Breakfast debate about TTIP with Hiddo Houben

On Friday 27th June, the Washington European Society organized a breakfast debate about the ongoing trade negotiations between the US and the European Union. We were joined by Hiddo Houben, the Head of the Trade and Agriculture Section at the EU Delegation in Washington, DC. The conversation touched upon the latest developments within the negotiation cycle and the technical, as well as political challenges that the negotiators face. Not surprisingly, the issues raised as contentious by participants were the so-called Investor-state Dispute Settlement mechanism, the barriers to agriculture and financial services. Mr Houben addressed these and others skillfully, as the plates and the coffee cups were being emptied. If you want to join us next time for one of our policy debates, or other events, make sure you put yourself on the mailing list and keep track of the events posted on our website.

The European Union’s problem is substance, not narrative (openDemocracy)

The hard fact that ‘pro-Europeans’ have to grasp is that for many people the EU is not at all that great. Quite the contrary, the EU imposes tough economic rules, yet gives little palpable in return.

The argument that Euroskepticism could be overcome by better ‘framing’PR techniques or a ‘new narrative’ appeals to many ‘pro-Europeans’. Its logic is simple: the EU does good things, but they are complex by nature and thus difficult to understand. Therefore, the solution surely lies in simplifying the language, engaging the skeptics on Twitter and carrying the day. Sadly, this belief reflects the pro-European elite’s failure to grasp the deeper reality of what shapes people’s perceptions and what the EU today does.

In fact, the EU’s problem is not the absence of a catchy narrative, but the presence of a rather unpopular substance. The lack of a positive narrative is only the most visible sign of the EU’s growing institutional and ideological tensions and this is what the pro-Europeans should really be worrying about, rather than decrying the lack of spin.

(The article was published on openDemocracy on April 24, 2014 and is available in full here)

Marko Bucik is board member of WES and works as a consultant for the World Bank, in Washington, DC. He is also a regular contributor to the Slovenian daily Večer, writing on the European Union, US politics and global affairs.

The Challenges of Nation-Building in the Syrian Arab Republic (POMEPS Briefing #22)

Syria’s ongoing existential conflict is arguably related to its nation-building trajectory starting in the beginning of the twentieth century. What can theories of nation-building and state formation tell us about the origins of conflict as well as future of the Syrian state? In The Politics of Nation-Building,[1] I identify the conditions under which the ruling political elites of a state target ethnic groups with assimilationist policies instead of granting them minority rights or excluding them from the state. I develop a theory that focuses on geostrategic considerations arguing that a state’s nation-building policies toward non-core groups — any aggregation of individuals perceived as an unassimilated ethnic group by the ruling elite of a state — are influenced by both its foreign policy goals and its relations with the external patrons of these groups. I posit that external involvement, whether clandestine, covert, or overt, drives not only the mobilization and politicization of the non-core group’ s identity, but also the host state’ s perception of the non-core group and the state’ s nation-building policies toward the group.

Through a detailed study of the interwar Balkans, I conclude that the way a nation-state treats a non-core group within its own borders is determined largely by whether the state’s foreign policy is revisionist or cleaves to the international status quo, and whether it is allied or in rivalry with that group’s external patrons. However, as I admit in the book, my argument does not travel to all states at all times. In particular, it should apply to countries that 1) are driven from a homogenizing imperative, 2) have non-assimilated segments of the population and no caste system in place, 3) have the capacity to directly rule the population, and 4) have a ruling political elite representing a core group with a clear “national type”. In what follows, I explore how my work illuminates some of the challenges of nation-building in the Syrian case.

Arguably, the Syrian government has not been motivated by a homogenizing imperative. This begs the question, why some places in the world are run by core groups consisting of apparent minimum winning coalitions,[2]while others by elites that go at great lengths to establish national states. [3] Why do some countries have leaders that try to make the national and the political unit overlap and others that opt to rule with a minimum winning coalition? One argument suggests that the degree of diversity prevents the nation-building path in some cases. Other arguments focus on the pattern of spread of nationalist ideology and/or the prevalence of competing ideologies such as communism, or colonial legacies. Yet others put forth the importance of war-making and imitation of successful military tactics as a mechanism that accounts for the spread of nationalism and the nation-state system.[4]

