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2791. The Missing Peaces

Author:
Michael D. Bell, Daniel C. Kurtzer, and Prem G. Kumar
Publication Date:
03-2009
Content Type:
Journal Article
Journal:
Foreign Affairs
Institution:
Council on Foreign Relations
Abstract:
To resolve the Israeli-Palestinian conflict, policymakers will have to develop a new regime for Jerusalem's Old City. Striking an Israeli-Syrian deal that draws Damascus away from Tehran is also essential, but it will be harder than it appears.
Topic:
Economics and Politics
Political Geography:
Israel, Palestine, and Syria

2792. Linkage Diplomacy: Economic and Security Bargaining in the Anglo-Japanese Alliance, 1902-23

Author:
Christina L. Davis
Publication Date:
03-2009
Content Type:
Journal Article
Journal:
International Security
Institution:
Belfer Center for Science and International Affairs, Harvard University
Abstract:
How do states use economic-security linkages in international bargaining? Governments can provide economic benefits as a side payment to reinforce security cooperation and use close security ties as a source of bargaining leverage in economic negotiations. Domestic political pressures, however, may constrain the form of linkage. First, economic side payments are more likely to be chosen in areas that will not harm the key interests of the ruling party. Second, involvement by the legislature pushes governments toward using security ties as bargaining leverage for economic gains. Evidence from negotiations between Britain and Japan during the Anglo-Japanese alliance of 1902 to 1923 supports the constraining role of domestic politics. Economic-security linkages occurred as Britain gave favorable economic treatment to Japan in order to strengthen the alliance. Economic competition between the allies, however, made it difficult for Britain to grant asymmetrical economic benefits. In tariff negotiations where business interests had more influence in the domestic policy process, the alliance was used as leverage to force reciprocity.
Topic:
Security, Diplomacy, Economics, and Government
Political Geography:
Britain and Japan

2793. Global Imbalances and the Financial Crisis

Author:
Steven Dunaway
Publication Date:
03-2009
Content Type:
Working Paper
Institution:
Council on Foreign Relations
Abstract:
The current economic and financial crisis has brought about a significant change in global economic governance as the international forum for discussions on the crisis has shifted from the small group of advanced countries in the Group of Seven (G7) to the Group of Twenty (G20), a broader group including important emerging market countries. The G20 summit held in Washington, DC, on November 15, 2008, dealt with the immediate concerns fostered by the crisis and focused on both macroeconomic policy actions needed to support global growth and ideas for implementing financial market reforms. Follow-up G20 summits are expected, starting with a gathering in the United Kingdom in April 2009. However, for these discussions to have a substantial impact, the agenda will have to be broadened beyond economic stimulus and financial market regulation. If not, global policymakers will miss a critical chance to make the world economy and financial markets more stable, as then U.S. treasury secretary Henry M. Paulson Jr. pointed out: If we only address particular regulatory issues—as critical as they are—without addressing the global imbalances that fueled recent excesses, we will have missed an opportunity to dramatically improve the foundation for global markets and economic vitality going forward. The pressure from global imbalances will simply build up again until it finds another outlet.
Topic:
International Relations, Economics, International Political Economy, and International Trade and Finance
Political Geography:
United States and China

2794. Whither aid? Financing development in Mozambique

Author:
Sam Jones
Publication Date:
03-2009
Content Type:
Working Paper
Institution:
Danish Institute for International Studies
Abstract:
Careful consideration of the appropriate level and composition of aggregate public spending is vital in low income countries, especially in the presence of large volumes of foreign aid. Not only can expansion of the public sector weaken economic growth, but also provision of public services may be difficult to re­trench. These issues are relevant to Mozambique as the share of government in GDP already is comparatively high and strategic management of aggregate public spending historically has been weak. A new long-term macroeconomic model quantifies the implications of alternative aggregate spending profiles. It shows that small increases in minimum levels of government spending correspond to large increases in the duration to aid independence. Sharp reductions in aid availability would necessitate significant fiscal and economic adjustments, including cuts in real public spending per capita. For this reason, there is no room for complacency as regards the future of development finance to Mozambique.
Topic:
Development, Economics, Humanitarian Aid, International Political Economy, Poverty, and Third World
Political Geography:
Africa

