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  • Author: Steve H. Hanke
  • Publication Date: 06-2020
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: Monetary instability poses a threat to free societies. Indeed, currency instability, banking crises, soaring inflation, sovereign debt defaults, and economic booms and busts all have a common source: monetary instability. Furthermore, all these ills induced by monetary instability bring with them calls for policy changes, many of which threaten free societies. One who understood this simple fact was Karl Schiller, who was the German Finance Minister from 1966 until 1972. Schiller’s mantra was clear and uncompromising: “Stability is not everything, but without stability, everything is nothing” (Marsh 1992: 30). Well, Schiller’s mantra is my mantra. I offer three regime changes that would enhance the stability in what Jacques de Larosière (2014) has asserted is an international monetary “anti-system.” First, the U.S. dollar and the euro should be formally, loosely linked together. Second, most central banks in developing countries should be mothballed and replaced by currency boards. Third, private currency boards should be permitted to enter the international monetary sphere.
  • Topic: Debt, Foreign Exchange, Monetary Policy, Developing World, Inflation, Currency
  • Political Geography: Europe, United States of America, European Union
  • Author: Michael D Bordo, Mickey D. Levy
  • Publication Date: 01-2020
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: The ratcheting up of tariffs and the Fed’s discretionary conduct of monetary policy are a toxic mix for economic performance. Escalating tariffs and President Trump’s erratic and unpredictable trade policy and threats are harming global economic performance, distorting monetary policy, and undermining the Fed’s credibility and independence. President Trump’s objectives to force China to open access to its markets for international trade, reduce capital controls, modify unfair treatment of intellectual property, and address cybersecurity issues and other U.S. national security issues are laudable goals with sizable benefits. However, the costs of escalating tariffs are mounting, and the tactic of relying exclusively on barriers to trade and protectionism is misguided and potentially dangerous. The economic costs to the United States so far have been relatively modest, dampening exports, industrial production, and business investment. However, the tariffs and policy uncertainties have had a significantly larger impact on China, accentuating its structural economic slowdown, and are disrupting and distorting global supply chains. This is harming other nations that have significant exposure to international trade and investment overseas, particularly Japan, South Korea, and Germany. As a result, global trade volumes and industrial production are falling. Weaker global growth is reflected in a combination of a reduction in aggregate demand and constraints on aggregate supply.
  • Topic: International Trade and Finance, Monetary Policy, Economic growth, Tariffs, Industry
  • Political Geography: Japan, China, Europe, Asia, South Korea, Germany, North America, United States of America
  • Author: Emma Lamberton
  • Publication Date: 05-2020
  • Content Type: Journal Article
  • Journal: Woodrow Wilson School Journal of Public and International Affairs
  • Institution: Woodrow Wilson School of Public and International Affairs, Princeton University
  • Abstract: Ukrainian surrogacy companies now hold over a quarter of the global surrogacy market since a series of human rights violations caused India, Thailand, and Nepal to close their borders. Similar violations are occurring in Ukraine, including the abandonment and trafficking of children and the abuse of surrogates. The Ukrainian government is not taking action, despite concerns expressed by both lawmakers and surrogates that the industry engages in unethical practices. This paper proposes that the Hague Conference’s Experts’ Group on the Parentage/Surrogacy Project spearhead international ratification of a holistic series of policies focused on protecting women and children from exploitation.
  • Topic: International Relations, Children, Women, International Development, Human Trafficking
  • Political Geography: Europe, Central Asia, Eurasia, Ukraine
  • Author: F. Michael Wuthrich, David Ingleby
  • Publication Date: 04-2020
  • Content Type: Journal Article
  • Journal: Journal of Democracy
  • Institution: National Endowment for Democracy
  • Abstract: Drawing from the 2019 mayoral elections in Turkey, this paper highlights a path that opposition parties might take to defuse polarized environments and avoid playing into the political traps set by populists in power. The particular type of moral and amplified polarization that accompanies populism’s essential “thin” ideology builds a barrier between a populist’s supporters and the opposition. Yet the CHP opposition in Turkey has recently won notable victories with its new campaign approach of “radical love,” which counteracts populism’s polarizing logic and has exposed Erdoğan’s weakness.
