Archive for the ‘Political Economy’ Category

23
Sep

The Pacific Alliance deserves some applause. Photographer: Alfredo Estrella/AFP/Getty Images

The Pacific Alliance is achieving significant results. Three years ago, Chile, Colombia, Mexico and Peru decided to move toward deeper economic and commercial integration. The effort was based on our common belief that the free movement of people, goods, services and capital can help us achieve greater welfare and social inclusion for our citizens.

Our four countries represent 214 million people, and our economies have a combined gross domestic product of $2.1 trillion, which accounts for 37 percent of Latin America’s total GDP, averaging a 5.1 percent annual growth rate over the past four years. Our foreign trade adds more than $1.13 trillion, and we receive 45 percent of total foreign investment flows in Latin America.

To fulfill our goal of free movement of people, we lifted tourist and business visa requirements for our citizens. Because cultural exchange and education are so important, we put in place special programs to make it easier for our students to study and travel.

We also found ways to expand the free movement of goods and services. A new trade agreement will immediately eliminate tariffs for 92 percent of our common products, and the remaining 8 percent will be phased out, giving extra help to small and medium enterprises.

On the free movement of capital, our stock exchanges are now unified in the Latin American Integrated Market. With the recent addition of Mexico, we are certain that this action will broaden the diversity of financial products that we can offer. More than 750 companies with a market value of $1.1 trillion are represented in our integrated market.

We believe we have come a long way in a short time. However, we want to do more and do it together. We are establishing embassies and trade offices in shared facilities overseas as well as organizing trade and economic missions. We created a fund to promote projects among ourselves and with third parties.

We are particularly committed to working with other countries. With 32 nations now observing the Pacific Alliance, we know there is broad global interest in our shared enterprise and the prospect for wider integration.

We are therefore strengthening our relationship with observer countries by defining projects of cooperation in our core areas. Specifically, we are working on education, trade, small and medium businesses, innovation, science and technology, and infrastructure. More generally, we are open to exploring engagement with other regional integration efforts.

The Pacific Alliance Business Council, which includes representatives of the main private economic institutions of our four countries, is another important partner in our project. As we gather this week in New York City to attend the United Nations General Assembly, we plan to discuss our achievements, challenges and prospects, as well as to deepen a fruitful exchange with the U.S. and the international business community.

If we had to highlight one characteristic of our integration process, it would be this: We firmly believe that the main purpose of the Pacific Alliance is to improve the welfare of all our citizens through the promotion of growth and economic development, and the improvement of the competitiveness of our economies.

Three years ago, we faced the challenge of fostering a process that would strengthen our countries and, especially, help us build a bridge to the Asia Pacific region. This aspiration has now become a reality. We will continue to work together, as partners, to fulfill our common goals and to deepen and extend our vision, for the benefit of our nations.

By  ,  ,  &Michelle Bachelet is president of Chile. Juan Manuel Santos is president of Colombia. Enrique Pena Nieto is president of Mexico. Ollanta Humala is president of Peru

Published on 21 September in http://www.bloombergview.com/articles/2014-09-21/chile-colombia-mexico-peru-better-together

10
Sep

I’m in Washington today to attend the annual meeting of the American Political Science Association. The timing is fortuitous, because I’m pondering a number of big questions these days and I’ll be interested to see what some of the nation’s best scholars think about them. So for what they may be worth, here are my Top 10 Foreign Policy Puzzles:

No. 1: Will there be a deal on Ukraine?

The crisis in Ukraine has been a colossal failure of analysis and of diplomacy, with plenty of blame to share on all aides. The main victims, alas, have been the unfortunate Ukrainian people. As I’ve written before, I think the United States and the West played a key role in causing the crisis, mostly by failing to anticipate that Russia was going to respond forcefully and vigorously to what its leaders regarded as a gradual attempt to incorporate Ukraine into the West. One need not approve of Russia’s response to recognize that the United States should have seen it coming and thought more carefully about our interests and objectives beforehand.