2795. The Future of the Chiang Mai Initiative: An Asian Monetary Fund?

Author:
C. Randall Henning
Publication Date:
02-2009
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
In September 1997, at the outset of the last global financial crisis, the Japanese Ministry of Finance proposed the creation of an Asian Monetary Fund. Although this particular proposal was scuttled, the idea of a common regional fund on which East Asian governments might draw in times of financial turmoil survives. The region's disaffection from the International Monetary Fund (IMF), stemming from the 1997–98 crisis, sustains this idea and a desire on the part of individual countries to self-insure with large holdings of foreign exchange reserves. East Asian governments and central banks have created a set of bilateral swap arrangements (BSAs) dubbed the Chiang Mai Initiative (CMI) and are negotiating among themselves to build these BSAs into a more comprehensive facility. Some Asian officials hope that such a facility could underpin exchange rate cooperation and monetary integration in the region, although such proposals remain for the moment long-term visions.
Topic:
Economics, International Cooperation, International Trade and Finance, Regional Cooperation, and Financial Crisis
Political Geography:
Japan, Israel, and Asia

2796. Money for the Auto Industry: Consistent with WTO Rules?

Author:
Gary Clyde Hufbauer and Claire Brunel
Publication Date:
02-2009
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
As the financial crisis threatens to lead to a depression, the woes of the automobile industry are second only to the distress of the financial sector. Employment in the US auto industry dropped 9 percent between 2007 and 2008, with much more to follow in 2009. Overall, US auto sales dropped 18 percent between 2007 and 2008, and sales of SUVs plunged 44 percent on a year-over-year basis. Since some sort of financing is required for 90 percent of US car sales, the global credit freeze hit the auto industry with a second blow.
Topic:
Economics, International Political Economy, International Trade and Finance, Poverty, and Financial Crisis
Political Geography:
United States

2797. A Green Recovery? Assessing US Economic Stimulus and the Prospects for International Coordination

Author:
Trevor Houser, Shashank Mohan, and Robert Heilmayr
Publication Date:
02-2009
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
As the 111th Congress begins and a new president takes office, the economic crisis dominates the US policy agenda. The financial system remains in a tenuous state despite massive bank recapitalization, and the economy, more than a year into the current recession, shows no signs of recovery. Given the scale of the challenge Washington faces and the amount of money required to combat it, there will likely be little room for other legislative priorities. As a result, policymakers are hoping to direct government spending over the next two years in a way that not only generates short-term economic growth and employment but also addresses long-term policy goals sidelined by the current crisis.
Topic:
International Relations, Climate Change, Economics, Environment, International Political Economy, and International Trade and Finance
Political Geography:
United States

2798. Buy American: Bad for Jobs, Worse for Reputation

Author:
Gary Clyde Hufbauer and Jeffrey J. Schott
Publication Date:
02-2009
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
On January 28, 2009, the US House of Representatives passed its economic stimulus plan, the American Recovery and Reinvestment Act of 2009. Out of the bill's 700 text pages, a small half-page section attracted enormous media attention: the section requiring that all public projects funded by the stimulus plan must use only iron and steel produced in the United States (box 1). Another provision, which drew less attention, extends the so-called Berry Amendment (an old Buy American provision) to uniforms purchased by the Department of Homeland Security.
Topic:
Economics, Globalization, Government, Industrial Policy, International Political Economy, International Trade and Finance, and International Affairs
Political Geography:
United States

2799. Did Reagan Rule In Vain? A Closer Look at True Expenditure Levels in the United States and Europe

Author:
Jacob Funk Kirkegaard
Publication Date:
01-2009
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
It is generally believed that the United States is a country of low taxes and small government, at least when compared with countries in Europe (and until the financial crisis so greatly expanded the role of the federal government in the United States in late 2008). Fully accounting for the role, size, and effect of the government in an economy is a complex endeavor, however, and it is hardly accomplished by repeatedly restating differences in top marginal tax rates, overall tax burdens, or gross sizes of governments in GDP terms.
Topic:
Economics, Government, Political Economy, and Privatization
Political Geography:
United States and Europe

2800. A New Information Infrastructure for Financial Markets

Publication Date:
02-2009
Content Type:
Working Paper
Institution:
Council on Foreign Relations
Abstract:
Information about prices and quantities of assets lies at the heart of well-functioning capital markets. In the current financial crisis, it has become clear that many important actors-both firms and regulatory agencies-have not had sufficient information. Distributed by the Center for Geoeconomic Studies, this Working Paper proposes a new regulatory regime for gathering and disseminating financial market information. The authors argue that government regulators need a new infrastructure to collect and analyze adequate information from large (systemically important) financial institutions. This new information framework would bolster the government's ability to foresee, contain, and, ideally, prevent disruptions to the overall financial services industry.
Topic:
Economics, Government, Industrial Policy, International Trade and Finance, and Markets
Political Geography:
United States