Despite much discussion of the resource curse in recent years, a consensus on a development model for resource-rich states has not emerged. Such states have tremendous economic potential but have tended to under perform when compared to resource-poor states due to a higher propensity to resort to civil conflicts. This article argues that the key to escaping the resource curse is through the application of a rentier state development mode, which creates political stability while increasing GDP per capita through (1) increased military expenditures, (2) private goods transfers to elites, (3) redistributive economic programs, and (4) security guarantees from foreign states.
Argentina’s public sector spending has consistently outpaced tax revenues—opening up a gap that could only be filled by massive deficits, official currency manipulations, inflation underreporting and other fiscal and monetary hocus pocus. But even that hasn’t worked for current president Cristina Fernández—forcing her to smear opponents and silence critics at the expense of creating sustainable policies. This paper looks at increased export taxes on soy and the privatization of national pensions as examples of fundamental argentine fiscal policy. Through first person interviews with a politician, government worker, businessman and academic, it also aims to imbue the issues with the local politics that shape Argentina’s political realities and that typically fail to make it to the international press.
As a result of different experiences of the processes of political liberalization and market-oriented reforms over the past few decades, there is a clear divide in styles of political leadership in Latin America today. Consolidated democratic regimes have been generally successful, addressing social concerns while maintaining responsible fiscal policies. on the other hand, economic and political instability have plagued those countries where populist regimes have mobilized marginal groups through the use of anti-elitist rhetoric. for these populist states, the example of their successful Latin American neighbors may offer guidance for a future transition to a different style of political leadership based on responsible fiscal management and social progress.
The leadership styles of and relationships between the authoritarian regimes and militaries in North Africa are important factors in understanding the dynamics of the current upheaval in the region. Inhabitants of the region, affected by blogs, social networks, and liberal European and American culture, demanded either a more rational, value-driven, and open leadership responsible to the people, or a constitutional system. Further, the United States and its allies should maintain political and military distance from the movements sweeping the region as not to discredit them, while training the local population in polling, election monitoring, and the like, to create a basis of democratic action that would ensure the success of the transition process.
the Bologna Center Journal of International Affairs had an opportunity to interview Mr. Divjak in his office in Sarajevo, and subsequently over the telephone from Italy. Translation provided by Jadranka Poljak (SAIS BC, 2011).
Europe urgently needs effective economic leadership to address its trade imbalances, shaky Eurobond markets, and diminishing trust in European integration. The European Union (EU)’s fiscal rules are neither strict enough nor comprehensive enough to hold the currency union together. The status quo is not sustainable. Already wobbly economies in Europe’s periphery face punishing, unaffordable interest rates as private creditors back away from their debt, and the European partners kick away successive chances to devise a comprehensive and feasible debt workout plan. Unfortunately, none of its present political leaders seems capable of meeting the challenge, in particular, German Chancellor Angela Merkel, the leader of the EU’s biggest economy, biggest exporter and biggest paymaster. Leaders overly focused on narrow perceptions of national advantage endanger the future of European economic integration and the benefits it has brought all member states.
Iran remains the one significant unsolved problem for the United States in the Persian Gulf. Over the course of the past decade, US policy has inadvertently allowed Iran to become the dominant power in the region. The best US policy might be to avoid seeking to control events in Iran, instead, leaving the various factions in Iran to fight amongst themselves. (From a lecture delivered at the Bologna Center, November 11, 2010, adapted by Shirin Mohammadi and William J. Burke)
On April 10, 2010 Lech Kaczynski, the President of Poland, his wife and dozens of top government officials were killed in a plane crash near Smolensk, Russia. Poland's army chiefs of staff, deputy Foreign Minister and central bank governor were among the 96 passengers on board. The delegation had been flying to Russia to commemorate the 70th anniversary of the Katyn massacre, in which an estimated 22,000 Polish POWs were executed by the People's Ministry of Internal Affairs (NKVD ). Ironically, some on board the plane were relatives of the officers slain in the Katyn massacre. Bologna Center's Monika Noniewicz interviewed Agnieszka Lada, the Head of the European Program at the Institute of Public Affairs in Warsaw, Poland, about the implications of the crash.
