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921. Bail-in Provisions in State Aid and Resolution Procedures: Are they consistent with systemic stability?

Author:
Stefano Micossi, Ginevra Bruzzone, and Miriam Cassella
Publication Date:
05-2014
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies
Abstract:
In July 2013, the European Commission adopted a new Banking Communication – the seventh since the start of the financial crisis – updating its criteria for the evaluation of state aid in the banking sector in response to the evolving economic and institutional environment. Under this Communication, any credit institution in need of recapitalisation or 'impaired asset' measures will be required, prior to any further action, to submit a plan for restructuring or the orderly winding down the bank. Moreover, whenever there is a capital shortfall, the Commission will require that, prior to any injection of public funds, not only shareholders – as has been the case so far – but also junior creditors write down or convert into equity their claims on the bank, regardless of whether the bank is under resolution, in order to minimise the need for state aid.
Topic:
Economics, International Trade and Finance, and Monetary Policy
Political Geography:
Europe

922. IMF Lending Practices and Sovereign Debt Restructuring

Author:
Domenico Lombardi, James M. Boughton, and Skylar Brooks
Publication Date:
06-2014
Content Type:
Policy Brief
Institution:
Centre for International Governance Innovation
Abstract:
The IMF has struggled for decades to develop a set of lending practices that enable sovereign borrowers to resolve serious debt problems and restore economic growth, but also respect the right of private financial markets to enter into and enforce contractual obligations. The challenge has always been to operate under a well-defined set of principles while dealing with each situation in a way that takes account of relevant circumstances. Recently, the international financial crisis that began in 2008 and the subsequent European sovereign debt crisis have raised this challenge to new heights. In providing €30 billion to Greece — the largest financial package ever granted to a single country — the IMF invoked greater discretion in its lending decisions to counteract potential "systemic" crises. By doing so, it entered a program without a restructuring agreement.
Topic:
Debt, Economics, International Trade and Finance, International Monetary Fund, and Reform

923. Keeping the Peace in the Pacific: The Next Steps in American Policy

Author:
John Lee and Charles Horner
Publication Date:
04-2014
Content Type:
Policy Brief
Institution:
Hudson Institute
Abstract:
U.S. administrations and officials are consistently caught flat-footed by the increasing assertiveness of the People's Republic of China (PRC) over disputed territories in the East China and South China Seas. This assertiveness is strident, yet controlled. Beijing's objectives in the region, with respect to maritime issues in particular, have been apparent for several decades. While the United States is well aware of the PRC's "talk and take" approach—speaking the language of negotiation while extending de facto control over disputed areas—U.S. policy has been tactical and responsive rather than strategic and preemptive, thus allowing China to control the pace and nature of escalation in executing talk and take.
Topic:
International Relations, Diplomacy, Economics, International Trade and Finance, and Bilateral Relations
Political Geography:
United States, China, and Asia

924. Time to Worry about China's Military Rise

Author:
Evan Braden Montgomery
Publication Date:
06-2014
Content Type:
Policy Brief
Institution:
Belfer Center for Science and International Affairs, Harvard University
Abstract:
What are the potential consequences of China's military modernization? This question is at the heart of recent debates over the durability of U.S. primacy, whether or not the United States can sustain its grand strategy of global engagement, and how it should adapt its armed forces. During the past two decades, China has been increasing its defense spending, developing new war fighting strategies, and fielding advanced weapons systems. Yet many scholars and policymakers still believe that U.S. dominance will remain uncontested.
Topic:
International Relations, Foreign Policy, Economics, International Security, and Military Strategy
Political Geography:
North America

925. Strengths and Constraints of Turkish Policy in the South Caucasus

Author:
Bayram Balci
Publication Date:
04-2014
Content Type:
Journal Article
Journal:
Insight Turkey
Institution:
SETA Foundation for Political, Economic and Social Research
Abstract:
Just after the end of the Soviet Union and the emergence of three independent states in the South Caucasus Turkey started to manifest a real interest for this region. Energy issue, which is the key issue in this Turkish policy since the beginning, is expected to remain the key priority for Turkey because of its growing economy. Ankara tries to have a balanced relations with the three South Caucasian countries, Azerbaijan, Georgia and Armenia, but for multiple reasons, Turkey's policy in the South Caucasus is still determined by its relations with Azerbaijan who is the best ally and economic partner for Ankara.
Topic:
Economics
Political Geography:
Turkey, Soviet Union, and Georgia

926. Japan and Turkey: The Contours and Current Status of an Economic Partnership/Free Trade Agreement

Author:
Scott Morrison
Publication Date:
04-2014
Content Type:
Journal Article
Journal:
Insight Turkey
Institution:
SETA Foundation for Political, Economic and Social Research
Abstract:
As the third largest economy in the world, Japan cannot be overlooked in any analysis of Asia's importance in international geopolitics and the global political economy. The ties between Japan and Turkey – whether diplomatic, political, economic or societal – span the breadth of Asia. Those ties have become more numerous and consequential in monetary terms over the last half-decade. Although the relationship has not been a top priority for either country, awareness of the potential for mutual gain as a result of more trade and investment has a history of at least three decades. This article surveys the current economic and trade relationship between Turkey and Japan, paying particular attention to recent notable Japanese investments in Turkey and the preliminary positioning of trade representatives in advance of a proposed Free Trade/Economic Partnership Agreement.
Topic:
Economics and Political Economy
Political Geography:
Japan, Turkey, and Asia

