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91. Ukraine, Gaza, and the International Order

Author:
Faisal Devji
Publication Date:
02-2024
Content Type:
Policy Brief
Institution:
Quincy Institute for Responsible Statecraft
Abstract:
The ongoing crises in Ukraine and Gaza show the urgent need for a new internationalism that comes to grips with the increasing independence of middle and smaller powers around the world. Such a vision must reject the effort to re-impose a failed framework of unilateral U.S. primacy, or an effort to shoehorn multiplying regionally specific conflicts into an obsolete model of “great power competition” that recalls the Cold War between the United States and the Soviet Union. In both Ukraine and the Middle East, the United States has been unable to impose its will either militarily or diplomatically. Smaller nations have successfully defied American–backed military force. Even more concerning, a significant share of the global community has failed to follow the U.S. diplomatic lead and support the U.S. interpretation of international norms. But opposition to the United States has not been supported by a superpower peer competitor to the United States, along the lines of a Cold War model. The current emerging world order is instead characterized by “regionalization,” a situation where middle and even small powers around the world feel free to circumvent or even defy U.S. interpretations of global norms based on more local interests and regional security concerns. The stage was set for the current situation by the U.S. attempt to assert unilateral power during the War on Terror in ways that appeared to give the United States alone a de facto exemption from global norms and institutions. These actions reduced the legitimacy of the post–World War Two international order that the United States had helped to create, and led many in the international community to seek alternatives to a system that seemed to grant the United States almost arbitrary power to define the rules. The U.S. foreign policy establishment must come to grips with the newly deglobalized and regionalized world order. A failure to do so poses a grave threat to U.S. power and influence, as relationships with key emerging powers such as India, or even traditional U.S. allies in Europe and Asia are not immune from the kind of de–globalizing and regionalizing forces seen in Ukraine and the Middle East.
Topic:
Cold War, International Law, National Security, Hegemony, Grand Strategy, Armed Conflict, International Order, Russia-Ukraine War, and 2023 Gaza War
Political Geography:
Russia, Ukraine, Israel, Eastern Europe, Palestine, Gaza, and United States of America

92. Paths to Crisis and Conflict Over Taiwan

Author:
Michael D. Swaine and James Park
Publication Date:
01-2024
Content Type:
Policy Brief
Institution:
Quincy Institute for Responsible Statecraft
Abstract:
Taiwan is the most likely flashpoint for a U.S.–China conflict, unmatched in its combustible mix of conflicting interests, high stakes, and eroding trust and assurances. A full–blown war over Taiwan has become a startling possibility. Suspicion, threat inflation, zero–sum framing, and worst–casing are increasingly dominant factors in U.S.–China interactions over Taiwan, driven by preconceived ideas of the other’s intentions based on history and ideology, and domestic pressures in each country to prioritize military deterrence and even aggression. Amidst this emerging threat of direct conflict, numerous scholars, experts, and military strategists have focused on how to discourage China from invading Taiwan through military force alone — warfighting perspectives that typically share glaring and mutually reinforcing faults that, if overlooked, may only help to pave the path toward conflict. Analysts’ emphasis on military deterrence tends to obscure the utmost importance of political reassurances to avert conflict, particularly the United States reaffirming and recommitting to its original understanding of the One China Policy; this fixation on the military dimension feeds into the destabilization of the Taiwan issue, brought about by heightened suspicions of the other side’s intentions. Policymakers and pundits, in turn, tend to underestimate the possibility of inadvertent escalation, driven by an environment of distrust, pressure in Washington and Beijing to appear tough on the other, and a lack of comprehensive crisis management mechanisms. By examining the common analytical blindspots regarding a conflict over Taiwan, this report sheds new light on how the political and social dynamics fueling mutual hostility between Beijing and Washington could play a much more decisive role in a future crisis over Taiwan, rather than factors that earn far more attention, such as calculations about military capability and resolve. Averting a destructive crisis will require the United States and China to build off recent diplomatic progress to restore a deeper mutual understanding concerning Taiwan through policies and actions including: Mutual recognition of the interactive nature of the growing crisis over Taiwan, to which Beijing, Washington, and Taipei contribute. A clearer, more credible U.S. commitment to its successful, long–standing stance on Taiwan: the One China Policy and strategic ambiguity. Continued U.S. rejection of both unilateral Taiwan independence and any unambiguous commitment to Taiwan’s defense. A credible Chinese affirmation of its continued commitment to peaceful unification without any specific deadline. The development of a broad–based crisis communication mechanism that includes both military and civilian dialogue.
Topic:
Bilateral Relations, Crisis Management, Joe Biden, and Regional Security
Political Geography:
China, Taiwan, Asia, and United States of America

