Catégorie : News Room

17 july 2018

Prince Michael of Liechtenstein, GIS

Pedro Sanchez, who twice led Spain’s Socialist Party, the PSOE, to crushing electoral defeats, engineered a parliamentary coup last month that ousted the government of Mariano Rajoy by a tiny margin and succeeded in installing his own minority cabinet.

Mr. Sanchez was helped by two factors. First were the corruption allegations against members of Mr. Rajoy’s People’s Party (PP), and second was backing from the radical, broadly Marxist Podemos party, along with far-left Catalonian separatists. Since the Socialists have only 84 seats in the 350-seat Congress of Deputies, or lower house of parliament, Mr. Sanchez’s government can only function awith the support of these two allies.

Spain’s economic situation improved strongly over the last few years of Mr. Rajoy’s premiership (2011-2018), but voters were unhappy with the political establishment, and incidents of corruption were unfortunately real.

Mr. Sanchez, by contrast, is a far-left socialist, and will now have to consolidate his fragile position by catering to the Marxist ideology of Podemos on one side and the radicalism of Catalan nationalists on the other.

At the same time, the new prime minister is cultivating Brussels with pro-European rhetoric, creating the expectation of drastic improvements in Spain. Mr. Sanchez aspires to play a much stronger European role than his predecessors. He has received recognition on the European Union level by comforting language and a vow to continue Mr. Rajoy’s fiscal consolidation strategy.

Power grab

Nevertheless, a closer look at Mr. Sanchez’s actions shows a disturbing push to consolidate power – both for ideological reasons, and also to satisfy the desires of his Marxist-leaning and separatist allies.

Showing his radical anti-Christian position, the prime minister refused – for the first time in Spanish history – to take the oath of office with a bible or a cross. Even for an atheist, this was an unnecessary demonstration, striking an ideological rather than a simply secular attitude.

Another of his first acts was to replace the head of RTVE, Spain’s public broadcaster, with a personality agreeable to Podemos. This will pave the way for news coverage of the government with a strong pro-left slant. One of Mr. Sanchez’s close associates was also installed at the Centro de Investigaciones Sociologicas (CIS), an influential state-owned institute for public opinion polling.

These are clear signs of a strong internal power grab from the left, and certainly not proof of a healthy democratic self-confidence about the government’s intended policies. Optimism about Mr. Sanchez’s “pro-EU” declarations should not blind European observers to these disquieting developments.

As indicated by his recent meeting with Catalan leader Quim Torra, Prime Minister Sanchez will also be forced to court the separatist movements in Catalonia with an opportunistic policy, as he needs their support.

Polarizing force

Pedro Sanchez appears to believe that his youthful vocation to change and lead is irresistible. Youthful elan is certainly good, but it is likely to fail when hitched to an outdated socialist belief in the efficacy of government planning and intervention.

Both in terms of reviving the economy and improving social cohesion, experience has shown that these methods do not work – except sometimes as short-term fixes that bring adverse unintended consequences in the long run.

Certainly Spain – like many other European countries – needs action and reform. Pragmatic leadership and charisma are valuable, but do not express themselves in ideological demonstrations. A mix of ideology, power grabbing, opportunistic policies and activism could prove to be a dangerous cocktail for Spain.

On the European level, the new government could have a similarly detrimental effect. It may give French President Emmanuel Macron an energetic new ally to push his agenda for a more centralized EU. But that might only further alienate other member countries, especially Germany – polarizing rather than integrating an already battered Union.

Publié le 17 juillet 2018

Renaud Girard, Le Figaro

Le vote référendaire du 23 juin 2016, où le peuple britannique a décidé de quitter l’Union européenne (UE) a créé beaucoup de confusion et de colère de part et d’autre de la Manche. Maintenant que les émotions sont retombées et que les Européens ont découvert que la stratégie de leur allié américain pouvait être encore plus erratique que celle de leur allié britannique, le moment est venu pour la France de réfléchir calmement au futur de ses relations avec la Grande-Bretagne, sans laisser les technocrates de la Commission européenne gérer seuls ce dossier politique important.
L’été est propice à la réflexion, puis à la négociation, puisque tous les éléments sont désormais en place. Le 12 juillet 2018, après deux ans d’atermoiements, le gouvernement britannique de Theresa May a enfin publié un livre blanc, contenant ses propositions pour le futur des relations entre le Royaume-Uni et l’UE. En désaccord avec ce texte qui fait des concessions à Bruxelles, ses ministres les plus eurosceptiques, Boris Johnson et David Davis, ont démissionné. Le nouveau cabinet May souhaiterait qu’un accord soit trouvé avec le Conseil européen dès le mois d’octobre 2018, afin de laisser du temps pour les ratifications parlementaires, avant l’entrée en vigueur du Brexit, prévu pour mars 2019.
Il est évident que le Royaume-Uni devra payer à l’UE le montant de toutes les dépenses auxquelles il s’était engagé comme membre de l’Union (cela fait un total de l’ordre de 40 milliards d’euros). Il est évident que la City ne pourra plus jouer le même rôle dans les affaires financières européennes et qu’elle perdra le privilège, unique au monde, de tenir des comptes en euros. Aujourd’hui, les banques britanniques n’ont pas l’obligation d’avoir « un compte de correspondant » en euros dans une banque de la zone, elles peuvent ouvrir directement un compte en euros auprès de la Banque centrale européenne de Francfort.
Mais les Français ne sauraient souscrire à une intransigeance excessive de la Commission face au Royaume-Uni, au risque de se pénaliser eux-mêmes. Les traités de l’UE ont créé quatre libertés de circulation : pour les biens, pour les personnes, pour les services, pour les capitaux. Le gouvernement de Sa Majesté souhaiterait ne pas toucher à la première mais reprendre sa souveraineté sur les trois autres. Theresa May a compris l’importance de ne pas entraver les échanges industriels (majeurs, par exemple, pour Airbus, qui produit en Angleterre la voilure de ses avions, et qui y achète beaucoup de ses moteurs).
La Commission ne veut pas laisser le client britannique choisir à la carte, elle veut lui imposer soit le menu gastronomique, soit le menu diététique, mais rien entre les deux. Elle a peur du mauvais exemple que cela créerait envers d’autres membres de l’UE. Cette peur est excessive : le cas anglais est très particulier ; aucun autre membre ne songe sérieusement à partir.
La France a un excédent commercial de 6 milliards d’euros avec le Royaume-Uni. Elle n’a donc aucun intérêt à un changement des règles de commerce sur les biens avec lui. Dans le cas de figure où l’on accepterait la proposition de Theresa May, les Britanniques devraient bien sûr appliquer toutes les normes (de qualité, de santé, etc.) décidées par l’UE, sans pouvoir participer à leur élaboration. Si le maintien de la liberté de circulation des biens avec le Royaume-Uni ne coûte rien à l’Union européenne, pourquoi ne pas la maintenir ? Il est évident que tous les coûts administratifs de gestion de cette situation particulière devraient être pris en charge par les Britanniques.
En matière de sécurité, la coopération directe entre les polices devrait être maintenue. La Commission préconise le transfert des données par le biais d’officiers de liaison au sein d’Europol. C’est un détour superflu. La coopération franco-britannique directe en matière de lutte contre la criminalité organisée et contre le terrorisme fonctionne bien. Laissons-la en état. On ne change pas une équipe qui gagne. Tant pis si les fonctionnaires de la Commission n’y retrouvent pas le schéma logique auxquels ils aspirent. Ces technocrates prétendent aujourd’hui exclure la Grande-Bretagne du système satellitaire Galileo, qui donne à l’Europe une indépendance indispensable en matière d’accès au GPS. Considèrent-ils les Britanniques comme des alliés moins sûrs que les Maltais ou les Chypriotes ?
Soyons clair. La relation des Britanniques avec la construction européenne a été du grand n’importe quoi. Un jour, ils refusent d’y participer ; le lendemain, ils nous supplient d’intégrer le Marché commun ; le surlendemain, ils veulent en changer les règles, etc., etc.
Le général de Gaulle l’avait compris avant tout le monde, qui avait expliqué dans une Conférence de presse prophétique de 1963 que la Grande-Bretagne ne se sentirait jamais à l’aise dans ce club (conçu pour être à terme un contrepoids amical à la puissance américaine). Cédant à la pression des Hollandais, le président Pompidou a commis l’erreur stratégique de la faire entrer.
Mais ce qui est fait, est fait. Est-ce une raison pour punir la Grande-Bretagne ? Bien sûr que non. Nous, Français, devons accepter son caractère parfois fantasque et maintenir des liens d’excellence avec elle. Car nous devons prendre en compte des enjeux beaucoup plus importants. Historiquement, c’est une alliée depuis plus d’un siècle. C’est à elle que nous devons notre siège permanent au Conseil de sécurité des Nations Unies. C’est une démocratie parlementaire qui fonctionne admirablement (sauf quand elle commet l’erreur de recourir à l’instrument latin du référendum…). Militairement, c’est notre seul partenaire efficace sur le continent européen (où aucun autre pays, à part la France, n’a démontré un tel « fighting spirit »). Culturellement, beaucoup d’Anglais gardent une passion pour la civilisation des Français et réciproquement.
Punir les Britanniques serait nous punir nous-mêmes. Il nous faut au contraire aider Theresa May, actuellement en difficulté. Car elle a offert la pire des solutions, à l’exception de toutes les autres, pour paraphraser le mot célèbre de Churchill sur la démocratie…

11 juillet 2018

M.Miguel Angel Moratinos, ancien ministre espagnol des Affaires étrangères s’exprime au micro de «Matin TV» sur la troisième édition du Morocco Today Forum (MTF) prévu pour le 20 juillet prochain à Casablanca. Pour lui, le thème de la régionalisation avancée retenu pour cette année est de plein actualité.

July 3, 2018

Masood Ahmed, CGD

This note is adapted from a chapter that Masood Ahmed contributed to Pakistan at Seventy: A Handbook on Developments in Economics, Politics and Society (Europa Publications, forthcoming).

A brief history of Pakistan’s macroeconomic management

Over the past 50 years, Pakistan’s record on macroeconomic management has been mixed. In the face of a variety of internal and external shocks, the country has managed to avoid excessive macroeconomic instability in the form of hyperinflation or severe exchange rate volatility. While its internal and external public debt has grown as a share of gross domestic product (GDP), and is now approaching levels that warrant attention, Pakistan has so far managed this growth without resorting to sovereign defaults, which leave a long shadow on a country’s ability to access capital markets. Finally, Pakistan has also avoided the kind of large-scale banking crises that many other developing countries have experienced with lasting impact on credit availability and private sector development.

Alongside these positive features, however, Pakistan has demonstrated an almost unique proclivity to allow fiscal and balance of payments pressures to build up into a near-crisis situation every few years, which then must be dealt with through orthodox economic stabilization tools, often with the help of the International Monetary Fund (IMF). In general, these stresses have been contained before they could become a full-blown economic crisis, but the cumulative cost of these periodic crisis-aversion programs has been to slow down economic and social development, resulting in the mediocre—and in some cases, poor—comparative development indicators that we see today. And, because each episode was addressed with short-term actions that stabilized the economy without adequate follow-through on structural reforms, the underlying weaknesses simply manifested themselves again with the next external shock or period of internal economic mismanagement. Moreover, this preoccupation with managing short-term macroeconomic vulnerabilities has limited the attention that top policymakers can devote to more fundamental issues of economic development and structural transformation.

The next crisis is now approaching. After successfully containing macroeconomic imbalances under an IMF-supported program during 2013–16, irresponsible fiscal expansion and a misguided attempt to maintain an increasingly overvalued exchange rate have led to a large and unsustainable balance of payments imbalance, a steep decline in foreign exchange reserves, and a sharp buildup of external debt, some of it on short maturities and expensive terms. Most economists agree that the post-election government will have no alternative but to approach the IMF yet again for another bailout with associated policy conditionality.

Against this background, this note examines three questions that economists both within and outside Pakistan are asking:

1. Why does Pakistan have these repeated episodes of macroeconomic distress?
2. Why have 18 IMF-supported programs failed to deal with this problem in a sustainable way?
3. Is the potential availability of IMF financing itself an impediment to the policy changes that would reduce the economy’s vulnerability to crisis, and would it be better if the IMF did not provide support to Pakistan the next time there was a macro-crisis?

The causes of repeated macroeconomic distress

The principal factors leading to periodic episodes of macroeconomic stress are chronic and uncorrected structural weaknesses in Pakistan’s economy. While—as in most developing countries—there are many areas of economic management that can be improved in Pakistan, the two principal causes of macroeconomic problems have been the imbalance between public sector spending and income, and Pakistan’s underdeveloped export base, which makes the country highly vulnerable on the external sector.

