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8541. Can Aid Buy Foreign Public Support? Evidence from Chinese Development Finance

Author:
Lukas Wellner, Brad Parks, Axel Dreher, Andreas Fuchs, and Austin M. Strange
Publication Date:
03-2022
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
Bilateral donors use foreign aid to pursue soft power. We test the effectiveness of aid in reaching this goal by leveraging a new dataset on the precise commitment, implementation, and completion dates of Chinese development projects. We use data from the Gallup World Poll for 126 countries over the 2006–2017 period and identify causal effects with (i) an event-study model that includes high-dimensional fixed effects, and (ii) instrumental-variables regressions that rely on exogenous variation in the supply of Chinese government financing over time. Our results are nuanced and depend on whether we focus on subnational jurisdictions, countries, or groupings of countries.
Topic:
Development, Bilateral Relations, Foreign Aid, and Influence
Political Geography:
China and Asia

8542. Who Lends to Africa and How? Introducing the Africa Debt Database

Author:
David Mihalyi and Christoph Trebesch
Publication Date:
03-2022
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
Africa’s sovereign debt markets are not well understood, partly due to a lack of data. This paper introduces the Africa Debt Database (ADD), the most granular and comprehensive dataset on external borrowing by African governments thus far. Our project moves beyond existing aggregate datasets and instead releases information on individual loans and bonds, in particular on the financial terms of each instrument. Taken together, we cover nearly 7000 loans and bonds between 2000 and 2020, with a total volume of 644 billion USD. Using this data, we study Africa’s record lending boom of the 2010s in detail. The debt boom was mainly driven by large sovereign bond issuances in London and New York, as well as growing lending by Chinese state-owned banks. The micro data also reveal a large variation in lending terms across countries, time, and creditors. Sovereign external bonds have interest rates of 6 percent, on average, Chinese banks charge 2-4 percent, and multilateral organizations just 1 percent. Strikingly, many governments in Africa simultaneously borrow large amounts from both private and official creditors, at vastly different rates. The large differences in debt servicing costs are indicative of a cross-creditor subsidy, as cheap concessional loans can be used to pay the high interest to private or Chinese creditors.
Topic:
Economics, Foreign Aid, Credit, and Influence
Political Geography:
Africa, China, and Asia

8543. Exchanging Money for Love? A Regional Analysis of EU Cohesion Policy on Euroscepticism

Author:
Michael Bayerlein and Matthias Diermeier
Publication Date:
04-2022
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
In the past, the European Union seems to have been able to tame Euroscepticism through regional 'convergence' funding. After the Eastern enlargement of the Union, however, this relationship needs to be put to the test. Not only have the new member states become the main recipients of EU funding, Eastern Europe has also changed from once being the most integration-friendly region to displaying the most integration-hostile attitudes in the EU. Motivated by this empirical puzzle, we revisit the relationship between structural 'convergence' funding and Euroscepticism and ask where - if at all - is the EU's convergence spending still able to tame Euroscepticism. Most surprisingly, correlation analyses reveal that between 2006 and 2018 larger regional subsidies go along with increasing opposition to EU integration. We can rebut this counterintuitive finding by a Diff-in-Diff approach that reveals an increasing Euroscepticism in Eastern European regions between 2006 and 2014. Nevertheless, also these more advanced models fail to establish a positive relationship between regional funding eligibility and pro-integrationist attitudes. Finally, fuzzy RDD models exploit the funding assignment rule and corroborate that the EU is no longer able to pacify integration-critical regions by their simply increasing 'convergence' funding. Nevertheless, the EU has won support in Eastern Europe where EU investments are perceived (positively). In designing a strategy to win back support for EU integration, Brussels does not need more fiscal capacity but rather has to design 'convergence' funding that is visible as well as clearly attributable to its donor.
Topic:
Economics, Regional Cooperation, Foreign Aid, European Union, and Eurocentrism
Political Geography:
Europe

