terça-feira, 29 de julho de 2014

Christopher Granville: EU’s sanctions on Russia will fail to be a knockout blow



The new sanctions against Russia agreed by the EU on Tuesday are described by European officials as “level three”. This implies higher levels still to come if Russia’s approach to Ukraine fails to satisfy the US and EU – the logical end point being, as in some computer game, a final confrontation with the supreme adversary: President Vladimir Putin. All such talk of levels obscures the reality that there are only two types of sanctions.

The impact of the lesser type of sanction works through sentiment. The actual measures in this category have targeted individuals and economically insignificant businesses owned by those individuals. Such measures have created an atmosphere in which Russian companies have found it increasingly difficult and expensive to refinance their foreign debt (totalling $650bn at the end of 2013) and the collapse of Russian issuance in the capital market. This has intensified capital outflow, rouble weakness (resuming now, after a bounce in May-June) and declining domestic investment. Real gross domestic product growth fell below 1 per cent in the first half of 2014 compared to the same period last year and 1.3 per cent last year as a whole.

The US already moved up to the second broad category of sanctions on July 16 (the day before the downing of Malaysia Airlines Flight MH17). This type of sanctions is designed to squeeze the financial lifeblood out of the Russian economy by banning credit and capital flows to major Russian banks and corporations, starting with Rosneft, Novatek, Vnesheconombank and Gazprombank. The EU is set to follow the US across this Rubicon – with the focus, judging by the European Commission’s consultation paper, on cutting off Sberbank, VTB and other state-controlled banks from external funding markets.

Whatever sanctions the EU governments finally agree to impose now and in the future, the US’s control of the dollar funding markets gives it the financial power to tip the Russian economy into recession single-handedly. Since the European economy would suffer much more from a slump in Russia than the US, the main significance of the MH17 tragedy in this context is that European governments no longer object to the US using that power, so there will be no transatlantic splits for Russia to exploit. As it turns out, the EU is proving ready not only to endure the effects of serious sanctions passively but to follow the US across the sanctions Rubicon. This will tighten more quickly the financial garrotte around the neck of the Russian economy.

Placing Russia under a financial interdict will have a more powerful longer-term impact than other so-called sectoral sanctions, such as the European Commission’s recommended ban on defence equipment and advanced drilling technologies for tight oil and offshore hydrocarbons in the Arctic. The natural Russian response will be to step up import substitution efforts. While this always takes time even in normal conditions, in the absence of easily accessible financing, the challenge will be that much tougher – and perhaps insurmountable in some cases.

It follows that Russia will have to fall back on its domestic savings. The country’s strong national balance sheet includes about $160bn in the government’s reserve funds that could be used to recapitalise and fund the state banks, which could then refinance the existing foreign debt of non-financial corporations. But with almost $100bn of principal external debt repayments falling due between now and the end of 2015, the sanctions regime will result in these reserves being rapidly depleted – leading in turn to further devaluation, credit rating downgrades and negative growth rates.

If the Ukraine crisis is not resolved by this stage, the whole European economy will feel the pain. A Deutsche Bank study at the outset of the crisis in March concluded that a repeat of the 8 per cent contraction in output suffered by the Russian economy in the wake of the global financial crisis in 2009 would now reduce Germany’s already lacklustre growth rate by half a percentage point.

Until these general blowback effects are felt, the main burden of the EU sanctions mooted by the commission would appear to fall on the UK. The core measure targets debt and equity capital raising by the Russian state banks and bans European intermediaries from offering associated underwriting and advisory services, and the bulk of such business is done in the City of London. Capital market funding is also a small portion of overall foreign funding of Russian banks (about 3.5 per cent as of March 2014), so an important detail about the EU sanctions package as regards both overall impact and burden sharing between the member states will be whether the prohibition on financing Russian banks will extend to ordinary lending. The international syndicated loan market for Russian borrowers is dominated by continental European banks. French banks have the largest exposure of $52.5bn.

