by Richard Gowan | Oct 12, 2011 | Climate and resource scarcity, Cooperation and coherence, Economics and development, Global system, Off topic
At a meeting on Global Green Growth in Denmark yesterday, Ban Ki-moon went on an alphabetical rampage:
The three Gs of Global Green Growth must respond to social, economic and environmental challenges equally. Because we live in an era of three Fs: crises on Food, Fuel and Finance. So we need to enhance the three Es: the Economy, the Environment and global Equity.
It’s a pity that, having turned to the economy, he didn’t talk about major powers losing their AAA ratings. Although I’m afraid this rhetoric will have elicited a few Zzz’s…
by Richard Gowan | Oct 11, 2011 | Africa, Conflict and security, Cooperation and coherence, Europe and Central Asia, North America
A year ago, I was worrying about the implications of the Euro crisis for UN operations:
Despite the financial crisis, the UN’s peacekeeping budget — running at between $7 billion and $8 billion a year — has not yet faced drastic cuts. The Obama Administration has made a point of paying its dues (now 27% of the total) on time, compensating for Bush-era arrears.
However, other big financial contributors — especially members of the European Union, who cover 40% of the costs combined — are looking for cuts as part of broader spending reductions.
In June [2010], Gérard Araud, France’s ambassador to the UN, told the Security Council that “in the context of budgetary austerity, the cost of peacekeeping was increasingly difficult to manage.”
You can find a longer version of this argument in a paper I wrote for ZIF, the German peacekeeping center, in August 2010. Fourteen months later, my gloomy predictions are being vindicated. Colum Lynch published a lengthy piece yesterday on the FP website headlined “U.S. and Europe fight over cuts in peacekeeping”:
Susan Rice, the U.S. ambassador to the United Nations, fended off a push last month by European governments to press to consider cuts next year in U.N.-backed peacekeeping mission in Liberia, which costs upwards of $525 million a year, more than Liberia’s $459 million annual national budget. Rice has also resisted calls from other European governments, like Britain and France, to consider deeper cuts in U.N. peacekeeping missions in Haiti and in Sudan.
France and Britain are required to pay, respectively, 7.5 percent and 8.16 percent of all U.N. peacekeeping costs.
U.S. officials say that peacekeeping missions must be adequately funded to ensure their success, and that European governments, who each pay a far smaller share of the U.N. peacekeeping budget, are in some instances motivated by a desire to shift funding to their own “pet” missions, not the commitment to fiscal discipline that they claim.
“There is no country that has a greater interest in the economies, effectiveness, and efficiencies of U.N. peacekeeping missions [than the United States]. We pay 27 percent of the bill while the Europeans pay a smaller percentage,” Rice said in an interview with Turtle Bay. “For them to be holier than thou is a bit rich, to say the least.”
I’d like to say “I told you so”, though that’s not super-helpful…
by Richard Gowan | Oct 7, 2011 | Conflict and security, Cooperation and coherence, Global system, South Asia
He’s back!
How does the world look to New Delhi’s top policy-makers? Hobbesian, according to a speech this week by Indian National Security Adviser Shiv Shankar Menon:
In other words, while domestic societies have evolved or are evolving towards rule of law, international society is still much closer to primeval anarchy, where to a very great extent “the strong do as they will and the weak do as they must.”
OK, that’s from Thucydides, but you get my point. Menon pulls no punches:
We live in a time where international law remains underdeveloped, international governance is non-existent or weak, and international society is fundamentally anarchic. As a result the role of force in international relations has been magnified. But the age of weapons of mass destruction and newer technologies make it essential that we consider new ways of regulating the use of force in international relations.
Now that technology has made the spectrum of conflict wider than ever before, it is more than ever a political call whether and how to use force. Societies that have not followed this simple rule have suffered as a consequence. Militaries will have to strive to close the gap between their military capabilities and desired political outcomes. This will require flexibility and agility.
India as a society and nation has by and large made wise choices in the past on matters relating to the use of force, showing strategic restraint and realism. We have contributed force to internationally legitimate uses such as UN peacekeeping, while limiting its domestic deployment. Today we are in a position to make a greater contribution to global public goods in areas such as maritime security. At the same time we are moving towards an Indian doctrine for the use of force, though this is a work in progress.