8544. Closing Pandora’s Box: How to Improve the Common Reporting Standard

Author:
Menusch Khadjavi and Marjolein Vertelman
Publication Date:
05-2022
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
The 2021 pandora papers show that many wealthy individuals and even politicians use shell companies to hide their fortunes. In order to fight international personal tax evasion, the Common Reporting Standard (CRS) was implemented and it helped governments to collect USD 85 billion already. USD 182 billion are still missing from the government budget because of personal tax evasion. The individual implementation strategies of CRS compliant countries can endanger the effectiveness of the Automatic Exchange of Information (AEOI). Several loopholes are used to circumvent the CRS. There are amendments possible which increase the effectiveness by improving the implementation strategies and closing the loopholes. The enforcement of the CRS should become stricter by removing financial institutions’ licenses to operate in cases of non-compliance. Beneficial ownership registers should increase transparency regarding investments and securities. Within the current momentum of international tax legislation, the CRS compliant countries may leverage the USA into signing the CRS as well. The USA could in turn demand a more effective CRS before signing it.
Topic:
Reform, Finance, Business, and Wealth
Political Geography:
Global Focus

8545. Who wins and who loses from state subsidies?

Author:
Sourafel Girma, Holger Görg, and Ignat Stepanok
Publication Date:
05-2022
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
China is perceived to rely on subsidizing firms in targeted industries to improve their performance and stay competitive. We implement an approach that allows for the joint estimation of direct and indirect effects of subsidies on subsidized and non-subsidized firms. We find that firms that receive subsidies experience a boost for productivity. However, our approach highlights the importance of indirect effects, which are generally neglected in the literature. We find that, in general but not always, non-subsidized firms experience reductions in their productivity growth if they operate in a cluster where other firms are subsidized. These negative externalities depend on the share of firms that receive subsidies in the cluster. Aggregating direct and indirect effects into a (weighted) total effect shows that this negative indirect effect tends to dominate. We interpret our results in the light of a simple heterogenous firm type model, which highlights that subsidization, in a competitive environment of firms, may potentially harm non-subsidized firms.
Topic:
Governance, Business, Subsidies, and Competition
Political Geography:
China and Asia

8546. A Primer on the 2022 National Security Strategy

Author:
Peter Juul and Heba Malik
Publication Date:
10-2022
Content Type:
Working Paper
Institution:
Center for American Progress - CAP
Abstract:
The 2022 National Security Strategy introduces new ideas on navigating strategic competition with China and Russia, investing at home, and a renewed focus on the fight against climate change.
Topic:
Security, Climate Change, National Security, Rivalry, and Strategic Interests
Political Geography:
Russia, China, Europe, Asia, North America, and United States of America

8547. The Expanding International Reach of China’s Police

Author:
Jordan Link
Publication Date:
10-2022
Content Type:
Special Report
Institution:
Center for American Progress - CAP
Abstract:
China’s Ministry of Public Security has expanded its global activities, increasingly threatening U.S. interests and influencing security sector governance around the world.
Topic:
Hegemony, Police, Foreign Interference, and Influence
Political Geography:
China and Asia

8549. How the Inflation Reduction Act Will Drive Global Climate Action

Author:
Frances Colon, Cassidy Childs, and Anne Christianson
Publication Date:
08-2022
Content Type:
Working Paper
Institution:
Center for American Progress - CAP
Abstract:
The Inflation Reduction Act puts the United States on track to meeting its Paris Agreement commitment and to reclaiming the mantle of global climate leadership.
Topic:
Climate Change, Energy Policy, Environment, International Cooperation, and Inflation
Political Geography:
North America and United States of America

8550. Will Viktor Orbán Bring His Racist Rhetoric to the United States this Week?

Publication Date:
08-2022
Content Type:
Working Paper
Institution:
Center for American Progress - CAP
Abstract:
Hungarian Prime Minister Viktor Orbán's embrace of far-right racism should prompt American conservatives to cut ties with the autocratic Hungarian leader.
Topic:
Foreign Policy, Leadership, Discrimination, and Far Right
Political Geography:
Europe, Hungary, North America, and United States of America

8551. Rising Anti-China Sentiment in South Korea Offers Opportunities To Strengthen US-ROK Relations

Author:
Haneul Lee, Alan Yu, and Tobias Harris
Publication Date:
08-2022
Content Type:
Special Report
Institution:
Center for American Progress - CAP
Abstract:
The Yoon administration’s posture toward China has important implications for the U.S.-ROK alliance and America’s strategic approach in the region
Topic:
Security, Diplomacy, Military Strategy, Bilateral Relations, and Strategic Interests
Political Geography:
China, Asia, South Korea, North America, and United States of America