In The Politics of Nation-Building I build on some of these explanations and suggest that the main reason that leaders adopt the “nation-building option” is the reality, or anticipation, of other powers manipulating non-core groups in their state to undermine their stability or annex parts of their territory. This process is particularly conspicuous in situations where the ruling elites perceive their borders to be challenged. While this process worked in Tilly’s account of Europe [5] and fits the pattern I narrate in the interwar Balkans, it does not seem to fit so much the story in Syria. Following the collapse of the Ottoman Empire, and after a brief interlude of direct rule by Ibrahim in the mid-19th century, the territories of contemporary Syria were divided up by decree through a series of treaties. Syria was under the French Mandate since 1920 and after a tumultuous history gained independence in 1946. As it is often the case, colonial powers had to rely on local elites coming from specific groups for political and economic control. Syria was no exception and the role of the Alawis and Christian minorities was vital for the French from the beginning of their Mandate. As Wendt and Barnett put it,

“Lacking political legitimacy, the colonial state’s power was always underwritten by the actual or threatened use of force. Significant military resources were typically not available from the centre, however, and since mass mobilization was not viable for an army of occupation, colonial states tended to militarize coopted groups or ethnic minorities. A similar process occurred in colonial bureaucracies, which were staffed by persons with a vested interest in upholding the authority of an alien state. The character of colonial military and bureaucratic development, in other words, was shaped by the security needs of foreign actors and their domestic clients rather than of the mass population.”[6]

As a result of this legacy, as well as the geopolitical situation in the region, this system of choosing a loyal local ethnic group and ruling the rest of the population through it–that has its roots to the French colonial period–was perpetuated. The various military coups following independence until Hafez al-Assad consolidated his rule on the country in 1970 solidified this outcome. The legitimating principle of the Assad regime has not been state-level nationalism. In fact, repression and a carefully constructed network of informants were the basis for legitimacy in Syria for the past four decades—if not longer. To complement this apparatus Lisa Wedeen revealed a cult that the Assad regime—father and son—designed which operated as a disciplinary device. [7] For decades citizens acted as if they revered their leader. “The cult works to enforce obedience, induce complicity, isolate Syrians from one another, and set guidelines for public speech and behavior” as Wedeen put it in 1999.[8]

Another set of conditions for my argument to be applicable is that part of the population has not yet been successfully assimilated and there is no “caste structure” in place since in caste systems assimilation is by definition impossible.[9] Syria is definitely a heterogenous society, but the heterogeneity is more pronounced depending on which cleavage dimension is salient at each historical moment. In terms of ethnicity, about 90% of the population was Arab before the civil war—including about 500,000 Palestinians and up to 1.3 million Iraqi refugees—while there were about 9% Kurds and smaller groups of Armenians, Circassians, and Turkomans. In terms of religion, based on 2005 estimates 74% of the population were Sunni Muslims, Alawis were about 12%, Druze 3%, while there are also some small numbers of other Muslim sects, Christians 10%, about 200 Jews, and Yazidis.[10] Finally, in terms of mother tongue we find the vast majority speaking Arabic, and then Kurdish, Armenian, Aramaic, and Circassian being used by the respective non-core groups. Moreover, although this was not a caste system the mode of rule was definitely blocking social mobility and especially political clout for non-Alawis and their close allies and informants. The rule of the Alawi controlled Baath party coupled with the state of emergency that had been in force since 1963 had decisively alienated the Arab Sunni majority. But following the Arab Spring and coupled with past violence, inequalities, and repression that many reportedly felt in Syria, resistance against the regime grew and by now it has turned into a multiparty civil war. The opposition is fragmented but defections from the Assad side have also been plentiful. The lack of any national cohesion is apparent.