Income and expenditure of the public sector

There has been a chronic imbalance between the income and expenditure of the public sector. This is not because Pakistan’s public budget is much larger, in relative terms, than that of other emerging markets. Rather, it is because the government’s income from taxes, fees, and other sources is strikingly low compared with other countries.

This is not to say that there is no waste in public spending, or that it could not be better allocated. There are well-documented studies that show how both current and capital spending by the federal and provincial governments and their associated bodies could be dramatically improved to get “more bang for the buck.” Similarly, the persistent losses made by some public sector enterprises,^[1] and the even larger losses made in the energy sector,^[2] provide additional scope for improving public finances. The case is all the more compelling given the comparatively low level of public spending on health and education, which explains, at least in part, why Pakistan lags woefully behind on social indicators of development. Finally, inadequate public investment in infrastructure constrains the potential for sustained high growth. There is, therefore, a clear need to rationalize and improve the effectiveness of public expenditure.

However, it is on the revenue side that Pakistan is among the weakest performing countries in the developing world. Despite 40 years of efforts to improve both tax policy and tax administration, the ratio of taxes to GDP remains stuck in the low teens, below the middle-income countries (MICs) average of around 18.5 percent.^[3] In addition, the tax system is complicated, distorting, and not sufficiently progressive.

Two features of the tax structure are worth noting in particular: the high proportion of taxes collected through indirect taxes (60 percent of total tax revenue) and the small number of individuals who file income tax returns. Indirect taxes—essentially excise taxes, import duties, and fees of various sorts—are generally more regressive than direct taxes; in other words, their burden falls disproportionately on the poor and less well-off households. A further problem is that the second-best system of withholding and presumptive taxes has grown very complex, adding to the negative perceptions of the overall tax system. Attempts to introduce a VAT, a more efficient indirect tax, have failed in the face of political opposition.

The low number of income tax filers (just over one million out of an estimated working population of 116 million^[4]), and the prevalent underreporting of income by those who do file, has important consequences. First, it limits total tax revenue for the government. Indeed, it is hard to envisage how the tax to GDP ratio could be increased by 50 percent (to reach the norm for developing countries) without a substantial increase in the number of filers in the tax net.

Second, tax avoidance or under payment undermines public confidence in the fairness of the tax system. The perception (and reality) that people who are known to have very high incomes pay little or no income tax fosters a sense that the system is rigged to protect the rich and powerful. The annual publication of tax payments by parliamentarians, demonstrating in many cases a clear disconnect between their declared tax payments and their visible standard of living, has been a great advance in transparency, but, so far, it has not altered the underlying pattern of behavior.

Those who claim to derive their income from agriculture (on which no income taxes are paid), and those engaged in trading or professional services who are either unregistered as taxpayers or pay small amounts in relation to their perceived incomes, are also often viewed as benefiting from an inequitable system. Property is mostly undervalued for tax purposes, so the revenue from this potentially important source is also very low by international comparison.

Tax avoidance is also found in the corporate sector. Of the 72,500 firms registered with the Security and Exchange Commission of Pakistan in 2016, less than half filed a tax return and half of the filers had a “zero return.”^[5]

Many studies have considered the problems of tax policy and tax administration. On the policy side, the recommendations range from proposals to address specific anomalies or missed opportunities all the way to plans for a complete revamp, with a new simplified and efficient approach to setting up a tax system. Similarly, there are incremental as well as radical proposals to reform tax administration, which is generally seen as inefficient and plagued by corruption. There have also been a variety of projects over the years, many supported by international agencies with technical assistance and policy conditionality, to promote these recommendations.

Why have past programs failed to generate a substantial and lasting improvement in Pakistan’s tax outcomes? Many blame corruption and incompetence in the tax administration, and this is certainly part of the explanation. Others point to the large share of the informal sector in Pakistan’s economy, which makes it harder to track individual and small business incomes. Yet others will point to the fact that a large share of the working population would fall below any reasonable income threshold for paying taxes. Finally, there is the problem of lack of trust in the quality and integrity of government spending. Many observers point to the generous levels of private charity by people who pay little in taxes as demonstrating that people are willing to contribute to the larger social good if they are confident that the money will be put to good use. These observers maintain that lower levels of tax avoidance would naturally follow a demonstrated improvement in the coherence and effectiveness of government spending. All these points have some truth to them, but they also apply to other countries that have, nevertheless, succeeded in enrolling much larger numbers of their working population into the tax net.

The larger and more important explanation for Pakistan’s failure to improve its tax outcomes, in my view, is one of political economy. Pakistan simply lacks a powerful enough coalition of interests to raise more taxes and to push for real improvements in the quality of government spending. Normally, this would come from a combination of those in government who want to spend money without raising the deficit and private taxpayers who are increasingly resentful of the high tax rates they pay while their peers remain outside the tax net. While both groups exist in the country, they have not been able to come together and overcome the powerful interests on the other side.

In particular, governments have often backtracked on their efforts to widen the tax net when faced with opposition from their political constituencies or linked interests. As a result, in times of fiscal stress, it has proved easier to cut back on the already low level of public investment spending, with damaging—but lagged—consequences. Many donor agencies and international partners—including the World Bank, the IMF, and bilateral aid agencies—have tried to influence this process through a combination of carrots and sticks, but they too have not succeeded.

Until Pakistan can substantially raise tax revenue by broadening the base of direct taxpayers, it will remain constrained in its ability to expand the delivery of much-needed public services and infrastructure without building up unsustainable fiscal deficits. And without that extra infrastructure and improved human development, growth will remain elusive and the country’s place in an ever more competitive world economy will remain fragile. What events or forces will bring about the political consensus to overcome longstanding constraints in this regard remains a subject of discussion.

The external sector

The second source of macroeconomic vulnerability for Pakistan has been its external sector. Most successful emerging markets followed a strategy of promoting both the quantity and quality of their exports. Starting from low export levels comprised mainly of relatively unprocessed commodities or low value-added manufactures, these countries have dramatically expanded the volume, diversity, and sophistication of their exports. The most-often cited examples are China and the so-called East Asian tigers (Korea, Thailand, Vietnam, Malaysia), but countries in other regions also provide good case studies.

In contrast, exports have remained a much smaller share of Pakistan’s economy since independence. And over the past three years, a combination of factors—security and energy supply problems, lower commodity prices, and an appreciating real exchange rate—have brought exports down to well below 10 percent of GDP. As shown in table 1, exports from Pakistan would have to more than triple from their current level to match the average for MICs. Pakistan’s exports have also been remarkably concentrated in a few low value-added products. Cotton and cotton products, rice, and leather still account for over 70 percent of the country’s exports, and the bulk of exports in each of these categories is in primary or little processed form. Service exports, which have been a rapidly growing source of high value-added export revenue in many countries, remain a small fraction of Pakistan’s exports.

Table 1. Exports of goods in 2017

Source: IMF Balance of Payments Statistics
Note: Data missing for numerous MICs. For a list of MICs, see footnote 3.

Given its low level of exports, Pakistan has relied in recent years on a large and growing volume of remittances and on official and private financing to cover its import bill. It is worth noting, however, that these international flows, especially private flows, can be volatile because they are subject to external and internal shocks. Pakistan has had a consistent rising trend of remittance flows for many years, but recent international economic developments suggest that this is unlikely to persist. Remittances from the Gulf countries, which have been a large and growing share of the total, are likely to plateau as these countries adjust their spending to the new lower price of oil. Pakistan will need to adjust to lower growth in remittances going forward.

In good years, these international inflows have been sufficient not only to meet the demands for foreign exchange—even with an appreciating real exchange rate—but also to lead to an increase in the country’s foreign exchange reserves. However, when there was an external shock—such as the increase in oil prices in the years leading up to 2014—or when an excessively loose fiscal stance or a misguided exchange rate policy translated into an increased demand for foreign exchange, as has been the case more recently, these reserves were drawn down, sometimes to a level that threatened a macroeconomic crisis and led to recourse to the IMF (figure 1). At the time of writing, after a few years of being on a positive trajectory, these reserves were again on a downward trend and hovering around $10 billion, below the three months of imports mark that is used by many institutions as a minimum for certain kinds of financial operations.

Figure 1. Liquid foreign exchange reserves with the State Bank of Pakistan

USD billion, end period

Source: State Bank of Pakistan
*Second week of June

There are many factors that underpin Pakistan’s long-term export performance. Security problems, energy shortages, poor infrastructure, and other shortcomings in the business environment provide a good part of the explanation. Pakistan is 147^th in the ranking of countries in the World Bank’s Doing Business report—an indication of its less-than-favorable business climate. A lack of investment in the export sector; or in updating technology and research and development that would raise the value added of exports; or in the educational system to generate enough trained technicians, workers, and managers are other reasons.

Also contributing to the small share of exports in Pakistan’s economy is the protected environment for the domestic market, which has made import substitution a profitable and less risky endeavor for many businesses. It is noteworthy that the largest corporations in Pakistan are either in manufacturing for the domestic market or in the service sector. A few rely on explicit or implicit protection in the form of import barriers or administered prices for inputs and outputs.

Finally, over the years a misguided adherence to an overvalued exchange rate has made it harder for Pakistani exporters to compete in international markets (while also resulting in the loss of a substantial share of foreign exchange reserves in an attempt to prevent necessary exchange rate depreciation). In contrast, some of the more successful emerging market exporters have seen the exchange rate as a tool to preserve their competitiveness and to build foreign exchange reserves to enhance their resilience and economic independence.

Behind these specific factors is the political economy of reforming the anti-export bias. Under the current regime, consumers have benefitted from cheaper imports and entrepreneurs have moved into producing for the domestic market with some degree of protection or in other non-tradeable activities. Exporters have voiced concerns about the exchange rate and other factors affecting their competitiveness, but they have sought government financial support rather than effectively lobbying for a more export-friendly regime.

Can Pakistan’s economy be made more export oriented? The entrepreneurial capacity and business acumen is certainly there. The performance of the small and medium enterprises sector in Sialkot is a striking example of success despite the weaknesses in the business environment and in infrastructure. However, to generalize this type of success requires a combination of public policy and supportive infrastructure investments. In this context, recent improvements in the security situation are welcome, as are investments to increase the capacity for electricity generation and—less so—distribution.

These efforts will need to be supplemented, however, by a much more fundamental revisiting of the public policy and business environment to better align incentives towards exporting. Exchange rate policy will need to prioritize economic fundamentals over seeing a “strong” exchange rate as a mark of national pride. Incremental schemes to provide limited subsidies or special incentives to exporters will only have a limited effect. If Pakistani policymakers truly want to quadruple the volume of exports, it will take nothing short of a national drive sustained over at least a decade. And it will require the political will to resist the calls of vested interests that gain from the current protectionism and anti-export bias.

Why have repeated IMF-supported reform programs failed to deal with the causes of macroeconomic vulnerability?

These two main structural weaknesses—fiscal imbalance and weak export performance—have been present for many decades, and their role in generating macroeconomic vulnerability is well understood. It is legitimate then to ask why they were not addressed under the numerous IMF-supported programs. Of course, the IMF is only one external agency engaged with Pakistan on economic policy questions. Still, the IMF’s focus on macroeconomic stability and its unique access to senior policymakers make the question more directly relevant to it. To be sure, many IMF-supported programs did attempt to address these structural issues, but, in the end, they were only partially successful. Why wasn’t a better and more sustainable improvement achieved despite repeated recourse to IMF financing and the associated policy conditionality?

The answer is that while IMF policy conditionality can reinforce what national governments are committed to doing, it cannot by itself achieve sustained policy change where there is no national commitment to the underlying reforms. Moreover, by its nature, IMF engagement is more effective at addressing short-term problems of macroeconomic instability and can play only a limited role in promoting longer-term actions to address underlying structural issues. In some countries, governments have used the presence (and conditionality) of the IMF to undertake difficult structural reforms, but these were reforms that the government wanted to carry out. Where the IMF has been less successful is in pushing reforms that the host country government itself does not support. In these cases, good intentions generally remained just that.

In Pakistan, as in many other countries needing IMF support, the decision to ask the IMF for help is typically deferred until a crisis appears imminent. At that point, both the authorities and the IMF staff agree that the immediate focus of the IMF program should be, first and foremost, on arresting the deterioration in macroeconomic imbalances and restoring macroeconomic stability. And in most instances, the programs have been quite successful in doing that. Fiscal and current account imbalances were contained, reserves started to be rebuilt, and confidence in the economy was strengthened, leading to a pick-up in domestic investment and external financing. In parallel to these stabilization measures, the authorities and the IMF staff also usually agreed on a set of plans to address the underlying structural weaknesses. On the fiscal side, this has often comprised targets for increased tax revenues backed up by plans to enhance tax administration or to bring more people into the tax net. This has sometimes been accompanied by plans to reduce losses in public enterprises through tariff policy, better management, or privatization. On the external front, the structural agenda has mainly focused on improvements to the business environment or tariff policy to encourage increased exports.