This analysis presupposes that the EU will never go for the “nuclear” sanctions option of banning gas imports from Russia, and that the EU and US together will not try to replicate against Russia the ban on oil exports imposed on Iran. The EU cannot for now substitute its present annual gas import volumes of 150bn cubic metres from Russia, and the loss of Russia’s present level of crude oil exports – 7m barrels a day, compared to Iran’s 2.5m b/d – would trigger a sharp rise in the oil price and a global economic slump. This would be the economic equivalent of the Cold War-era concept of nuclear deterrence based on mutually assured destruction.

Short of the “Mad” options, the Russian economy will decline and Europe will suffer, but there will be no knockout blow and, as so often in Russia’s history, the Russian nation may be expected to rally around in the face of hardship caused by foreign foes.


Christopher Granville Managing director and director, Russia/FSU research for Trusted Sources


Fonte: FT


segunda-feira, 28 de julho de 2014

Thomas Wright: Europe should confront its enemies as one citizenry



Two thousand years ago, the words civis romanus sum (I am a Roman citizen) were like a charm for warding off evil, such was the protection that the empire bestowed on all its citizens no matter where they might travel. In the 19th century Lord Palmerston, the British foreign secretary, invoked Roman precedent to promise that any British subject “shall feel confident that the watchful eye and the strong arm of England, will protect him against injustice and wrong”.

Today, more than a week after 210 EU citizens perished in an attack on a civilian airliner, European diplomats are due to debate sweeping economic sanctions against Russia, which supports the Ukrainian separatists who are widely believed to have been responsible for the attack and probably supplied the weapons. Roman precedent should again be at the forefront of diplomats’ minds.

In the days that followed the downing of Malaysia Airlines flight MH17, the Ukrainian rebels failed to protect the site, allowed the victims’ possessions to be looted, and threatened observers from the Organisation for Security and Co-operation in Europe. “In defiance of all the rules of proper investigation, people have evidently been picking through the personal and recognisable belongings of the victims,” said Mark Rutte, the Dutch prime minister. “This is appalling.”

Consider the situation if the same number of American citizens had been killed. Images of the site being desecrated would have placed the White House under immense pressure. Serious consideration would have been given to retaliatory air strikes against separatist positions in Ukraine. The Ukrainian armed forces would probably have received lethal military assistance.

At a minimum, the separatists would have been given an ultimatum to hand over control of the site to US or Nato forces for the duration of the investigation. Crushing sanctions would have been passed with overwhelming bipartisan support. The authorities would have insisted that those responsible be handed over; and if that failed, the US would have pursued them to the ends of the earth.

One can debate the accuracy of this counterfactual. What is beyond dispute, however, is that the US would have responded with righteous anger from Florida to Alaska. The Dutch, who suffered an unbearable loss, are certainly outraged – as are the British, who had 10 among the dead. But elsewhere, people were detached. There was no visceral cry of pain in Rome, Paris or Madrid; no sense that there, too, people had been attacked. Outside the Netherlands, no one marched in solidarity with the 210 fellow EU citizens who died. In Brussels, the flags stayed hoisted to full mast.

In the debate over sanctions that followed, President François Hollande said France should not be expected to repay the €1.1bn it received for the first Mistral warship it had sold to Russia. It would undoubtedly be different if the 210 were French – but that is precisely the point.


The revanchism of Vladimir Putin’s Russia might have been expected to bring European nations together. So far, it has sent them running for cover. Governments have tried to protect their economic interests by maintaining their own countries’ ties to Russia, instead of standing shoulder to shoulder with their allies. In private, officials openly question whether western European nations would make good on their commitment, under Article 5 of the north Atlantic Treaty, to defend the Baltic states if Russia were to launch an operation there of the kind that led to its annexation of Crimea earlier this year.

This is a dangerous time for Europe to signal that it is unable, and even unwilling, to defend its own. Further Russian aggression could be in store – not to mention the lesson that other actors may possibly draw.

Today’s discussion in Brussels is an opportunity to change course. If tougher sanctions are agreed, as many now expect, it will be a start. However, EU leaders must explain to voters why the attack on a civilian air route is an attack on all of Europe. They must resolve to bring those responsible to justice – including the separatist leaders, if their troops are found responsible. And since sanctions may not be enough to deter Mr Putin, they must also do more to help the Ukrainian government to prevent him from achieving his territorial goals.