  • Topic: Elections, Democracy, Populism, Authority
  • Political Geography: Europe, Turkey, Asia
  • Author: I. Aytac Kadioglu
  • Publication Date: 06-2020
  • Content Type: Journal Article
  • Journal: Turkish Journal of Middle Eastern Studies
  • Institution: Turkish Journal of Middle Eastern Studies
  • Abstract: The purpose of this article is to assess international negotiation efforts towards ending the civil war in Syria. Although many peace events have been organised since the beginning of the civil war, the existing literature has paid little attention to the impact of international peace efforts in ending the Syrian war. The article aims to close this gap by assessing major peace efforts between 2011 and 2019; The Arab League Peace Plan, the United Nations peace initiatives, and the Geneva, Vienna and Astana peace talks. It analyses these efforts through official reports and documents published by the UN, US, Republic of Turkey, UN Security Council, and members of peace initiatives. These documents are complemented by newspaper articles showing the official views of the regional and global actors as well as the key agents of the conflict. Therefore, the article reveals the reasons for the failure of these conflict resolution efforts. The Syrian government’s reluctance to end the conflict in a non-violent way, the armed groups’ dream of territorial gains and regional and global powers’ involvement in the conflict prevented the solution of the conflict. It utilises official negotiations and ripeness approaches to investigate the insights and contents of peace efforts. The article argues that the regional and global powers have acted as facilitators instead of mediators in the peace talks. It finds that even though these peace events are viewed as official negotiations, they are only pre-negotiation efforts.
  • Topic: Civil War, Diplomacy, International Cooperation, United Nations, Peace
  • Political Geography: Europe, Turkey, Middle East, Asia, Syria
  • Author: Mustafa Onur Tetik
  • Publication Date: 06-2020
  • Content Type: Journal Article
  • Journal: Turkish Journal of Middle Eastern Studies
  • Institution: Turkish Journal of Middle Eastern Studies
  • Abstract: Following Turkey’s recent military operation in Syria (Operation Peace Spring), “Turks” and “Kurds” have widely been dichotomized by the Western media outlets and political circles. US President Donald Trump even claimed that “Turks” and “Kurds” have been fighting for hundreds of years, and that they are “natural enemies.” However, the complex historical relationship of “Turks” and “Kurds,” as a loosely connected social totality prior to the age of nationalism, refutes such sloppy and feeble contentions. This work presents an identity-driven historical survey of Turkish/Turkmen societies’ and polities’ interrelations with Kurdish collectivities until the emergence of modern nationhood and nationalism. In doing so, this article provides an ideational and narrational context feeding the Turkish government’s contemporary relationship with the Kurds of the Middle East. The major complication in journalistic and academic literature is rooted in the lack or omission of historical background informing current policy choices influenced by how relevant actors historically perceive each other. Today’s incidents and facts such as the “solution process,” “village guard system” or different Kurdish collectivities’ positions between Iran and Turkey are sometimes akin to precedent events in history. This work aims to make a holistic contribution to fill this gap and to provide a succinct historical overview of interrelations.