In the majority of cases, these reforms were not fully implemented, leading to Pakistan abandoning the IMF assistance program before completion. Although each episode and each program are unique, there is a common pattern. In most cases, the initial year of the programs went well, with the government taking the urgent fiscal, monetary, and exchange rate measures necessary to stabilize the economy and restore a degree of confidence. However, in the later years, when the programs moved to tackling some of the underlying structural weaknesses that gave rise to the macroeconomic stress, the government’s ability and political will to follow through waned and, as the crisis-related pressures were also abating at the time, the programs were left to wither.

Sometimes, the IMF continued to support the country when the macroeconomic aggregates—such as the reduction of the fiscal deficit or the buildup of reserves—continued to show the anticipated progress. In these situations, the IMF staff and board have generally adopted an accommodative posture and given the benefit of the doubt to the country authorities, with the IMF board approving continued program funding with “waivers of conditionality.”

Is the availability of IMF financing a disincentive for reform?

It is sometimes asked whether the availability of IMF financing is itself a disincentive to fundamental reforms. Since policymakers know that the IMF will be there with a “bailout” if they run into a macro crisis, the argument goes, there is less of an incentive for them to undertake difficult reforms that would be counter to the interests of powerful stakeholders. Economists refer to this as the “moral hazard” problem. This is a serious argument with a foundation in both economic theory and empirical evidence. The work of respected economists like Michael Bruno has shown that many instances of fundamental economic reforms have been triggered by a major crisis.

The question then becomes whether, given the history of past programs, the IMF should refuse to finance a new program when approached by Pakistan, in the hope that the ensuing crisis would trigger reforms that would obviate the need for subsequent support. This is theoretically a possibility, but it faces intellectual, moral, and practical difficulties that make it unlikely to happen.

Intellectually, it is true that deep crises can lead to deep reforms, but this is not inevitable in any given episode. Reforms are generated by a variety of factors and conditions, and each country context is different. It is equally possible that a deep crisis will simply result in a prolonged period of chaos and stagnation. On a moral plane, the cost of crisis is borne disproportionately by the poor and vulnerable. Millions would fall below the poverty line, and some would suffer permanent damage to welfare and living conditions. It is not evident that any policymaker or international institution has the right to willingly bring about a crisis with such severe consequences for the poor in the uncertain expectation that it will lead to a change in national behavior. On a purely practical level, the IMF was created to help its members facing an imminent financial and economic crisis, and it would not be realistic to expect its staff or board to refuse assistance to a member to teach it a lesson and change its behavior.

Another question is whether the design of IMF programs is flawed in promoting stabilization over growth or structural change. This is a complex topic on which much has been written both by the IMF and by independent observers. However, at the end of the day, the fundamental problem is that a country facing an imminent balance of payments or economic crisis must make (often painful) adjustments to reduce fiscal or external account imbalances. While the pace and scope of these adjustments can be moderated by the additional funding that comes from the IMF, some adjustment remains necessary. The relevant question becomes how to design the adjustment to minimize the negative impact on growth or on the welfare of the more vulnerable sections of society. This requires the engagement of a broader set of policymakers—at both the federal and provincial level—than has sometimes been charged with managing the discussions with the IMF on macroeconomic issues.

Can the future be different?

How can Pakistan break out of the cycle of near-crisis to stabilization, to partial but inadequate structural reform, to buildup of vulnerabilities leading to a new crisis? One suggestion is for Pakistan to embark on a process to develop and agree upon a national economic agenda. A striking feature of successful emerging market countries is that there is a broad consensus around a core economic agenda. Politicians of different parties, private sector leaders, opinion makers, and economic experts all agree on the general direction and content of the economic program. To be sure, there are differences of emphasis on specific policies or on timing, but much of the content enjoys broad support. This has two advantages: first, when the government in power is trying to undertake a difficult reform—privatization or labor market reforms—there will be debate on the method or the manner in which it is carried out, but not on the basic objectives. And second, this broad consensus provides domestic and international investors with a degree of certainty about the future business environment within which they can operate and make long-term investment decisions.

In Pakistan, there is a broad consensus on a national security agenda and on the direction of foreign policy, but when it comes to economics, such a consensus is lacking. The result is that the party in power manages the day-to-day affairs of the economy, and if a crisis is looming, takes steps to restore macroeconomic stability. But it finds it much harder to implement more fundamental reforms. There is no shortage of visions for the future, but there is a disconnect between these visions and the willingness or ability to take the actions required to make the vision a reality.

Pakistan needs a national discussion on what kind of economy it wants to be in 10 years, and then it must agree on the actions needed to get there. This is a broad topic, but even at a narrow macroeconomic level, Pakistan needs a realistic plan of actions that will generate the growth rates that are often set as aspirations rather than objectives. A non-exhaustive list of questions that a national discussion could seek consensus on includes:

• What kind of macroeconomic policies would support Pakistan’s broader growth and distribution objectives?
• What level of inequality is Pakistan comfortable with as a society and what actions is it willing to take to reduce inequality?
• Do Pakistani policymakers want the government to have tax revenues that are close to the emerging market norm of 20 percent of GDP? If so, what would be the composition and structure of those taxes and what kind of revenue administration system would deliver that outcome?
• What is the appropriate level and composition of public spending and how should it be divided between the federal and provincial administrations?
• Where should defense spending be most effectively focused in the context of a tightly constrained overall resource envelope?
• Does the country want to raise exports from under 10 percent of GDP to 25 percent of GDP?
• If so, what actions are needed to change the incentive structure for exporting, and is there broad consensus to implement them?
• Are policymakers willing to support indefinitely a set of loss-making public enterprises, both in the energy sector and outside? If not, can they agree upon a plan for their restructuring and privatization?
• Does the government have a role in fixing administered prices for a variety of products, in effect protecting the producers from market forces? If so, which products and at what cost?

An often-voiced objection to developing a national economic consensus is that it has not happened in many decades and is unlikely to come about now. Perhaps. But it is also the case that attempting to make major structural reforms without such a consensus has failed so far, and there is enough underlying agreement across the political spectrum on core economic fundamentals that, with a degree of political leadership, forging such a consensus should be possible.

The immediate challenge for the next government will be to address a looming balance of payments crisis with a stabilization program that will inevitably impose short-term hardship and reduce growth. However, the more important agenda for Pakistan is to break through to a high-level equilibrium that would avoid the need for repeated stabilization through reforms that leverage the talent of its youth and the entrepreneurial skills of its private sector, and deliver the economic and social performance that its population demands and deserves.

July 13, 2018

Steven Erlanger, The New York Times

Publié le 09/07/2018

Renaud Girard, Le Figaro

Dans les Relations internationales, il y a parfois des moments rares, qu’il faut savoir saisir.

Cet enchaînement particulier de la mi-juillet 2018 en est un. Les 11 et 12 juillet à Bruxelles se tiendra un sommet de l’Otan. Le 16 juillet un autre sommet, lui aussi en grande partie consacré à la sécurité en Europe, se tiendra à Helsinki entre les Etats-Unis et la Russie. Pourquoi ne pas préparer pendant le premier sommet un plan qui serait proposé lors du second ?

Le scénario attendu du sommet de l’Otan est connu : son Secrétaire général va dresser un tableau alarmiste des menaces potentielles en provenance de l’Ours russe ; le président américain va exprimer sa lassitude de payer pour la défense de ses riches alliés européens ; et ces derniers vont promettre de faire davantage d’efforts budgétaires en faveur de leurs forces armées. Le « si vis pacem, para bellum » ayant fait ses preuves dans l’Histoire, cette approche classique n’est pas sans justification.

Mais la France pourrait utiliser sa position particulière dans l’Alliance atlantique, marquée par sa tradition d’indépendance, pour faire acte d’inventivité à ce sommet de l’Otan. Elle pourrait faire valoir à ses alliés que la sécurité ne se recherche pas que dans l’armement, qu’elle se recherche aussi dans les traités.

Lors de la crise des missiles de Cuba (1962), le monde n’était pas passé loin de l’apocalypse atomique. S’ouvrit alors une seconde phase de la guerre froide, où les grandes puissances nucléaires mirent en place des arrangements (comme le téléphone rouge entre Moscou et Washington) et construisirent des traités, afin d’éviter les possibilités de dérapage, afin de réduire l’intensité de la course aux armements, afin de garantir la sécurité du continent européen. La plupart de ces traités sont aujourd’hui caducs. La France serait donc bien avisée de proposer à ses partenaires de l’Otan le principe d’une nouvelle grande Conférence sur la sécurité en Europe, qui aborderait tous les sujets qui fâchent : missiles nucléaires à portée intermédiaire théoriquement bannis (mais les Russes ont déployé dans l’exclave de Kaliningrad des missiles Iskander); « boucliers » anti-missiles de l’Otan en Pologne (dont les rampes de lancement peuvent aussi servir pour des missiles à portée intermédiaire) ; déséquilibre des Forces conventionnelles entre les différents pays ; manœuvres militaires ; cyberguerre, etc.

Le traité de Paris de réduction des forces conventionnelles de novembre 1990 a été suspendu, d’abord par la Russie, ensuite par les pays membres de l’Otan. Il n’est plus pertinent, car conçu bien avant l’élargissement de l’Otan aux anciens pays du Pacte de Varsovie, puis aux pays Baltes. Il a besoin d’être refait de fond en combles.

Le traité ABM de Moscou de 1972 limita à deux, puis à un, le nombre de sites de missiles antimissiles autorisé pour chacune des deux superpuissances. Il a été abandonné par George W. Bush au début de l’année 2002. Il mériterait d’être réactivé.

La cyberguerre est un nouveau type de conflit, très à la mode. C’est vraiment la « continuation de la politique par d’autres moyens » chère à Clausewitz, car, sans vacarme, elle permet d’avertir, d’intimider, de désorganiser, un adversaire qu’on a secrètement décidé de faire plier. Les Russes l’ont pratiqué contre les Etats Baltes ou, plus récemment, contre l’Ukraine. A commencer par la Russie, les Etats parties à cette nouvelle Conférence pourraient adopter un code de conduite où ils renonceraient à s’attaquer les uns les autres sur les réseaux informatiques.

N’est-il pas absurde de tenir une telle Conférence de sécurité en Europe alors que la crise ukrainienne de 2014 n’est toujours pas résolue ? L’hostilité Kiev-Moscou ne se résorbera pas du jour au lendemain car le sang a coulé au Donbass et l’armée ukrainienne y a été humiliée à deux reprises. Mais il faut à tout prix éviter que cette crise en catalyse d’autres. La persistance de la guerre au Donbass milite justement pour l’utilité de cette Conférence. L’absurde est qu’une forme de guerre froide soit revenue à l’Est de l’Europe, alors que l’intérêt des Occidentaux, face à la montée en puissance de la Chine, est qu’ils parviennent à ramener la Russie de leur côté.

Trump est affaibli car son Secrétaire d’Etat s’est fait ridiculiser par la Corée du Nord. C’est donc le moment pour les Européens de lui tendre la main et de l’aider à obtenir un succès diplomatique. L’Otan doit montrer son unité, afin que Trump arrive en position de force face à Poutine. Mais une fois renforcé, le président américain doit aussi proposer une ouverture à son homologue russe. Face à une Russie qui a besoin de réduire son budget militaire, quoi de mieux que la perspective d’un nouveau traité de sécurité ?

Les dirigeantes de Grande-Bretagne et d’Allemagne sont trop affaiblies chez elles pour prendre une telle initiative. A Macron donc de jouer !

July 10,2018

Prince Michael of Liechtenstein, GIS

The January 1999 introduction of a common currency, the euro, for several European Union countries was a great, visionary concept. It proved extremely helpful in facilitating business and afforded Europe a stronger position in global currency markets. Today, the eurozone faces a crisis that can no longer be ignored or fixed painlessly.

The criteria for joining the euro club were set with great foresight and clarity nearly two decades ago. They included restrictions for governments on the use of the common currency, with its comparatively lower interest rates and availability, to increase public debt. Limiting eurozone countries’ budget deficits to 3 percent of their gross domestic product (GDP) and the total accumulated debt to 60 percent of GDP was supposed to avert such a threat.

