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  • Author: Helena Legarda
  • Publication Date: 02-2020
  • Content Type: Working Paper
  • Institution: International Institute for Strategic Studies
  • Abstract: China hits back after NATO calls it a security challenge, dormant Chinese hacking group resumes attacks, and more.
  • Topic: Security, Defense Policy, NATO, Diplomacy
  • Political Geography: United States, China, Europe, North Atlantic, Beijing, Asia, Vietnam, Sri Lanka
  • Author: Douglas Barrie, Lucie béraud-Sudreau, Henry Boyd, Nick Childs, Bastain Giegerich, James Hackett, Meia Nouwens
  • Publication Date: 02-2020
  • Content Type: Working Paper
  • Institution: International Institute for Strategic Studies
  • Abstract: In 2019, European governments’ combined defence spending, when measured in constant 2015 US dollar terms, surpassed the level reached in 2009, before the financial and economic crisis led to a series of significant defence-spending cuts. However, a different strategic paradigm – one that Europe is struggling to adjust to and which is once more a concern for European governments – has re-appeared in this past decade: great-power competition. Russia attempted to change international borders in Europe through the use of force in 2014 by annexing Crimea and continues to support an armed insurgency in eastern Ukraine. Moscow’s challenge to Euro-Atlantic security exists in multiple dimensions: as both a conventional military and also a hybrid-warfare issue, with Russia working to dislocate existing societal alignments and disrupt political processes in Western states. The poisoning of a former Russian intelligence officer (and of his daughter) in the United Kingdom, attributed by the British government to Russia, underlines further how much the character of conflict has changed. How to manage the challenge Russia poses without simply reverting to Cold War logic remains a worrying problem for governments in NATO and the European Union member states. Meanwhile, European security establishments are beginning to recognise the growing political, economic and military influence of a rising China. Although less of an immediate challenge, China’s growth in these areas has possible profound consequences in the long run. Indeed, in December 2019, NATO declared: ‘We recognise that China’s growing influence and international policies present both opportunities and challenges that we need to address together as an Alliance.’2 For the United States, China has already become the pacing military threat. The US Indo-Pacific Strategy Report, released in June 2019, opens with the assertion that ‘the Indo-Pacific is the Department of Defense’s priority theater’. In other words, the European theatre is not. European analysts and officials have begun to wonder whether the US might begin to see Europe through an Asian lens, seeking to generate European commitments to the Indo-Pacific region, or at the very least getting Europeans to take on greater responsibility for their own security and thereby freeing up US resources. Although there will be some elements of the US military presence in Europe that are indispensable to US military action in other regions of the world, that might not be enough to sustain Washington’s firm commitment to European security in the future, regardless of who occupies the White House. Significantly, not even the US has the capability to fight two major wars simultaneously any more, meaning binary choices regarding focus are inevitable. As some observers have argued, Europeans need to urgently assess what Washington’s choices in this regard – and their implications for Europe – might look like. Considering both how to deter Russia and what a European contribution to containing China might entail represents a major challenge for Western European nations, which have relegated defence to a secondary position, as almost a discretionary activity. European states partially demobilised in the 1990s and early 2000s, intellectually and in terms of their force structures, in response to the end of the Cold War. For example, according to IISS data, in 1990 West Germany alone was thought to be able to field 215 combat battalions and the UK 94. Today it is a fraction of that. However, security challenges relating to regional instability, crisis management and transnational terrorism – which all dominated the previous two decades – have not disappeared. On the contrary, all these still demand attention and the investment of European resources. While there is a growing recognition among Europe’s analytical community, and some governments, that things cannot simply continue as before in terms of regional security and defence, coherence and resolve among core actors in the Euro-Atlantic sphere have weakened. The US administration has intensified its call for better transatlantic burden sharing, at the same time displaying a cavalier attitude to the collective-defence commitment enshrined in NATO. France’s President Emmanuel Macron has also expressed severe doubts about the viability