Nation-building cannot be pursued by a failed state that cannot directly rule its population. Assad’s regime clearly did not suffer from this problem. Syria was far from a failed state. In fact, it is a state with high literacy rates– 88% for males and 74%for females. But even if Syrian ruling elites faced the pressures I described above and had the capacity to do so, they would have had a hard time to nation-build. For nation-building to occur, the ruling political elites of the state must represent a core group that is well defined and has a clear criterion of inclusion—a “ national type” in what Eric Hobsbawm called the age of nationalism. In Syria, the closest thing we can find to a constitutive story in Assad’s Syria has to do with a Pan-Arab identity. Particularly, a version of baathist ideology that combines a supranational form of nationalism that calls for the unity of Arabs with anti-imperialism, anti-Zionism and secular socialism.[11] Arab nationalism, a form of unification nationalism,[12] was vital in the struggle for independence—a by-product of British machinations against the Ottoman Empire—as well as the decolonization movement against the French. Thus, the state-level type of nationalism that dominated Europe, did not manage to emerge in much of the Arab Middle East, since such a unification was opposed by multiple great and regional powers. The short experiment of the United Arab Republic that brought Egypt and Syria together in a union between 1958 and 1961 was stillborn but characteristic of the supranational character of the constitutive story that motivated Syrian leadership.  Given this configuration, it is really hard to identify a Syrian constitutive story and this is reflected in the school curriculum that primarily emphasizes anti-Zionist ideas, Pan-Arab ideas, and ironically, Sunni Islam.[13] Thus, while linguistically and ethnically there could be an overwhelming majority constructed–that of Arabs and Arabic–if one had to decide what constitutes the core group in Assad’s Syria, they would most likely suggest that it is the Alawis – together with other minorities – in the exclusion of the Sunni Arab majority.

Despite the well-known arguments that territory is becoming increasingly less important in our globalized world, myriad of territorial disputes, dozens of border changes and the long list of “nations without a state,” or “stateless nations,” point to a more sobering picture. For the past couple of years, several external state and non-state actors are aligning themselves with internal factions or non-core groups in Syria. However, the most powerful regional states Turkey, Iran, and Israel – all non-Arab– are unable to dominate Syria through these local alliances. The USA can be an arbiter of the conflict by intervening with Sunni, which would please Turkey and the Gulf states along with Sunni populations in Syria, Jordan, Palestine, and Egypt—each for different reasons.  Alternatively, if Iran prevails, Alawis in Syria, Hezbollah in Lebanon, Shia minorities in the Gulf States, and the Shia majority of Iraq would rejoice. But a more cynical point of view, one perhaps best summarized by Ed Luttwak,[14] suggests that the USA—and even Israel —should allow this war to go on since it is in their strategic benefit for the factions to fight each other thus preventing the emergence of a strong and unified Arab state, or a victorious Iran.  A note of caution flows from my work in the Balkans. Shifting alliances in the context of the current multiparty civil war with ample external backing, coupled with the rapid changes in control over territory already have lead and will continue to lead to repeated instances of violent exclusionary policies, since non-core groups that are perceived as enemy-backed, or collaborating with the enemy, are going to be targeted by the respective sides of the conflict.

This article first appeared in: The Political Science of Syria’s War, POMEPS Briefing #22, December 18, 2013. 

[1] Mylonas, Harris. 2012. The Politics of Nation-Building: Making Co-Nationals, Refugees, and Minorities. New York, NY: Cambridge University Press.

[2] Riker, William H. 1962. The Theory of Political Coalitions. New Haven: Yale University Press; Bruce Bueno de Mesquita, James D. Morrow, Randolph M. Siverson and Alastair Smith. 2002. “Political Institutions, Policy Choice and the Survival of Leaders,” British Journal of Political Science, Vol. 32, No. 4 (Oct.,), pp. 559-590; Bueno de Mesquita, Bruce; Alastair Smith; Randolph M. Siverson and James D. Morrow. 2003. The Logic of Political Survival.  MIT Press.

[3] Weber, Eugen. 1976. Peasants into Frenchmen: The Modernization of Rural France, 1870-1914. Stanford: Stanford University Press; Gellner, Ernest. 1983. Nations and Nationalism. Ithaca, NY: Cornell University Press; Smith, Anthony. 1986. “State-Making and Nation-Building,” in John Hall (ed.), States in History. Oxford: Basil Blackwell, 228–263;  Smith, Rogers. 2003. Stories of Peoplehood: The Politics and Morals of Political Memberships. Cambridge University Press; Darden, Keith and Anna Maria Grzymała-Busse. 2006. “The Great Divide: Literacy, Nationalism, and the Communist Collapse,” World Politics – Volume 59, Number 1: 83-115.

[4] Connor, Walker.  1984. The National Question in Marxist-Leninist Theory and Strategy. Princeton, New Jersey: Princeton University PressPosen, Barry. 1993. “Nationalism, the Mass Army and Military Power,” International Security, 18, 2: 80-124; Wimmer, Andreas. 2013. Waves of War: Nationalism, State Formation and Ethnic Exclusion in the Modern World. New York: Cambridge University Press, 2013.