The heart of Brazil’s recent rise in international relations lies in its growing influence in the global economic arena. This article evaluates one aspect of economic activity – the emergence of Brazilian transnational corporations. The article argues that an important legacy of decades of state intervention in the market fostered the successful internationalisation of big business in Brazil, impacting on Brazil’s international profile. However, this legacy also hampered its systemic competitiveness as evidenced by various international competitiveness rankings. The article concludes with some remarks on the long-run sustainability of Brazil’s current economic performance.
This paper argues that the advancement of Chinese capabilities in the areas of information warfare, anti-access measures, and strategic nuclear forces has substantially altered the balance of forces between China and the US, particularly regarding potential conflicts in China’s littoral waters, including over Taiwan. This challenge to US “command of the commons” may undermine America’s regional dominance in East Asia. More specifically, the article argues that the nature of any conflict between the two powers has been fundamentally changed by China’s development and implementation of technologies aimed at: degrading US communication and intelligence gathering capabilities; limiting the ability of the US to deploy air and sea assets in the Chinese theater of operations; and denying the US the ultimate trump card of an assured nuclear first strike capability.
In 1959, one of the largest natural gas fields in the world was discovered in the Netherlands. This article describes the impact these reserves have had on the political economy of the Netherlands, and some of the challenges associated with managing the “wealth effect.” Integrating the revenues accrued into the national budget has proven troublesome because of the highly volatile nature of commodity prices. Moreover, the management of the wealth accrued from the reserves has been subject to rent-seeking behaviour, imposing substantial losses on Dutch society. The case of the Netherlands serves as a reminder that rich resource-rich countries stand to lose if the wealth of a natural resource is not treated with the appropriate prudence.
Contrary to what was widely expected when the Soviet Union imploded, the collapse of the old bipolar system has led not to a closely integrated “unipolar” global system but to a more plural world of distinctive and independent-minded states and regions. The old assumptions that lay behind America’s unipolar role and identity – that it possesses infinitely attractive soft power, incomparably superior hard power, limitless economic means, and intrinsic legitimacy – no longer hold true. Instead, the coming world of regional blocs raises questions as to how the West can accommodate the new Asia and avoid a dismal degradation of the Earth’s environment.
This paper charts the failure of the post-war British governments to adequately acknowledge and adapt to the changing world order, in which the United States (U.S.) was in ascendancy and Britain, with its Empire, was in decline. Characterized by the deliberate preservation of sterling’s prestige on the international stage, fueled by a lingering nostalgia for the halcyon days of international British supremacy, the argument put forward describes the punishing and painful damage inflicted upon the domestic British economy in an effort to achieve successive governments’ international agenda. The conclusion is, therefore, that a strong element of dynamic self-awareness should be promoted when an international power is faced with decline, in order to better facilitate a controlled and measured descent, rather than an abrupt and precipitous deterioration.
The financial crisis and the approach of Britain’s general elections have given a new twist and urgency to the long-running British debate on national identity. The British governing class and Gordon Brown in particular, have responded to the consequent political and economic challenges in three ways. They have intensified the debate on identity and citizenship. Brown himself has inspired a major new reflection on Being British: the Search for the Values that Bind the Nation. Secondly, they have carried forward long-developing and quite radical plans for constitutional reform. Finally they have continued to draw on the United States for models, examples and precedents with which to pursue the ‘modernisation’ of Britain. These trends all point to a decisive shift in the nation’s political development: towards the production of a written constitution. The evidence suggests that London will look first to American experience and expertise when this historic moment arrives.
This paper analyzes the factors that aided and hampered the growth and popularity of political Islam in Somalia by tracing the history of al-Ittihad al-Islamiyya. After examining the emergence of political Islam in Somalia and the creation of al-Ittihad al-Islamiyya, this paper traces the growth of the group, its association with the Sharia courts in Mogadishu, and finally its subsequent downfall. There are many factors that allowed al-Ittihad al-Islamiyya to become a significant political force in Somalia. These include Somalia’s status as a collapsed state and outside intervention in the country.
The world is still far from reaching a meaningful agreement on climate change. Neither the US nor China are willing to play the role required of them to ensure the international climate change negotiations are successful. Europe is to some degree willing to lead but lacks leverage. Using a game-theory approach this paper will show the difficulties with the way the climate change negotiations are currently conducted. If leaders are to find a consensus solution to the global warming problem, they will need to consider changing the negotiation rules.