of NATO’s collective-defence mission. In addition, the British decision to leave the European Union in 2020 implies that the EU has lost one of its most militarily experienced and one of its most capable member states. There is a tendency among many observers and some politicians to argue that European NATO and EU member states need to clarify the political dimension of their defence ambition, via-à-vis greater strategic autonomy, before resolving the problem of how to meet this ambition militarily, at what cost and in what time frame. Indeed, at times, the debate about European strategic autonomy seems to focus more on the degree of independence from the US that its various proponents would like to achieve and less on the military requirement that autonomy is meant to respond to. It is now widely accepted across Europe that Europeans need ‘to do more’ for their own security and defence. Most of the intellectual energy allocated to this aspiration is spent on achieving better coordination – and even a level of integration – among European armed forces. This is useful, but only if it is directed at building capability to provide for the defence of Europe. The existing military capabilities of the European NATO member states fall short when compared to the force requirements generated by the political–military level of ambition as defined by NATO, or for that matter the EU.5 However, this should not be an excuse to lower the level of ambition, nor should the assumption that Europeans are unable to defend themselves be declared an inevitability. Defence output is the result of political, financial and military choices by governments. To think systematically about the challenge of providing capabilities that can meet Europe’s emerging military requirements, The International Institute for Strategic Studies and the Hanns Seidel Foundation convened a group of thinkers and practitioners from Germany and the UK. The group took seriously the US assertion that Europe needs to be able to provide for its own defence. If Europeans can achieve this, they will be valuable partners to the US in upholding and strengthening the liberal international order on which Euro-Atlantic prosperity and security depend. Meeting twice in 2019, the group discussed threat assessments, debated European capability gaps and scoped potential approaches to addressing them. The following pages draw on the group’s deliberations but do not represent a consensus position.
  • Topic: Defense Policy, NATO, Regional Cooperation, European Union, Military Spending
  • Political Geography: Russia, Europe, North Atlantic, Asia, North America
  • Author: Alice Evans
  • Publication Date: 10-2019
  • Content Type: Working Paper
  • Institution: The John F. Kennedy School of Government at Harvard University
  • Abstract: This paper re-examines why global collective action problems persist, and how to overcome them. Drawing on 140 interviews with campaigners, politicians, and businesses in 10 European countries, it suggests that many activists are stuck in a despondency trap. Never seeing radical reform, they lower their ambitions, and invest in more feasible but sub-optimal alternatives. This creates a negative feedback loop, in which the dearth of radical reform becomes self-fulfilling. But if reformists see advances at home and abroad, they may become more optimistic about collective mobilisation and break out of their despondency trap. This is shown by tracing the drivers of ground-breaking legislation. From 2018, large French firms must mitigate risks of environmental and human rights abuses in their global supply chains, or else be liable. This bill – the world’s first of its kind – was vociferously contested by businesses. But French campaigners and politicians persisted for four years, because they saw reasons for optimism. These include growing international support; public outcry; the French political culture (state intervention, and distrust of multinationals); together with a Centre-Left Government. Optimism galvanised relentless mobilisation. Legislative success in France then delivered a positive shock to activists across Europe, who were emboldened to launch similar campaigns and escape their despondency trap.
  • Topic: Political Activism, Reform, Business , State, Multinational Corporations, Legislation, Accountability
  • Political Geography: Europe, France
  • Author: Timothy Besley, Anders Jensen, Torsten Persson
  • Publication Date: 09-2019
  • Content Type: Working Paper
  • Institution: The John F. Kennedy School of Government at Harvard University
  • Abstract: This paper studies individual and social motives in tax evasion. We build a simple dynamic model that incorporates these motives and their interaction. The social motives underpin the role of norms and is the source of the dynamics that we study. Our empirical analysis exploits the adoption in 1990 of a poll tax to fund local government in the UK, which led to widespread evasion. The evidence is consistent with the model’s main predictions on the dynamics of evasion.