  • Topic: Diplomacy, Nationalism, Regional Cooperation, Nation-State
  • Political Geography: Europe, Turkey, Asia, Kurdistan
  • Author: Can Eyup Cekic
  • Publication Date: 06-2020
  • Content Type: Journal Article
  • Journal: Turkish Journal of Middle Eastern Studies
  • Institution: Turkish Journal of Middle Eastern Studies
  • Abstract: This study aims to expose the ways in which leading officials of the Committee of Union and Progress (the CUP) interpreted, internalized, and questioned the conditions of their mission in Arab lands during World War I (WWI). It builds on the memoirs of Falih Rıfkı, aide-de-camp of Commander-in-Chief Cemal Pasha, and Halide Edip, an ardent supporter of the social and educational reforms of the CUP government. Both written after the war, these memoirs reflect not only nostalgia and regret but also the complicated relationship between Turkish officials and Arabs on the eve of their breakup from one another as citizens of the Ottoman State. The study also questions the orthodox argument that the Turkist and anti-Arabic ideology of the CUP government in general and Cemal Pasha’s wartime crusade against Arab nationalists in particular triggered the emergence of Arab nationalism. By contemplating the memoirs of CUP members in Arab lands, this study argues that Falih Rıfkı, Cemal Pasha, and Halide Edip tried to understand the region and its people in order to create a mutual future for Turks and Arabs within the Ottoman Empire.
  • Topic: Nationalism, War, Citizenship, World War I
  • Political Geography: Europe, Turkey, Asia, Ottoman Empire
  • Author: Ayfer Erdogan
  • Publication Date: 06-2020
  • Content Type: Journal Article
  • Journal: Turkish Journal of Middle Eastern Studies
  • Institution: Turkish Journal of Middle Eastern Studies
  • Abstract: In 2013, Egypt’s first democratically elected president Mohammed Morsi was overthrown by a military coup. Since then the country has undergone serious setbacks in terms of democracy, individual freedoms, and social justice. Egypt’s failed revolution and the military coup could not be thought independently from the role of external actors - either directly or indirectly involved in this process. Despite their political rhetoric emphasizing democracy promotion and political reforms, both the US and the EU failed to pursue consistent and contributory policies in promoting democratic transition in Egypt out of fear that the electoral victory of Islamist groups would harm their interests in the region. On the other hand, the Gulf Monarchies played a pivotal role in the entrenchment of the military rule by providing financial and political support to the military-backed government as a shield against the democratically elected government in Egypt. This article investigates how the policies adopted by Egypt’s key allies, the European Union, the US and the Gulf Monarchies, impacted the trajectory of Egypt’s political transition in the face of the January 25 revolution and 2013 military coup. The main thesis of the article is that the policies pursued by external actors created a political environment unfavorable for democratic change in Egypt.
  • Topic: Non State Actors, Military Affairs, Authoritarianism, European Union, Transition
  • Political Geography: Africa, Europe, Egypt
  • Author: Veronica Mihalache
  • Publication Date: 01-2020
  • Content Type: Journal Article
  • Journal: Warsaw East European Review (WEER)
  • Institution: Centre for East European Studies, University of Warsaw
  • Abstract: This paper brings into discussion a concept that has not yet been distinctively and uniquely defined but which, at the same time, can be considered a classical one, thanks to the establishment of the theoretical basis of the social frameworks of memory in 1925 by the sociologist Maurice Halbwachs. Basically, any past memory reaches the fields of human memory causing a process of perpetual transformation. The social frameworks of memory are pieces of collective memory, past memories that are dominant and persistent in time, which offer explicit historical and social coordinates that lead to the interpretation of the past and the orientation of present values. Both public and collective environments offer the individual social and historical coordinates as well as a certain orientation of these values, an implicit ideology, so that the individual is influenced, and in time, even shaped by these coordinates and values that are implicitly transmitted by the social fields of memory.
