The West’s Uncertain Trade Relations with East Asia

Swiss Ambassador Luzius Wasescha, left, talking to Markus Mugglin (Swiss Radio DRS) at JapanGate. © Nozomi Glanzmann

Deep down Luzius Wasescha is a multilateralist. Until July 2012, Wasescha led the Swiss delegation to the WTO in Geneva, where he was widely respected for his negotiation skills. Ultimately, he is probably not happy about the Doha Round being deadlocked and would prefer a multilateral trade agreement to the proliferation of bilateral accords that have been concluded recently.

Yet, in part, Wasescha is also responsible for the stalemate at the WTO – in his capacity as Switzerland’s representative. As the former speaker of the G10, a group of agriculturally protectionist countries, he fought against a substantive reduction in tariffs on agricultural imports. Those tariffs are part of the conflict at the WTO between developed and developing countries that is holding up the Doha Round.

Final Preparations for an Arms Trade Treaty

Not everbody is as enthusiastic about the ATT. Image: Control Arms/flickr

While the ISN is examining the relationship between economics and war this week, UN delegations in New York are gathering for the last preparatory meeting on a treaty to regulate the global arms trade. After years of advocacy, preparation and dialogue, representatives from all UN member-states will meet in July for the UN Conference on the Arms Trade Treaty (ATT). While expectations surrounding the treaty are very high in some quarters  (as “one of the most important treaties the world has ever seen”, according to Kate Allen of Amnesty International UK), many remain skeptical.

What is the treaty about? The aim of the ATT is to regulate the import and export of conventional weapons (and related products and services) on a global scale. While for some states the goal is merely to curb illicit trade in arms (i.e., mainly smuggling), others are aiming higher.  Advocates of a strong and comprehensive ATT want to prevent arms exports to states which don’t comply with international humanitarian law and human rights law.

In response to such high standards, some states accuse the West of wanting to stop the export of weapons to certain states altogether, which would deny them the right to self-defense, or so critics argue.

The Era of “Debt Capitalism” Has Come to an End

Private debt, public debt and inflation: the drivers of economic growth for the last 40 years. Image: Mikko Saari/flickr

After 40 years of economic growth based on debt, the era of  “debt capitalism” has come to an end, says Wolfgang Streeck. The Managing Director of the Max Planck Institute for the Study of Societies in Cologne gave a remarkable interview (in German) last week that I would like to share with you, in advance of the World Economic Forum‘s meeting in Davos starting today.

Economies must grow in order to increase welfare. This has been the basic requirement for capitalist societies since the industrial revolution. Yet the last time Western societies experienced real economic growth was in the decades following WWII, says Streeck, in his account of recent economic history. Since the 1970s, when this period ended and economic growth slowed, governments started to print money in order to create the illusion of increasing salaries and greater welfare. In reality, however, income stagnated.

When decision-makers realized that high inflation rates could no longer be sustained, they looked for new recipes to keep the economy growing. In the 1980s, they found a solution in increased government spending based on public debt. Ronald Reagan was the unlikely representative of this policy.

Streeck argues that when government debt reached unsustainable levels, the third and final phase of “debt capitalism” (he uses the term Pumpkapitalismus in German) began. From the 1990s on, economic welfare was no longer based on inflation or on public debt but on private debt. Financial markets were liberalized and consumers, especially in the US, were convinced to take out loans in order to pay for their expenses.

Business and Finance

Now, Seriously: Financial Transaction Tax

A tax that won't hurt, except for gamblers. Image: artuemuestra/flickr

Liberal-minded economists are usually skeptical of taxation: taxes distort markets and lead to the inefficient allocation of resources. However, some taxes are better than others, and financial transaction taxes, such as the Tobin Tax, are certainly in that category.

Now, the European Commission is getting serious about introducing a financial transaction tax. Their proposal: levy a tax of 0.1% on every financial securities transaction performed by a financial institution based in the EU.

New ISN Partner: Climate Change and African Political Stability Program

We are happy to announce that the Climate Change and African Political Stability (CCAPS) Program based at the Strauss Center for International Security and Law has joined the International Relations and Security Network. CCAPS is a collaborative research program among the College of William and Mary, Trinity College Dublin, the University of North Texas and the Strauss Center at the University of Texas at Austin.

CCAPS examines the impact of climate change on political stability in Africa and develops strategies for how to prevent related conflicts. In the words of CCAPS, the program aims at answering three main questions:

  • Where and how does climate change pose threats to stability in Africa?
  • What is the role of government institutions in mitigating or aggravating the effects of climate change on political stability?
  • How effective is foreign aid in helping African countries adapt to climate change?