  • Topic: Political Economy, Economy, Financial Crimes, Tax Systems
  • Political Geography: United Kingdom, Europe, Global Focus
  • Author: Hans Binnendijk, Daniel S. Hamilton, Charles L. Barry
  • Publication Date: 08-2019
  • Content Type: Working Paper
  • Institution: Center for Transatlantic Relations
  • Abstract: The NATO Alliance faces simultaneous dangers to its east, to its south, and from a series of security challenges unbounded by geography, at a time when disparate allied responses to a host of challenges are tearing the seams of European unity and American political figures have even questioned the need for NATO. Europe risks turning from an exporter of stability to an importer of instability. The vision of a Europe whole, free and at peace is challenged by a Europe fractured and anxious. The Alliance must be revitalized for the new world rising before us. An overarching Alliance strategy must rely on NATO’s ability to provide a full spectrum of deterrent and defense tools to provide collective defense for all of its members, together with an ability to project stability and resilience beyond its borders using an array of tools for crisis management.
  • Topic: Defense Policy, NATO, International Cooperation, Nuclear Weapons, Partnerships, Alliance
  • Political Geography: Russia, Europe, North America
  • Publication Date: 12-2019
  • Content Type: Working Paper
  • Institution: Africa Center for Strategic Studies
  • Abstract: The dynamism of clandestine African migration flows continues to present criminal and violent extremist groups opportunities for exploitation.
  • Topic: Migration, United Nations, Diaspora, Violent Extremism, European Union
  • Political Geography: Africa, Europe, Southern Europe
  • Author: Helena Legarda
  • Publication Date: 02-2019
  • Content Type: Working Paper
  • Institution: International Institute for Strategic Studies
  • Abstract: Europe has become a major target of China’s push to acquire advanced key technologies. These technologies support the development of dual-use products with civilian as well as military applications, a development that is in line with China’s efforts towards civil-military integration. The EU has been slow to wake up to this trend. Despite recent efforts, including those to set up a tighter investment screening mechanism, it still lacks strong coordinated regulations to protect its research and technologies. Even more importantly, the author of our newest China Global Security Tracker, MERICS researcher Helena Legarda, warns that Europe lacks a clear policy or strategy to keep up with China’s ambitions in this area. Joint European initiatives providing strategic guidance and adequate funding for innovation in dual-use technologies will be needed to not only preserve but to advance the EU’s scientific and engineering expertise. The China Global Security Tracker is a bi-annual publication as part of the China Security Project in cooperation between Mercator Institute for China Studies (MERICS) and the International Institute for Strategic Studies (IISS). This issue also features the Trump administration’s tightened export controls in response to China’s civil-military integration efforts, and it tracks other security developments in China in the second half of 2018, from the launch of a number of new defense systems to an increase in China’s military diplomacy activities around the world.
  • Topic: Security, Diplomacy, Regional Cooperation, Science and Technology, Military Strategy, European Union
  • Political Geography: China, Europe, Beijing, Asia
  • Author: Ben Barry, Douglas Barrie, Lucie béraud-Sudreau, Henry Boyd, Nick Childs, Bastain Giegerich
  • Publication Date: 05-2019
  • Content Type: Working Paper
  • Institution: International Institute for Strategic Studies
  • Abstract: The study applies scenario analysis – with scenarios set in the early 2020s – to generate force requirements, and assesses the ability of NATO’s European member states to meet these requirements based on data from the IISS Military Balance Plus online database. The cost of closing the identified capability shortfalls through equipment acquisition has been estimated. The objective of the study is to enable informed policy dialogue both in Europe and in a transatlantic setting. The study explicitly does not intend to predict future conflicts nor the intentions of any of the actors involved. Neither does it wish to prescribe a certain path of action to be pursued by European NATO governments. The first scenario examined deals with the protection of the global sea lines of communication (SLOCs). In this scenario, the United States has withdrawn from NATO and has also abandoned its role of providing global maritime presence and protection, not just for its own national interest but also as an international public good. It thus falls to European countries to achieve and sustain a stable maritime-security environment in European waters and beyond, to enable the free flow of international maritime trade, and to protect global maritime infrastructure. The IISS assesses that European NATO members would have to invest between US$94 billion and US$110bn to fill the capability gaps generated by this scenario. The second scenario deals with the defence of European NATO territory against a state-level military attack. In this scenario, tensions between Russia and NATO members Lithuania and Poland escalate into war after the US has left NATO. This war results in the Russian occupation of Lithuania and some Polish territory seized by Russia. Invoking Article V, the European members of NATO direct the Supreme Allied Commander Europe (SACEUR) to plan Operation Eastern Shield to reassure Estonia, Latvia and Poland, and other front-line NATO member states, by deterring further Russian aggression. European NATO also prepares and assembles forces for Operation Eastern Storm, a military operation to restore Polish and Lithuanian government control over their territories.