Europe should appoint a high representative for foreign policy with the heft and understanding to meet the challenge posed by a revanchist Russia. Carl Bildt, the Swedish foreign minister, would make an excellent candidate. So would Radek Sikorski, his Polish counterpart, or Toomas Ilves, the Estonian president.

The EU confronts an existential question. Is there a price to be paid for killing 210 of its citizens? Will the words Ich bin ein Europäer resonate in foreign lands as civis romanus sum did in a previous age? Or is it every nation for itself? Today the EU begins to give its answer. It must be full-throated.


Thomas Wright is a fellow at the Brookings Institution



sexta-feira, 25 de julho de 2014

Diplomacia e poder


Spektor é uma raridade no deserto intelectual  que ainda é a área de pesquisas de International Political Economy no Brasil. Seu livro e artigos são leitura obrigatoria aos interessados no tema.


Neto de ucranianos e italianos, nascido na Argentina e criado no Brasil, onde ganhou seu leve sotaque na Bahia e os primeiros títulos acadêmicos em Brasília, Matias Spektor, doutorado em Oxford, com passagens em Washington e Londres, é a globalização em pessoa. Dias atrás, por celular, Twitter, Facebook, por e-mail e em chamadas nos serviços gratuitos de telefonia e mensagens Viber e Skype, conectou-se com autoridades e amigos brasileiros e indianos para acompanhar, de Londres, a reunião, no Ceará, do grupo dos Brics, que reúne Brasil, Índia, China, Rússia e África do Sul. Gostou do que ouviu. "Foi um passo importante na institucionalização que o grupo não tinha", disse ao Valor, citando a criação do banco dos Brics e do novo arranjo de reservas para socorro em caso de risco nas contas externas. Uma das vozes mais originais e independentes surgidas no debate de política externa ultimamente, o historiador e especialista em relações internacionais diz que os Brics "aumentam capacidade de alavancagem da diplomacia brasileira, dão acesso a um mundo que, de outra forma, o país não teria."

Mas Brasil, Rússia, Índia, China e África do Sul são diferentes entre si. Seus interesses e recursos de poder diversos os impedem de, algum dia, constituir uma espécie de G-7, o clube das potências ocidentais, que, apesar de divergências pontuais, compartilha valores culturais, econômicos e políticos. A reunião com grandes líderes regionais dos Brics é importante por dar maior autonomia de decisão ao Brasil nas grandes discussões mundiais, analisa Spektor. E por aproximar o país da maior economia do grupo, a China.

"Os Brics abrem oportunidade de investimentos, de negócios comerciais e, acima de tudo, dão algo de que a gente precisa muito: acesso ao governo chinês", diz, lembrando a crescente dependência da economia brasileira em relação à China. "Se o Brasil tem problemas para construir canais com os EUA, que dirá com a China." Sobre a construção de canais de entendimento com os EUA, Spektor não precisa falar; deve ser lido. Ele acaba de lançar o livro "18 Dias - Quando Lula e FHC se Uniram para Conquistar o Apoio de Bush" (Objetiva, 288 págs., R$ 36,90) é muito mais do que o título promete.

Sem dúvida, vale a pena, no cenário polarizado da política brasileira, conhecer em detalhes a história de como o governo tucano, já no fim, deu apoio aos petistas para afastar em Washington e em Wall Street a imagem de incendiário colada ao recém-eleito Luiz Inácio Lula da Silva. Além de espírito público, tratava-se de evitar colapso financeiro que afundaria a economia brasileira e, com ela, o legado de estabilização econômica pelo qual o presidente Fernando Henrique Cardoso esperava marcar sua passagem pelo Planalto. A partir de sólida pesquisa acadêmica em documentos de arquivos oficiais e privados no Brasil e nos EUA, Spektor traz revelações que explicam opções de política externa nos governos FHC e Lula como resultado da tradição da diplomacia brasileira somada a visões diferentes sobre o espaço reservado ao Brasil na cena internacional.



