Economics & Business Archive

In its spring issue, the venerable Washington Quarterly asked what has become a perennial question, and the central theme of “Under the Influence”: Is the United States entering an age of decline or renewal? But while everyone agrees on the question, it seems that no one can make up their minds on the answer. At first glance, recent events seem to point to the former, or decline. The financial crisis has not only hobbled the U.S. economy, but has discredited the free-market messages it has long propagated abroad. Years of war without decisive victory in Iraq and Afghanistan has added […]

As if to illustrate the challenges facing an integrated European defense market, the French naval shipyard DCNS is suing Spain’s leading state-owned shipbuilding firm, Navantia, for allegedly stealing trade secrets relating to the Scorpène submarine project. The two companies originally developed the Scorpène as part of a joint venture. But DCNS now accuses its Spanish partner of copying Scorpène technology and using it for the new S-80 submarine that Navantia is building both for the Spanish Navy as well as for export markets, where it will compete with the Scorpène. Navantia says the dispute originated in July 2005, when the […]

U.S. Secretary of State Hillary Clinton says the State Department is engaging the public “through Facebook and Twitter, YouTube and Flickr.” It’s all part of what she calls 21st century statecraft.

Last week was a busy one for Brazilian President Luiz Inácio Lula da Silva. In one week, the Brazilian leader visited China, Saudi Arabia, and Turkey, on a tour intended to strengthen Brazil’s diplomatic and economic ties with those three nations. The three days Lula spent in China, from May 19-21, received more attention than the other legs of the trip, in large part due to the close economic ties between the two nations. Spurred by a mutual demand for each others’ exports — with China seeking Brazilian raw materials, and Brazil seeking Chinese manufacturing — China is now the […]

Two frustrating EU summit meetings last week, with China and Russia, served to illustrate the EU’s well-known difficulties in conducting foreign policy under its presently awkward institutional structure. These problems have propelled efforts to adopt the Lisbon Treaty, which will restructure how the EU manages its foreign policy representation and decision-making. Even with more coherent foreign policy machinery, however, the EU would still find it difficult to achieve its objectives in the case of difficult dialogue partners such as China and Russia. The May 20 meeting in Prague with a visiting Chinese delegation marked the 11th EU-China summit since 1998. […]

On May 8, the Czech Republic hosted a long-awaited Nabucco Summit under the auspices of its European Union (EU) presidency. Notably, the meeting convened just as the Bulgarian government finalized its participation in Russia’s competing South Stream pipeline. A little-noticed element of the negotiations in Moscow, however, was Bulgaria’s effort to link its participation in South Stream with Russian financing for a domestic nuclear power program. Pipeline politics may generate headlines, but Bulgarian officials expect nuclear power to generate most of their future electricity. And Bulgaria’s South Stream agreement demonstrates the perverse incentives which arise when EU energy security and […]

When the global financial contagion kicked in last fall, the blogosphere was quick to predict that a sharp uptick in global instability would soon follow. While we’re not out of the woods yet, it’s interesting to note just how little instability — and not yet a single war — has actually resulted from the worst global economic downturn since the Great Depression. Run a Google search for “global instability” and you’ll get 23 million hits. But when it comes to actual conflicts, the world is humming along at a level that reflects the steady decline in wars — by 60 […]

For more than half a century, the United States has held the reins of the world’s most powerful economic institutions. By design, Washington has long dominated decision-making at both the International Monetary Fund and at the World Bank — responsible, respectively, for big loans to states and economic development. At the same time, domestic institutions within the U.S., like the Treasury Department, have also exerted significant influence in the economies of foreign lands. The ideology underpinning much of this leverage — based on free markets and limited government intervention — was for a long time known formally as the Washington […]

Since the eruption of the global financial crisis last fall, the world’s three largest economies — the United States, Japan, and China — have become very generous toward countries in need of cash, opening up a bevy of new bilateral currency swap arrangements. At first glance, this may seem to be a positive example of great-power cooperation in the face of a collective threat: The world’s economic powers are working together to provide liquidity to a global economy dying of thirst. A closer look, however, reveals that the intentions of the parties in question may be far more self-interested than […]

