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141. Mask Off: Implications of the EU’s “Geopolitical Awakening” for its Relations with the MENA Region

Author:
Johannes Späth
Publication Date:
02-2024
Content Type:
Working Paper
Institution:
IEMed/EuroMeSCo
Abstract:
Russia’s invasion of Ukraine has forced European foreign policy-makers to reassess their view of international relations and reconceptualise the European Union (EU)’s approach to it. A broad consensus has emerged that the foreign policy of the EU needs to become more geopolitical. A sentiment echoed and championed by Ursula von der Leyen, who, since assuming the role of President of the European Commission in December 2019, has actively advocated for a more assertive and strategic EU presence on the global stage (Bayer, 2019). The High Representative of the European Union for Foreign Affairs and Security Policy, Josep Borrell, has labelled these developments as “the awakening of geopolitical Europe” (Borrell, 2022). He further insisted that a more geopolitical European outlook on the world should not be temporary but should become the “new normal” (Borrell, 2022). This suggests a fundamental and lasting shift in the EU’s approach to external relations. Given the ambiguity of the term ‘geopolitics’, which has at least five different meanings (Kundani, 2023), many questions about the EU’s new normal remain to be answered: What does a more geopolitical foreign policy entail? What would be the implications of such a new approach regarding the European Neighbourhood, in particular the Middle East and North Africa (MENA) region? And how can such an approach be reconciled with the EU’s liberal principles? This paper aims to assess these questions from a realist perspective. The article proceeds as follows. The first part examines the different conceptualisations of geopolitics and assesses which of them EU policy-makers refer to. The second part examines whether a more geopolitical EU foreign policy towards the MENA region can be seen as a paradigm shift or rather a continuation of existing policies. The third part considers how the “geopolitical awakening” can be reconciled with the EU’s liberal principles. The paper concludes by drawing on the findings to develop concrete recommendations.
Topic:
International Relations, Foreign Policy, European Union, Geopolitics, and Russia-Ukraine War
Political Geography:
Middle East and North Africa

142. Türkiye-EU Relations and the European Political Community in the Aftermath of Russian Invasion: Is the Transactional Turn Here to Stay?

Author:
Başak Alpan
Publication Date:
02-2024
Content Type:
Working Paper
Institution:
IEMed/EuroMeSCo
Abstract:
Bilateral relations between Türkiye and the European Union (EU) acquired an EU conditionality dimension with the 1999 Helsinki decision, granting the country the EU candidacy status. Nevertheless, especially since the March 2016 EU-Turkey Statement, also known as Türkiye-EU Refugee Deal, what we see is a thorough shift in Türkiye-EU relations from a conditionality perspective to transactionalism, coupled with several domestic and international developments. In the aftermath of the Russian invasion of Ukraine, the significance of geopolitics and the heightened relevance of realpolitik also contributed to a renewed focus on strategic and pragmatic issues, relegating normative concerns to the background within Türkiye-EU relations. All in all, the shift from a conditionality perspective to a security-based logic within the framework of Türkiye-EU relations was mainly determined and characterised by the so-called “transactional turn”. Within this very transactionalist paradigm, both the EU and Türkiye want to pursue their short-term interests at the expense of a long-term principled engagement for some time. The launch of the European Political Community (EPC) on 6 October 2022 with 44 European heads of state and government (including all 27 EU member states as well as Türkiye) also contributed to this transactional tide, which aimed to “emphasise European geopolitical cooperation in light of Russia’s aggression against Ukraine; to remedy enlargement fatigue by providing an additional forum for exchange between EU candidates and member states; as well as create a forum for exchange with non-EU security actors” (Tcherneva, 2023). The EPC’s rather flexible structure and focus on mini-lateralism, which could provide greater freedom for leaders to focus on their immediate concerns, also raises eyebrows about whether the EPC would be attentive enough (and even have the mandate) to safeguard human rights, democracy, and the rule of law (Jurkovic, 2023). In light of these debates, the aims of this paper are twofold. First, it aims to explore how recent transactional initiatives between Türkiye and the EU in general and the EPC initiative in particular have unfolded and have been perceived by the Turkish diplomats and foreign policy experts. This endeavour to understand the Turkish perceptions of Türkiye-EU relations mainly focusing on recent transactionalism between the parties will be explored with a particular focus on three thematic layers, namely the foreign policy, migration and energy through semi-structured interviews with Turkish diplomats and foreign policy experts. The main rationale behind picking up these thematic layers is to identify, analyse and describe better the complex nature of Türkiye-EU relations with a particular focus on these policy fields (namely foreign policy, migration and energy), which recently witnessed the highest intensity of interactions between two parties. Second, the paper discusses the significance of the EPC within this very transactional turn and aims to understand whether the EPC is another repercussion of the increasing transactionalism. The final aim of the paper will be to understand whether the EU foreign policy, on the one hand, and the bilateral Türkiye-EU relations, on the other, would evolve in a completely transactional and security-based manner leaving no room for normativity amidst the current global uncertainties and challenges, as well as bringing together policy recommendations for the future.
Topic:
Foreign Policy, Migration, Bilateral Relations, European Union, and Russia-Ukraine War
Political Geography:
Europe, Turkey, and Middle East