O livro de Spektor seleciona momentos-chave no período que vai desde o anúncio da vitória de Lula nas eleições de 2002 ao encontro dele, ainda não empossado, com o presidente George W. Bush, em dezembro daquele ano. Cobre um período bem mais longo que esse, porém, e lembra como o governo FHC rejeitou proposta de Bush para integrar o G-7 e adotou uma política de "resistência defensiva" em relação aos EUA, que chegou a irritar Washington.

Spektor conta, ainda, como o americano rechaçou proposta de acordo comercial entre EUA e Mercosul e relata o esforço do então embaixador brasileiro em Washington, Rubens Barbosa, para atrair o interesse do candidato tucano José Serra pelas relações Brasil-EUA, até que o diplomata recebeu instruções de Brasília para ajudar Lula a entender-se com a Casa Branca. Apesar de visto com desconfiança até no governo de Bill Clinton, com quem construiu um forte relacionamento pessoal e "uma falsa ilusão de sintonia diplomática", Fernando Henrique era tido como o presidente de maior experiência na região sul-americana, e tinha credibilidade, que usou, no governo Bush, para avalizar as promessas de gestão responsável feitas por Lula à comunidade internacional.

Spektor não se prende ao eixo Brasília-Washington, e traz novas informações, muitas delas baseadas nos arquivos da FGV, do Rio, e da diplomacia americana. Mostram como o governo tucano apoiou a consolidação de Hugo Chávez no poder na Venezuela, e como operou para evitar golpe de Estado no Paraguai. Traz, ainda, uma memória da rejeição do governo Fernando Henrique aos esforços no continente contra a ditadura de Alberto Fujimori no Peru.

Para explicar a guarida de FHC a Alberto Fujimori, Spektor recorre à justificativa de um diplomata anônimo, segundo o qual o governo brasileiro optou por evitar, no Peru, envolvimento numa crise sobre a qual não teria total controle, ao contrário da crise paraguaia (esta última descrita em detalhes saborosos, como o conselho do então ministro do Exército de FHC a seu ex-aluno e general golpista paraguaio Lino Oviedo: "Lino, não faz isso").

"18 Dias" é também um remédio para as análises maniqueístas e superficiais que costumam aparecer em manifestações sobre política externa no Brasil. São pontos altos no livro os personagens apresentados por Spektor, em papéis diferentes daqueles em que geralmente são vistos na cena política, como José Dirceu, que, aliado a Antônio Palocci, foi um dos principais defensores e gestores da relação com os EUA, em contraposição a um talvez excessivamente cauteloso e desconfiado Itamaraty.

No livro, lê-se como, ao defender os interesses nacionais - contra negociadores europeus e americanos - na questão dos medicamentos genéricos, José Serra encantou-se (e chegou a cogitar chamá-lo em um eventual ministério) pelo diplomata Celso Amorim, quando ainda não personificava a diplomacia de Lula. Acompanha-se também o notável esforço do então embaixador do Brasil nos EUA, Rubens Barbosa, para elevar o perfil do Brasil na capital americana, o que também lhe gerou enormes atritos na defesa dos interesses brasileiros em temas como comércio e propriedade intelectual.

"Estivemos perto de construir uma parceria estratégica", disse Lula, em entrevista para o livro, falando da "relação muito boa" com Bush. Spektor defende esforço semelhante de busca de afinidades e cooperação com os EUA, assim que definido o cenário político com as eleições presidenciais deste ano. Como explicita "18 Dias", diplomacia não é feita para câmeras de TV nem microfones de palanque, embora exija satisfação à opinião pública e possa usar os holofotes para atingir seus resultados. A partidarização excessiva do debate público da política externa também cria preconceitos que livros como o de Spektor ajudam a desmontar.


Fonte: Valor

quinta-feira, 24 de julho de 2014

Philip Stephens: Europe needs a cold war lesson in deterrence





Europe faces a realist moment. Nearly 25 years have passed since US President George HW Bush saw an opportunity for a new, liberal international order. The EU hoped the landscape would be remade in its postmodern image. The dream has been lost to systemic disorder. Myriad conflicts in the Middle East now lap at Europe’s borders. Russia’s war in Ukraine has crossed them.