8552. How the United States Should Respond if Russia Invades Ukraine

Author:
Max Bergmann
Publication Date:
01-2022
Content Type:
Special Report
Institution:
Center for American Progress - CAP
Abstract:
A Russian invasion of Ukraine must come at a high cost to the Kremlin.
Topic:
Defense Policy, Military Strategy, Conflict, and Russia-Ukraine War
Political Geography:
Russia, Europe, Ukraine, North America, and United States of America

8553. A Saudi-Pakistani Reset: Business as Usual?

Author:
Joshua Albin Cheyaden
Publication Date:
01-2022
Content Type:
Commentary and Analysis
Institution:
Moshe Dayan Center for Middle Eastern and African Studies
Abstract:
“Saudi Arabia and Pakistan are back on track,” declared ʿAli ʿAwadh ʿAsseri, a former Saudi ambassador to Pakistan, following Pakistani Prime Minister Imran Khan’s state visit to Riyadh in May 2021.[1] Khan’s visit ended a two-year diplomatic rift that had marred a close relationship spanning seven decades.[2] The Pakistani Prime Minister’s visit reopened vital channels of communication that had been shut for almost a year and signaled a “reset” in Saudi-Pakistani relations.[3] The rift between Pakistan and Saudi Arabia began in 2019 and peaked in 2020, while the year 2021 was marked by calls for a reset in their relations.[4] Saudi Arabia’s deepening ties with India remain at the heart of the Saudi-Pakistani split, and they are unlikely to change despite any presumptive diplomatic reset between Pakistan and Saudi Arabia. Saudi Arabia’s increasing engagement with India as a key energy client is just one aspect of a broader transformation the Kingdom is experiencing under Saudi Crown Prince Mohammed bin Salman.[5] At the same time, Pakistan is in a deep economic crisis and is looking for foreign investment in major infrastructure projects to generate employment in the country.[6] In 2021, Pakistan declared its intention to pursue a foreign policy guided by its focus on economic security over its geopolitical interests.[7] Therefore, the long-term prospects for the Saudi-Pakistani reset depends on Pakistan’s ability to accept Saudi Arabia’s more even-handed India-Pakistan policy and the Saudis’ willingness to invest in an economic partnership with Pakistan.
Topic:
Diplomacy, Bilateral Relations, and Economy
Political Geography:
Pakistan, South Asia, Middle East, India, and Saudi Arabia

8554. The UAE Under Attack: A Foreign Policy Test

Author:
Moran Zaga
Publication Date:
02-2022
Content Type:
Commentary and Analysis
Institution:
Moshe Dayan Center for Middle Eastern and African Studies
Abstract:
January 2022 was an exceptional month in Abu Dhabi’s history. For the first time, this peaceful city suffered casualties as a result of a direct airstrike on two strategic sites – a petroleum storage site and Abu Dhabi International Airport.[1] The January 17 attacks, associated with the Houthis in Yemen, were followed by several failed attempts to attack the United Arab Emirates’ (UAE) capital again. After the initial shock, the UAE launched an international campaign, calling for a multinational response.[2] And indeed, a chain of Arab leaders arrived in Abu Dhabi through the same airport that was attacked just a few days earlier.[3] The goal of their visit was clear – to express their full support and affirm their countries' solidarity with the UAE, its leaders, and its people. For the UAE, these high-level visitors reinforced the Emirati message that it was not alone on this front. The expressions of solidarity with the Emiratis transcended the region - leaders from around the world reached out to the Emirati leaders with messages of support and through other diplomatic channels.
Topic:
Foreign Policy, Diplomacy, Political stability, and Houthis
Political Geography:
Yemen, United Arab Emirates, and Gulf Nations