  • Topic: NATO, Military Strategy, Maritime, Free Trade
  • Political Geography: Russia, United States, Europe
  • Author: Yvonni-Stefania Efstathiou, Connor Hannigan, Lucie béraud-Sudreau
  • Publication Date: 05-2019
  • Content Type: Working Paper
  • Institution: International Institute for Strategic Studies
  • Abstract: Between March and November 2018, the 25 participating member states launched 34 projects, with the core aim of addressing the EU’s capability shortfalls. In May 2019, a call for a third round of project proposals will be launched. The IISS undertook an early assessment of how PESCO projects are carried out, to assess whether the momentum on the ground has continued since the projects were announced at the political level. A strong pace of implementation would require detailed timelines, deadlines and financial plans, as well as clear links with EU capability requirements. Questionnaires were sent to the projects’ country leads, and were complemented by interviews and secondary-source research. We looked at various dimensions of implementation: timelines, financial commitments, stakeholder involvement and the projects’ relation to strategic autonomy. The results are mixed. While some projects are off to a strong start, there are common challenges for all
  • Topic: Defense Policy, Regional Cooperation, Military Strategy, European Union, Military Spending
  • Political Geography: Europe, Eastern Europe, Brussels, Central Europe, Western Europe
  • Author: Helena Legarda
  • Publication Date: 06-2019
  • Content Type: Working Paper
  • Institution: International Institute for Strategic Studies
  • Abstract: Presenting China as a 'responsible power' – Beijing releases first major defense white paper in four years
  • Topic: Security, Defense Policy, Science and Technology, Military Spending
  • Political Geography: United States, Japan, China, Europe, Canada, Taiwan, France, North America
  • Author: Nick Childs
  • Publication Date: 09-2019
  • Content Type: Working Paper
  • Institution: International Institute for Strategic Studies
  • Abstract: The United Kingdom is on the cusp of regenerating what is a transformational capability. The first of the UK’s new-generation aircraft carriers, HMS Queen Elizabeth, has been at sea on trials for two years, and is working up towards its first operational deployment in 2021. The second ship, HMS Prince of Wales, is scheduled to be accepted into service before the end of the year. The F-35B Lightning II has achieved initial land-based operating capability and the Lightning Force has carried out its first overseas deployment, Lightning Dawn. Maritime aviation in the round has undergone a significant transformation, and there has been a substantial increased focus on collaboration and partnering with industry as well as developing stronger links with critical allies. To underscore the significance of the undertaking, then secretary of state for defence Penny Mordaunt announced on 15 May 2019 that the UK planned to produce a National Aircraft Carrier Policy to lay down a blueprint for how the new carrier era would help deliver the UK’s global objectives. In addition, on 4 June, then prime minister Theresa May announced that the UK would earmark the Queen Elizabeth-class carriers to form part of NATO’s significant new Readiness Initiative. These developments have prompted thought and discussion on the extent to which the carrier programme will enable and actually drive the transformation of UK joint-force capabilities, and are posing questions about the demands such a programme will place on UK defence and industry. This paper considers both the opportunities and challenges that the carrier era presents in a number of key areas
  • Topic: Defense Policy, Diplomacy, National Security, Military Strategy, Maritime
  • Political Geography: United States, United Kingdom, Europe, London
  • Author: Lianna Fix, Bastain Giegerich, Theresa Kirch
  • Publication Date: 09-2019
  • Content Type: Working Paper
  • Institution: International Institute for Strategic Studies