There is nothing to be gained from another cold war, even if it is evident that Vladimir Putin wants to tear up the post-communist settlement in Europe. There are, however, lessons to be rescued from the decades-long confrontation with the Soviet Union. One of them is about deterrence. Politicians sedated by hopes of a world organised around international collaboration will have to wake up again to the dynamics of great power rivalry.

Francis Fukuyama was half right in declaring the end of history. Capitalism reigns supreme, but rising states such as China and declining ones such as Russia have found a new political model. Authoritarian capitalism, as the Harvard scholar Michael Ignatieff called it in this summer’s Ditchley Foundation annual lecture, presents them with an alternative to liberal democracy. As for a rules-based global system, these states prefer to dine à la carte. They take what they like and reject what is inconvenient.

Europeans have been slow to recognise the world as it is rather than as they imagined. The reaction to Russia’s march into Ukraine has made this painfully obvious. The reflex has been to seek to defuse the crisis. On one level this is admirable – war did not solve much in Iraq and Afghanistan. The snag is that ceding ground to Mr Putin does not amount to de-escalation. To the contrary, weakness stokes the Russian president’s expansionism.

The west’s priority – and the downing by Russian-backed insurgents of Malaysia Airlines flight MH17 provides an opportunity – should be to recover the concept of deterrence. Not the nuclear deterrence of mutually assured destruction but the traditional understanding that political resolve and a readiness to deploy force can apply a brake. The mistake many Europeans have made – and, to a lesser degree, Barack Obama’s White House has done the same – is to confuse deterrence with escalation. I cannot count the times I have heard politicians and policy makers say they must tread carefully for fear of provoking Mr Putin.

Some of these protestations are self-serving – what these people really mean is that they do not want to jeopardise economic relationships. But there seems also to be a genuine misunderstanding about the purpose of deterrence. Imposing sanctions on Moscow will not of itself persuade Mr Putin to pull out of Ukraine. It might persuade him to think twice before marching his army into other Russian-speaking territories.

To be effective, deterrence has above all to be credible. The potential adversary has to believe that aggression will provoke proportionate retaliation, whether economic or, as a last resort, military. The sanctions imposed on Moscow by the EU have been anything but credible. Washington has gone further, but not far enough to signal serious intent. What Mr Putin has seen of a divided west tells him it is bluffing. He will take sanctions seriously when he sees that those threatening them are ready to bear the costs.

European hesitation has ceded to the Kremlin control of the public debate. The annexation of Crimea overturned the cardinal pillar of European security since 1945: states cannot extend their territory by force of arms. As such, Russia’s action represents a profound threat to the security of the continent. Yet to listen to the discussion in some European capitals is to wonder if Mr Putin is not among the victims.


Nato has a chance to remedy this when its leaders hold a summit in Newport, Wales, in September. The gathering had been intended as a stocktaking exercise after the alliance’s planned withdrawal from Afghanistan. The imperative now is to restore Nato as a solid guardian of the post-1945 security order.

Many of the things the alliance needs to do are practical. They are set out persuasively in a report published this week by the think-tank Chatham House. Nato needs to find ways of working in groupings smaller than the full membership of 28. The alliance should extend the interoperability of forces and improve planning and burden-sharing. Governments badly need to re-explain to their electorates why Nato is vital for their security. Jihadis are not the only threat.

The big danger, though, lies in the credibility deficit. Seen from Moscow, Nato looks like two-tier alliance. No one doubts its resolve to defend, say, Germany, but does the Article 5 guarantee of collective security apply equally to the states that joined after the collapse of communism? Would the US – or Britain, France, or Italy – really resist if Mr Putin turned his attention to “protecting” the Russian-speaking people of the Baltics? If the answer is no, the alliance is worthless.

The best way to make sure the commitment is never tested is to make it credible. That can be done by stationing sufficient “tripwire” forces in the east to persuade Mr Putin that a robust response to aggression would be unavoidable.

The heavy lifting, as ever, will have to be done by the US. Europe has depended since 1945 on Washington’s security guarantee and events in Ukraine suggest that is not about to change. But Europeans cannot forever be reluctant partners in their own defence. The way to avoid war is to deter aggressors.