  • Topic: Sociology, Memory, Identities, Values
  • Political Geography: Europe
  • Author: Ieva Gajauskaite
  • Publication Date: 01-2020
  • Content Type: Journal Article
  • Journal: Warsaw East European Review (WEER)
  • Institution: Centre for East European Studies, University of Warsaw
  • Abstract: Lithuania is a small state by objective features (population, territory, GDP) and subjective ones (geopolitical position, resilience from external security threats, national identity). The goal of this research is to define the main roles of Lithuania, which are relevant to the Lithuanian foreign policy decision-making process nowadays. Those roles are the structure for Lithuania’s new President Gitanas Nausėda. While during his presidency he will have the possibility to modify them, for now for the roles formed and enacted over the last ten years serve as the limits of the change of the policy in the Euro-Atlantic area. The main assumption regarding the roles of Lithuania in the Euro-Atlantic area is that policymakers emphasize the smallness of the state. Accordingly, being a small state is translated to a set of expected and appropriate behavior. Therefore, the classical definition of smallness suggests that Lithuania’s roles should include the strategies of hiding and appeal to democratic values. In order to deny or confirm the assumptions, the research includes the definition of small states, an analysis of small state foreign policy strategies, the main thesis of the Role theory, the theoretical basis of subjective smallness concept, and discussion of Lithuania’s roles in the Euro-Atlantic area, using an interpretive methodology of Social constructivism.
  • Topic: Foreign Policy, Diplomacy, Small states, Constructivism
  • Political Geography: Europe, Lithuania, Baltic States
  • Author: Adrian Popa, Cristian Barna
  • Publication Date: 01-2020
  • Content Type: Journal Article
  • Journal: Warsaw East European Review (WEER)
  • Institution: Centre for East European Studies, University of Warsaw
  • Abstract: Russia’s recent buildup of A2/AD (anti-access/area denial) forces in Crimea and Kaliningrad, coupled with its increasingly confronting rhetoric in the Black and Baltic Seas, pose a serious challenge for the NATO’s Eastern flank countries. While the mare sui generis status of the Black Sea might be altered under the expected inauguration of Canal Istanbul in 2023 as it would probably require the revision of the Montreux Convention, the mare liberum status of the Baltic Sea might also be questioned as Russia contests NATO’s Enhanced Forward Presence in this region. Facing this challenging geostrategic context, Pilsudski’s ideas of Intermarium seem to have revived within the Central and Eastern European countries under modern interfaces such as the Bucharest Nine and the Three Seas Initiative. This paper proposes a comparative analysis between the Black Sea and the Baltic Sea in terms of their newly-emerged geostrategic context, discusses the feasibility of the recent endeavours to promote cooperation within the Central and Eastern European countries and not ultimately, highlights the utility of a regional military alliance in support of NATO.
  • Topic: NATO, Diplomacy, International Security, International Affairs, Geopolitics
  • Political Geography: Russia, Europe, Asia, Crimea, Baltic Sea, Baltic States
  • Author: Weronika Michalak, Dr hab. Zbigniew Karaczun
  • Publication Date: 01-2020
  • Content Type: Journal Article
  • Journal: Warsaw East European Review (WEER)
  • Institution: Centre for East European Studies, University of Warsaw
  • Abstract: The phenomenon of climate change, observed for years and constantly intensifying, has had a negative impact on health, significantly deteriorating the quality of life of people in many regions of the world, including Poland. Already now we are dealing with increasingly frequent extreme weather phenomena; hurricanes, storms and increasingly longer heat waves no longer surprise us. Unfortunately, this is merely the beginning of the negative effects of climate change. Others will come before long. In the coming years, many other new threats will be observed, such as flooding of ocean islands, desertification of areas exposed to water scarcity or serious loss of biodiversity, which will translate into food security. Unfortunately, it does not end there.1 The greenhouse effect is a process by which radiation from the Earth’s atmosphere warms the planet’s surface to a temperature above what it would be without this atmosphere. We can differentiate short-term solar radiation (0.15-4.0 nm) and long-term radiation. Thermal radiation escapes into the cosmic sphere and heat radiation returns to the ground, being stopped by a layer of GHG – greenhouse gases (CO2, CH4, N2O, SF6, water vapor etc.), which warm up Earth’s athmosphere to a dangerous level – even a 1°C degree increase (in comparison to pre-industrial level, when emissions stared to rise) in the average world temperature can be detrimental to human health and change the conditions of life on this planet (Figure 1). However, we currently face a risk of global warming even up to 3°C degrees, unless GHG emissions are significantly reduced. Any further rise of the global temperature will have deteriorating impact on people and whole humanity, as well as staying at the current level of emissions.