  • Abstract: Recent developments in transatlantic relations have reignited the debate about the need for Europeans to assume greater responsibility for their own security. Yet, efforts by European leaders to substantiate the general commitment to 'take their fate into their own hands' are so far lacking sufficient progress. Against this backdrop, the Körber Policy Game brought together a high-level group of senior experts and government officials from France, Germany, Poland, the UK and the US to address a fictional scenario that involves a US withdrawal from NATO, followed by multiple crises in Europe. How will Europeans organise their security and defence if the US withdraws from NATO? To what extent will future European security be based on mutual solidarity, ad-hoc coalitions or a bilateralisation of relations with the US? Which interests would the respective European governments regard as vital and non-negotiable? What role would the US play in European security after the withdrawal? The Körber Policy Game is based on the idea of projecting current foreign and security policy trends into a future scenario – seeking to develop a deeper understanding of the interests and priorities of different actors as well as possible policy options. The starting point is a short to medium-term scenario. Participants are part of country teams and assume the role of advisers to their respective governments.
  • Topic: NATO, Regional Cooperation, Military Strategy, European Union
  • Political Geography: United States, Europe, North Atlantic, North America, Brussels
  • Author: Nicholas Crawford
  • Publication Date: 10-2019
  • Content Type: Working Paper
  • Institution: International Institute for Strategic Studies
  • Abstract: China has become the largest lender to developing countries, and a major investor there too. As a result, it has a major stake in many countries facing political and economic instability. Western policymakers involved in responding to instability and crises overseas need to understand how China navigates these situations. China’s approach is similar in some respects to that of Western states, but there are also important differences. China’s policy towards countries facing political and economic instability is driven by four main concerns: It seeks to strengthen and maintain its partnerships with those countries to ensure they remain open to and supportive of the Chinese government and its businesses. China is determined to protect its financial interests, businesses and citizens from the harms that result from instability. It is concerned to see its loans repaid, its investments secure, its workers safe and its supply chains undisrupted. It wants to maintain its narrative of non-interference. Any intervention in the politics or policies of its partner states must be seen as being at the invitation of their governments (although China may pressure its partners for consent). China wants to increase its influence in the world, independently and distinctively. It is increasingly proactive in its response to instability in partner countries. Some responses seek to address the instability directly; other responses are intended to protect Chinese interests in spite of the instability. This paper analyses the political economy of China’s responses to instability, identifies the types of responses China undertakes, and assesses these responses.
  • Topic: Human Rights, International Cooperation, Developing World, Political stability, Trade
  • Political Geography: Africa, United States, China, Europe, Beijing, Asia
  • Author: Maciej Bałtowski, Piotr Kozarzewski
  • Publication Date: 08-2019
  • Content Type: Working Paper
  • Institution: Center for Social and Economic Research - CASE
  • Abstract: The paper discusses the role of the state in shaping an economic system which is, in line with the welfare economics approach, capable of performing socially important functions and achieving socially desirable results. We describe this system through a set of indexes: the IHDI, the World Happiness Index, and the Satisfaction of Life index. The characteris-tics of the state are analyzed using a set of variables which describe both the quantitative (government size, various types of governmental expenditures, and regulatory burden) and qualitative (institutional setup and property rights protection) aspects of its functioning. The study examines the “old” and “new” member states of the European Union, the post-communist countries of Eastern Europe and Asia, and the economies of Latin America. The main conclusion of the research is that the institutional quality of the state seems to be the most important for creation of a socially effective economic system, while the level of state interventionism plays, at most, a secondary and often negligible role. Geographical differentiation is also discovered, as well as the lack of a direct correlation between the characteristics of an economic system and the subjective feeling of well-being. These re-sults may corroborate the neo-institutionalist hypothesis that noneconomic factors, such as historical, institutional, cultural, and even genetic factors, may play an important role in making the economic system capable to perform its tasks; this remains an area for future research.