93. Responsibly Demilitarizing U.S.–Mexico Bilateral Security Relations

Author:
Aileen Teague
Publication Date:
01-2024
Content Type:
Policy Brief
Institution:
Quincy Institute for Responsible Statecraft
Abstract:
These are trying times for U.S.–Mexico relations. As America’s opioid epidemic reaches unprecedented proportions, U.S. politicians have begun to advocate unilateral military action against Mexican drug cartels in sovereign Mexican territory. This approach would not only do extraordinary damage to one of America’s most vital international relationships, but also carry a real risk of importing violence to the United States. The calls for military action have infuriated Mexico’s leaders, who in turn criticize America’s broken and inhumane border security and Washington’s inability to curb the seemingly insatiable demand for drugs in the United States. The basis for the neighboring nations’ security cooperation, the 2008 Mérida Initiative, seems to have failed, largely failing to stem the tide of violence and instability in Mexico, or to halt the cross border flow of migrants, guns, and drugs. The result is poor regional security and a deteriorating bilateral relationship. There is reason to hope that the Plan Mérida’s replacement, the U.S.–Mexico Bicentennial Framework for Security, Public Health, and Safe Communities, will strengthen bilateral cooperation and help put security relations on a path to demilitarization. However, since the State Department announced the framework in 2021, little progress has been made in developing the shape and contents of this program. The continued failure to articulate how the Bicentennial Framework will represent a meaningful break from failed policies in the past suggests militarized enforcement may still dominate security relations for years to come. This status quo poses grave risks to both countries. But through the Bicentennial Framework, U.S. policymakers have the potential to make meaningful changes in bilateral security relations by: Rejecting U.S. unilateralist measures against Mexico Developing more robust policies to halt U.S. arms flow to Mexico Reducing the military’s role in enforcement functions and redirecting military entities toward civil action and development Supporting Mexico–led development programs By decreasing the scope of militarization in regional security policies through an appropriately designed Bicentennial Framework, the United States and Mexico can achieve healthier and more balanced relations, and eliminate the risk of a worst-case scenario: unilateral U.S. military intervention next door.
Topic:
Bilateral Relations, Global South, Borders, Restraint, and Security Cooperation
Political Geography:
North America, Mexico, Global Focus, and United States of America

94. What if? The Effects of a Hard Decoupling from China on the German Economy

Author:
Julian Baqaee, Julian Hinz, Benjamin Moll, Moritz Schularick, Feodora A. Teti, Joschka Wanner, and Sihwan Yang
Publication Date:
01-2024
Content Type:
Policy Brief
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
How would the German economy cope with a hard economic decoupling from China? The authors study a scenario where the global economy fragments into three distinct blocs: the G7 economies and their allies, China and her allies, as well as neutral countries. German trade with China would have to be entirely rerouted to countries within the "Western" block and neutral countries. The authors quantify the costs of such a worst-case hard decoupling using the (Baqaee and Farhi 2021) multi-sector model of the world economy. The key finding is that a total cut-off of trade relations with China would have severe but not devastating effects on the German economy. The welfare loss for Germany (relative to a no-cut-off baseline) would be around 5 percent of Gross National Expenditure (GNE) over the first few months and around 4 percent over the first year, plus additional short run costs due to business-cycle amplification effects. In the medium and long run, the costs would fall to a permanent loss in the 1–2 percent range. Less extreme decoupling or gradual de-risking scenarios (“small yard, high fence") would incur smaller costs. The single most influential assumption relates to the “trade elasticity,", i.e., the ease and speed with which trade can be reorganized away from China to neutral countries and within the “Western” block. The authors´ findings, in particular the critical dependence of economic costs on the time horizon over which adjustments take place, provide some rationale for embarking on a gradual de-risking trajectory to avoid a costly and politically contentious hard decoupling dictated by geopolitical events.
Topic:
Globalization, International Trade and Finance, Sanctions, Geoeconomics, Decoupling, and De-Risking
Political Geography:
China, Asia, and Germany