If the ultimate doctrine is anything like the NSA’s speech, it will be a bracing read.
by Claire Melamed | Oct 7, 2011 | Economics and development
Is the FTT a good idea? You’d think that since we’ve been arguing about this for the best part of 30 years now, there would be some consensus. Oh no. The announcement by Jose Manuel Barroso, the President of the European Commission, that he was proposing that the EC introduce a Financial Transaction Tax (FTT, or Robin Hood Tax) has sparked off a flurry of claim and counter-claim on both sides. But there are two big problems in trying to evaluate the evidence, or work out what this argument is actually about:
Firstly, it’s incredibly difficult to predict the impact of something that hasn’t happened yet (this debate in the FT has two extremely knowledgeable commentators making opposite predictions with equal certainty). Despite the confidence with which both supporters and opponents of the tax state their case, no one actually knows what would happen if a tax were introduced. The best one can do is to guess on the basis of similar taxes. And of course you can pick the historical example that best suits your case. Love the FTT? Then cite the UK’s stamp duty on shares, a unilateral tax which has raised a lot of money and quite obviously not driven much business out of the City. Hate it? Then cite the attempt to introduce an FTT in Sweden which led to a collapse in trading, and so almost no revenue collection at all. There’s no actual conclusion possible to this argument – there are possibly hundreds of taxes out there whose effects can be examined for evidence, and inevitably it’s going to tell you different things – and none of them will necessarily be a good guide to a future that hasn’t happened yet.
Secondly, there’s huge confusion in the argument about what introducing a tax would actually be for. This inspires some cynicism among commentators who argue, rightly, that it’s unlikely that a single tax can achieve all the things claimed for the FTT. It also creates real difficulty for politicians and others who might bet trying to evaluate the costs and benefits of the tax (for there will certainly be both) – unless you know what the objective is, how can you know if it’s succeeding?
There are two possible contenders for the primary goal of an FTT – controlling volatility in the markets and raising revenue (James Tobin’s original proposal was all about curbing volatility, and he was reportedly horrified at the suggestion that the tax could actually be more about bringing in money) . Campaigners have tended to argue that there’s no reason to chose, you can have both. But the most comprehensive assessment of the evidence suggests that in fact a tax might not reduce – and under some circumstances might increase – volatility (despite which, the author of that assessment started out an FTT sceptic and changed his mind on the basis of what his ressearch found about the other possible benefits of the tax. Which tells you something about the way the facts stack up).
The problem is that if the evidence points in different ways, it’s useful to know which is the primary objective. Say the tax did reduce volatility – then it would also raise less money over time as taxable trades diminished, but that might not matter if controlling volatility was the main target. Say it increased volatility – this might still make the tax worth having, if it succeeded in what is really, for the Robin Hood Tax campaign, and for President Barroso, its main aim, which is raising money from people who can afford it.
The question then would be about the trade off between the two – there might, for example, come a point where increases in the volatility of markets were so destructive to other policy goals that it wasn’t worth the extra revenue. That would be an important consideration in setting the level of the tax. But unless the two possible objectives are separated, policy makers have no hope of knowing what choices they are making.
An FTT which is just about raising money from rich institituions and individuals is a perfectly laudable aim. The question then becomes a factual one – will it actually do that? Will the tax be paid mainly be banks and other big institutions and therefore be progressive (the rich pay more), or will it be passed on to consumers, pensioners and the like and be regressive (the poor pay more). We can’t actually know, again because it hasn’t happened yet, and there’s evidence on both sides (though on balance the evidence comes down on the side of progressivity). So that won’t quite settle the case either.
The argument is not going to end. There are heavyweight economists and good arguments on both sides. But at some point politicians have to make a decision. No one could have known exactly what the impact of introducing income taxes, or VAT, or stamp duty on house purchases, was going to be, but in the end governments have to take a punt, cross their fingers, and go with what seems like the right decision on the basis of the information they have. There might be a better idea out there, but this is the one that has the momentum behind it, so for the moment it’s the FTT or nothing as far as taxing finance goes.
(For the record, my money’s on Robin Hood – in a previous job, I was a member of the campaign and it’s always seemed to me like a bet worth taking)