Since the collapse of the Yanukovych government, the United States and its allies have followed the usual playbook: ramping up sanctions and waiting for Moscow to cave and give us everything we want. Unfortunately, this view fails to recognize that Russia does have valid reasons to care about its border areas and still has cards to play. Sanctions are clearly hurting, but Putin probably anticipated them and has been willing to pay the price. In the meantime, sanctions aren’t helping the sputtering European economy (see below), and Ukraine itself is going from bad to worse.

So my question is: Will someone get serious about real diplomacy, and make Putin an offer he’s unlikely to refuse? Instead of building more bases in Eastern Europe, the United States and its allies should be working to craft a deal that guarantees Ukraine’s status as an independent and neutral buffer state. And that would mean making an iron-clad declaration that Ukraine will not be part of NATO. (Just because many Ukrainians want to join doesn’t mean NATO has to let them.) Recent proposals for a deal lack that essential ingredient and aren’t going to solve the crisis.

A “Finlandized” Ukraine might not be an ideal outcome, but it is better than watching the country get destroyed. Putin may reject such a solution, of course, but surely it deserves a serious attempt before things get even worse.

 No. 2: When will anyone in Israel or Palestine try something different?

The latest Gaza war was déjà vu all over again: more people were killed, vastly more damage was done to the imprisoned civilian population of Gaza, the IDF lost more than 60 soldiers (a total more than twice the number of civilian victims from Gazan rockets and mortars over the past five years), and the eventual cease-fire agreement changed nothing of significance. On the West Bank, the occupation grinds on, while Israeli politics drift rightward. Yet despite all these worrisome trends, nobody in a position of authority seems capable of rethinking their hardened positions: not Israel, not Hamas, and not the Palestinian Authority. And certainly not the United States, either. Until one of those actors adopts a different mind-set and/or a different approach, we can count on another reprise in a few months or years.

No. 3: Will Europe ever get its act together?

There was a brief flurry of optimism a year or so ago, as the eurozone achieved some modest economic growth and interest rate spreads eased, but the French economy is now in serious trouble and even Germany’s economy contracted during the last quarter. (As noted above, this may not have been the smartest moment to impose stiffer sanctions on Russia.) Scotland’s status in the U.K. is up for grabs, and so is England’s membership in the EU. Some European Jews are heading for Israel to escape fears of rising anti-Semitism, even as some Israelis are heading the other way. Remember when Euro-optimists used to crow about it becoming a different sort of world power, based on democracy, rule of law, and “civilian power”? Today, a better question is whether Europe can retain any sense of unity, regain its economic health, and avoid geopolitical irrelevance.

No. 4: Where will the borders be drawn in the greater Middle East?

There are good reasons why existing borders tend to endure, even when they don’t conform well to ethnic, cultural, or religious boundaries. One reason is simple prudence: Once you start redrawing the map, it is hard to know where the process will end, and so existing elites will have every incentive to preserve the present arrangements, however flawed they might be. Even so, it is hard to look at what is now happening in the Middle East and believe that the current borders aren’t going to look different some years from now. Libya might break up completely. The borders drawn by Sykes and Picot may end up on the ash heap of history, and be replaced by a rump Alawite state, a radical Sunni community in eastern Syria/western Iraq, and a genuinely independent Kurdistan. The Green Line separating pre-1967 Israel from the West Bank is increasingly meaningless too, but a future “Greater Israel” would catalyze a Palestinian struggle for civil rights. I don’t know if any of these things will happen or what the final end states will be, but trying to keep the pre-2009 Humpty Dumpty together is looking like a bad bet these days.

No. 5: Will a stable equilibrium emerge in East Asia?

China’s rise has shifted the balance of power in East Asia, and Beijing continues to press various territorial claims in the East China and South China seas. There have been desultory efforts to resolve these disputes but no serious progress. In the absence of multilateral agreement, these disputes are just trouble waiting to happen, especially given U.S. treaty commitments to various regional allies and to freedom of navigation more broadly. America’s “rebalance” to Asia was supposed to help address these issues, but Washington keeps getting distracted by more dramatic but ultimately less significant events elsewhere. My guess: East Asia will be even more contentious in 2016 than it is today, and these issues are going to loom large in the next president’s agenda.