Philip Stephens




Fonte: FT

quarta-feira, 23 de julho de 2014

Devesh Kapur: Western anti-capitalists take too much for granted





There is something paradoxical about the crisis of capitalism that has unfolded since the financial turmoil of 2008. Westerners are heirs to the capitalist system – and to a vast trove of wealth that it has created. But many in the developed world now count themselves among capitalism’s discontents. It is in the east, where the tradition of free enterprise is still young, that its virtues are more easily perceived.

Capitalism has of course been tarnished by its role in a financial crisis that plunged many countries into recession and put millions of people out of work. It is resented, too, for its perceived tendency to exacerbate inequalities, which sting all the more now that so many people find themselves poorer.

Look east, however, and you see something different. Economic statistics show that hundreds of millions are being lifted out of poverty. Below the surface, the social changes are even more profound.

Among the most striking beneficiaries are India’s Dalits (previously known as the “untouchables”), who for centuries were victimised by one of the most hierarchical societies in the world. Capitalism’s role in erasing this stain on Indian society is comparable to the contribution it made to curtailing slavery, serfdom, feudalism and patriarchy in the west.

Since India underwent market-based reforms in the early 1990s, Dalits have advanced their economic lives. If they have the money they can now buy what was once out of reach, and receive the education they were once denied. They have made still more impressive gains in securing dignity and ending social humiliation. Surveys have found that in the early 1990s, for example, fewer than 3 per cent of non-Dalits who visited Dalit homes in the state of Uttar Pradesh would condescend to drink water or tea; two decades later, two-thirds would accept.

Dalits have also increased their consumption of high-end food, grooming products and other goods associated with high social status. They participate in ceremonies, such as weddings, that were once reserved for people of more fortunate birth. They are no longer confined to their own parallel economy, but buy from the same merchants and sell to the same customers as everyone else.

Capitalism has played a critical role in securing this emancipation. The Dalits were once consigned to demeaning occupations, such as handling dead animals or working as bonded agricultural labourers. This transmitted the patterns of caste oppression down the generations. But market forces are driving out these humbling activities.

No longer the indentured servants of high-caste groups, the Dalits have instead become their customers – leasing land or hiring capital goods such as tractors, and selling their wares at market. They are also moving away from rural settings, where many people are still obsessed with caste, to the cities, where there is less discrimination.

And the Dalit community is producing its own capitalists, too – entrepreneurs who are profiting from opportunities in everything from construction to healthcare to education. In a growing economy that is open to all, fortune rewards those with grit, ambition, drive and hustle. Even if stories of self-made success are rare, such role models will inspire future change.

Echoes of the Dalits’ new freedoms reverberate through India’s democracy – indeed, they are amplified by it. In the most recent elections, for example, a plurality of Dalits voted for the Bharatiya Janata party, which has traditionally been dominated by the upper castes.

This is a constituency that can no longer be ignored. Dalits have received legal and constitutional protections, and benefited from affirmative action in public employment and education – measures that have helped create a small Dalit middle class. In 2007 Mayawati Kumari, a Dalit, was elected chief minister of India’s largest state. That a woman of her caste should have risen to high office largely on her own efforts would, until recently, have been unimaginable. Caste has by no means disappeared. But India’s economic growth and dynamism, unleashed by market forces, are at last providing new ways for Dalits to liberate themselves from servility and servitude.

At the end of Aravind Adiga’s Booker Prize-winning novel on contemporary India, The White Tiger, the amoral protagonist says, after slitting his master’s throat: “I’ll say it was all worthwhile to know, just for a day, just for an hour, just for a minute, what it means not to be a servant.” Happily, the liberation of India’s Dalits has been accomplished at a far lower price. Capitalism has been a wrenching force in human history – but also a revolutionary one, weakening deeply entrenched social hierarchies. In the tropics the people are cheering as capitalism undermines social inequalities. Whatever its flaws, westerners are short-sighted to lament it.