143. Securing European Interests from the Mediterranean to the Persian Gulf: Rethinking EU Strategic Autonomy at Sea

Author:
Jean-Loup Samaan
Publication Date:
02-2024
Content Type:
Working Paper
Institution:
IEMed/EuroMeSCo
Abstract:
The discussion about the implications of an objective like strategic autonomy has primarily circled around the question, could the Europeans defend themselves against a Russian offensive without US support? (Barrie et al., 2019; Meijer & Brooks, 2021). This scenario is a critical one, especially considering the long-term implications of the Russia-Ukraine war. Nevertheless, it presents a narrow view of European security interests shaped only by challenges from its eastern flank. As a result, the debate tends to put an emphasis on the need to invest in European ground and air capabilities for a Cold War-like scenario of military operations on the continent. This paper does not discount the demands of the Russian challenge on Europe’s military posture, but it offers a different perspective by looking at an under-researched topic: the concurrent need to secure European interests in the maritime domain vis-à-vis threats originating from the area going from the Mediterranean to the Strait of Hormuz.
Topic:
Defense Policy, European Union, and Strategic Autonomy
Political Geography:
Europe and Mediterranean

144. The Migration Agreements in Euro-Mediterranean Relations for a Geopolitical Europe

Author:
Ezgi Irgil
Publication Date:
02-2024
Content Type:
Working Paper
Institution:
IEMed/EuroMeSCo
Abstract:
The discussion about the implications of an objective like strategic autonomy has primarily circled the question, could the Europeans defend themselves against a Russian offensive without US support? (Barrie et al., 2019; Meijer & Brooks, 2021). This scenario is a critical one, especially considering the long-term implications of the Russia-Ukraine war. Nevertheless, it presents a narrow view of European security interests shaped only by challenges from its eastern flank. As a result, the debate tends to emphasize the need to invest in European ground and air capabilities for a Cold War-like scenario of military operations on the continent. This paper does not discount the demands of the Russian challenge on Europe’s military posture, but it offers a different perspective by looking at an under-researched topic: the concurrent need to secure European interests in the maritime domain vis-à-vis threats originating from the area going from the Mediterranean to the Strait of Hormuz.
Topic:
Security, Migration, Geopolitics, and Strategic Autonomy
Political Geography:
Europe and Mediterranean

145. Mapping Fragility – Functions of Wealth and Social Classes in US Household Finance

Author:
Orsola Costantini and Carlo D'Ippoliti
Publication Date:
01-2024
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
Which households are more exposed to financial risk and to what extent is their debt systemically relevant? To provide an answer, we advance a new classification of the population, adapted from Fessler and Schürz (2017), based on the type of wealth families own and their sources of income. Then, we investigate data from eleven waves of the Survey of Consumer Finances (SCF), a triennial survey run by the U.S. Federal Reserve, to explore the association of different debt configurations and motives to get into debt with our class distinctions. Our new approach allows us to assess competing hypotheses about debt and financial vulnerability that have so far been analyzed separately in disconnected strands of literature. The results of our study reinforce and qualify the controversial hypothesis that relative poverty and inequality of income and access to services have been important factors explaining household indebtedness and its relationship with economic growth over time.
Topic:
Debt, Poverty, Inequality, Finance, Fragility, and Income Distribution
Political Geography:
North America and United States of America

146. Labor Market Volatility and Worker Financial Wellbeing: An Occupational and Gender Perspective

Author:
Julie Yixia Cai
Publication Date:
01-2024
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
One emerging but underexplored factor that is likely to contribute to group racial earnings disparity is unstable work schedules. This is often detrimental for hourly workers when volatility is frequent, involuntary, or unanticipated. Using data from 2005-2022 monthly Current Population Survey and its panel design, this study follows a group of hourly workers across a four-month period to assess whether labor market volatility relates to their financial well-being, focusing on low-wage care and service occupations as well as female workers and workers of color. The findings are threefold: In general, during economic expansion periods, nonwhite workers often benefit more in terms of wage growth compared to their white counterparts. Second, net of other characteristics, on average, greater volatility is associated with lower earnings, and this is mostly driven by those holding jobs in low-wage service sectors and healthcare support roles. Last, the earnings consequences of volatility vary significantly by the type of low-wage jobs a worker holds and their gender and race, but this is only true when volatility happens in a job. Specifically, when working within the same employment spell, female workers, particularly those of color and those working in low-wage service and care jobs, earn significantly less when facing greater volatility than their male counterparts or those working in non-service, non-care occupations.
Topic:
Economics, Inequality, Finance, Labor Market, and Gender
Political Geography:
Global Focus and United States of America