Read more…

By Stephen Walt; Published on Aug. 28 in http://www.foreignpolicy.com

Stephen M. Walt is the Robert and Renée Belfer professor of international relations at Harvard University.

 

19
Aug

A century has passed since the start of World War I, which many people at the time declared was “the war to end all wars.” Unfortunately, wars just kept happening. And with the headlines from Ukraine getting scarier by the day, this seems like a good time to ask why.

Once upon a time wars were fought for fun and profit; when Rome overran Asia Minor or Spain conquered Peru, it was all about the gold and silver. And that kind of thing still happens. In influential research sponsored by the World Bank, the Oxford economist Paul Collier has shown that the best predictor of civil war, which is all too common in poor countries, is the availability of lootable resources like diamonds. Whatever other reasons rebels cite for their actions seem to be mainly after-the-fact rationalizations. War in the preindustrial world was and still is more like a contest among crime families over who gets to control the rackets than a fight over principles.

If you’re a modern, wealthy nation, however, war — even easy, victorious war — doesn’t pay. And this has been true for a long time. In his famous 1910 book “The Great Illusion,” the British journalist Norman Angell argued that “military power is socially and economically futile.” As he pointed out, in an interdependent world (which already existed in the age of steamships, railroads, and the telegraph), war would necessarily inflict severe economic harm even on the victor. Furthermore, it’s very hard to extract golden eggs from sophisticated economies without killing the goose in the process.

We might add that modern war is very, very expensive. For example, by any estimate the eventual costs (including things like veterans’ care) of the Iraq war will end up being well over $1 trillion, that is, many times Iraq’s entire G.D.P.

So the thesis of “The Great Illusion” was right: Modern nations can’t enrich themselves by waging war. Yet wars keep happening. Why?

One answer is that leaders may not understand the arithmetic. Angell, by the way, often gets a bum rap from people who think that he was predicting an end to war. Actually, the purpose of his book was to debunk atavistic notions of wealth through conquest, which were still widespread in his time. And delusions of easy winnings still happen. It’s only a guess, but it seems likely that Vladimir Putin thought that he could overthrow Ukraine’s government, or at least seize a large chunk of its territory, on the cheap — a bit of deniable aid to the rebels, and it would fall into his lap.

And for that matter, remember when the Bush administration predicted that overthrowing Saddam and installing a new government would cost only $50 billion or $60 billion?

The larger problem, however, is that governments all too often gain politically from war, even if the war in question makes no sense in terms of national interests.

Recently Justin Fox of the Harvard Business Review suggested that the roots of the Ukraine crisis may lie in the faltering performance of the Russian economy. As he noted, Mr. Putin’s hold on power partly reflects a long run of rapid economic growth. But Russian growth has been sputtering — and you could argue that the Putin regime needed a distraction.

Similar arguments have been made about other wars that otherwise seem senseless, like Argentina’s invasion of the Falkland Islands in 1982, which is often attributed to the then-ruling junta’s desire to distract the public from an economic debacle. (To be fair, some scholars are highly critical of this claim.)

And the fact is that nations almost always rally around their leaders in times of war, no matter how foolish the war or how awful the leaders. Argentina’s junta briefly became extremely popular during the Falklands war. For a time, the “war on terror” took President George W. Bush’s approval to dizzying heights, and Iraq probably won him the 2004 election. True to form, Mr. Putin’s approval ratings have soared since the Ukraine crisis began.

No doubt it’s an oversimplification to say that the confrontation in Ukraine is all about shoring up an authoritarian regime that is stumbling on other fronts. But there’s surely some truth to that story — and that raises some scary prospects for the future.

Most immediately, we have to worry about escalation in Ukraine. All-out war would be hugely against Russia’s interests — but Mr. Putin may feel that letting the rebellion collapse would be an unacceptable loss of face.

And if authoritarian regimes without deep legitimacy are tempted to rattle sabers when they can no longer deliver good performance, think about the incentives China’s rulers will face if and when that nation’s economic miracle comes to an end — something many economists believe will happen soon.

