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761. GDP Now Matters More Than Force

Author:
Leslie H. Gelb
Publication Date:
11-2010
Content Type:
Journal Article
Journal:
Foreign Affairs
Institution:
Council on Foreign Relations
Abstract:
Most nations have adjusted their foreign policies to focus on economic security, but the United States has not. Today's leaders should adapt to an economic-centric world and look to Presidents Harry Truman and Dwight Eisenhower for guidance.
Topic:
Security and Economics
Political Geography:
United States, Europe, and Washington

762. Managing the Challenge of Russian Energy Policies

Author:
Keith C. Smith
Publication Date:
12-2010
Content Type:
Working Paper
Institution:
Center for Strategic and International Studies (CSIS)
Abstract:
Following the breakup of the Soviet Union and the Warsaw Pact, the leaders of Russia, including then-President Boris Yeltsin, searched for new methods of continuing to exert influence over the former Soviet-controlled region. The Kremlin at first used an energy blockade to the Baltic States in 1990 in an attempt to prevent their breakaway from the Soviet Union. After that failed, it then focused on the growing opposition in the former republics of the Soviet Union and in East Central Europe to its foreign and economic policies, and in particular on demands that Russian military forces withdraw from the newly independent states. The Kremlin leadership quickly recognized that short of military action, its major foreign policy tool was the denial or threat of denial of access to Russia's vast oil and gas resources. The economies of East European and Central Asian countries, and especially their rail and pipeline infrastructures, had been hardwired by Soviet leaders to assure total dependency on Moscow for their raw materials, including oil, gas, coal, and nuclear fuel.
Topic:
Cold War, Economics, Emerging Markets, Energy Policy, and Oil
Political Geography:
Russia, Europe, Central Asia, and Soviet Union

763. The Transformational Impact of EMU and the Global Financial Crisis

Author:
Francesco Paolo Mongelli
Publication Date:
12-2010
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
The headwinds facing the euro area are many and substantial: there is no pretence of denial. While most attention is correctly devoted to the size of rescue packages for some countries and the terms of crisis management and resolution mechanisms, we argue that these challenges must also be met from within the euro area. We are aided by a simple framework illustrating how the benefits the euro can generate depend on the degree of openness, flexibility and income correlation among euro area countries. Sharing the euro has steadily transformed euro area economies that are now deeply interconnected. This is generating largely benign effects that represent the intrinsic value of the euro area: it is a shared asset. Yet, such integration has provided the ground for the transmission of the sovereign crisis: through financial exposure, trade linkages and cross-country asset ownership.
Topic:
Economics, Global Recession, Monetary Policy, and Financial Crisis
Political Geography:
Europe

764. A Renewed Political Deal for Sustainable Growth within the Eurozone and the EU: An Open Letter to the President of the European Council

Author:
Daniel Gros, Stefano Micossi, Richard Baldwin, Giuliano Amato, and Pier Carlo Padoan
Publication Date:
12-2010
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
Under current policies, the European Union will only be able to pull itself out of low growth and high unemployment very slowly – too slowly to exclude dangerous economic and political assaults on the Union's continuing cohesion and viability. What is needed is a substantial increase in the EU output growth rate, which has been persistently low for too long a time. With low growth, sovereign debt sustainability in a number of member states will remain uncertain, possibly leading to renewed strains in financial markets and rising spreads that will aggravate the costs of budgetary consolidation. The divergences in productivity and competitiveness and the current external imbalances they engendered can be unwound at an acceptable cost only if growth accelerates in the core and the periphery. On present trends, the adjustment burden might be unbearable for peripheral countries and generate strains that may eventually undermine the euro.
Topic:
Economics, Regional Cooperation, Monetary Policy, and Governance
Political Geography:
Europe

765. The European Council Summit and the Political Economics of the EMU Crisis

Author:
Christian Fahrholz and Cezary Wójcik
Publication Date:
11-2010
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
Roger Ailes, a former advisor to Ronald Reagan, recalls in his book an intriguing practice of the ancient Romans: when they finished building a bridge or an arch, they enforced accountability by placing the engineer in charge beneath the construction when the scaffolding was removed. If the edifice did not hold, he was the first to know. We do not follow such drastic practices these days in Europe, but with some European economies shaking and the Greek sovereign debt crisis still not over, the architecture of the euro area has been certainly come under severe stress. Unfortunately, the 28-29 October 2010 European Council Summit has not made this architecture much safer.
Topic:
Economics, Regional Cooperation, Monetary Policy, and Financial Crisis
Political Geography:
Europe