Devesh Kapur is a professor at the University of Pennsylvania and
co-author of ‘Defying the Odds: The Rise of Dalit Entrepreneurs’Tagged



Fonte: FT

terça-feira, 22 de julho de 2014

Adam Posen: The errors of conservatives obscure the case for trade





Twenty years after Bill Clinton, former US president, signed the North American Free Trade Agreement, its very name chills the spines of US voters and congressmen alike. Even advocates of new regional trade agreements insist that they are not countenancing “another Nafta”. Yet Nafta-phobia is irrational. None of the terrible things that were, according to its opponents, supposed to result from its implementation have in fact occurred. Members of the free-trade area – Canada, Mexico, and the US – enjoy a large joint market and a common supply chain. Consumers in all three countries have gained.

It is true that America’s less-skilled workers have received an increasingly raw deal since the 1970s. But Nafta is not to blame. To claim otherwise is at best to mistake coincidence for causation. At worst, it is a cynical tactic employed to protect special interests at the expense of the common good.

Econometric studies have established that when US companies invest abroad, the net result is increased employment, stronger demand and more investment at home. This makes sense, since it should on average be the more competitive businesses that have the resources and opportunities to expand abroad, and investing should increase their productivity. This conclusion applies specifically to US companies that have invested in Mexico. Recent research has found that, on average, for every 100 jobs US manufacturers created in Mexican manufacturing, they added nearly 250 jobs at their larger US home operations, and increased their US research and development spending by 3 per cent.

At least until the 2008 financial crisis, US unemployment rates were much lower in the decades following Nafta than before the agreement came into effect, even at a time when the US labour force was growing steadily. Doomsayers claimed that after Nafta, US exports of corn and other agricultural products would lead to a surge of displaced Mexican farmers drifting northward. Yet US Border Patrol apprehensions from Mexico have been declining steadily since 2000, in line with most estimates of illegal immigration from Mexico to the US. The current tragedy of minors from Central America crossing the southwestern border illustrates how desperation, not globalisation, is what truly triggers migration.

True, there have been job losses as a result of competition from Mexican (and Canadian) exports. Some critics of Nafta estimate these at an average of 45,000 a year over the past two decades. But out of a US workforce of 135m workers – between 4m and 6m of whom leave or lose their jobs every month – that is less than 0.1 per cent of turnover. What about the 4m or more other American workers who change jobs every month, many of whom are forced to do so through no fault of their own? It is unclear why someone who loses their job because digital photography replaces film, or because the taste for business-casual decreases demand for suits, or because an industrial plant moves from California to Texas, is any less deserving of support than someone who loses their job because assembly of computers and flatscreen televisions moves to Mexico. It is clear, though, that since such a tiny fraction of total labour force churn in the US is due to Nafta, that deal cannot be a significant cause of wage or employment conditions at home.

Many on the left in the US nevertheless use international trade, and especially Nafta, as a scapegoat for the weakening of labour rights and growing inequality. Others have tried to use trade legislation as a bargaining chip with which to secure concessions on extending the American welfare state – something that conservatives oppose.

For all their efforts, opponents of trade legislation have won only meagre adjustment funds for workers whose job loss is supposedly attributable to international trade. Pro-trade Democrats and Republicans alike have seen these as the minimum concessions required to secure consent for liberalisation. But the result is that job losses attributable to trade are unjustifiably given an outsize significance in the public mind. Moreover, this relatively minor cause of unemployment has been demonised in a way that other job losses are not, even when they are involuntary.

This bogeyman-based approach to trade has failed both the progressive agenda and the US economy as a whole. America has ended up delaying or missing out on opportunities for trade expansion and thus income growth, while the welfare state continues to shrink.

In most countries, increases in openness to trade are associated with a more generous welfare state. In contrast, the US has steadily cut back benefits and worker protections at both the federal and state level. This has nothing to do with international trade. It is the result of legislative majorities that favour a smaller role for the state. Even many Democrats have attacked forms of welfare.

Progressives should stop blocking or scapegoating trade, and instead tackle the problems that contribute to voters’ grievances head-on. Nafta resulted in increased employment, higher productivity, and greater purchasing power for American consumers. This did not come at the expense of less-skilled American workers. Attacking Nafta has done little to help progressives win elected office. Nor has it produced policies that would offer workers greater security. It is time to move on.