  • Topic: Climate Change, Health, Food, Food Security
  • Political Geography: Europe, Poland, Global Focus
  • Author: Selin M. Bolme, Mevlut Cavusoglu
  • Publication Date: 03-2020
  • Content Type: Journal Article
  • Journal: Uluslararasi Iliskiler
  • Institution: International Relations Council of Turkey (UİK-IRCT)
  • Abstract: This paper aims to analyze Britain’s relations with the former colonies in the Gulf after the termination of the British protectorate in the Persian Gulf and discuss how the British colonial ties influenced the post-colonial relations with the Arab Gulf States. Archive documents, official papers and secondary sources were used in order to determine and compare the relations in pre/post withdrawal periods and the results were analyzed in frame of the Post-colonial theory. The main argument of this study is that the British colonial relations and ties, which had been constructed in political, military, economic and institutional spheres in the colonial era, were significant determinants in reshaping the new British foreign policy towards the Arab Gulf States. Britain, who successfully adopted the colonial relations in the new term, managed to preserve its interests after the withdrawal and even extended some of them in certain fields such as the oil sector.
  • Topic: International Relations, Foreign Policy, History, Colonialism
  • Political Geography: Britain, Europe, Persian Gulf
  • Author: Alan McPherson
  • Publication Date: 03-2020
  • Content Type: Journal Article
  • Journal: Strategic Visions
  • Institution: Center for the Study of Force and Diplomacy, Temple University
  • Abstract: Contents News from the Director Spring 2020 Colloquium …………………2 Spring 2020 Prizes……………………......3 Diplomatic History ……………………….3 Non-Resident Fellow, 2020-2021………...4 Funding the Immerman Fund……………..4 Thanks to the Davis Fellow ………………4 News from the Community …………………... 5 Note from the Davis Fellow ………………….. 9 Spring 2020 Interviews Timothy Sayle ……………………….…..10 Sarah Snyder ………………………….…13 Book Reviews Lincoln, Seward, and US Foreign Relations in the Civil War Review by Alexandre F. Caillot …15 How to Hide an Empire: A History of the Greater United States Review by Graydon Dennison …..17 Enduring Alliance: A History of NATO and the Postwar Global Order Review by Stanley Schwartz ……19
  • Topic: International Relations, Foreign Policy, NATO, Empire, Diplomatic History
  • Political Geography: United States, Europe, Global Focus
  • Author: Carlos Espaliú Berdud
  • Publication Date: 05-2020
  • Content Type: Journal Article
  • Journal: Journal on International Security Studies (RESI)
  • Institution: International Security Studies Group (GESI) at the University of Granada
  • Abstract: In view of the magnitude of the migration crisis, the SEGERICO research group at the Nebrija University in Madrid organised a call for papers, inviting all interested researchers to join us in the reflection on these relevant events, which we wanted to describe metaphorically in the image of the migration crisis knocking on the door of Fortress ‘Europe’. As a result of this reflection, we present to the general public, and to the scientific community in particular, a selection of six articles that address specific aspects of this crisis of human dignity and security, but that together provide a global and multi-faceted image of it, in accordance with the composition of our research group.
