancellor Merkel is increasingly facing domestic opposition and challenges to her authority, including from within her own centre-right political grouping, amid growing tensions over migration and asylum policy. In late October 2018, Merkel announced that she will not run for re-election in 2021. Moreover, Chancellor Merkel has been too constrained domestically to pursue significant new EU initiatives along the lines advocated for by Macron.
Furthermore, some observers assert that European leaders do not have a clear and shared strategic vision for the EU future development. True, the crises over Greece and migration have produced significant divisions and a lack of trust among EU member states. Moreover, these crises threatened the core EU principle of solidarity. However, various EU initiatives to manage the crisis proved largely unsuccessful.
Over the last few years concerns have grown about what many EU officials view as democratic backsliding in some member states, particularly Poland and Hungary. EU leaders and civil society organizations have criticized both countries for passing laws and adopting policies that appear to conflict with basic EU values and democratic norms. In addition, EU officials have voiced concerns recently about the rule of law and corruption in Romania and Malta. Some worry that EU tensions with Poland and Hungary reflect broader divisions within the EU. Poland and Hungary bristle at what they see as EU interference in their national sovereignty, in part because they believe that member states have ceded too much sovereignty in certain areas to Brussels. Both Poland and Hungary appear sceptical of further EU integration in some policy fields, such as migration .
Especially eroding for the EU unity are significant migrant and refugee flows. According to the United Nations, more than 1 million refugees and migrants reached Europe by crossing the Mediterranean Sea in 2015, roughly 363,000 did so in 2016, over 172,000 in 2017, and over 105,000 thus far in 2018 . Thus, the migrant and refugee flows have exposed deep divisions within the EU. The EU continues to work on developing a more comprehensive migration and asylum policy and on measures to better manage both legal and irregular migration. However, progress has been slow, and many EU national governments face considerable domestic pressure for ever-stricter policies designed largely to curb continued and future migration.
Since the earliest days of the European integration move, European leaders have valued U.S. support and recognized the U.S. role in helping to ensure European security and prosperity - Marshall Plan . EU and European officials widely view NATO and the U.S. security guarantee as central to maintaining peace and stability on the European continent. Many consider U.S.-EU trade and investment ties, by virtue of their size and interdependence, as crucial to European economic well-being. Furthermore, as asserted in a September 2018 European Parliament resolution, many EU policymakers regard a cooperative U.S.-EU partnership as "the fundamental guarantor for global stability" and as being in "the interest of both parties and of the world" .
The EU accounts for about one-fifth of U.S. total trade in goods and services, and the United States and the EU are each other's largest source and destination for foreign direct investment. Many in the EU greeted the July 25, 2018, accord between President Trump and European Commission President Juncker on renewing U.S.-EU economic cooperation as a positive first step toward de-escalating tensions on trade and tariff issues. EU officials hope that U.S.-EU discussions will lead to an end to U.S. tariffs on steel and aluminium products and prevent potential new U.S. tariffs on autos and auto parts. Administration officials and supporters credit President Trump's approach with compelling the EU to address U.S. trade concerns. Various EU officials and European analysts increasingly question whether the United States will remain a credible and reliable partner in the years ahead.
In light of the internal and external challenges facing the EU, the future shape and character of the bloc are being questioned. The EU would largely continue to function as it currently does, without any significant treaty changes or decision-making reforms.
The EU would probable to become a two-speed entity, consisting of a strongly integrated group of "core" countries and a group of "periphery" countries more free to select those EU policies in which they wish to participate.
Further EU integration essentially would be put on hold, and possibly reversed in some areas, with sovereignty on certain issues reclaimed by national capitals. Should euroskeptic parties come to power in more EU countries this outcome may be most probable.
Following the UK's Brexit, EU leaders acknowledged that it could no longer be "business as usual" and announced that the other 27 member states would launch a "political reflection" to consider the EU's future.
The EU would emerge from its current challenges more united and integrated. Such an outcome could actually be more likely as a result of Brexit, resulting in more aligned membership on the need for further political and economic integration. This configuration is likely not to encourage further EU enlargement.
Regardless of a formal decision to move toward a multispeed integration procedure, the EU appears to be pursuing greater integration in certain areas, with varying degrees of success. Over the past two years, EU leaders have announced several new initiatives to bolster security and defence cooperation.
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