"The increasing debt burden will lead to rifts in transatlantic politics"
What should Europe and the US do?
Video comments
Theme Intro
Reinventing Economic and Financial Policy
Erik Jones on Economic and Financial Policy
The increasing debt burden will lead to rifts in transatlantic politics Go to expert page.
Tomas Valasek on Economic and Financial Policy
The increasing debt burden will lead to rifts in transatlantic politics Go to expert page.
Session 1 - Clip 7
Erik Jones intro " losing the power of collective action"
Session 1 - Clip 8
"Will the west continue to limp along?"
Session 1 - Clip 14
Is China more important than Europe?
Session 1 - Clip 17
Erik Jones on "leaders and followers, the role of china and global governance'
Session 1 - Clip 24
John Hulsman and Erik Jones on how economics impacts the West's shaping power + China's economic trouble
Session 2 - Clip 2
Erik Jones on difficulties to improve global governance (UN, IMF, Doha)
Session 2 - Clip 11
Erik Jones on the ECB & shifting economic blame
Background
Both America and Europe face a similar predicament. The economic crisis has burdened Western economies with huge piles of public debt. But does the same problem on both sides of the Atlantic also lead to common solutions? Different policies are developed by Western leaders to weather the crisis they face. Austerity measures are leading to new priorities in defence and security policy, and national economic interests are taking precedence in foreign policy goals. What does transatlantic economic and foreign policy cooperation mean under austerity? Where can common interests be identified?
Eline Chivot / 13-12-2011 @ 17.10
What will be the consequences of Cameron's decision to veto changes to the European treaty ? It will further isolate Britain from the European integration process, clearly. It even climbed doubts about whether Britain can remain a EU member state. Beyond, this decision will impact our economic future and the directions Europe will be taking: the 'two-speed Europe' is here (http://www.guardian.co.uk/world/2011/dec/09/jonathan-freedland-two-speed-europe). Britain's influence on political and economic decisions is now weakened. The consequences of Cameron's decision are therefore radically different than these of his predecessors who chose never to leave the table and defend the country's interest.
Here again, fighting against populist narratives and anti-European discourses seems crucial in preserving the European unity. This means "caution" for Cameron's government: they should probably try to take the possible initiatives that are left e.g. to take action on euro zone liquidity or emphasize a number of policies that show the British commitment towards Europe.
Mark Hendriks / 21-12-2011 @ 17.47
I disagree Artur: quite the contrary, we need more Europe! Although I think you're right in pointing out that there will be many more hurdles on the road towards a more integrated EU (e.g the German constitutional court), Cameron's choice is a big gamble that I fear will play out wrongly in the long run, also for the UK government's beloved "city". Politically, diplomatically and economically, it was a failure. Why do you think the integration process "went too far already"?
artur / 15-12-2011 @ 16.32
Eline, how sure are you that any northern euro zone country would ratify the new EU treaty at a referendum? I don't think that Britain is the only hurdle to the European integration process. I think it went too far already.
Mark Hendriks / 22-11-2011 @ 17.26
I’ve just read the Foreign Policy article on the recent upsurge of anti-Germanism posted on the HCSS twitter. To me it just seems bizarre to discuss whether Germany should be “allowed” to save the EU when it is the only viable savior around! Its like asking if firemen should be allowed to extinguish fires.
PNR / 10-11-2011 @ 16.21
With the events of the past week in Italy continuing to shake the confidence of markets around the globe, what can the US and Europe do to prevent the spread and deepening of these financial issues to other countries? Italy being to large to fail and to big to bail is becoming a common discussion point among many. With EU leaders saying there is no plan for an Italian bailout and the ECB policymakers resisting to intervene further at the moment it is clear the challenges are far from over. What should, or can the US and Europe do? Is Europe and the US working together really of that much importance? Or has the importance already shifted to other regions?
artur / 22-11-2011 @ 17.43
Budget situation in both the US and UK is much worse in any euro zone except Greece - they both have budget deficit of 9% of GDP (Spain is only 6.5%). Is it a special Anglo-Saxon magic that keeps their bond yields at the historically lowest level of less than 2%? Yes, one can call it this way, but more common term is fiat money (although it originated in China). Or simply speaking they don't have to produce more to increase the amount of money in the system - it is just a couple of mouse clicks for the Fed and the Bank of England. Unfortunately (for Italy) or fortunately (for Germany) it is more complicated for the ECB to do the same. Essentially euro is similar to the gold standard and euro zone countries have to live according to means. But when it really comes to the break-up of the euro zone I just don't see the ECB refusing to buy government debt of solid euro countries. It would be insane to take responsibility for the crash of the European project just to keep ideological purity. But I cannot give a 100% guarantee that this won't happen.