  • Topic: Human Rights, Migration, Governance, European Union, Refugees
  • Political Geography: Europe
  • Author: Sonia Boulos
  • Publication Date: 05-2020
  • Content Type: Journal Article
  • Journal: Journal on International Security Studies (RESI)
  • Institution: International Security Studies Group (GESI) at the University of Granada
  • Abstract: The perception of Islam as antithetical to European human rights values is widespread in Europe. Such perceptions complicate the task of integrating Muslim minorities across Europe. While incrementing respect to human rights norms among migrant communities is an important element of any integration policy, this goal should not be perused by forcing migrant communities to adhere to human rights norms based on purely secular grounds. The drafting history of the Universal Declaration of Human Rights is the ultimate proof that human rights can be justified from different political, philosophical and religious perspectives. While European States cannot compromise their commitment to human rights, even in relation to migrant communities, still, they must allow other narratives on the importance and the meaning of human rights to emerge. Muslim migrant communities must be allowed to engage in intra-group religion-based dialogues to reevaluate their stance on human rights and to debate their meaning. After being given the opportunity to engage in internal debates on the significance of human rights, Muslim migrant communities should also be engaged in cross-cultural dialogues with the rest of community to generate a wider agreement on the meaning and the application of human rights. This two-fold strategy is consistent with the principle of subsidiarity, which suggests that for human rights be effective they must be seen as legitimate by all those small groups that are close to the individual. Such legitimacy cannot be imposed from the outside, it must emerge from within these small groups. However, for these intra-group and cross-cultural dialogues to succeed, the separation of religion and State cannot be understood as the complete exclusion of religion from the public sphere. Individuals of different philosophical or religious convictions must have an equal access to public debates on the centrality of human rights in the European legal order.
  • Topic: Human Rights, Islam, Religion, Culture, Integration
  • Political Geography: Europe
  • Author: Juan Carlos Fernández-Rodríguez, Neidy Zenaida Domínguez Pineda, Fernando Miralles Muñoz
  • Publication Date: 05-2020
  • Content Type: Journal Article
  • Journal: Journal on International Security Studies (RESI)
  • Institution: International Security Studies Group (GESI) at the University of Granada
  • Abstract: In the development of this work, a presentation has been made of the current conditions that can be found in the migratory process and that have the possibility of giving rise to the appearance of the so-called Ulysses Syndrome or Limit Stress Syndrome, in the immigrant population. In this article, special reference is made to the conditions that can be found today in our country, quantitative data are offered that can form a very approximate idea of ​​the enormous magnitude and importance of this migratory phenomenon. Next, a description of the characteristics of the so-called Ulysses Syndrome or Immigrant Syndrome with Chronic and Multiple Stress has been made. In the development of this work, these main characteristics have been shown, with special emphasis on the appearance of a mourning process and on the stress that Ulysses Syndrome can entail. Likewise, the different areas of personal functioning that may be impaired in immigrants and their similarity to a process of mourning (with the possibility of up to seven different types of mourning) have been commented, mainly due to the different personal issues and the different social factors that immigrants leave in their various countries of origin. Next, the symptoms of Ulysses Syndrome are described and the different areas of involvement of people suffering from this disorder are also described. Lastly, a brief reference is made to the possible therapeutic intervention in people affected by the problems described, both if they are in an adult age or if they are in a young infantile age. As it cannot be otherwise, the Syndrome requires preventive intervention, both at the individual and community level.
  • Topic: Migration, Immigrants, Stress
  • Political Geography: Europe, Global Focus
  • Author: Jordi Regi
  • Publication Date: 05-2020
  • Content Type: Journal Article
  • Journal: Journal on International Security Studies (RESI)
  • Institution: International Security Studies Group (GESI) at the University of Granada
  • Abstract: The problem caused by the growing migratory pressure has caused the European Union (EU) one of its most significant crisis of late. A crisis without precedent. Existing asylum and migration policies have not been able to give the necessary and adequate response due to the serious pre-existing migratory problem. A large number of infringement procedures have also been opened against European Union Member States due to this situation, some of them still are still unresolved and submitted to the Court of Justice of the European Union (CJEU). This article analyzes EU's active policies on migration and asylum from a descriptive point of view as a starting point for the study of the implementation problems of these regulations in the wake of the governance crisis caused by the massive entry of immigrants in 2015 as a consequence of the war in Syria and the massive exodus of its refugees. In addition, the crucial role of the EU Council in this matter is studied through the analysis of its growing role and its active intervention policies against migration problems. The EU legislation is also analyzed as well as the United Nations rules on the matter through the study of the conventions on transnational organized crime and human trafficking. The article finally reviews the infringement procedures on the matter, taking as a comparative basis the reports on compliance with EU law from the last two years, concluding with the need to reformulate the aforementioned policies and the degree of member states' involvement, so as to create a common front against the problem analyzed in this article and its future development.