If enforced, the limits would have led the weaker economies to gradually improve their productivity and become competitive. Before they joined the euro system, such countries could achieve competitiveness by devaluating their currency. To assure the maintenance of healthy regional competition in Europe, the eurozone’s rules excluded imposition of a common economic policy. Equally wisely, bailing out excessively indebted governments was ruled out.

Brazen irresponsibility

Everything was set for a good start. Optimism was also based on the belief that with the politically independent European Central Bank (ECB) in place, the legendary stability of the old German mark would be extended to the entire eurozone.

So much for good intentions. No later than two years after the common currency’s launch, the two largest eurozone members, Germany and France, violated the deficit criteria. Although Germany corrected its behavior later on, a terrible example had been set. The ECB, too, became politicized and the dam broke.

More and more members embarked on unsustainable growth strategies financed with low-cost debt while expanding oversized welfare programs. Political parties bought votes with debt-financed gifts. Next, to forestall inevitable bankruptcies, the ECB betrayed its mission and engaged in such rule-bending schemes as zero-to-negative interest rates and “quantitative easing” to shore up the troubled eurozone governments.

These travesties appeared helpful – but only on the surface and in the short term. Today, most EU leaders remain stuck in the mind-set in which the right remedies are excluded and the steps considered possible can merely delay the catastrophe. The idea of creating a common eurozone economic and fiscal policy, and common debt, might buy another few years. But it would in no way solve the problem. To the contrary, such measures would turn the eurozone into a transfer union.

Lately, concerns about the Italian debt have surfaced. Justifiably so, given the size of the Italian economy. In contrast to Greece, a bailout of Italy would be too huge to finance. And Italy’s problem is not the only one the EU faces.

Several European countries lament the competitive edge enjoyed by some countries in the north, especially by Germany’s export sectors. It is true that the euro has proven highly beneficial for Germany and the Netherlands, which steadily increased their productivity and kept a lid on public spending. The countries that took advantage of abundant “hard” currency are in a fix today that reveals the scope of the problem for all. The bill for the spenders’ profligacy shows in the target balances of the ECB, where the amount – unpaid and practically unpayable – due to Germany, approaches a trillion euros.

However, a country like Italy cannot leave the eurozone without going bankrupt. If Italy introduced its own currency to become more competitive, the value of that currency would inevitably and drastically weaken against the “hard” euro. Italy’s debt, though, would remain denominated in euros. As a result, the existing, already nonrepayable debt would balloon in the local currency, in which Italy’s income would be generated.

Skating on thin ice

The situation in the eurozone reminds me of a dancing party on dangerously thin ice with the beat of the music quickening and the number of dancers growing, while the temperature keeps rising.

At this point, all of the correct solutions appear unthinkable, as too painful to the interested parties. But as responsible and realistic individuals, we need to face the scenarios – bitter as they may be – and try to make the best choice.

One such solution would be to allow member countries to leave the euro and go bankrupt. This is the simplest way out, albeit with grave consequences to all debt holders who trusted the governments and rating agencies – even after the triple AAA ratings and mathematical models of these agencies proved worthless in the 2008 financial crisis. Under this scenario, the broke governments would need to sell quite a few of their assets to the private sector or pension funds and subject themselves to stricter spending discipline (increasing taxes is certainly not the right way to go).

The states’ bankruptcies and leaving the eurozone are tough measures, difficult to entertain. In the long term, however, this is the best solution. It offers the only sure path to restoring vibrant economies, solving the liquidity problems and easing the social tensions. Such a cure also would be less damaging for Europe’s global position than any alternative.

Another possible way to go, also politically difficult and considered “unthinkable” for various reasons, would be to split today’s eurozone into two parts. Germany and other highly productive northern countries like the Netherlands could leave the euro and create a “hard” currency system of their own. The remaining eurozone members, including big countries such as France, Italy and Spain, soon would see their euro weaken, their competitiveness improve and the total sum of their debt decrease.

The approach has several drawbacks. The northern block countries would find themselves under even harsher pressure to ramp up their productivity (to remain competitive despite their very strong currency). On top of that, the “northerners” would still need to write down a big part of the receivables from foreign government debt and the ECB, due to the devaluation in the eurozone. Also, the split would send an ominous signal about the prospects of the EU’s internal market, not to mention the “political union” project. Worst of all, it again could create the wrong incentives for fiscally irresponsible governments.

Although this script may seem quite far-fetched, it has a chance of becoming a reality. At the moment, though, it looks like muddling through as usual, for as long as possible. This is irresponsible: if the eurozone countries fail to address their biggest problem, they may quickly get caught on the wrong foot by a sudden political crisis or global economic slowdown.

The responsibility for fixing the eurozone’s problem rests with the politicians, as it has been caused by the states, not a market failure. The governments and some in the media will, of course, try to scapegoat business, as they frequently have done in the past. Business and savers need to be extraordinarily cautious and hedge against the worst consequences of the inevitable crisis.

July 11, 2018

By Steven Erlanger and Julie Hirschfeld Davis, The New York Times

10 juillet 2018

Xerfi Canal

Xerfi Canal a reçu Thomas Gomart, Directeur de l’Institut Français des Relations Internationales, pour parler de l’impact de la politique extérieure de Donald Trump.

Une interview menée par Ivan Best.

July 4, 2018

Ashoka Mody, Independent

Even if the Chinese economy merely slows down global trade deceleration will continue and if, in addition, the global trade war escalates, global economic conditions could deteriorate rapidly. Italy will face the ill-effects of a global slowdown most acutely.

World trade has decelerated sharply. This ill omen portends severe risks in the months to come. The greatest risks are in the eurozone– where Italy is the fault line along which the most acute vulnerabilities lie.

In the three months ending in April, the annual pace of world trade growth dipped slightly below 4 percent, a sharp decline from 5.5 percent rate in the second half of 2017.

Trade growth in 2017 was both a barometer and cause of rare “synchronized” GDP growth with nearly every country experiencing buoyant conditions. That sweet spot is fading because the Chinese economy is slowing down.

With its huge size and extensive global trade relationships, changes in Chinese domestic economic priorities have a huge impact on trade and the world economic outlook. A blistering pace of Chinese imports propped world trade growth until January this year, and a slowdown since then in Chinese imports has dampened world trade.

The shift is a consequence of the attempt by Chinese leadership to diffuse a grossly oversized credit bubble. But reduced credit has squeezed investment in infrastructure projects and, hence, in the imports of goods and materials to support those projects. Recently, retail sales have also slowed.

China’s credit bubble may yet burst, causing global economic and financial mayhem. Even if the Chinese economy merely slows down, which it seems almost certain to, global trade deceleration will continue. If, in addition, the global trade war escalates, global economic conditions could deteriorate rapidly.

Growth deceleration is already evident in the eurozone. German growth relies to an extraordinary degree on exports to China and, not surprisingly, German industrial production has been in the doldrums in the past few months. Moreover, when German exporters face weaker growth prospects, they buy less from their largely European suppliers, which significantly dampens economic growth in Europe.

Italy will face the ill-effects of a global slowdown most acutely. After abysmal performance through much of the last decade, Italian GDP growth had picked up to annual rate of 1.8 percent in the second half of 2017. But that did not last. Already, Italian GDP growth is slowing and forecasts for the 2018 have are down to just above a 1 percent annual growth rate.

Even these forecasts may prove too optimistic. If world trade growth stays below 4 percent a year for an extended period of time—as now seems likely— the Italian economy will face headwinds via Germany’s slowdown and direct limits on exports to the rest of the world. In that case, the Italian economy would stop growing in the second half of 2018.

Italy could then face the perfect storm. The European Central Bank’s monetary policy is too tight for Italy. The real interest rate (the interest rate adjusted for inflation) for many Italian borrowers is above 2 percent. The euro is too strong for Italian exporters.

With such demanding monetary conditions, the Italian economy could tip over quickly into recession. The government’s already high debt burden on over 130 percent of GDP would rise rapidly. Delinquent borrowers would add to the pressure on the country’s fragile banks.

Italy is large. Italian government debt is €2.5 trillion, about the same size as the debt owed by the German and French governments. Italian banking assets are only slightly smaller than those of German and French banks.

An Italian financial crisis could run through the defences that eurozone authorities constructed during the prolonged crisis from 2009 to 2013. The signature lending facility, the European Stability Mechanism (ESM) may well be downgraded if called on support Italy financially. Credit rating agencies had briefly threatened to downgrade Germany and the ESM even during the Greek crisis, and the Greek government debt and financial system are about one-eight the size of Italy’s.

The ECB’s promise to buy unlimited quantities of bonds of a eurozone member country does not face technical limits—the ECB can, in principle, print money. But the ECB would almost certainly face political limits on it the scope of its actions.

To make good on its promise, the ECB would require a fiscal austerity program and deep reforms from the Italian government. Any Italian government that tried to deliver on such measures would face a public rebellion, fueling more political instability. Fear that the Italian government may end up defaulting on the debt that the ECB has bought will give other member states pause because they will be called on to top the ECB’s capital.

The world faces challenging prospects. If the Chinese credit bubble continues to grow, the global economy would hum for a while longer but the bubble could burst uncontrollably with dire consequences. Continuation of a controlled Chinese slowdown would dampen global growth, causing economic stress in the eurozone and sending tremors along Italy’s financial fault line. Throw into this mix a trade war, and it could be a cold and long winter.

9 juillet 2018

Propos recueillis par Marie Charrel et Philippe Escande, Le Monde

L’ancien chef économiste du FMI estime qu’une désagrégation de l’euro n’est pas exclue, mais que l’Union européenne pourrait lui survivre.

Face à la montée du populisme, les gouvernements doivent s’attaquer d’urgence aux inégalités, prévient Olivier Blanchard, économiste au Peterson Institute de Washington. Présent aux Rencontres économiques d’Aix-en-Provence vendredi 6 juillet, l’ancien chef économiste du Fonds monétaire international (FMI) s’inquiète également des fragilités de la monnaie unique.

Les tensions commerciales entre les Etats-Unis et la Chine menacent-elles la reprise mondiale ?

A court terme, le principal risque porte sur l’investissement. Face au comportement aussi imprévisible d’un dirigeant comme Donald Trump, la décision la plus rationnelle que les entreprises sont susceptibles de prendre est d’attendre. Au niveau macroéconomique, cela peut se traduire par une baisse de l’investissement de 1 ou 2 points de PIB : ce n’est pas rien, mais ce n’est pas catastrophique au point de déclencher une récession mondiale.

A moyen terme, les conséquences sont bien plus préoccupantes, au regard de ce que cela pourrait signifier pour l’avenir et les relations internationales. Et ce, alors que si l’on s’en tient aux seuls chiffres, l’économie mondiale va mieux. Les grands déséquilibres ont été résorbés. Le véritable danger est aujourd’hui de nature politique.

L’Union européenne doit-elle repenser sa stratégie économique et commerciale afin de se passer des Etats-Unis ?

Nous n’en sommes pas là, même si les relations entre les deux continents risquent d’être plus compliquées. En outre, il ne faut pas oublier que les hausses tarifaires se traduisent en général par un ajustement par les taux de change, compensant en partie les effets négatifs. Dans le cas de l’union monétaire, l’euro se déprécierait. Mais les secteurs ne seraient pas tous affectés de la même façon.

Les gouvernements populistes hongrois et polonais prônent une hausse des dépenses sociales tout en dénonçant l’échec des politiques d’austérité…

July 6, 2018

Ana Palacio, Project Syndicate

At last year’s summit, US President Donald Trump’s hostile tone sent shockwaves through the transatlantic alliance. America’s allies had already known, of course, that Trump could be erratic and extreme, but they had expected his administration’s more seasoned members to keep him in check. That belief turned out to be misplaced, to say the least.

The blows to the transatlantic alliance have kept coming. Trump has unilaterally imposed tariffs on other NATO members, citing national security concerns, of all things. And, most notably, at last month’s G7 summit in Quebec, he showed unprecedented hostility toward America’s closest allies, launching personal attacks against Canadian Prime Minister Justin Trudeau and backing out of the final communiqué in response to a perceived slight.

In view of such actions, expectations for Trump’s behavior at the upcoming summit have gone from prickly to dangerous. The sense of foreboding has been heightened by the announcement that, just four days after the summit ends, Trump will meet with Russian President Vladimir Putin, in Helsinki. The nightmare scenario is easy to imagine: Trump lays bare NATO’s fractures, including by questioning mutual defense, before selling his allies down the river by publicly embracing Putin.

But this does not need to be the outcome. Rather than a high-drama, make-or-break moment for the entire transatlantic alliance, as some have presented the summit, it can instead be a constructive meeting – even if Trump refuses to cooperate.