[5] Tilly, Charles (ed.). 1975. The Formation of National States in Western Europe.  Princeton, N.J.: Princeton University Press; Tilly, Charles. 1990. Coercion, Capital and European States: AD 990-1990. Cambridge, MA: Basil Blackwell. Tilly, Charles and Wim P. Blockmans (eds.). 1994. Cities and the Rise of States in Europe, AD 1000 to 1800. Boulder: Westview Press.

[6] Wendt, Alexander and Michael Barnett. 1993. “Dependent State Formation and Third World Militarization”,Review of International Studies 19: 321-47, p. 331.

[7] Whitman, Elizabeth. “Stalemate in Syria,” The Nation, April 23, 2012.

[8] Wedeen, Lisa. 1999. Ambiguities of Domination: Politics, Rhetoric, and Symbols in Contemporary Syria. Chicago, IL: University of Chicago Press.

[9] They involve an “ideology of inferiority for the subordinate groups” and thus an almost fixed ethnic structure that is perceived as natural. For more on hierarchical systems, see Horowitz, Donald. 1985. Ethnic Groups in Conflict. University of California Press, pp. 21–32.

[11] It is characteristic that both in 1982 when the regime violently crushed the Muslim Brotherhood rebellion in Hama and in mid-March 2011 following the brutal response of the regime to the protests in Daraa, the conflict was attributed to Zionists and Americans intervening in Syrian internal affairs using fifth columns as agents of Western imperialism. See Wedeen 1999 and Seale, Patrick. “The Syrian Time Bomb Forget Libya”, Foreign Policy, March 28, 2011.

[12] Hechter, Michael. 2000. Containing Nationalism. Oxford University Press.

[13] Landis, Joshua M.  2003. “Islamic Education in Syria: Undoing Secularism,” presented at the conference onConstructs of Inclusion and Exclusion: Religion and Identity Formation in Middle Eastern School Curricula, Watson Institute for International Studies, Brown University.

[14] Luttwak, Edward. “In Syria, America Loses if Either Side Wins,” The New York Times, August 24, 2013.

For Transatlantic Trade, This Time Is Different (Foreign Affairs)

In the past, U.S. and European negotiators have tried and failed to create a unified transatlantic market. But the trade talks that President Obama announced this month have a much better chance of succeeding, thanks to a greater need for economic growth on both sides, the threat of China’s illiberal economic behavior, and the desire to give U.S.-European relations a new purpose.

TYSON BARKER is the director of transatlantic relations at the Bertelsmann Foundation.

Macro-Prudential Policies in Turkey (Roubini)

By Heiko Hesse. Turkey’s economy has long been subject to boom-bust cycles linked to capital flows. And while the Turkish banking system continues to perform well, it faces some structural vulnerabilities that can pose financial stability risks. In common with peer countries, Turkey has been developing and implementing a macroprudential policy (MPP) framework, which has had some success in mitigating financial stability concerns. Looking ahead, Turkey’s macro-prudential and micro-prudential tool kit should be expanded and used in a more targeted and active manner to ensure financial stability, with a focus on debt-to-income limits on households, steps to constrain unhedged foreign exchange borrowing, and more active use of steps to limit growth in very fast-growing credit segments.