At the London G-20 Summit in April, British prime minister and host Gordon Brown asserted that “The Washington Consensus is over.” With the struggling U.S. economy pulling much of the world down with it, the “Anglo-Saxon model” is now deemed flawed. Dirigiste tendencies are in, with U.S. President Barack Obama embracing a government-funded “stimulus” package whose numbers are well in excess of his high-spending predecessor. Washington itself is moving away from the formula — consisting of fiscal discipline, market-set interest rates, competitive exchange rates, liberalisation of trade and investment regimes, deregulation and privatisation — to which it lent its name. […]

The International Monetary Fund has been reinvigorated by the global economic crisis. While the added resources it has been given has attracted attention, the IMF has also responded to the challenge of the crisis by overhauling conditionality. So far, reforms have been announced to meet the needs of middle-income developing countries, with those designed for lower-income countries slated to be adopted this summer. But a review of the reforms to date suggests that low-income countries can expect to enjoy unprecedented bargaining leverage over the fund in coming years. At the London G-20 summit in April, the leaders of the world’s […]

NEW DELHI — The unexpected landslide victory of the Congress Party in India’s general elections has unshackled the incoming government from the tricky task of managing its earlier coalition for political survival, especially the rabidly anti-American Left parties. There is little doubt that the team of Prime Minister Manmohan Singh, all-powerful Congress party president Sonia Gandhi and her son Rahul Gandhi — who led the election campaign — will look to firm up some of their earlier aims, given the near-majority and stability that the party and its allies now command. In fact, the new government can no longer offer […]

Summer is the tourist season on the southern Italian coastline, but these days its also high season for the illegal immigrants who set off in thousands from Libya. The governments of Italy and neighboring Malta — 60 miles from Italy — have recently been bickering over which of these two EU countries should assume responsibility for receiving the boat people who often arrive bedraggled and near starvation, in leaking boats that barely survive the crossing. Last year, 35,000 illegal immigrants managed to reach the island of Lampedusa, the first point of contact with Italy — a 75 percent increase over […]

During a three-day visit to Japan last week, Russian Prime Minister Vladimir Putin pushed commercial deals and received an honorary degree from Tokyo University for his efforts to improve Russian-Japanese ties (as well as for his knowledge of judo, in which he holds a black belt). But as expected, the Russian and Japanese governments made little progress in resolving their territorial dispute over four islands that Russia seized from Japan at the end of World War II. The dispute over the islands — the Russians call them the Southern Kurils, while the Japanese refer to them as their Northern Territories […]

On May 16, Nicolas Sarkozy marked his second anniversary as the president of France. Despite having done much of what he promised to do when the French elected him with just over 53 percent of the vote, polls show that nearly 70 percent now disapprove of the results. Circumstances have not helped: The worst economic downturn since the Depression has overwhelmed a program of cautious reforms that was never as bold or ambitious as the candidate claimed. Yet most people in France expect Sarkozy not only to ride out the storm, but to win re-election in 2012. Such a double […]

Germany’s policy of engagement and partnership with Russia is rooted in the German experience within Europe. If economic interdependence and integration could transform Germany after both World War II and the Cold War, so German thinking goes, then it might also transform Russia. Nevertheless, nearly 20 years after the end of the Cold War, Germany’s efforts — as well as those of Europe and the U.S. — to transform and integrate Russia have failed. Over the past decade, Vladimir Putin’s Russia has forcefully rejected integration with the West, predicating its desire for a return to great power status on expanded […]

Last week, officials in Gong’an county in China’s Hubei province were forced to withdraw an order issued in March requiring civil servants to smoke at least 230,000 packs of locally produced cigarettes each year, or else face a fine if they failed to meet their targets. The order was withdrawn not due to intervention from the central government in Beijing, but rather due to overwhelming public outrage, demonstrating how so often in China, the farcical corruption of many local officials is held in check only by the decency and common sense of ordinary citizens. Although this short drama was absurd […]