8555. Hizballah, Lebanon, and Reconciliation with the Gulf: The Impasse

Author:
Carl Yonker
Publication Date:
03-2022
Content Type:
Commentary and Analysis
Institution:
Moshe Dayan Center for Middle Eastern and African Studies
Abstract:
On February 14, in Beirut’s southern, Hizballah-dominated suburb of Ghobeiry, Bahraini opposition groups marked the anniversary of the 2011 failed popular uprising in Bahrain. The gathering, organized by the Bahraini opposition group al-Wifaq, took place despite the Lebanese interior ministry’s orders to cancel it, which were issued in order to avoid offending Bahrain and its Gulf allies.[1] Lebanese ties with a quartet of Gulf states – Saudi Arabia, Bahrain, Kuwait, and the United Arab Emirates – have been at an impasse since October 2021. The diplomatic crisis, which has yet to be resolved, was sparked by Lebanese Information Minister George Kurdahi's critical comments regarding Saudi Arabia’s military intervention in Yemen. At its core, however, the crisis in Lebanese-Gulf relations is a dispute over Hizballah and its growing political influence in Lebanon – a source of tension for several years.
Topic:
International Relations, Non State Actors, Hezbollah, and Reconciliation
Political Geography:
Saudi Arabia, Lebanon, Bahrain, United Arab Emirates, and Gulf Nations

8556. Politics, War and Eastern Mediterranean Gas

Author:
Joshua Krasna
Publication Date:
03-2022
Content Type:
Commentary and Analysis
Institution:
Moshe Dayan Center for Middle Eastern and African Studies
Abstract:
In the past two months, there have been several significant, interlocking developments regarding Eastern Mediterranean gas. In January, the Biden Administration withdrew American support for the Israeli-Cypriot-Greek EastMed gas pipeline. In February, U.S. officials shuttled between Israel and Lebanon for another round of talks to resolve the question of the maritime border and the exclusive rights to exploit gas in their disputed waters. Most importantly, the Russian aggression against Ukraine, which began in late February, has transformed the long-discussed European need to reduce its dependence on Russian gas (and oil) into an urgent priority. It has also exposed the disconnect between optimistic policies that anticipated an imminent shift to renewable resources and the reality that the developed world will, in the short- to medium-term, remain dependent on fossil fuels. Confronted with this new reality, does Europe's need to rapidly diversify its sources of energy increase the strategic value of Eastern Mediterranean gas? And can the Eastern Mediterranean contribute meaningfully to reducing Europe's dependence on Russian gas?
Topic:
Foreign Policy, Diplomacy, Energy Policy, Politics, War, and Gas
Political Geography:
Europe, Turkey, Middle East, Israel, Palestine, Lebanon, Egypt, and United States of America

8557. Tunisia’s Turbulence: On the Road to Economic and Political Collapse

Author:
Daniel Zisenwine
Publication Date:
04-2022
Content Type:
Commentary and Analysis
Institution:
Moshe Dayan Center for Middle Eastern and African Studies
Abstract:
Thousands of Tunisians took to the streets of the capital Tunis in mid-March, demonstrating against Tunisian president Kais Saied’s July 2021 power grab and the country’s ongoing economic crisis. Citing alleged threats to Tunisia’s political order, Saied dismissed the government on July 25, 2021, suspended parliament, and moved to rule by decree. Critics, including opposition Islamist parties but also the country’s powerful trade unions, civil society groups, and foreign experts have since assailed Saied’s moves, contending that he effectively re-imposed one-man rule on Tunisia, and secured unchecked control over all branches of government. This political crisis intensified in late March, after Saied dissolved the Tunisian parliament which convened online and voted to repeal his decrees. The March protest differed from previous ones, as it was organized by the anti-Islamist Free Destourian Party (FDP), which has been critical of democratic measures adopted in Tunisia after the 2011 revolution that overthrew Zayn al-ʾAbidin Ben ʿAli’s authoritarian regime. The protest, led by a right-wing party not unsympathetic to some of Saeid’s grievances, focused on the president and the deteriorating economic crisis.[1] It was another indication of Tunisia’s growing unrest.
Topic:
Politics, Democracy, Civil Unrest, Economic Crisis, and Instability
Political Geography:
North Africa and Tunisia