  • Topic: Demographics, Economy, Economic growth, State, Economic Policy, Institutions, Trade, Welfare
  • Political Geography: Europe, Eastern Europe, Asia, Latin America, European Union
  • Author: Saliha Metinsoy
  • Publication Date: 09-2019
  • Content Type: Working Paper
  • Institution: Centre for Global Political Economy, University of Sussex
  • Abstract: Why does the International Monetary Fund (IMF) assign more stringent labor conditions in some cases and not others? This paper argues that the Fund’s bureaucratic organizational culture and neoliberal economic beliefs dictate its interpretation of international economics and predict the stringency of labor conditions in its programs. Particularly, the Fund staff envisage that lower unit labor costs would indirectly increase competitiveness, boost exports, and contribute to the balance of payments in fixed exchange rate regimes, where currency depreciation is not possible. To this end, the Fund assigns more stringent labor conditions in fixed regimes compared to floating ones. To test this theory, the paper uses a mixed method. It firstly demonstrates the association between exchange rate regimes and the stringency of labor conditions in Fund programs in a global sample. It then complements this analysis by showing particular organizational habits and beliefs at work in two cases, namely in Latvia and Hungary in 2008 under their respective IMF programs. Furthermore, the paper shows that distribution of income away from labor groups (i.e. lowered wages) is in fact by design in IMF programs in an attempt to increase competitiveness in fixed regimes.
  • Topic: Economics, International Monetary Fund, International Development, Neoliberalism
  • Political Geography: Europe, Eastern Europe, Hungary, Latvia
  • Author: Michael Kende1, Nivedita Sen
  • Publication Date: 01-2019
  • Content Type: Working Paper
  • Institution: Centre for Trade and Economic Integration, The Graduate Institute (IHEID)
  • Abstract: E-commerce has long been recognized as a driver of growth of the digital economy, with the potential to promote economic development. The benefits come from lower transaction costs online, increased efficiency, and access to new markets. The smallest of vendors can join online marketplaces to increase their sales, while larger companies can use the Internet to join global value chains (GVCs), and the largest e-commerce providers are now among the most valuable companies in the world.
  • Topic: Development, Economics, Science and Technology, World Trade Organization, Digital Economy, Economic growth, Free Trade
  • Political Geography: United States, Europe, Switzerland, Global Focus
  • Author: Tarek A. Hassan, Laurence van Lent, Stephan Hollander, Ahmed Tahoun
  • Publication Date: 01-2019
  • Content Type: Working Paper
  • Institution: Institute for New Economic Thinking (INET)
  • Abstract: Using tools from computational linguistics, we construct new measures of the impact of Brexit on listed firms in the United States and around the world: the share of discussions in quarterly earnings conference calls on costs, benefits, and risks associated with the UK’s intention to leave the EU. Using this approach, we identify which firms expect to gain or lose from Brexit and which are most affected by Brexit uncertainty. We then estimate the effects of these different kinds of Brexit exposure on firm-level outcomes. We find that concerns about Brexit-related uncertainty extend far beyond British or even European firms. US and international firms most exposed to Brexit uncertainty have lost a substantial fraction of their market value and have reduced hiring and investment. In addition to Brexit uncertainty (the second moment), we find that international firms overwhelmingly expect negative direct effects of Brexit (the first moment), should it come to pass. Most prominently, firms expect difficulties resulting from regulatory divergence, reduced labor mobility, trade access, and the costs of adjusting their operations post-Brexit. Consistent with the predictions of canonical theory, this negative sentiment is recognized and priced in stock markets but has not yet had significant effects on firm actions.