Starting a war is a very bad idea. But it keeps happening anyway.

By Paul Krugman, published on Aug. 17 in the http://www.nytimes.com

2
Aug

There is war in Europe. No, I’m not using the historic present tense to evoke August, 1914. I’m talking about August, 2014. What is happening in eastern Ukraine is war – “ambiguous war” as a British parliamentary committee calls it, rather than outright, declared war between two sovereign states, but still war. And war rages around the edges of Europe, in Syria, Iraq and Gaza.

I do not say “Europe is at war.” Most European countries are not directly engaged in armed conflict. Still, we should be under no illusions. For decades, we have lived with the comforting notion that “Europe has been at peace since 1945.” This was always an overstatement. In parts of Eastern Europe, low-level armed conflict continued into the early 1950s, followed by the Soviet invasion of Hungary in 1956 and of Czechoslovakia in 1968. In the 1990s, the former Yugoslavia was torn apart in a series of wars.

For all the differences, the dirty little wars of 2014 have an important connection to the horrendous “great” one that began in 1914. Many of them involve struggles of definition and control over patchwork territories left behind by the multiethnic empires that clashed 100 years ago, and their successor states. Thus, for example, the battle for eastern Ukraine is about the boundaries of the Russian empire. Some of the Russians, from Russia itself, who are now leading the armed pro-Russian movement in eastern Ukraine, have characterized themselves as “imperial nationalists.”

During the Balkan wars of the 1990s, jigsaw pieces from the Austro-Hungarian and Ottoman empires were fought over, and then reassembled into new, smaller puzzles, such as Bosnia, Kosovo and Macedonia. Many of the frontiers on today’s map of the Middle East go back to the post-First World War settlement, when Western colonial powers spliced together disparate parts of the former Ottoman Empire into new protectorates – Iraq, Syria, Palestine. The big exception is of course the state of Israel;   but that, too, can  trace a lineage   back to the deadly after-life of European empires. For Nazi Germany,   which attempted to exterminate the Jews, was the last hideous fling of German racial and territorial imperialism.

So what is Europe going to do now about its own long-term consequences? The first thing Europeans must do is simply to wake up to the fact that we live in a dangerous neighbourhood. Being Greater Switzerland is neither a moral nor a practical option: not moral, because Europeans, of all people, should never be silent while war crimes are being committed; not practical, because we cannot insulate ourselves from the effects. Today’s fighters in Syria will be tomorrow’s terrorists in Europe. Today’s dispossessed are tomorrow’s illegal immigrants. Let these little wars burn, and you will be shot down out of the sky on your way from the Netherlands to Malaysia on Flight MH17. No one is safe.

Read more…

Published on Augusto 1 in the Globe and Mail by Timothy Garton Ash.

14
May

On Monday 12 May, Dr. Casilda Güell, Professor of Political Science at the Universitat Internacional de Catalunya, addressed the MIR class in a very lively debate on regional integration. Quoting various authors including Barry Buzan and Richard Haas, Dr. Güell discussed the merits of regional integration in addressing the global challenges countries face today including financial crises, epidemics, terrorism, climate change. The nation state is now receding and no country alone can tackle these global problems, not even a superpower.  According to Buzan, the world is changing and we are evolving from a unipolar world dominated by a reluctant hegemon, the US, to a multipolar world with different poles composed of regional unions such as the EU, Mercosur, ASEAN…

Unlike what many pundits affirm, China will not be the next hegemon. It is unwilling to take on that role and should it rise to that position, other poles would counterbalance it.  Dr. Güell then discussed the 5 layers of integration, free trade, customs union, common market, economic union and political union. The EU is currently between the 4th and 5th layers. NAFTA is at the first stage while Mercosur is currently a customs union. Dr. Güell asked the students if economic integration was a prerequisite to political integration: peace through commerce. Opinions were divided even though history shows that political union when it is reached first goes through the stage of economic integration.

The seminar concluded with short student presentations on the pros and cons of NAFTA, Mercosur and the EU. The class was overwhelmingly in favor of regional integration with one of two dissenting voices that made for a richer discussion.

 

 

 

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