Maarten / 11-11-2011 @ 11.48
The US has no funds to offer, since it's cash strapped itself. It's probably China and other BRICs that will buy up cheap assets in Europe and invest in bonds in exchange for political influence. But that doesn't mean transatlantic bonds don't matter anymore. It's a risky bet that this shift in economic power will play out well for the West and it would be naive to think the BRICs will save the day and bail out Europe. First, the BRICs are no monolithic entity. Don't expect any coordinated, Marshall-plan like initiatives. Second, they will increasingly have problems themselves that will limit their economic power (e.g. demographic, security and scarcity issues). Although transatlantic bonds are under preassure, they are as important as ever. We should get our act together, reinvogorate policies that strengthen common economic interests and especially: redesign our international institutions so they become at once attractive for new powers like China and tie them into norm based and thus more or less predictable behavior.
artur / 07-11-2011 @ 22.40
Historically, it was creditors (and savers) who almost always loose in debt crises. Temptation to default on or inflate away one's debt is just too strong (Britain seems successfully doing the latter). Banks have already "voluntarily" accepted 50% write off on their investment in Greek debt. I think Berlin and Paris will soon have to write their loans to Greece as well. Other Western countries don't have much choice either. They will have to default on their promises to their own population that they just cannot keep. But some will probably first default on their debt before they will be forced to take decisive measures...
Mark Hendriks / 09-11-2011 @ 18.07
Right Arthur, the kicking the can down the road approach doesn't seem to work and inflating your way out of the crisis is too big a temptation to resist, I agree. I share your fear that "some will probably first default on their debt before they will be forced to take decisive measures". But in spirit with the proposition, I'd like to put the transatlantic relation in the equation here. I see our atlantic relationship being weakened by the weight of our respective economic concerns. There is less room for brotherly love in times of crisis, and less for costly "joint" programs and policies (be it military, economic or political). This is especially so since our new powerful cousin China is knocking on our door with, surprise, this time actually something to offer (eg good old cash)!
Frank / 07-11-2011 @ 21.00
A couple of days ago, the U.S. Office of the National Counterintelligence Executive published a report called “Foreign Spies Stealing U.S. Economic Secrets in Cyberspace.” The report, which reflects the views of 14 US intelligence agencies, accuses China of extensive spying to steal US economic data and technology, with most of the attacks originating in cyberspace. Russia also stands accused of similar practises.Such attacks primarily target information technology, military technology, and clean energy and medical technology. China uses such tactics for the purpose of economic development, the report says.
The two countries are "trying to build their economies" on American - and presumably also European - research and development. It seems to me it is next to impossible to assess with any precision (a) the scale of state-sponsored economic espionage; and (b) what it delivers the spying country in terms of improper competitive advantage. However, in these times of fierce global competition the gain might well be very significant. All the more reason to put cyber defence (including cyber offence used as part of a overall defensive posture) high on the political agenda!
PNR / 07-11-2011 @ 13.41
Given the events of the past months, and particularly the last week, here is a link to an interesting article from the BBC. http://www.bbc.co.uk/news/magazine-15600594
Kiona / 07-11-2011 @ 16.36
These are two opposing perspectives, though the spirit at the moment is leaning more towards 'Greece has brought this onto itself'. The question remains though, what concrete action should be taken? Is there a way out for Greece and the Eurozone?? Now that is the question that needs to be discussed. We can decide later on whether or not we feel sorry about Greece, but right now the most important thing for Greece and Europe is to deal with it.
Jonne / 01-11-2011 @ 17.23
Pressing debt and louder calls for austerity measures will put the U.S. and Europe increasingly at loggerheads. Diverging interests and popular politics give incentive to protectionist policy which I fear will only worsen the problem. Upcoming economies well-versed in "divide and rule" will be able to use their considerable resources to "save the day" in exchange for influence over the Atlantic nexus.
PNR / 01-11-2011 @ 16.35
Endless re-use of raw materials, regained from waste and garbage, seems one of the most promising avenues to deal with scarce and highly priced materials. It also kills two birds with one stone: it is also good for the environment. The holy grail, of course, is a circular economy: plastic not used to produce fleece jackets (i.e. a downgrade), but to produce new plastic. Seems to me there is still a lot of low hanging fruit, next to technically and logistically challenging innovation. I guess governments can promote this, or take away thresholds
Maarten / 01-11-2011 @ 14.24
In their statements, Tomas Valasek and Erik Jones don’t mention the divisive effects of shifts in who in this world (the West) owes who (China) money. States like China and others see their geo-economic influence rise, with, for example, their huge piles of reserves as carrot for increasingly indebted countries such as the European peripheral states. What will this translate into? Will the carrot one day turn out to be a stick? Following this line of reasoning, I see a serious chance of the PIIGS being wooed by easily available Chinese money, resulting in a new “Asian influence zone” in Europe.