Events archive

  • Debate with Paul Adamson on the result of European elections (May 2014)
  • Private viewing of the art from Haiti at the Haitian art gallery Galerie Monin (May 2014)
  • Breakfast Discussion with Domenico Lombardi, Senior Fellow at Brookings, on the Italian Election (February 2013)
  • WES Christmas Party at L2 (December 2012)
  • Breakfast Discussion with the Artistic Director of the Washington National Opera, Christina Scheppelmann (November 2012)
  • WES Discussion on the U.S Election (November 2012)
  • Breakfast Discussion with Sasha Issenberg, Monocle Magazine, on his book “The Secret Science of Winning Campaigns (September 2012)
  • Breakfast Discussion with Atul Singh, Founder and Editor-of-Chief of Fair Observer, on the Global Media Landscape (August 2012)
  • WES Summer Party at L2 (July 2012)
  • Dinner Event with Washington DC Bureau Chief of the Financial Times, Edward Luce, on the U.S. Election (June 2012)
  • Event on “Internet Freedom and Open Government” with the Wikimedia Foundation DC and the Estonian Embassy (April 2012)
  • Exhibition Opening of Suprasensorial at the Hirshhorn Museum (February 2012)
  • Reception and Discussion on Innovation and Education at the Embassy of Finland with Ambassador Ritva Koukku-Ronde and Professor Daniel Hamilton (February 2012)
  • WES Christmas Part at L2 (December 2011)
  • Panel Discussion on “The Future of Europe” with Alan Beattie, Annette Heuser and Angel Ubide (December 2011)
  • Breakfast Discussion with Professor Oreste Foppiani (November 2011)
  • Any Warhol VIP Opening at Hirshhorn Museum (September 2011)
  • Dinner Discussion with Bahraini Ambassador Ms Nonoo (September 2011)
  • Dinner Discussion with Ambassador Mr Areikat, P.L.O. Delegation to the U.S. (September 2011)
  • Breakfast Discussion with Reinhard Butikofer, Member of European Parliament (July 2011)
  • WES Summer Party at L2  (June 2011)
  • Breakfast Discussion with Steffen Kern, Helmut Schmidt Fellow (Transatlantic Academy) and a Director at Deutsche Bank (June 2011)
  • Breakfast Discussion with Gordon Bajnai, former Prime Minister of Hungary (June 2011)
  • Breakfast Discussion with Dan Hamilton, Director of the Center for Transatlantic Relations (SAIS) (May 2011)
  • Breakfast Discussion with Professor Randall Stone (Rochester) on his new book Controlling Institutions (May 2011)
  • Dinner Discussion with Cris Popa, Deputy Governor of the National Bank of Romania (April 2011)
  • SpeedDebating on Wikileaks, Middle East etc (February 2011)
  • Discussion with H.E. Igor Munteanu, Ambassador of the Republic of Moldova to the US (January 2011)
  • Dinner Discussion with Janamitra Devan, Vice President, World Bank (January 2011)
  • Panel Discussion on the G20 Summit with Kati Suominen, Ted Truman, Angel Ubide and James Vreeland (November 2010)
  • Dinner Discussion with Jurek Martin, Financial Times Columnist, on the U.S. Midterm Elections (November 2010)
  • Dinner Discussion with Alan Beattie, International Economy Editor of the Financial Times, on the G20 (October 2010)
  • Film Screening of Nuclear Tipping Point and Roundtable Discussion with Deborah G. Rosenblum, Justin P. Friedman and Blaise Misztal (September 2010)
  • Dinner Conversation on the UN with Amar Bakshi, Steve Feldstein and Harris Mylonas (September 2010).
  • Brown Bag Lunch Video Conference on US-EU Relations in the Post-Lisbon Era with Paul Adamson (Publisher of E!Sharp and Chairman of The Centre) and Danuta Hübner (Member of European Parliament, European Commissioner for Regional Policy, 2004-2009) among others. Jointly organized with the Bertelsmann Foundation (May 2010).

Financial Spillovers and Deleveraging: The Case of Romania (Roubini)

By Heiko Hesse. This blog looks at foreign bank deleveraging and examines how Romania’s asset prices have been impacted from European crisis spillovers. Foreign bank deleveraging has been orderly and moderate so far in Romania unlike in some peer countries. Findings from the spillover analysis suggests that Romania’s asset markets tend to co-move more closely with its regional peers but have been also strongly impacted by the Euro area financial crisis. Romania’s bank capitalization has remained strong at 14.7 percent at end-June while prudential provisions covered 98 percent of non-performing loans. In addition, the National Bank of Romania takes a pro-active stance in intensively supervising the financial system.

The Promethean Dilemma in Third-Party Nation-Building (The Monkey Cage)

By Keith Darden and Harris Mylonas

[First published on The Monkey Cage]

The killing of the US Ambassador last week in Benghazi and the recent wave of attacks on NATOpersonnel by uniformed Afghan police and military highlight the perils of international efforts to build states and societies on foreign soil. Why is it that the people we arm and assist keep on turning those weapons against us?

The New York Times, CBSnews, Washington Postall reported on Sept 17, 2012 that the number of NATO personnel killed in Afghanistan by uniformed Afghan military and police is already at 51 this year, up from a total of 35 for all of last year.  Approximately one in six of the NATO soldiers killed in Afghanistan this year were killed by our local allies and trainees. And this only counts those who killed while in uniform. The attrition and desertion rate from the Afghan National Army and police forces is exceptionally high and many have joined the ranks of the Taliban.  If we consider the number of allied personnel killed by soldiers and police who have been armed and trained by coalition forces, the number is certainly much higher.