147. Bagehot’s Classical Money View: A Reconstruction

Author:
Perry Mehrling
Publication Date:
01-2024
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
Bagehot is difficult for modern economists to read with understanding, for three reasons. He was a classical economist not neoclassical, his orientation was global not national, and, most importantly, his intellectual formation was as a practicing country banker not an academic. This paper adopts all three perspectives, and uses this frame to reinterpret his mature work, both Lombard Street and the unfinished Economic Studies, as the origin of the key currency tradition which continues as a minority view in modern economics.
Topic:
Globalization, History, Macroeconomics, and Walter Bagehot
Political Geography:
Global Focus

148. Monetary Policy and Illiquidity

Author:
Jan Toporowski
Publication Date:
01-2024
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
The discussion of financial stability, and the role of monetary policy, is incoherent because there is very little agreement on what constitutes financial stability (and, by implication, instability) - exchange rate stability, asset price stability, absence of debt default. By implication, there is a gap between the claims of various authors to the general applicability of their respective analyses, and the actual applicability of their conclusions, let alone the usefulness of some of their policy recommendations. The paper argues that the key issue is the regulation of the liquidity of all financial markets, and not just that of the banking system, through the markets for government securities. The paper examines the sources of this liquidity in the financial portfolios of the private sector, and how that liquidity may be managed through the open market operations of central banks and the debt management operations of governments. An implication of this approach is yield curve control and the use of (government) debt management to control the liquidity of the markets. These elements of monetary policy have been neglected in theory and policy since the 1950s.
Topic:
Debt, Economics, Monetary Policy, Banking, and Liquidity
Political Geography:
Global Focus

149. Considering Returns on Federal Investment in the Negotiated “Maximum Fair Price” of Drugs Under the Inflation Reduction Act: an Analysis

Author:
Edward W. Zhou, Paula G. da Silva, Debbie Quijada, and Fred D. Ledley
Publication Date:
03-2024
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
The Inflation Reduction Act (IRA) of 2022 contained landmark provisions authorizing government to negotiate a “maximum fair price” for selected Medicare Part D drugs considering the manufacturer’s research and development costs, federal support for discovery and development, the extent to which the drugs address unmet medical needs, and other factors. This working paper describes federal investment in the discovery and development of the ten drugs selected for price negotiation in the first year of the IRA as well as the health value created through Medicare Part D spending on these drugs. We identified $11.7 billion in NIH funding for basic or applied research leading to approval of these drugs with median investment costs of $895.4 million/drug. This early public investment provided a median cost savings to industry of $1,485 million/drug, comparable to reported levels of investment by industry. From 2017-2021, Medicare Part D spent $126.4 billion (median $10.7 billion) for these products before rebates. Excluding two products for diabetes, Medicare Part D spending was $97.4 billion and the total health value created was 650,940 QALYs or $67.7 billion (WTP/QALY=$104K) representing a negative residual health value of -$29.7 billion (before rebates). We argue that a negotiated fair price should provide returns on both private and public investments in these products commensurate with the scale and risk of these investments, with the principal return on public sector investments being the residual health value (net price) accruing to those using the product. These empirical data provide a cost basis for negotiating a fair price that rewards early government investments in innovation and provides social value for the public.
Topic:
Economics, Health, Public Health, Pharmaceuticals, and Public Investment
Political Geography:
North America and United States of America

150. Tilting at Windmills: Bernanke and Blanchard’s Obsession with the Wage-Price Spiral

Author:
Servaas Storm
Publication Date:
04-2024
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
Bernanke and Blanchard (2023) use a simple dynamic New Keynesian model of wage-price determination to explain the sharp acceleration in U.S. inflation during 2021-2023. They claim their model closely tracks the pandemic-era inflation and they confidently conclude that “… we don’t think that the recent experience justifies throwing out existing models of wage-price dynamics.” This paper argues that this confidence is misplaced. The Bernanke and Blanchard is another failed attempt to salvage establishment macroeconomics after the massive onslaught of adverse inflationary circumstances with which it could evidently not contend. It misrepresents American economic reality, hides distributional issues from view, de-politicizes (monetary and fiscal) policy-making, and sets monetary policymakers up to deliver significantly more monetary tightening than can be justified on the basis of more realistic model analyses.
Topic:
Economics, Monetary Policy, Inflation, Macroeconomics, and Wages
Political Geography:
North America and United States of America