The agenda for the summit should include planning for Brexit’s impact on the alliance and addressing the unraveling relationship with its most problematic member, Turkey, which has, among other things, undermined US policy in Syria. Participants should also consider how to combine NATO’s activities with the budding European security and defense system.

What the summit’s participants should not do is allow all the focus to be put on NATO members’ obligation to spend 2% of GDP on defense, even though it is true that countries must increase their defense expenditure further. Nor should they fixate on the mutual defense commitment contained in Article 5 of the NATO Charter, even though the principle that an attack on one NATO member is regarded as an attack against all is crucial to the alliance.

The problem with this approach was on stark display last year, when the stage was set for Trump to reaffirm his administration’s commitment to mutual defense. After all, Trump would be speaking at the dedication of a memorial to the September 11, 2001, terrorist attacks in the US – the only time Article 5 has been invoked. It was a moment manufactured to press Trump on the point.

But Trump did not take the bait. While he declared that the US would never “forsake the friends” that supported it after 9/11, he did not explicitly mention, let alone endorse, Article 5. Instead, he lashed out at his NATO partners yet again about their inadequate defense spending. Rather than showing the world that NATO remains strong and united, he exposed it as uncertain and divided. NATO cannot afford to make that mistake again.

The truth is that, as important as Article 5 and the 2%-of-GDP spending requirement are, NATO’s value and relevance extend far beyond these issues. Consider Articles 2 and 3 of the NATO Charter. They are rarely referenced, yet both are of paramount importance to fulfilling NATO’s purpose.

Article 2 encourages NATO members to collaborate economically and to bring “about a better understanding of the principles upon which” their free institutions are founded. More important, Article 3 calls upon members to work together to build and maintain a capacity for defense, thereby boosting resilience.

Whereas Article 5 has become a source of leverage for Trump to use to pressure his allies to spend more, while impressing his domestic supporters, Articles 2 and 3 are practical and direct. They focus not on visions of war, but on the building blocks of peace, including public education, improved institutional relations, and effective organization. These are the areas where NATO – especially its European members – has the most work to do.

In Europe, one rarely hears the word “defense” without “security.” This is no accident: pairing these ideas makes them more palatable for European publics that, traumatized by history, have long been lukewarm on defense. But, with a revanchist Russia to their east and chaos to the south, Europeans can no longer afford to live in denial. They must strengthen defense at the foundations, with Articles 2 and 3 as their guides.

Europe has long been given a free pass on defense, but the expiration date is approaching fast. At this moment of uncertainty, it can be tempting to focus on the high-stakes politics of Article 5. But what NATO really needs is not to grab more headlines, but to build its own resilience, methodically and even tediously, from the bottom up.

29 juin 2018

Jean Pisani-Ferry, Project Syndicate

FLORENCE – Revenons au milieu des années 1990. Après une séparation de quatre-vingts ans entre les deux blocs, l’économie mondiale était en voie de réunification. L’ouverture économique était au programme, la finance libéralisée. L’internet naissant allait donner à chacun sur la planète un égal accès à l’information. Pour gérer cette interdépendance en développement continu, les institutions internationales voyaient leur heure venue. L’Organisation mondiale du commerce voyait le jour. Un accord contraignant sur le climat, le Protocole de Kyoto allait bientôt être finalisé.

Le message était clair : la mondialisation ne consistait pas seulement à libéraliser la circulation des biens, des services et des capitaux, mais aussi à établir les règles et les institutions requises pour gouverner les marchés, renforcer la coopération, et garantir l’accès aux biens publics globaux.

Examinons maintenant la situation en 2018. Malgré dix ans de discussions, les négociations sur les échanges mondiaux lancées en 2001 n’ont mené nulle part. L’internet s’est fragmenté et pourrait bien se morceler plus encore. Le régionalisme financier a le vent en poupe. L’effort mondial pour combattre le changement climatique repose sur un accord non-contraignants, dont les États-Unis se sont retirés. Certes, l’OMC existe toujours, mais elle est de moins en moins efficace. Le président Trump, qui ne cache pas son mépris pour les institutions multilatérales, tente de paralyser son système de règlement des différends. Les États-Unis prétendent, contre toute évidence, que les importations de BMW menacent leur sécurité nationale. La Chine est violemment sommée – en dehors de tout cadre multilatéral – d’importer plus, d’exporter moins, de réduire les aides qu’elle accorde à son industrie, de freiner ses achats d’entreprises américaines de technologie, et de respecter les droits de la propriété intellectuelle. Les principes mêmes du multilatéralisme, ce pilier de la gouvernance mondiale, semblent aujourd’hui les vestiges d’un passé lointain.

Que s’est-il passé ? Trump, bien sûr. Le quarante-cinquième président des États-Unis a mené campagne avec la délicatesse d’un éléphant dans un magasin de porcelaine, appelant de ses vœux la destruction d’un ordre international à la construction duquel tous ses prédécesseurs, depuis Franklin Roosevelt, ont contribué. Depuis qu’il a pris ses fonctions, il tient parole, se retirant les uns après les autres des accords internationaux et imposant une augmentations des droits de douanes sur maints produits importés par les États-Unis, que ceux-ci proviennent de leurs amis ou de leurs adversaires.

Ne nous y trompons pas pourtant : les problèmes d’aujourd’hui n’ont pas commencé avec Trump. Ce n’est pas Trump qui, en 2009, a fait échouer les négociations de Copenhague sur un accord climatique. Ce n’est pas Trump qu’il faut blâmer pour l’échec du cycle de Doha sur les échanges internationaux. Ce n’est pas Trump qui a demandé à l’Asie de prendre ses distances avec le filet de sécurité financier que le Fonds monétaire international est censé gérer pour l’ensemble de la planète. Avant Trump, les problèmes étaient abordés de façon plus civile. Ils n’en existaient pas moins.

Les explications ne manquent pas. Ainsi de nombreux participants au système international ont de plus en plus de doutes sur la mondialisation. Dans les pays avancés, on considère volontiers que les rentes issues de l’innovation technologique se sont dissipées trop vite. L’ouvrier américain d’hier devait son niveau de vie à ces rentes. Mais comme l’a brillamment montré l’économiste Richard Baldwin, dans son ouvrage The Great Convergence, la technologie est devenue plus accessible, les procès de productions se sont segmentés et un bonne part des bénéfices se sont évaporés.

L’échec de la stratégie américaine envers la Russie et la Chine constitue la deuxième explication. Dans les années 1990, les présidents George H. W. Bush et Bill Clinton étaient convaincus que l’ordre international contribuerait à transformer ces pays en « démocraties de marché ». Mais sur la plan politique, ni l’une ni l’autre n’ont convergé. Économiquement, la Chine a certes convergé quant au PIB et au niveau de développement, mais son système économique demeure une exception. Comme le montre Mark Wu, de Harvard, dans un article de 2016, les forces du marché jouent certes un grand rôle dans son économie, mais la coordination par la puissance publique (et le contrôle du Parti communiste) demeure omniprésente. La Chine a inventé ses propres règles économiques.

Troisièmement, les États-Unis doutent qu’un système fondé sur des règles constitue le meilleur cadre pour sortir vainqueurs de leur compétition avec la Chine. Certes, un système multilatéral devrait en principe aider la puissance qui détient encore l’hégémonie et la puissance montante à éviter le « piège de Thucydide », c’est-à-dire une confrontation militaire. Mais le multilatéralisme est de plus en plus perçu aux États-Unis comme une contrainte qui pèse plus fort sur leur comportement que sur celui de la Chine.

Enfin, les règles mondiales semblent toujours plus dépassées. Si certains des principes qui les sous-tendent – à commencer par la simple idée que les questions se règlent dans un cadre multilatéral plutôt que bilatéral – sont plus forts que jamais, d’autres ont été conçus pour un monde qui n’existe déjà plus. Les négociations commerciales, telles qu’elles étaient traditionnellement pratiquées, n’ont guère de sens dans un cadre où les chaînes de valeur sont globales et la distinction entre biens et services de plus en plus ténue. Quant au classement des pays en fonction de leur développement, il a perdu de sa pertinence, puisqu’on trouve chez certains d’entre eux aussi bien des entreprises de rang mondial que des poches d’arriération économique. Mais l’inertie est considérable, ne serait-ce qu’en raison du consensus nécessaire pour parvenir à modifier les règles.

Que doit-on faire alors ? On peut choisir de préserver l’ordre existant, autant qu’il est possible. Ce fut l’approche adoptée après que Trump a eu retiré les États-Unis de l’accord sur le climat : les autres signataires continuent de s’y conformer. Ce type de réaction a l’avantage de contenir les dommages causés par le comportement d’un seul pays. Mais dans la mesure où l’attitude des États-Unis est un symptôme, cette position de sauvegarde ne traite pas la maladie à la racine.

On pourrait aussi se servir de la crise comme d’une opportunité de réforme. L’Union européenne, la Chine et quelques autres pays – parmi lesquels on peut encore espérer compter les États-Unis eux-mêmes – devraient en prendre l’initiative, en récupérant de l’ancien multilatéralisme les points qui demeurent utiles, mais en opérant leur refonte, au sein de nouveaux accords, plus équitables, plus souples et mieux adaptés au monde d’aujourd’hui.

Cette stratégie aurait pour avantage d’identifier et d’assimiler les leçons qu’on peut tirer de l’étiolement des dispositifs traditionnels et de l’émergence de nouveaux cadres. Mais existe-t-il aujourd’hui assez d’autorité et de volonté politique pour dépasser les compromis vides, surtout destinés à sauver les apparences ? C’est incertain. Et en cas d’échec, une telle approche pourrait conduire au délitement complet du système mondial.

On ne trouvera en définitive la solution ni en cultivant la nostalgie de l’ordre ancien ni en misant sur des formes relâchées, donc inefficaces, de la coopération internationale. L’action collective au niveau international requiert des règles, car l’adaptabilité et la bonne volonté ne peuvent à elles seules résoudre les problèmes difficiles. La voie étroite par laquelle il faudra passer consiste à déterminer, au cas par cas, les conditions minimales permettant à l’action collective d’être efficace, et à bâtir le consensus sur les réformes remplissant ces conditions. Ceux qui croient en l’existence d’une telle voie n’ont plus de temps à perdre pour l’explorer.

Traduit de l’anglais par François Boisivon

July 4, 2018

July 5, 2018

Joseph S. Nye, Project Syndicate

13/03/2018

Bertrand Badré, Project Syndicate

WASHINGTON, DC – La décennie écoulée depuis la crise financière mondiale a été pour le moins agitée. Certes, aucune grande guerre n’a éclaté, et nous sommes plus ou moins parvenus à éviter les erreurs de la Grande Dépression, qui conduisit pendant les années 1930 à davantage de protectionnisme, à des faillites bancaires, à une austérité sévère, ainsi qu’à un environnement déflationniste. Pour autant, la réapparition de tensions sur les marchés démontre que ces risques ont été davantage masqués que véritablement éradiqués.

En un sens, l’histoire de la crise financière de 2008 a débuté avec la naissance de l’ordre mondial, sur les cendres de la Seconde Guerre mondiale. Plusieurs initiatives telles que les institutions de Brettons Woods (Banque mondiale et Fonds monétaire international), le plan Marshall, et la Communauté économique européenne sont venues appuyer la reconstruction de pans significatifs de l’économie mondiale. Malgré la guerre froide (ou peut-être grâce à elle), ces institutions ont également relancé la mondialisation à laquelle la Seconde Guerre mondiale avait porté un coup d’arrêt.

Ce processus de mondialisation a été interrompu à la fin des années 1960 et au début des années 1970 par la guerre du Vietnam, la suspension de la convertibilité du dollar américain en or, le choc pétrolier de 1973, et la grande stagflation. Les États-Unis et le Royaume-Uni ont néanmoins vécu par la suite une forme de révolution conservatrice, ainsi qu’un renouveau des politiques économiques néolibérales, faisant intervenir une déréglementation généralisée, une libéralisation des échanges commerciaux, et une ouverture sans précédent de leur compte de capitaux.