95. Paying Off Populism: EU-Regionalpolitik verringert Unterstützung populistischer Parteien

Author:
Robert Gold and Jakob Lehr
Publication Date:
04-2024
Content Type:
Policy Brief
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
How to break the populist wave? With the elections to the European Parliament ahead, and the Presidential Elections in the US looming, this question bothers policymakers in many Western democracies. Our study shows that regional policies effectively decrease populist support. Specifically, EU Regional Policy investing into the development of lagging-behind regions decreases the vote share obtained by right-fringe populist parties by 15–20 percent. Moreover, regional policy investments increase trust in democratic institutions, and decreases discontent with the EU.
Topic:
Political Economy, European Union, Populism, and Regional Integration
Political Geography:
Europe

96. Foul Play? On the Scale and Scope of Industrial Subsidies in China

Author:
Frank Bickenbach, Dirk Dohse, Rolf Langhammer, and Wan-Hsin Liu
Publication Date:
04-2024
Content Type:
Policy Brief
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
China makes extensive use of subsidies in order to take a leading role on the global markets in the green technology sectors of electric vehicles, wind turbines and railway rolling stock. According to DiPippo et al. (2022) and recent OECD studies, the industrial subsidies in China are at least three to four times or even up to nine times higher than in the major EU and OECD countries. According to a very conservative estimate, industrial subsidies in China amounted to around EUR 221 billion or 1.73% of Chinese GDP in 2019. According to recent data of 2022, direct government subsidies for some of the dominant Chinese manufacturers of green technology products had also increased significantly - the electric car manufacturer BYD alone received EUR 2.1 billion. The authors point out that Chinese companies are benefiting from further support measures, including subsidized inputs, preferential access to critical raw materials, forced technology transfers, the strategic use of public procurement and the preferential treatment of domestic firms in administrative procedures. The authors recommend the EU to use its anti-subsidy proceeding against BEV imports from China to enter into negotiations with the Chinese government and persuade it to abolish public support measures that are particularly harmful to the EU.
Topic:
Globalization, International Trade and Finance, Foreign Direct Investment, European Union, Business, Renewable Energy, Industry, Subsidies, and Electric Vehicles
Political Geography:
China and Europe

97. African Sovereign Defaults and the Common Framework: Divergent Chinese Interests Grant Western Countries a “Consumer Surplus”

Author:
Eckhardt Bode
Publication Date:
05-2024
Content Type:
Policy Brief
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
• China has become a major player in sovereign lending towards Africa during the past two decades but has recently been faced with increasing defaults. A new African debt crisis is looming. • Differences in the motives of sovereign lending between China and Western creditor countries contribute to preventing effective global sovereign debt management under the “Common Framework for Debt Treatment” in this looming African debt crisis. Chi-nese lending during the past two decades was motivated primarily by its own economic interests while most of the Western countries’ lending appears to be at odds with their self-interests but is not yet well-understood. • Debt settlements under the Common Framework that involve China are less generous than past settlements with the Paris Club alone. This is an obstacle to a rapid and sus-tainable economic recovery of financially distressed African countries. • Western countries derive a kind of “consumer surplus” from the agreements under the Common Framework because they are prepared to make greater concessions than Chi-na. They could transfer this hypothetical surplus as additional (conditional) Official De-velopment Assistance to the defaulted African countries to alleviate social hardship.
Topic:
Emerging Markets, International Trade and Finance, Financial Markets, Lending, Economic Crisis, Sovereign Debt, Consumer Behavior, and Geoeconomics
Political Geography:
Africa and China