The US has wisely put the training of the Afghan Local Police (ALP) on hold for a month until it can improve procedures for vetting its recruits, but the problem runs much deeper.

In a symposium published recently in Ethnopolitics we debated the merits of international state-building efforts.  Our main lesson: There is more to state-building than simply expanding the ranks of the army and police.  Expanding the army and police may be state-building, but it might just as easily be insurgency-building if it is not preceded by systematic efforts to build loyalty and to carefully select recruits. If you are unsure of the loyalties of the recruits who you are training, it’s best not to train them at all.

Here is the link to our piece, which was followed by some responses (Erin JenneFotini Christia,Gordon BardosDavid Siroky & Yoav Gortzak) and our reply to their thoughtful comments.

September Is the Cruelest Month (Foreign Policy)

September Is the Cruelest Month

Welcome back from summer holiday, Europeans! Get ready for 30 days that will determine the fate of your continent.

By Tyson Barker,1

When German travelers return from their hallowed August vacations this week, they will find that the euro is gone — at least as far as Frankfurt airport is concerned. Without much fanfare, the massive euro sculpture, a fixture at Germany’s largest airport since 2001, was unceremoniously dispatched in the dead of night to make room for an inter-terminal railway. The sculpture’s unloved twin, which is famously perched in front of the European Central Bank (ECB) in the heart of Frankfurt, has become the symbol of the eurozone crisis (and a favorite of wire service photographers) and may suffer a similar fate. When the bank moves to the east end of the city in 2014, some urban planners are lustily planning the sculpture’s removal from public view. Symbols are inexorably tethered to politics, and this one is a doozy.

But in the coming month, anxiety-ridden policymakers struggling to maintain the euro will face a series of threats that are anything but symbolic. September will witness a political big bang that ushers in another existential crisis, and failure on any single issue could wreck the European currency. Over the next month, four potential crisis points constitute a political cliff for Europe that will be key to determining if the eurozone has a future.

First, on Sept. 12, Germany’s constitutional court is set to rule on the constitutionality of participating in the European Stability Mechanism (ESM), an institution that was envisioned as the permanent facility for pooled sovereign lending to debt-strapped European countries. The ESM, which passed the Bundestag comfortably (493 votes to 106) in June, would have autonomous control over German public funds — and therein lies the legal problem. The German constitutional court sees itself as the guardian of a certain idea of Germany — small, stability-minded, and inwardly oriented — and court watchers expect a “yes, but…” ruling that stipulates that the red lines of German democracy have been reached. Any further moves to integrate crisis management at the eurozone level — and there will inevitably be more — will necessitate a referendum, the first in Germany’s post-war history. Already the debate around a possible constitution-altering plebiscite is driving the political narrative.

The second crisis point is the upcoming assessment of Greece’s progress in fulfilling the terms of its loan conditions by the troika of the ECB, the European Commission, and the International Monetary Fund (IMF), expected in late September or early October. Greek Prime Minister Antonis Samaras is already trundling between Berlin and Paris in an attempt to prepare eurozone leaders for a disappointing report. Athens’ hope for extending its repayment schedule has sparked heated debate in Germany, where exasperated rhetoric on the political right about the inability of Greece to meet its commitments has become more vociferous. Grandstanding in the Bundestag in the wake of the troika report is likely, especially from the arch-conservative Bavarian Christian Social Union (CSU) and the business-minded Free Democratic Party (FDP). Germany’s paper of record, Der Spiegel,called in May for Greek’s exit from the euro, citing its unwillingness to undertake structural and labor-market reforms.

For ultra-cautious German Chancellor Angela Merkel, the unintended, potentially devastating second and third order consequences of the “Grexit” are anathema. She is a politician who prizes the maintenance of the status quo above all else and fears the unpredictable effects on Spain, Italy, and France, among other countries. A Grexit would eliminate all credibility that the eurozone has left as an insoluble currency union. This could lead to massive speculation and capital flight on an unprecedented scale from countries seen as next in line to go. While German banks have limited but important exposure to Greek debt, they have much more exposure to other countries of the eurozone’s south and a need for these markets as consumers for German exports. The effects would tear through the German economy. It is this worry, not a vague sense of European solidarity, that drives the chancellor to hold firm on Greek membership in the eurozone amid the siren calls from her backbench to kick Greece out.