Publié le 03/07/2018

Renaud Girard, Le Figaro

La fracture qui s’accroît actuellement en Allemagne entre les chrétiens-démocrates et les chrétiens-sociaux de Bavière (partis de centre-droit continûment alliés depuis la création de la République fédérale) pose la question de la décision des politiques migratoires dans les démocraties occidentales. La CSU (Union chrétienne-sociale) reproche à la Chancelière chrétienne-démocrate d’avoir pris seule une décision stratégique, aux conséquences immenses pour l’Allemagne, et accessoirement pour l’Europe. Sous le coup d’une juste émotion, Angela Merkel a déclaré publiquement en 2015 que l’Allemagne offrait chez elle 800000 places de réfugiés, et décidé de mettre les lois allemandes de côté, afin d’ouvrir grand ses frontières. Elle a ainsi mis en branle des millions de miséreux du Moyen-Orient, d’Asie centrale et d’Afrique, pour qui un Etat de droit riche, tempéré, stable, bien organisé, sans violence, offrant logement, nourriture, instruction et soins gratuits aux familles, incarnait un extraordinaire eldorado.

C’est une décision que la Chancelière a prise seule, sans consulter ni ses ministres, ni ses parlementaires, ni ses partenaires de l’Union européenne. Elle n’a pas non plus sollicité ses hauts fonctionnaires, ses universitaires, ses chercheurs – politologues, géopoliticiens, anthropologues, sociologues, spécialistes des religions. Elle ne leur a pas demandé de lui dessiner les conséquences prévisibles de son tournant stratégique, qu’elles fussent politiques, sociales ou internationales. Il est vrai qu’elle croulait sous les fleurs des médias, qui virent en elle la vestale de l’honneur européen. Le Quatrième Pouvoir, à qui il arrive parfois d’avoir la mémoire courte, avait oublié que Mme Merkel avait expliqué, quelques mois auparavant, que le multiculturalisme, cela ne fonctionnait pas en Europe.

De nombreux commentateurs voulurent ajouter des considérations économiques à leurs jugements moraux : l’Allemagne, si faible démographiquement, avait un besoin vital de nouveaux bras pour son industrie. Tout cela est peut-être vrai. Mais n’aurait-il pas fallu consulter le peuple allemand avant de transformer l’Allemagne en société multiculturelle ? La démocratie ne consiste-t-elle pas à interroger les populations sur les choses les plus importantes ? La démocratie ne sert-elle pas à ce que les peuples puissent décider librement de leurs destins ?

En France, la décision d’Etat la plus importante du dernier demi-siècle porte aussi sur la question migratoire. C’est le regroupement familial. Il a changé le visage de la société française. Il est fascinant qu’une décision aussi cruciale ait été prise sans le moindre débat démocratique préalable. Il s’agit d’un décret simple d’avril 1976, signé par Jacques Chirac et contresigné par Paul Dijoud. Cette mesure provoque immédiatement un afflux très important de jeunes personnes en provenance de nos anciennes colonies d’Afrique du nord, à la mesure de la déception que suscitent quinze ans de piètre gestion et de confiscation du pouvoir par les vaillants héros des indépendances. Ce décret Chirac voit son application suspendue pour trois ans par le premier ministre suivant, mais le Conseil d’Etat (institution non élue) annule cette prudente décision de Raymond Barre, expliquant que le regroupement familial faisait dorénavant partie des « principes généraux du droit français ».

En 1977, une aide au retour est instaurée par le Secrétaire d’Etat Stoléru, versée aux immigrés acceptant de rentrer dans leur pays d’origine. En 1980, une loi Bonnet accroit les possibilités d’expulsion et de refoulement des étrangers (un étranger commettant un crime ou un délit est expulsable immédiatement). Mais, à l’été 1981, sans l’avoir explicitement annoncé dans son « programme commun de la gauche », le nouveau gouvernement d’alternance change à 180 degrés de politique : il régularise 130000 étrangers en situation irrégulière, facilite le regroupement familial, supprime la loi Bonnet et l’aide au retour.

Consultés par référendum par le général de Gaulle – qui ne voulait pas d’un Colombey-les-deux-Mosquées -, les Français ont accepté, en 1962, de se séparer de leurs départements d’Algérie, où une insurrection arabe brandissant le drapeau de l’islam avait surgi huit ans auparavant. Cinquante-six ans plus tard, ils voient les titres inquiets de leurs journaux : « 450 islamistes vont être libérés de prison ! ». Ils s’aperçoivent alors qu’on leur a imposé en France une société multiculturelle, sans qu’ils l’aient réellement choisie.

La situation est comparable en Grande-Bretagne, en Allemagne, en Italie, en Hollande, en Belgique, etc. On peut fort bien soutenir que le brassage culturel enrichit les sociétés modernes. Mais, dans une démocratie qui fonctionne, le minimum est que la population soit consultée sur l’ampleur du multiculturalisme qu’elle aura ensuite à gérer.

Publié le 01/07/2018

Virginie Robert, Les Echos

Les Etats-Unis font tout pour tarir les exportations de pétrole iranien. Téhéran se démène pour essayer de préserver ce qu’il peut l’être des sanctions américaines.

Afin notamment de compenser la chute des exportations iraniennes qui pourrait peser sur les prix en raréfiant l’offre, un tweet triomphal de Donald Trump expliquait samedi   qu’il avait obtenu du roi Salman d’Arabie d’augmenter sa production jusqu’à deux millions de barils jours.

Just spoke to King Salman of Saudi Arabia and explained to him that, because of the turmoil & disfunction in Iran and Venezuela, I am asking that Saudi Arabia increase oil production, maybe up to 2,000,000 barrels, to make up the difference…Prices to high! He has agreed!

— Donald J. Trump (@realDonaldTrump) 30 juin 2018

Une affirmation rapidement tempérée par Riyad et par la Maison Blanche qui a dû publier un communiqué précisant que ‘le roi Salman a soutenu que le royaume disposait de capacités de production inutilisées de deux millions de barils par jour, qu’il utilisera prudemment si et lorsque ce sera nécessaire pour garantir l’équilibre du marché’. Le 22 juin, les membres de l’Opep, dont l’Iran fait partie, sont convenus d’augmenter collectivement leur production d’un million de barils par jour.

A Téhéran, on tente de faire front. Dimanche, dans un discours retransmis à la télévision, le premier vice-président iranien, Eshagh Jahangiri, a affirmé que « nous serons capable de vendre notre pétrole autant que de besoin ». La veille, lors d’une conférence de presse à Téhéran, le ministre de l’Industrie iranien, Mohammad Shariatmadari avait demandé aux sociétés étrangères implantées en Iran à ne pas céder aux ‘menaces’ de sanctions américaines.

Interrogé spécifiquement sur PSA (qui a dit avoir commencé le processus de suspension de ses joint-ventures) et Renault (qui est prêt à réduire la voilure sans pour autant abandonner ses intérêts), il a assuré que « jusqu’à présent, ils ne nous ont pas dit qu’ils ne continuaient pas » leurs activités en Iran.  Pour le secteur automobile, les sanctions américaines doivent être réinstaurées le 6 août  prochain.  Les émissaires du régime font campagne: la semaine dernière à Paris Gholamhossein Shefeie, président de la chambre de commerce iranienne, expliquait que « la France est une priorité pour nous. Nos deux pays cherchent des solutions, notamment pour les petites et moyennes entreprises ».

Troubles intérieurs

Fragilisé à l’extérieur, le régime l’est de plus en plus à l’intérieur avec une succession de manifestations ou de grèves, comme celle des routiers qui a duré deux semaines. En Iran, depuis les manifestations de janvier, «il n’y a pas eu un moment de répit », assure  Afchine Alavi , porte-parole du CNRI en France. Ce week-end, plusieurs personnes ont été blessés alors des manifestants protestaient contre la pollution de l’eau à Khorramshahr, dans le sud-ouest du pays.  Quelques jours auparavant, le bazar de Téhéran avait été fermé «  c’est exceptionnel, ça a rappelé la fin du règne du shah », observe  Afchine Alavi. La chute de la devise, le manque d’eau potable, le hausse du chômage , tout cela fait que « la population a conclu que la solution n’est pas dans ce régime » appuie-t-il.

June 26, 2018

Steven Erlanger, The New York Times

BRUSSELS — NATO has been preparing for its July summit meeting for a year now, but there is one wild card: President Trump.

Nobody knows which president will show up — the truculent one railing about inadequate military spending by the allies or the boastful one taking credit for recent spending increases.

Either way, NATO members say they fear that all the preparation and the desire to show solidarity in the face of a new Russian threat will be overshadowed, if not undone, by a divisive encounter followed by Mr. Trump’s prospective summit meeting with the Russian president, Vladimir V. Putin.

The European allies are deeply worried that they will confront the Trump who was on display at the meeting in June in Canada of the seven major economies, known as the Group of 7, or G-7. Those in the room described him as angry, mocking, wandering and rude, especially to the host, Canada’s prime minister, Justin Trudeau, and to Chancellor Angela Merkel of Germany.

There, Mr. Trump focused on two of his fixed ideas: the unfairness of trade with European allies and their inadequate level of military spending. He then departed early for Singapore, where he met with and praised the North Korean dictator, Kim Jong-un.

The Trump administration regards Western European nations as free-riders on an American-funded, postwar peace that enabled them to build lavish social benefit systems because they spent so little on defending themselves. He has also made clear that he thinks the European Union, as a trading bloc, has taken advantage of American generosity.

European and some American officials say they dread the same pattern — a noisy, divisive NATO summit, damaging deterrence, followed by a chummy meeting with a dictator, in this case Mr. Putin, whose long-term goals are to destabilize the European Union, undermine NATO and restore Russian influence over Eastern Europe, the Baltic States and the Balkans.

Whatever the organization has prepared, “the only real deliverable for NATO summits is solidarity and cohesion,” said Douglas Lute, a former American general and ambassador to the organization. “But that is at risk because the odds are that Trump will deliver a G-7 performance. And I fear that we will come out of this summit with symbols of division.”

R. Nicholas Burns, a former NATO ambassador and career diplomat who served both Republican and Democratic administrations, asked: “Which Trump will show up?”

The headline for the summit meeting, he said, “should be about NATO’s containment of Russia in Eastern Europe, but Trump might blow it all up for Putin.” If Mr. Trump “arrives pushing dialogue with Russia with no clear deliverables from Moscow in return, it will make a mess in NATO.”

Even senior American officials said they had no clarity on Mr. Trump’s intentions for this meeting. They have told senior European officials that a lot will depend on Mr. Trump’s mood as he arrives and what is being highlighted on his favorite American news media outlets such as Fox News. And no one expects him to sit quietly through nearly two days of normally mind-numbing speeches by at least 28 other leaders.

For its two-day meeting on July 11 and 12 in its new headquarters (which Mr. Trump has disparaged), NATO has prepared significant steps to enhance deterrence against Russia.

Defense Secretary Jim Mattis has built support for a plan to fill the gap between the small “spearhead” forces now deployed in Poland and the Baltic States and what would be a slow reinforcement of troops. His plan, known as “30-30-30-30,” would require NATO to assemble a fighting force of 30 land battalions, 30 aircraft squadrons and 30 warships within 30 days.

Who would deploy those forces is still to be decided, but NATO is also planning to sign off on a revised command structure, including two new commands, one devoted to troop mobility and one to maritime security. There will be agreement on an enhanced NATO training mission in Iraq and on putting more effort into cyber warfare and counterterrorism.

But if there is a repeat of the Group of 7 haranguing, with public criticism of the allies, the Europeans will be caught, one NATO official said, between smiling as they are attacked or choosing to challenge Mr. Trump, which they know will almost surely go badly and make them the target of his next Twitter blast.

Julianne Smith, director of the Trans-Atlantic Security Program at the Center for a New American Security, said that “European officials are thinking about how to respond, about what it costs them politically at home and what it costs them bilaterally, with Washington.”

The Europeans are also anxious about the fate of Mr. Mattis, who is an outspoken supporter of the NATO alliance and an aggressive stance toward Russia.

With John Bolton as national security adviser and Mike Pompeo as secretary of state, Mr. Trump has rejected the defense secretary’s advice on North Korea and on preserving the Iran nuclear deal.

At the Group of 7 meeting, Mr. Trump approached some European leaders and asked them for their thoughts on Mr. Mattis, said Ms. Smith, who was deputy national security adviser to Vice President Biden.

“It was awkward for them and might be the kiss of death,” if they praised him, she said, “so they said deliberately that he is being so tough on us on 2 percent defense spending, to try to save the guy.”

Everyone understands that Mr. Trump will want a discussion about “burden-sharing” and the commitment of all NATO allies, made at their Wales summit meeting in 2014, to aspire to spend 2 percent of their gross domestic product on defense and 20 percent of military spending on equipment by 2024.

But they worry about how heated, and how public, it might get. Mr. Trump’s past comments suggest that he thinks that there is some NATO treasury to which members owe dues, and that allies are behind on their payments.