98. Build Carbon Removal Reserve to Secure Future of EU Emissions Trading

Author:
Wilfried Rickels, Mathias Fridahl, Roland Rothenstein, and Felix Schenuit
Publication Date:
05-2024
Content Type:
Policy Brief
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
• A carbon central bank (CCB) that translates carbon removals into allowances would transform the European Union Emissions Trading System (EU ETS) from a fiat allowance to a gold standard system, ensuring unchanged net emissions on the path to net-zero greenhouse gas (GHG) targets. • Meeting such expectations would require a CCB with a clear commitment to a net-zero GHG target, but also with the capacity to manage the market on the path to that target. • This requires a strong institutional framework, which could be achieved by integrating the CCB into the European Central Bank (ECB), building on its reputation and capacity. • Given the long lead time to set up such an institution, the European Commission should already take the first steps to fulfil the other requirement, namely building up a large carbon removal certificate (CRC) reserve, which would provide the CCB with the credibility to stabilize the market in the future. • To fill the CRC reserve, the EU should emulate the US approach by immediately initiating resultbased carbon removal procurement as a first key step of a sequential approach to integrated carbon removal into climate policy. • This could be achieved by developing a centralized procurement program, supporting existing procurement programs, such as Sweden’s or Denmark’s, and incentivizing additional EU member states to initiate procurement. • An important prerequisite for this is the ability to bank CRCs that are not yet eligible for compliance with near-term EU climate targets and use them in later crediting periods.
Topic:
Climate Change, European Union, Carbon Emissions, Net Zero, and Carbon Central Bank
Political Geography:
Europe and Global Focus

99. EU-China Trade Relations: Where Do We Stand, Where Should We Go?

Author:
Alexander Sandkamp
Publication Date:
05-2024
Content Type:
Policy Brief
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
• In the aftermath of the Covid-19 pandemic, China’s share in European trade has fallen continuously. Nevertheless, the country remains the EU’s largest source of imports (20.5 percent in 2023) and its third largest export destination (8.7 percent). • This apparent dominance of China is put into perspective when incorporating intra-EU trade. For example, Germany – Europe’s largest economy – sent 6.1 percent of its ex-ports to China, but 55 percent to EU members states. For imports, the Chinese and Euro-pean shares are 11.5 percent and 52.7 percent, respectively. • Decoupling the EU from China (i.e. almost eliminating bilateral trade) would permanent-ly reduce European real income by 0.8 percent in the long-run. In terms of gross domes-tic product in 2023, the EU would forego 136 billion EUR of value added every year. Short-term effects are likely to be stronger. • China dominates global production of important products such as laptops and mobile phones as well as raw materials including Germanium and Gallium that are critical for the green energy transition. A trade disruption might thus both delay the energy transi-tion and increase its costs. • To reduce specific dependencies, the EU should intensify its efforts to diversify procure-ment by increasing the attractiveness of alternative suppliers. Finding the courage to move forward in the negotiation of free trade agreements with potential strategic part-ners such as Australia and the Mercosur countries would strengthen the EU’s geopolitical position and increase prosperity among partners.
Topic:
Globalization, International Trade and Finance, European Union, Geoeconomics, and Decoupling
Political Geography:
China, Europe, and Germany

100. EU-NATO relations in a new threat environment: Significant complementarity but a lack of strategic cooperation

Author:
Tuomas Iso-Markku
Publication Date:
01-2024
Content Type:
Policy Brief
Institution:
Finnish Institute of International Affairs (FIIA)
Abstract:
The relationship between the EU and NATO has traditionally been characterised by a degree of ambiguity and competition but also by attempts at coordination and cooperation. In the context of Russia’s war on Ukraine, the EU and NATO have played crucial and mutually complementary roles, taking advantage of their respective strengths. However, there are also many areas in which their efforts overlap and closer cooperation would be necessary. Thus far, only small steps in this direction have been taken. Ideally, the EU and NATO would work together to develop a more strategic outlook on issues such as developing Europe’s military capabilities, strengthening the security and defence of membership aspirants as well as managing crises beyond EU and NATO territory. Formal relations between the EU and NATO remain complicated. However, there are ways to work around the existing obstacles to EU-NATO cooperation, not least in the capitals of EU and NATO member states.
Topic:
Defense Policy, NATO, European Union, and Threat Assessment
Political Geography:
Europe