Adam Posen is president of the Peterson Institute for International Economics



Fonte: FT

sexta-feira, 18 de julho de 2014

A peek into the IMF machine



A couple of years ago, Liaquat Ahamed, a Washington-based fund manager turned writer, flew to Tokyo to participate in the annual meeting of the International Monetary Fund. It was a febrile moment for the global economy: the eurozone region was on the brink of a crisis, and speculation was sky-high about what the Fund should (or should not) do.

But unlike the other 12,000 delegates who typically attend such meetings, Ahamed was not lobbying for policies, cutting business deals or reporting. Instead, for a few days he observed the IMF circus as if he were an ethnographer plunged into a strange tribe – or a botanist planted in a jungle. Then he travelled to Mozambique and Ireland to watch IMF missions at work. This was not to evaluate the efficacy of IMF programmes but simply to see how the Fund’s staff interacted with each other and local officials as human beings, within the dizzy cross-cultural kaleidoscope of encounters.

The results, published this month in a monograph, Money and Tough Love: On Tour with the IMF , are not just hilarious but shrewdly provocative. These days, as I observed in last week’s column, the issue of globalisation is more emotive than ever. As Ian Goldin, the Oxford-based economist (and a former World Bank official himself) notes in The Butterfly Defect, another thought-provoking new book, “The tidal wave of globalisation that has engulfed the planet in the past two decades has brought unprecedented opportunity. But it has also brought new risks that threaten to overwhelm us.” Financial crises – of the sort the IMF was created to contain – are just one case in point.



But while this means that the question of international governance is also becoming more important, what is striking is how little on-the-ground ethnographic research has been done into organisations that try to implement this. In the wake of the Great Financial Crisis there has been a plethora of books that offer blow-by-blow accounts of what happened inside banks before and after the meltdown. There have also been some fly-on-the-wall accounts of what occurred inside national finance ministries, central banks and regulatory agencies, often written by officials themselves (Timothy Geithner’s Stress Test is simply the latest in this genre). But there are almost no inside accounts of what happens when central bankers congregate for international meetings at the Bank for International Settlements in Basel, or when finance ministers and others gather at the IMF or World Bank.

It is not difficult to work out why. Institutions such as the IMF are generally terrified of letting outsiders peer too closely inside, and Ahamed probably only received permission to do this research because his last book, Lords of Finance, was a weighty, prize-winning tome. Even with these credentials, Ahamed could only peek into the more sanitised edges of the IMF machine.

But even this limited glimpse is fascinating, because Ahamed lifts the lid on seemingly irrelevant details about the fabric and rhythm of IMF life and on the myriad subtle cultural symbols that are used to signal hierarchy, tribal affiliation and power – and which the IMF economists themselves almost never talk about. Ahamed describes, for example, the dress code patterns, noting that “the men [at IMF meetings are] uniformly dressed in dark suits and ties, apart, that is, for two groups: the Iranians, who have this odd habit of buttoning up their collars but refusing to wear ties, and the hedge fund managers, who [are] young, fit and wear designer suits…[they] no doubt refuse to wear ties for much the same reason as the Iranians – to signal their rather self-conscious freedom from arbitrary social conventions.”

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He also tries to explain how policy ideas emerge to dominate the debate – via media platforms. In the case of the Tokyo meeting, for example, he details how the issue of austerity took centre stage, even amid linguistic confusion. “When someone asked the panel why, in view of the costs exacted by fiscal austerity on the social fabric of the countries in crisis, it did not make sense to go slow on budget cuts,” he writes, “[Jörg] Asmussen tried the following comparison: if you plan to cut off a cat’s tail, better to do it in one fell swoop, rather than in slices. This left the half-Japanese audience quite bewildered: why would anyone want to cut off the tail of a cat in the first place?”

Of course, while his account is deliciously droll, this mass of observation reveals a serious point. Although policy makers and economists might like to pretend that international governance is all about abstract ideas or quantitative models, it is actually rooted in complex cultural patterns and languages that outsiders struggle to understand. That is no surprise; all institutions have such traits. But I just hope that the experiment that Ahamed has started will now open the door to other ethnographic accounts of how our huge cross-border bureaucracies really work – not simply to spark more reflection among voters but also among the staff of groups such as the IMF too.




Gillian Tett


Fonte: FT