In fact, what happens is that each country decides its own military spending. And as the secretary general of NATO, Jens Stoltenberg, keeps pointing out, the level of non-American allied military spending has gone up some $87 billion since 2014 and continues to grow.

In a speech last week, the United States assistant secretary of state for European affairs, A. Wess Mitchell, acknowledged progress in military spending, while urging greater efforts.

“Since January of last year, every member of NATO but one has increased defense spending,” he said.

“The number that will spend 2 percent of GDP on defense by 2024 has more than tripled (from five to 18). The number allocating at least 20 percent of their military spending to major equipment purchases has more than doubled (from 14 to 26). And the alliance as a whole has increased military spending by 5.2 percent (or $14.4 billion) — the largest one-year surge in defense spending in a generation.”

But there are European concerns that Mr. Trump will try to tie military spending to trade issues at the meeting, especially with Ms. Merkel.

“If Germany needed another wakeup call about Trump, the G-7 was it,” said Daniela Schwarzer, director of the German Council on Foreign Relations. “With potential tariffs on European cars and the NATO summit, the pressure on Germany is growing,” she said.

Berlin is also concerned about potential American sanctions aimed at the Nord Stream II pipeline from Russia to Germany, bypassing Ukraine and Poland, new tariffs on foreign cars, and American secondary sanctions against European companies that might invest in Iran to try to save the Iran nuclear deal.

Mr. Trump’s apparent admiration for Mr. Putin is also raising concerns, said François Heisbourg, president of the International Institute for Strategic Studies and a French defense analyst.

Mr. Trump “may act on his instincts and try to do a bilateral deal with strongman Putin and sacrifice NATO interests — he might lift sanctions on Crimea, cancel military exercises or withdraw American troops from the Baltics,” Mr. Heisbourg said. “We saw it with Kim Jong-un.”

There is also concern that because Mr. Putin objects to any new NATO member, Mr. Trump may try to block an invitation for the newly named Republic of North Macedonia.

Ian Lesser, director of the German Marshall Fund and a former American diplomat, said that “meeting Putin in the wake of a symbolic and successful NATO summit is one thing, but a meeting against the backdrop of a summit that goes badly is quite another.”

Burden-sharing was important, Mr. Lesser said, “but it’s wrong to suggest that the U.S. has no interest of its own in European security, as if it were some charitable gift. We’re stakeholders in European security, with our own interests and reasons to spend money,” he said, especially in the light of Russia’s efforts to destabilize Western democracies and NATO.

As ever, plans are for a long final communiqué, essentially drafted, about the accomplishments of the meeting. But given Mr. Trump’s angry, last-minute withdrawal of his approval of the Group of 7 final communiqué, because he did not like Mr. Trudeau’s closing news conference, some think that NATO would be safer not having a final statement.

“The irony is that this should be a good NATO summit, with consequential improvements of deterrence,” said Tomas Valasek, a former Slovak ambassador to NATO who now runs Carnegie Europe. “But with the memories of the G-7 fresh, the headlines will be all about the leaders and the mood of Donald Trump.”

June 24, 2018

By Steven Erlanger, The New York Times

24/06/2018

Par Laurent Ribadeau Dumas, GEOPOLIS Afrique

Pour le géographe Michel Foucher, «les migrations de l’Afrique vers l’Europe constituent un phénomène irrépressible». Selon lui, il faut parler de «mobilité». Une mobilité qu’il faudrait organiser pour éviter les drames quotidiens en Méditerranée. De plus, observe-t-il, ce sont des pays relativement développés, bien plus que les pays pauvres, qui alimentent l’immigration. Interview.

Dans votre étude, publiée par la fondation Jean-Jaurès, vous faites une différence entre «migration» et «mobilité». Pourquoi? 
Je raisonne en géographe. En l’occurrence, il y a des pays de départ et des pays de destination: il s’agit donc de flux. Des flux que je considère comme irrépressibles, qui doivent être organisés. En France, on est incohérent sur ces sujets, il n’y a pas de discours de vérité. On est pris entre Le Pen et SOS Méditerranée. On n’arrive pas à voir la question dans sa complexité.

C’est-à-dire ?
Il faut savoir d’où viennent les gens, quels sont leurs projets, analyser au cas par cas. Il existe ainsi des flux très anciens. Prenez l’exemple de Mamoudou Gassama, ce jeune Malien qui a sauvé un enfant suspendu dans le vide au 4e étage d’un immeuble parisien. Il vient de Kayes, à l’extrême ouest du Mali, une région où à l’époque coloniale, les Français recrutaient des tirailleurs sénégalais. Aujourd’hui, la tradition se perpétue. Ce sont les chefs de village qui se cotisent pour payer les passeurs.

Il faut partir des réalités: le monde est interconnecté, les jeunes veulent circuler. Ils font des choix. Ils ne partent pas à l’aventure. Ils se dirigent vers les pays européens dont ils parlent la langue: l’Afrique francophone choisit souvent la France, les anglophones comme les Ghanéens et les Nigérians ont tendance à se rendre en Grande-Bretagne. Ils sont alphabétisés et très bien informés. Au Sénégal, par exemple, 70% des familles ont un membre qui a migré à l’étranger. Ces jeunes connaissent le mauvais état du système éducatif dans leur pays et veulent aller dans de meilleures écoles. Si ici on persiste dans une politique de fermeture, ils n’apprendront plus le français. C’est le meilleur moyen de mettre fin à la francophonie!

Un individu qui part est soutenu par son entourage. Il leur envoie ensuite 30% de ce qu’il gagne. Cet argent sert à construire une maison en dur, à préparer son mariage. Dans les grandes villes, les choix sont davantage individuels. Les gens partent souvent seuls, ce qui correspond à un choix d’émancipation. C’est donc en connaissant en détail toutes ces situations qu’on peut construire cette mobilité, qui existe déjà.

Elèves ghanéens à Accra le 7 février 2018 © AFP – ERIC LALMAND / BELGA MAG / BELGA

Selon vous, les Etats les plus pauvres du Sahel (Burkina, Niger, Tchad…) «ne sont pas les principaux points de départ de migrants vers l’Europe. Ce sont «ceux de la région qui ont déjà atteint un certain niveau de développement (Sénégal, Côte d’Ivoire, Nigeria, Ghana) qui font (…) le choix de l’Europe». Est-ce une tendance de fond?
Tout à fait. C’est d’ailleurs ce qu’a rappelé, dans une interview au Monde en date du 13 juin 2018, le nouveau ministre espagnol des Affaires étrangères, Jospeh Borell: «Ceux qui partent ne sont ni les plus pauvres ni les plus faibles», expliquait-il. Il faut savoir que pour migrer, il faut disposer au moins de 2500 euros.

En France, on a le cœur sur la main. Et l’on a tendance à croire que la pauvreté et le sous-développement sont à l’origine des migrations. D’où la priorité donnée aux politiques de développement pour bloquer l’immigration. Mais c’est une illusion! C’est quand on est relativement développé que l’on a les moyens de partir.

Pourtant, votre propos ne correspond pas forcément aux données de l’Office international des migrations. En avril 2018, parmi les nationalités les plus représentées arrivant en Italie, on trouvait ainsi les Erythréens, venus d’un pays très pauvre…
C’est un problème différent. Car l’Erythrée est une dictature avec un service militaire à durée illimitée. Alors que le Sénégal, la Côte d’Ivoire, la Guinée ne sont pas des dictatures.

Concernant l’Afrique de l’Ouest, que faudrait-il faire selon vous?
Comme je le disais, il est indispensable d’organiser les flux et la mobilité avec les pays de départ en mettant de côté la question des réfugiés. C’est le meilleur moyen d’éviter les drames en Méditerranée. Il faut conclure des pactes migratoires d’Etat à Etat avec des systèmes de multi-visas. Ce qui implique que ceux qui partent doivent revenir chez eux. A la différence de la migration: là, on s’installe définitivement à l’endroit où l’on arrive.

Un tel programme pourrait être financé par l’Union européenne mais organisé par les pays de destination, les associations. On doit agir avec les acteurs de terrain: les communes, les maires, les chefs de village. Il existe déjà de très nombreuses micro-expériences. Il est nécessaire de développer ce qui marche déjà. Tout cela coûterait moins cher que les milliards dépensés pour Frontex! Je plaide par exemple pour l’action très pragmatique menée par l’Espagne au Sénégal, qui met de l’argent dans les associations du pays de départ. Une action qui a permis de tarir les flux vers les Canaries.

Drapeaux des pays participant au sommet de l’Union européenne le 23 février 2018 à Bruxelles. © AFP – ALEXEY VITVITSKY / SPUTNIK

Mais si l’on veut faire accepter une telle politique aux opinions du Vieux continent, il est indispensable de renforcer sérieusement la dimension sociale de la construction européenne. Notamment en restructurant le Fonds social européen (FSE). Sinon, on risque d’entendre les gens d’ici dire: «Les immigrés, on en fait trop pour eux!» Il faudrait par exemple élargir les problématiques en instituant des programmes genre Erasmus pour les apprentis, les métiers de santé, les professions artistiques, les journalistes…

Il faut impérativement dépolitiser. Expérimenter. Et arrêter de vouloir conclure un accord entre les 28 pays de l’UE!

Jun 22, 2018

By Ana Palacio, Project Syndicate

More than any other challenge facing Europe today, the ongoing migration crisis has the potential to destroy the European project. Rather than debating European Commission diktats and lamenting member states’ rebelliousness, EU leaders must consider fresh approaches, including third-country disembarkation platforms.

MADRID – The European Union loves giving itself ultimatums, whether it is the two-year deadline for Brexit negotiations or European Commission President Jean-Claude Juncker’s declaration, upon taking office, that his was a “last-chance commission.” Unfortunately, European leaders rarely follow through on their best-laid plans. When it comes to migration, however, they may not have a choice.

The issue has become a sword of Damocles hanging over the EU. It straddles every fault line: between country and community, between security and openness, between national and European identity, between social values and economic or strategic interests. As a result, migration, more than any of the other myriad challenges the EU confronts today, has the potential to destroy the European project.

Of course, the EU has often proved that, when push comes to shove, inertia prevails. But, given the urgency of today’s migration crisis, not even the EU will be able to muddle through. If it tries, the issue will only fester, eating away at the Union’s very foundations. For once, Europe’s leaders have no choice but to put up or shut up.

Make no mistake: Europe’s migration problem is not going away. The decline in asylum applications in 2017 was not, as many believed, an indication that the problem was being overcome. On the contrary, while the migration challenge became apparent to many Europeans only in 2015, when German Chancellor Angela Merkel opened the door to a million desperate asylum seekers, the issue has long plagued southern Europe and is now mutating in dangerous ways.

That change is exemplified by the recent saga of the MS Aquarius. Operated by a Franco-German charity, the Aquarius rescued 630 migrants and refugees off the coast of Libya. On June 9, Italy’s new interior minister and deputy prime minister, Matteo Salvini, rejected the ship’s request to dock in his country and prohibited them from even entering Italian waters. Then Malta, too, turned the refugees away. Finally, after nearly a week, Spain stepped up, allowing the ships to dock in the port of Valencia.

Irregular migrants arrive in Europe every day: as the Aquarius was arriving in Valencia, more than a thousand people were saved just a couple of hundred miles to the south, while trying to cross the Strait of Gibraltar. But a high-profile drama like that of the Aquarius creates political incentives for hardline positions. It is political candy for populists and poison for rational policymaking.

June 22, 2018

Steven Erlanger, The New York Times

Publié le 22/06/2018

Propos recueillis par Alexis Lacroix dans L’Express

L’ancien ministre Hubert Védrine et l’historien Alexandre Adler échangent sur le nouvel ordre mondial, et ses menaces.

Hubert Védrine, ancien ministre des Affaires étrangères et spécialiste de politique internationale, signe un livre important, Comptes à rebours (Fayard). Face à lui, l’historien Alexandre Adler, auteur, entre autres, de La Chute de l’empire américain, une charge vibrante contre le trumpisme, paru chez Grasset. Ils dessinent à deux voix les lignes de force d’un mêlée mondiale pleine de périls et d’inconnues.

L’EXPRESS.- Pourquoi parlez-vous, dans votre livre, de « comptes-à-rebours ». Ont-ils commencé et, si oui, depuis quand ?