927. overeignty After Empire: Comparing the Middle East and Central Asia Sally Cummings and Raymond Hinnebusch

Author:
Gul Berna Ozcan
Publication Date:
04-2014
Content Type:
Journal Article
Journal:
Insight Turkey
Institution:
SETA Foundation for Political, Economic and Social Research
Abstract:
Sovereignty After Empire: Comparing the Middle East and Central Asia The demise of empires left a powerful and perplexing legacy for successor states in the Middle East and Central Asia. Sally Cummings and Raymond Hinnebusch set the scene for this fascinating collection of essays in the introduction, where they address the limits of the Westphalian state system and frame the sovereignty question in relation to the imported character of the state in former colonies. Empires were amorphous, whether as contiguous landforms or maritime empires. In contrast to modern nation-states with clearly demarcated boundaries as prerequisites for legitimacy, empires could devolve variable autonomies from the center without breaking up. Empires may adapt to nationalism and local challenges, but the nation-states that emerge are fragile. What is especially interesting about this volume is that the authors seek to explore continuities, ruptures and divergences. In stark contrast to those who suggest that the legacy of imperialism is no longer relevant, these essays focus on the understanding that comes from analyses of the imperial and colonial past.
Topic:
Economics and Sovereignty
Political Geography:
Central Asia, Middle East, and Soviet Union

928. Withdrawing incentives to attract FDI: Can host countries put the genie back in the bottle?

Author:
Anna De Luca
Publication Date:
07-2014
Content Type:
Working Paper
Institution:
Columbia Center on Sustainable Investment
Abstract:
Many governments offer incentives to attract foreign direct investment (FDI). For example, the renewable energy sector has benefitted from large national incentive schemes in the past decade. However, the withdrawal of such incentives can lead to investors bringing investment treaty claims against host countries. This Perspective looks at some claims host countries face from investors in the renewable energy sector and their implications.
Topic:
Economics, International Trade and Finance, and Foreign Direct Investment
Political Geography:
Italy

929. How Should Donors Respond to Resource Windfalls in Poor Countries?

Author:
Alan Gelb, Anton Dobronogov, and Fernando Brant Saldanha
Publication Date:
07-2014
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Natural resources are being discovered in more countries, both rich and poor. Many of the new and aspiring resource exporters are low-income countries that are still receiving substantial levels of foreign aid. Resource discoveries open up enormous opportunities, but also expose producing countries to huge trade and fiscal shocks from volatile commodity markets if their exports are highly concentrated. A large literature on the "resource curse" shows that these are damaging unless countries manage to cushion the effects through countercyclical policy. It also shows that the countries least likely to do so successfully are those with weaker institutions, and these are most likely to remain as clients of the aid system. This paper considers the question of how donors should respond to their clients' potential windfalls. It discusses several ways in which the focus and nature of foreign aid programs will need to change, including the level of financial assistance. The paper develops some ideas on how a donor like the International Development Association might structure its program of financial transfers to mitigate volatility. The paper outlines ways in which the International Development Association could use hedging instruments to vary disbursements while still working within a framework of country allocations that are not contingent on oil prices. Simulations suggest that the International Development Association could be structured to provide a larger degree of insurance if it is calibrated to hedge against large declines in resource prices. These suggestions are intended to complement other mechanisms, including self-insurance using Sovereign Wealth Funds (where possible) and the facilities of the International Monetary Fund.
Topic:
Economics, International Trade and Finance, Natural Resources, and Foreign Aid
Political Geography:
Uganda, Kenya, Tanzania, and Ghana

930. Guatemalans returning home from the U.S. face unemployment, a maze of red tape—and social stigma. (slideshow available)

Author:
Michael McDonald
Publication Date:
04-2014
Content Type:
Journal Article
Journal:
Americas Quarterly
Institution:
Council of the Americas
Abstract:
Dispatches: Guatemalan Migrants BY Michael Mcdonald Guatemalans returning home from the U.S. face unemployment, a maze of red tape—and social stigma. (slideshow available) Read a sidebar about voluntary return migration. Read a sidebar about the stigma that return migrants face. View a slideshow of return migrants in Guatemala below. Fidelino Gómez remembers fondly the years he spent in Iowa, where his middle child was born. Standing outside his one-room wood home in his native Guatemala, Gómez, 34, thumbs through pictures he took of the Mississippi River, snowy Midwest winters and gatherings with family and friends. He recalls easier times. “We lived well,” Gómez says under the searing sun. “We could feed our children, pay our bills, and we still had money left over.” From 2004 to 2008, Gómez and his wife María earned roughly $7 an hour working at Agriprocessors Inc., a slaughterhouse and meatpacking plant in Postville, Iowa. The money was more than they ever imagined as subsistence farmers back home. But the family's dream was cut short when United States immigration officials raided the plant in May 2008, arresting hundreds of undocumented Guatemalan workers and deporting them. Now, like more than 100 other families deported after the Postville raid, they struggle to eke out a living back in the economically depressed farming village San José Calderas, some 40 miles (64 km) west of Guatemala City. They grow corn and beans to feed their loved ones and do odd jobs, scraping by on the equivalent of between $15 and $30 per month.
Topic:
Economics and Government
Political Geography:
United States and Guatemala