8558. A Tale of Two Normalizations: Israeli Normalization with the United Arab Emirates (UAE) – Part I

Author:
Joshua Krasna
Publication Date:
05-2022
Content Type:
Commentary and Analysis
Institution:
Moshe Dayan Center for Middle Eastern and African Studies
Abstract:
The “Treaty of Peace, Diplomatic Relations and Full Normalization Between the United Arab Emirates and the State of Israel” was signed on September 15, 2020. On the same day, Bahrain and Israel signed their “Declaration of Peace, Cooperation, and Constructive Diplomatic and Friendly Relations.” Since then, bilateral relations between the two states and Israel have progressed speedily, with many more issue-specific agreements signed and economic relations with the Emirates burgeoning. The Negev Conference on March 28, 2022, which was attended by the U.A.E., Bahrain, Egypt, and Morocco, as well as the United States, symbolized a maturing and coalescence of the regional normalization processes between Israel and conservative Arab states. This paper will address recent developments in the foreign policy of U.A.E. that impact the current status of relations with Israel, as well as recent developments in relations between the two states.
Topic:
Foreign Policy, Diplomacy, Bilateral Relations, Normalization, and Abraham Accords
Political Geography:
Middle East, Israel, Palestine, United States of America, Gulf Nations, and UAE

8559. A Tale of Two Normalizations: Israeli Normalization with the United Arab Emirates (UAE) and Bahrain – Part II

Author:
Joshua Krasna
Publication Date:
06-2022
Content Type:
Commentary and Analysis
Institution:
Moshe Dayan Center for Middle Eastern and African Studies
Abstract:
Bahrain and Israel signed their “Declaration of Peace, Cooperation, and Constructive Diplomatic and Friendly Relations” on September 15, 2020; the “Treaty of Peace, Diplomatic Relations and Full Normalization Between the United Arab Emirates and the State of Israel” was signed on the same day. Since then, bilateral relations between the two states and Israel have rapidly progressed, with many more issue-specific agreements signed. The Negev Summit on March 28, 2022, which was attended by Bahrain, U.A.E., Egypt, and Morocco, as well as the United States, symbolized a maturing and coalescence of the regional normalization processes between Israel and conservative Arab states. A follow-up to the Negev Summit took place in Manama on June 27, 2022 and the steering committee, which was chaired by Bahraini Undersecretary for Political Affairs Sheikh Abdullah bin Ahmed Al Khalifa, formed working groups on security, health, education, tourism, food and water security, and energy.[1] A previous paper addressed recent developments in the foreign policy of U.A.E. which impact on the current status of relations with Israel, as well as recent developments in the two states’ bilateral relations. This paper will look at the context and content of relations between Israel and Bahrain, and analyze the overall state of normalization in the region at this stage.[2]
Topic:
Diplomacy, Bilateral Relations, Normalization, and Abraham Accords
Political Geography:
Israel, Palestine, Bahrain, United Arab Emirates, and Gulf Nations

8560. Saudi Arabia’s New Nationalism: Embracing Jahiliyyah

Author:
Ilan Zalayat
Publication Date:
07-2022
Content Type:
Commentary and Analysis
Institution:
Moshe Dayan Center for Middle Eastern and African Studies
Abstract:
For more than two-thousand years, the walled city of al-ʿUla has been laying peacefully in a northwestern oasis of the Arabian Peninsula. While in ancient times it was an important oasis on the Spice Route, in the modern era, only the approximately five-thousand inhabitants of this far-flung town on the Saudi periphery know it to be the home of well-preserved stone monuments made by Nabataean sculptors. Its relative anonymity stands in stark contrast to its world-renowned twin city in Petra of the Hashemite Kingdom of Jordan. However, ever since the de-facto Saudi ruler, Prince Mohammed bin Salman (“MbS”), became Crown Prince in June 2017, Saudi Arabia has gone to great lengths to publicize forgotten al-ʿUla: The government has invested $15 billion on advertising and developing the site, attracting hundreds of thousands of visitors.[1] The government also used the site to host the Saudi reconciliation with Qatar in 2021. Al-ʿUla was also the setting for the first-ever movie that was shot and produced in Saudi Arabia.[2] The counterintuitive choice to feature pagan monuments as the new symbol of Saudi Arabia,[3] a country that has long touted itself as the custodian of Islam, epitomizes the kingdom's effort to reimagine its pre-Islamic history in a nationalist frame.
Topic:
Islam, Nationalism, History, and Legitimacy
Political Geography:
Saudi Arabia and Gulf Nations