  • Topic: Security, Migration, European Union, Refugees, Asylum
  • Political Geography: Europe
  • Author: Gracia Abad Quintanal
  • Publication Date: 05-2020
  • Content Type: Journal Article
  • Journal: Journal on International Security Studies (RESI)
  • Institution: International Security Studies Group (GESI) at the University of Granada
  • Abstract: The end of the Cold War has given way to an impressive tranformation of the security concept, which has experienced an incredible expansion over the last few decades. This expansion has also gone hand by hand with the emergence of new concepts which might allow better analysis in this realm. The human security concept stands out among such new concepts as a result of its analytical value, in spite of all the criticism it has received. One of the questions which has become securitized in the context of the mentioned expansion of the security concept is migration. However, even if migrations have been approached too frequently from a traditional security concept based on the state and its sovereignty, the human seecurity concepts seems a much better tool for the analysis of this reality and its causes. In this sense, we cannot forget that people become migrants or refugees because they see questioned their personal security. Likewise, we have to pay attention to the extent to which, the host states and, particularly, their societies, may see their political, economic and societal security in danger. Therefore, the analysis should pay attention to the security challenges of both, host societies and migrants and refugees. Besides, only an analysis on the basis of the human security concept will allow us to come up with an accurate response to the question of migratory and refugee flows, this is a response which pays attention to some key aspects such as conflict prevention and management an growth and development promotion in the countries of origin of migrants and refugees, always in cooperation with those countries themselves. Such un analysis will show the indivisible nature of security and the fact that the security of host societies and that of migrants and refugees, far from being incompatible, go hand by hand.
  • Topic: Development, Migration, Refugees, Conflict, Human Security
  • Political Geography: Europe, Global Focus
  • Author: Gunther Schnabl
  • Publication Date: 10-2019
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: Twenty years after the introduction of the euro, the European Monetary Union (EMU) is at its crossroads. Following the outbreak of the European financial and debt crisis in 2008, the European Central Bank (ECB) took comprehensive measures to stabilize the common currency. Interest rates were cut to and below zero and several asset purchase programs have inflated the ECB balance sheet (Riet 2018). Within the European System of Central Banks, large imbalances have emerged via the TARGET2 payments system, which can be seen as quasi-unconditional credit in favor of the southern euro area countries (Sinn 2018). While the ECB terminated its asset purchase program at the end of 2018 and is expected to increase interest rates in late 2019, financial instability is reemerging. Growing uncertainty about the fiscal discipline of the Italian government has triggered a significant increase in risk premiums on Italian government bonds. In particular, in Italy and Greece, but also in Germany, bad loans and assets remain stuck in the banking systems. In the face of the upcoming downswing, European banks do not seem ready for new financial turmoil. In this fragile environment, the future path of the EMU is uncertain. To enhance the stability of the EMU, a group of German and French economists has called for a common euro area budget, for a strengthening of the European Stability Mechanism as lender of last resort for euro area countries and banks, as well as for a common European deposit insurance scheme (Bénassy-Quéré et al. 2018). In response, 154 German economists have warned against transforming the EMU into what they call a “liablity union,” which systematically undermines market principles and wealth (Mayer et al. 2018). In 2018, a French-German initative to introduce a common euro area budget faced strong opposition from a group of northern European countries as well as from Italy, symbolizing the political deadlock concerning reforms of the EMU. This article explains the different views on the institutional setting of monetary policymaking in Europe from a historical perspective. It begins with a description of the economic and monetary order in postwar Germany. It then discusses the positive implications for the European integration process and the economic consequences of the transformation of postwar German monetary order. The final section offers some economic policy recommendations.
  • Topic: Economics, History, Monetary Policy, Reform, European Union, Banks, Currency
  • Political Geography: Europe, Germany