Which brings us to the third element in the eurozone crisis saga — the Dutch elections, also scheduled for Sept. 12. The Netherlands is one of the small economic powerhouses that has aligned itself with Germany — tough-minded but traditionally somewhat pro-European. This summer, prominent Dutch politician Bas Eickhout excoriated a group of American commentators for focusing on Germany when lamenting the eurozone’s future, when they should focus more on the Dutch and the Finns. His criticism is justified — both countries are seen as losing their resolve to contribute to the financial lifelines for more bailouts beyond current commitments and the Dutch elections are expected to serve as a release valve for voters’ frustration with regarding the eurozone crisis management.

The Netherlands and Finland have not enjoyed the same economic boomlet that Germany had experienced until recently. The Dutch economy shrunk by almost 1.5 percent in the first half of 2012, and Moody’s added a negative outlook to the country’s prized AAA rating due to the weakening economy. This economic stagnation has bolstered the country’s political fringe: The far-left Socialist Party (SP), which is currently leading in the polls, says it would flout EU budgetary rules, call for a referendum on the recently signed EU Fiscal Pact, oppose rescue packages for Greece, and roll back the “Berlin Consensus” economic policy built on hard money, tight fiscal controls, and structural reform. Euroskeptic Geert Wilders’ Freedom Party (PVV) will also play a pivotal role in the election’s outcome: The famously anti-Muslim politician was in an informal alliance with the center-right until recently and brought down the countries’ last government over opposition to EU imposed austerity requirements. His party is also expected to get a substantialshare of the national vote.

The Netherlands’ atomized politics reflects a wider ungovernability sweeping Europe. Here, as in Finland, the Euroskeptic fringe is squeezing out the pro-European center. The Dutch elections could add a new actor to the already unwieldy pantheon of potential spoiler governments.

Amidst all this chaos, the fourth and final crisis may be sparked by attempts to draw EU countries closer together. On September 11, the European Commission is expected to present a blueprint a for banking union — a logical extension of EU’s single market. Such a union should create depositor guarantees across the eurozone, guarantee muscular pre-emptive supervision across borders, and establish re-capitalization and wind-down plans for troubled banks that ensure consistency in case of a systemically important bank failure. It would also sever the link between banking and sovereign debt woes. In short, such a scheme is intended to free Europeans from a vicious cycle in which a collapse of a major national bank in a country such as Spain will inevitability lead to the total collapse of Spain’s public finances.

These would be necessary and straightforward reforms in a political vacuum. But the EU is anything but a politics-free zone. A banking union will work only if European member states are willing to cover depositors in neighboring states and provide European institutions with tools, such as taxation, that allow reserves to be accumulated in order to shore up weak banks. Since negotiations on such a union will be awash in parochial politics, Euro-watchers should expect decisions that will limit ability of the EU to override national authorities in countries such as Spain and France. Talks are also probable on a limited role for any fiscal pooling that could create a eurozone-wide deposit insurance designed to mitigate the risk of exit from the currency union.

These are just the latest sagas in the ongoing eurozone crisis. In the absence of strong institutions, clearly defined decision-making processes, and a pan-European political culture, the EU has created a snowballing political and economic crisis. The odd reality is that the world economy is now held hostage by such minor political dramas as votes in the Slovak parliament, bilateral collateral negotiations between Finland and Greece, and the ominous statements by former Italian Prime Minister Silvio Berlusconi. This is the height of indulgence, and a reflection of a saturated political environment that is drowning Europe. All of this is having a corrosive effects on European society — which, if policymakers aren’t careful, may turn out to be the euro’s ultimate legacy.

Tyson Barker is the director of the transatlantic relations program at the Bertelsmann Foundation.

Romney’s Trans-Atlantic Policy Needs a Reboot (Spiegel Online)

Romney’s Trans-Atlantic Policy Needs a Reboot

A Commentary By Annette Heuser and Tyson Barker

Likely Republican presidential candidate Mitt Romney will visit the United Kingdom and Poland at a time when the GOP’s policy toward Europe seems to be trapped in the days of the Cold War. It will be a chance for him to update his outdated views.

Mitt Romney’s first foreign tour as the Republican Party’s likely presidential candidate includes visits to two European states. While designed to send a message to potential voters at home, particularly blue-collar Reagan Democrats in the Midwest, the trip will be about photo opportunities. Romney’s visit to London is meant to echo his own successful management of the 2002 winter games in Salt Lake City and play into a campaign narrative built on executive experience and sober business acumen.