Often, an unrestrained capitalism in association with globalization is blamed for causing the actual financial crisis. In this article, after a historical overview on the emergence and development of the term “Laissez-faire Capitalism,” the question of the truthfulness of the above assertion is examined. Although laissez-faire capitalism does not oppose globalization, it does not endorse the process of the last two decades. While laissez-faire capitalism champions economic freedoms and deregulated markets, it also stresses the aspect of accountability: the possibility of failure itself is essential for assessing risks. Globalization on the other hand made not only markets and players global, but also regulations and regulators, and thus constrained economic freedom. In particular, globalization played a significant role in diminishing accountability for the decisions of actors in the market.
The global financial crisis has a significant impact on euro adoption strategies in the Czech Republic, Hungary, Poland and Slovakia, as national governments use the crisis strategically in national debates about economic policies and future choices. The turmoil in Hungary was a wake-up call exposing the vulnerabilities of emerging economies as Central Europe did not prove resistant to liquidity deterioration, exchange rate volatility and direct and indirect effects of the crisis. The policy implications of the crisis on the euro adoption strategies reveal that these developments only intensified the already existing position on the euro rather than dramatically changed the attitude of the governments currently in power. Analyzing the effects of the financial crisis on Central Europe, exemplified in the issue of euro adoption, helps us to understand policy choices that politicians make and the extent to which these are being influenced by international organizations. The global financial crisis has a significant impact on euro adoption strategies in the Czech Republic, Hungary, Poland and Slovakia, as national governments use the crisis strategically in national debates about economic policies and future choices. The turmoil in Hungary was a wake-up call exposing the vulnerabilities of emerging economies as Central Europe did not prove resistant to liquidity deterioration, exchange rate volatility and direct and indirect effects of the crisis. The policy implications of the crisis on the euro adoption strategies reveal that these developments only intensified the already existing position on the euro rather than dramatically changed the attitude of the governments currently in power. Analyzing the effects of the financial crisis on Central Europe, exemplified in the issue of euro adoption, helps us to understand policy choices that politicians make and the extent to which these are being influenced by international organizations.
Both realists and institutionalists agree that more empirical research is needed to determine the explanatory value of institutions. This paper looks at the EU’s reaction to the 2007–2008 financial crisis for evidence that the EU mattered in shaping the behavior of its member states. Three responses at the EU level—attempts to reform EU banking supervision, the creation of European Economic Recovery Plan, and the push for the November 2008 G20 summit—are examined for evidence of the EU altering member states’ interests, calculations of interests, power, and resources. It concludes that the EU mattered only when member states were not motivated by relative-gains concerns to restrain collective action.
In handling the current financial crisis, policymakers are seemingly blind to the opportunity to re-fashion the financial sector into a more efficient and competitive form. This failing is due to three major erroneous lessons: that it is better for banks to be big than to be bust; that securitization is without social value; and that investment banking is dead. Large commercial banks pose both a systemic risk and a risk to competition. Securitization is necessary to reduce the concentration of risk in smaller banks. Investment banking is a necessary activity, and should be made up of smaller market participants.
Through analyzing the Mexican and Salvadoran migrant communities living in the US and their remittance flows back to Latin America, this paper attempts to examine the political implications of economically empowered diasporas and how home country governments are responding and becoming more accountable. This paper explores this phenomenon’s implications on political processes through remittance delivery collaboration and reviews recent developments in Mexico and El Salvador in light of the current global economic crisis.
Michel Rocard was Prime Minister of France from 1988 to 1991, under President Françoise Mitterrand. Previously, he was French Minister of Planning, of Town and Country Planning and of Agriculture. He was First Secretary of the French Socialist Party (1993–1994), then Socialist deputy to the European Parliament from 1994–2009. He currently chairs the Scientific Committee of Terra Nova, a think tank for the intellectual revival of the Left. In March 2009, President Nicolas Sarkozy nominated him French ambassador for international negotiations relating to the Artic and Antarctic poles. This interview was conducted in Paris in February 2008. In the course of the discussion, Michel Rocard identifies three phenomena at the heart of this transformation: the drift away from the capitalism of “les Trente Glorieuses” that has been brought about by deregulation, the replacement of traditional values of work and thrift with those of profit and fortune, and, finally, the potentially criminal practices of the banking and financial sectors.