  • Topic: Economics, Political Economy, Regional Cooperation, Brexit, Global Political Economy, Economic Policy
  • Political Geography: Britain, United States, United Kingdom, Europe, European Union
  • Author: Joseph Halevi
  • Publication Date: 06-2019
  • Content Type: Working Paper
  • Institution: Institute for New Economic Thinking (INET)
  • Abstract: This paper analyzes the early stages of the formation of the Common Market. The period covered runs from the end of WW2 to 1959, which is the year in which the European Payments Union ceased to operate. The essay begins by highlighting the differences between the prewar political economy of Europe and the new dimensions and institutions brought in by the United States after 1945. It focuses on the marginalization of Britain and on the relaunching of French great power ambitions and how the latter determined, in a very problematical way, the European complexion of France. Because of France’s imperial aspirations, France, not West Germany, emerged as the politically crisis prone country of Europe acting as a factor of instability thereby jeopardizing the process of European integration, Among the large European nations, Germany and Italy appear, for opposite economic reasons, as the countries most focused on furthering integration. Germany expressed the strongest form of neomercantilism while Italy the weakest.
  • Topic: Economics, Political Economy, Global Political Economy, World War II, Common Market
  • Political Geography: United States, Europe, Germany, Global Focus
  • Author: Joseph Halevi
  • Publication Date: 11-2019
  • Content Type: Working Paper
  • Institution: Institute for New Economic Thinking (INET)
  • Abstract: This essay deals with the contradictory dynamics that engulfed Europe from 1959 to 1979, the year of the launching of the European Monetary System. It focuses on how the macroeconomic frame- work of stop-go policies in the 1960s ended up privileging external – intra-European - exports at the expense of domestic demand. The paper offers a very tentative explanation as to why stop-go policies, by weakening domestic demand, did not put an end to the to the ‘long boom’ earlier as they should have. The French crisis of 1968-69 leading to the demise of De Gaulle is discussed at length, as is the renewal of the German export drive in the wake of a nominal revaluation of the D-Mark in 1969. Finally, the revival of labor struggles in Italy in the same year is put in the context of the structural weaknesses of the Italian economy as analyzed by the late Marcello de Cecco. The conclusion is that European countries had neither the political culture nor the institutional mechanisms to coordinate mutually advantageous policies. Their so-called cooperation was an exercise in establishing hegemony while defending the interests specific to the dominant economic groups of each country. The essay then deals with the formation of the EMS as an expression of efforts to establish and enforce economic dominance.
  • Topic: Economics, Markets, History, Monetary Policy, Capitalism, Common Market, Macroeconomics
  • Political Geography: Europe
  • Author: Joseph Halevi
  • Publication Date: 11-2019
  • Content Type: Working Paper
  • Institution: Institute for New Economic Thinking (INET)
  • Abstract: The paper highlights the position of German authorities, showing that they were quite lucid about the fundamental weaknesses inherent in a process that separated monetary from fiscal policies by giving priority to the centralization of the former. Instead of repeating the well known critiques levelled against the EMU – for which readers are referred to the unsurpassed treatment by Stiglitz, the essay highlights the splintering of Europe in the way in which it has unfolded during the 1990s and in the first decade of the present millennium. In particular the early economic and political origins of the terminal crisis of Italy are located between the late 1980s and the 1990s. France is shown to belong increasingly to the so-called European periphery by virtue of a weakening industrial structure and persistent balance of payments deficits. The paper argues that France regains its central role by political means and through its weight as an active nuclear military power centered on maintaining its imperial interests and posture especially in Africa. The first decade of the present millennium is portrayed as the period in which a distinct German economic area had been formed in the midst of Europe with a strong drive to the east with an increasingly powerful gravitational pull towards the People’s Republic of China.
  • Topic: Economics, International Political Economy, Political Economy, History, Macroeconomics
  • Political Geography: Africa, China, Europe, Asia, Germany, Global Focus