His visit to Gdansk and Warsaw will highlight the triangle that broke the back of communism: the Polish people’s courage, their Catholic faith and Western resolve. Not coincidentally, Polish-American immigrants dot the landscape in important battleground states such as Ohio and Pennsylvania.

Romney’s visit will inevitably draw parallels to that of candidate Barack Obama, who on a visit to Germany in July 2008, resolutely declared on the steps of Berlin’s Victory Column that he is a “citizen of the world.” Now the Republican candidate has an opportunity to articulate his vision for US relations with Europe, which has so far remained underdeveloped and reliant on dated platitudes.

Cold-War Rhetoric

At the moment, Romney’s European policy hints at a worldview more reminiscent of 1982 than 2012. In a March interview, Romney described Russia as the US’s “number-one geopolitical foe.” More recently, one of his top defense surrogates warned of the creeping Soviet threat in the Arctic. Another stated that the Obama administration’s decision to opt for a phased adaptive approach to missile defense was abandoning “Czechoslovakia.”

Individually these unfortunate statements are meaningless, but taken together they represent a worldview that is tinged with Cold War-era tropes. The Romney camp seems to overlook that Russia’s accordance of access to the International Security Assistance Force’s northern distribution network has been essential to the continuation of the mission in Afghanistan. His campaign also fails to remember that recent arms reductions in the new Strategic Arms Reduction Treaty make the US military more effective and the world safer, and that Russia’s entry this month into the World Trade Organization forces Moscow to accept higher standards for the rule of law.

That is not to say that US-Russia relations are unproblematic. Russia’s obstinacy in the face of the Syrian civil war runs counter to the humanitarian responsibility incumbent upon the United Nations Security Council’s permanent members. The Kremlin’s new, restrictive laws on non-governmental organizations and internet freedom also call into question even the most basic commitment to civil society. And the country’s endemic corruption is worrisome. Indeed, Russia’s relationships with the US and Europe are complex and wrought with difficulty. They cannot be boiled down into simplistic, anachronistic sound bites.

Lack of Vision

In Poland, Romney is expected to criticize the Obama administration’s reset policy with Russia. In fact, US and Polish approaches to Moscow have hewed closely together. Polish Foreign Minister Radek Sikorski has stated that his country started its own reset with Russia in 2007 and paved the way for the US to follow a similar path. Even in conservative Poland, Obama’s approval rating stands at 50 percent, up from George W. Bush’s 41 percent during his last year in office, according to the Pew Global Attitudes Survey.

Apart from criticizing Obama’s Russia policy, the most remarkable feature of Romney’s vision is his lack of approach. His 48-page document outlining his foreign-policy strategy does not once mention the North Atlantic Treaty Organization or the European Union. That will certainly be a source of concern for his European hosts, two of the largest members of both organizations and countries with two of the largest troop contingents to the NATO mission in Afghanistan.

The one bright spot in Romney’s trans-Atlantic vision has been his public call for a trans-Atlantic free trade agreement, a major positive agenda item that is sure to find support from Europe’s most important leaders including German Chancellor Angela Merkel.

But Romney has yet to address what role his administration would play in tackling the euro-zone crisis, now the most serious foreign-policy challenge for the US. Instead, Romney campaign rhetoric has used Europe as a foil in domestic-policy debates over debt and public spending: “We are increasingly becoming like Europe,” he has said. “Europe is not working in Europe. It will never work here.” He has stated that he would not allow America’s national balance sheet to be exposed to the euro-zone crisis, but the US is already exposed indirectly through trade, banking ties and returns on foreign direct investment. Romney will inevitably have to articulate a policy that recognizes America’s continued role as a European power.

Once upon a time, the Republican foreign policy brain trust was replete with some of the greatest minds on US relations with Europe. It was the creative tension in America’s center-right foreign-policy establishment from realists such as Henry Kissinger and Brent Scowcroft, to strident Cold Warriors such as Jeane Kirkpatrick, to brash pragmatists such as James Baker that drove successful American foreign policy in the latter half of the Cold War, eventually leading to an unequivocal geopolitical triumph for the West. Today, however, the Republican candidate’s relations with Europe have been relegated to vague pronouncements. Romney’s trip to Europe gives him a chance to change that.

Annette Heuser is executive director, and Tyson Barker is director of trans-Atlantic relations at the Washington, DC-based Bertelsmann Foundation.