766. Living Standards in an Ageing, Greener, Knowledge Economy: Towards a period of lean cows?

Author:
Jørgen Mortensen
Publication Date:
12-2010
Content Type:
Working Paper
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
This paper provides evidence on past growth of productivity, analysing the evolution of labour productivity, capital deepening and multi-factor productivity. Based on a literature review of recent studies, it shows that economic growth is increasingly attributable to the accumulation of intangible capital and that consequently, an increasing share of conventionally measured rise in labour productivity has, in fact, been ploughed back into the economy as intangible capital formation. In addition, it shows that on average for the developed countries examined, the growth of total factor productivity has been the main determinant of the increase in living standards over the 50 years from 1960 to 2010. It also demonstrates a striking slowdown in the growth of both productivity and living standards during this period. Looking ahead, it argues that the period 2010 to 2030 is likely to see a considerable expansion of tangible and intangible capital formation and lower growth of multi-factor productivity. The paper therefore concludes that over the next 20 years the scope for growth in living standards in the developed economies will be very limited, on average around half a percent per annum, with serious consequences for social conditions and a likely aggravation of inequalities.
Topic:
Economics, Globalization, Human Welfare, and Labor Issues
Political Geography:
Europe

767. Carbon Capture, Transport and Storage in Europe: A problematic energy bridge to nowhere?

Author:
Christian von Hirschhausen, Johannes Herold, and Sophia Rüster
Publication Date:
11-2010
Content Type:
Working Paper
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
This paper summarises the findings of work package 5.3 of the SECURE project, with regard to the role of carbon capture, transport and storage (CCTS) for the future European supply security of coal. The real issue in European supply security with respect to coal is the absence of an economically and politically sustainable use of coal for electricity, liquefaction, gasification, etc. Whereas earlier papers delivered for work package 5.3 on the coal sector indicated that there are few risks to the European energy supply of (steam) coal, there is an implicit supply security threat, i.e. that coal will no longer be an essential element of European energy supply because the CCTS rollout will be delayed or not be carried out at all. This thesis is substantiated in this subsequent paper, with more technical details and some case study evidence.
Topic:
Security, Economics, and Energy Policy
Political Geography:
Europe

768. Five Surprises of the Great Recession

Author:
Uri Dadush and Vera Eidelman
Publication Date:
11-2010
Content Type:
Policy Brief
Institution:
Carnegie Endowment for International Peace
Abstract:
The Great Recession included five major surprises: (1) the severity of the global trade and output collapse, (2) the United States suffered a milder than expected recession, (3) Europe saw the onset of a severe sovereign debt crisis, (4) China grew at an extraordinary rate even though it's greatly dependent on exports, and (5) Latin America showed remarkable resilience.
Topic:
Economics, Globalization, Global Recession, and Financial Crisis
Political Geography:
United States, China, Europe, and Latin America

769. Sovereign Bankruptcy in the European Union in the Comparative Perspective

Author:
Leszek Balcerowicz
Publication Date:
12-2010
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
This paper distinguishes four alternative sovereign debt resolution mechanisms: pure market solutions, modified market solutions, crisis lending by the IMF and other institutions, and the proposed Sovereign Debt Restructuring Mechanism (SDRM). It is hard to find—at the general level of analysis—the unique advantages of SDRM. The assessment of the European Stabilization Mechanism will ultimately depend on its operation, especially whether it will be a tool of subsidizing countries in debt distress or an instrument of fiscal crisis lending. The present fiscal problems in the eurozone are due to the erosion of fiscal discipline and not to the lack of strong compensatory transfers within the eurozone. The right model to look at the conditions for the stability of the eurozone is not a single state but the gold standard–type system, a system of sovereign states with a (de facto) single currency. Based on this analogy and considering modern developments, three types of measures are needed to safeguard the stability of the eurozone: (1) measures that would reduce the procyclicality of the macroeconomic policies and of the economy; (2) reforms that would help the eurozone economies grow out of increased public debt; and (3) steps to increase the flexibility of the economy so that it can deal with the future shocks in a better way.
Topic:
Debt, Economics, Markets, Monetary Policy, and Financial Crisis
Political Geography:
Europe

770. Russia's Oil Exports: Economic Rationale Versus Strategic Gains

Author:
Adnan Vatansever
Publication Date:
12-2010
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Russia, the world's largest oil producer, is vigorously promoting the development of new outlets for oil exports. While the recent launch of a long-awaited cross-border oil pipeline between Russia and China has received most of the publicity, it is a part of a much larger Russian initiative aimed at developing new oil export infrastructure in almost every possible direction: Asia, the Baltic Sea region, the Black Sea region, and the Arctic. This export strategy will have considerable policy and economic implications for Eastern and Central Europe and even the United States.
Topic:
Economics, Energy Policy, Markets, and Oil
Political Geography:
United States and Europe