Hubert VEDRINE. En toile de fond de l’actualité qui nous distrait chaque jour, plusieurs comptes-à-rebours inquiétants, dont les tic-tac s’égrènent, se poursuivent. Or, aucun de ces processus globaux n’est automatiquement favorable à ce que nous sommes : des Occidentaux, des Européens, des Français. D’abord, la démographie. La période qui s’annonce est périlleuse : la juxtaposition d’une Europe qui restera stable, dans le meilleur des cas, et d’une Afrique voisine qui va exploser jusqu’à ce qu’elle soit touchée, elle aussi, par la transition démographique. Indissociable du compte-à-rebours démographique, il y a le compte-à-rebours écologique (climat, biodiversité, océans, forêts, etc.). Il est tout simplement impossible que, demain, 10 milliards d’individus arrivent à coexister sur la planète s’ils persistent à pratiquer le mode de vie et de production occidental et prédateur actuel. Enfin, il y a l’incertitude numérique : panacée ou menace supplémentaire ? Il faut se méfier de l’optimisme technologique quand il est trop simpliste. Progrès nombreux, oui, mais le numérique, avec son horizontalité spontanée, et son anarcho-démocratie, peut contrarier la décision publique, verticale, ou tout thromboser. S’il est évidemment très prometteur, le moment Macron ne suffit pas à nous réconforter, car il est particulier.

Hubert Védrine. afp.com/Lionel Bonaventure

Alexandre ADLER. Vous avez entièrement raison sur ce diagnostic. La question démographique n’est pas séparable des enjeux écologiques, et ceux-ci ne sont pas étanches vis-à-vis de la question du numérique. Toute personne qui n’arrive pas à saisir les interactions entre les trois phénomènes est condamnée à passer à côté de la réalité. De même, en 1947, même de Gaulle escomptait une attaque soviétique et se trompait lourdement. Il aurait dû en rester à son analyse antérieure, selon laquelle il y avait du jeu entre la politique soviétique et la politique américaine, et selon laquelle il y avait encore une marge de manoeuvre pour la France. Les interactions étaient en fait déjà présentes, et les relations occidentalo-soviétiques n’étaient pas figées. Il était possible d’anticiper, sur le plan économique, une évolution en faveur de l’Occident.

H.V.- Mon analyse se concentre en effet sur cette « conjonction » menaçante. Nous sommes défiés par une combinaison potentiellement explosive, au sens chimique du terme, de ces phénomènes. Et pourtant, les élites classiques ont toujours du mal à intégrer l’absolue nécessité d’arrêter le compte-à-rebours écologique ! Quant aux milieux économiques « mondialisateurs », ils ont trop longtemps cru la géopolitique périmée. Elle est bien là, plus coriace que jamais.

A.A.- Hubert Védrine fait partie des rares esprits qui montrent l’interdépendance de la démographie et de l’écologie, qui sont en train de modifier de manière radicale notre monde. Comment peut-on raisonner sur le prix du pétrole et des matières premières, sans voir la transition énergétique ; un certain nombre de Saoudiens sont plus lucides sur ce point et ont pris acte que la transition écologique a déjà condamné en tendance le prix actuel des hydrocarbures. D’où le caractère, selon eux, indispensable d’investissements productifs en Arabie saoudite même.

H.V.- Oui, ce bouleversement modifiera bientôt le sens même de l’expression « Etat voyou ». Bientôt, l’Etat voyou, ce sera celui qui ne mettant pas une oeuvre une écologisation raisonnable, mettra en péril tous les autres.

Le Moyen Orient est-il l’un des théâtres principaux de ce basculement du monde?

A.A.- Sans aucun doute, à cause de la fin, justement, de l’ère du pétrole. Mais dans le raisonnement d’Hubert, j’intégrerais volontiers la révolution engendrée par une urbanisation massive. Une des voies les plus écologiques pour gérer des ressources rares et pour intégrer le choc démographique que nous allons subir est évidemment l’urbanisation. Le pouvoir des villes est en train de s’affirmer d’une façon inédite à l’échelle de l’Europe. Je vois, par exemple, la façon dont Lyon s’autonomise de Paris en regardant à la fois vers Barcelone et vers Milan. Tout indique notre entrée dans un monde quantique.

Un monde quantique, au sens d’Einstein. C’est-à-dire ?

AA.- Un monde d’incertitude maximale, où il n’y a plus ce paysage stable de sujets attendus. On ne peut plus tabler, par exemple, sur le fait, pour reprendre l’expression consacrée, que « l’Amérique veut ». La caractéristique déroutante d’un monde quantique, c’est que tous les acteurs y sont divisés : ainsi, aujourd’hui, l’Amérique est divisée ; de même, il n’y a pas une, mais deux Russie, et Poutine n’incarne pas la pire ; le Moyen-Orient n’est pas plus uni que l’islam, et j’ajouterais que, s’il existe une exception chinoise – notamment l’ambition de maintenir la solidité de la puissance chinoise -, il existe partout ailleurs une labilité quantique.

H.V.- A raison, Régis Debray écrit que la mondialisation « heureuse » a conduit à la « balkanisation généralisée ». Oui il y a une certaine fragmentation « quantique » des grandes entités, mais ce phénomène touche aussi les entités privées. Voyez les GAFAM : elles détiennent plus de pouvoir que les 3/4 des membres des Nations unies, mais elles entrent dans une zone moins triomphale !

A.A.- Même la mafia s’est atomisée…

H.V.- Quant au Moyen-Orient, ce qui s’y passe confirme malheureusement que le monde en l’absence d’une puissance hégémonique, ne parvient pas à s’ordonner par lui-même. Cela laisse à beaucoup d’acteurs sans scrupules, encouragés par l’impunité du « trumpisme », la latitude de pousser leurs propres pions. Dans cette région s’entrecroisent, dans une sorte de mêlée généralisée, des conflits classiques entre Etats mais qu’aucun pays (ni l’Egypte, ni la Turquie, ni l’Arabie, ni l’Iran, ni Israël) ne peut gagner complètement, et des entités comme Daesh. Et contrairement à l’époque de Sykes-Picot, les grands de ce monde ne seraient pas davantage en mesure de se mettre d’accord sur une solution, même mauvaise, et de l’imposer…

AA.- Cette « mêlée » est d’autant plus déroutante et irritante pour nous que la France a, dans cette région, un rôle décisif …

HV.- Elle l’a eu longtemps, elle le croit encore un peu, mais ce n’est plus vrai.

AA.- Non, avec les Russes, ce rôle-clé lui revient

Qu’est-ce à dire, exactement, Alexandre Adler ?

AA.- Comme les Russes furent plutôt des vaincus de l’histoire des trente dernière années, nous n’y songeons pas… Et pourtant ! Le père de Hubert Védrine s’est battu pour l’indépendance du Maroc avec un homme extraordinaire que nous admirons tous les deux, et qui était le général Méric. Eh bien, aujourd’hui, le Maroc et l’Algérie sont intensément tournés vers la France, et tous les écrivains algériens qui comptent vivent entre Alger et Paris. En Algérie, la « perestroïka » qui s’annonce avec la disparition de Bouteflika sera française.

Un autre pays est comparable à la France : la Russie, pour qui la sauvegarde de la Syrie est une affaire intérieure. Ainsi, elle est en train de mener une politique pragmatique au Moyen Orient, qui s’avère complètement convergente avec celle de la France, qui, sous l’impulsion de Jean-Yves Le Drian, a consenti de grands sacrifices pour contenir les djihadistes au Sahel. Anglais et Américains ne veulent rien savoir de ce vaste défi géopolitique ; Français et Russes témoignent d’un même souci d’endiguer la destructivité islamiste, ce qui installe une convergence.

H.V.- Nous sommes encore bien loin de cette convergence. Certes, les torts sont partagés, nous avons réveillé par nos erreurs depuis 1992 les pires aspects du système russe, mais cet antagonisme paraît pour le moment sans issue. Même aux pires moments de la guerre froide, à l’époque de menaces beaucoup plus concrètes, de grands dirigeants réalistes avaient osé la détente. Aujourd’hui, nous ne sommes qu’au début du cheminement souhaitable dessiné par Alexandre Adler, si nous y sommes. Mais, peut-être Emmanuel Macron a-t-il parlé de l’avenir avec Poutine ?

Comment tenir l’équilibre entre l’Iran et l’Arabie saoudite, pour une puissance comme la France ?

A.A.- Il n’y a pas d’équilibre à tenir. L’Iran et l’Arabie saoudite sont deux partenaires indispensables pour la France. Mais dans la décision immédiate, le choix d’un camp est indispensable. Et j’approuve tout à fait Jean-Yves Le Drian, qui n’a pas hésité à tirer la barbe des mollahs, et à ce que nous soutenions le cours actuel d’une Arabie saoudite qui se réforme. Mais, à un plus long terme, j’estime que les efforts de Rohani pour réintégrer la communauté internationale doivent être soutenus. Mais nous n’accepterons pas la politique de force en Syrie, dirigée contre l’Occident mais aussi contre la Russie et son influence modératrice ; ne sera pas non plus tolérée la politique d’invasion du dossier yéménite par des ambitions de grandes puissances, de même que le rapprochement irano-turc.

Les Européens ont-ils raison de vivre dans la nostalgie de ce que fut « l’Amérique virgilienne » ?

H.V.- Globalement, quel que soit le sujet, les Européens pèchent par irréalisme. Du coup, face aux dures réalités, ils sont choqués et se réfugient dans les chimères. Cela dit, la chancelière Merkel a déclaré récemment que les Américains étant devenus peu fiables (euphémisme !), il était nécessaire que les Européens s’organisent mieux entre eux. C’est ce que souhaite aussi le Président Macron. Le déclenchement de la guerre commerciale par Trump devrait avoir cet effet. Mais il y a encore du chemin ! Cela dit ce sursaut européen ne passe pas forcément par plus d’intégration au sens classique. Des votes à la majorité, sans veto, dans l’Europe telle qu’elle est, ne conduiraient pas à une Europe-puissance au contraire. C’est un déblocage mental pour une ré-accepation préalable et la notion de puissance qui est nécessaire au préalable.

A.A.- Il nous faut renoncer à toute influence ultérieure avec les Anglais, lesquels ne feront pas retour à l’Europe. Pour l’heure, Macron affiche une position personnelle d’adhésion à la France, et sa première adhésion au parti socialiste s’était d’ailleurs déroulée dans le giron idéologique du chevènementisme. Les objectifs européens qu’il affiche ne sauraient donc en aucun cas s’accompagner d’une minoration des intérêts français. A titre personnel, j’apprécierais qu’il ait plus de souplesse à l’égard d’une opinion allemande elle-même traversée par de nombreux remous. Il a mangé son pain blanc avec Angela Merkel, qui va, je crois, devoir se retirer, ce qui explique les lauriers qu’on lui tresse !

H.V. – Ce qui est très intéressant, chez Emmanuel Macron, c’est la synthèse dynamique en cours entre son européisme philosophique de départ, l’objectif d’une Europe qui doit protéger, et les projets.

21 June 2018

Sergey Karaganov, Russia in Global Affairs

The first phase of Russia’s turn towards rising Asia is gaining momentum – the Far East’s rate of development is twice the national average (this is not enough, though). Dozens of major businesses crop up in the region.

Oddly enough, these changes have highlighted deficiencies nobody would think of before. Eastern Russia’s development has not yet become a common cause for the whole nation, although the dire need for grand projects is more than obvious. The attitude of the locals remains distrustful. Population outflow from the Far Eastern territories has slowed but not stopped. High on the agenda is the need to involve in this process “Russia’s Asians” – residents of the Far East and Siberia, who have for many centuries maintained and tightened cooperation with their neighbors, who know and feel their needs well enough. Also, it is essential to change the attitude to this turn of the Russian public at large, to promote the awareness that it leads the country towards economic, technological and cultural markets of the future.

Russia has received from Europe nearly all it could and for the time being it is unwilling to get more in exchange for even a tiny bit of its sovereignty, which, bearing in mind its history, is a sacrosanct asset. Russia has borrowed much of European social expertise, a wealthier and more comfortable lifestyle it lacked in the lean Soviet years. The degree of personal freedom among Russians is probably higher:  there is certainly far less depressing political correctness.

Also the world around has changed, too. Whereas starting from the 17th century Europe used to be nearly the sole provider of advanced technologies, now their source is quickly drifting to Asia. So does the center of economic activity. While 40 years ago that center was some place in the Atlantic Ocean, west of Ireland, now it is in Turkey, and in ten years from now it will have to be looked for on the border of India and China.

In addition, Russia has apparently reached the limit of its social and public rapprochement with Europe. The Western neighbors find annoying Russia’s unpreparedness to follow the European way and the loss of their profitable and flattering status of a mentor. For its part, Russia by and large is reluctant to import modern European values (for instance, the super-tolerance towards immigrant) because it finds many of them alien, post-European or just disadvantageous. This does not mean Europe is rejected altogether – Russians share the same high  culture. A great deal in Europe, such as its ecological regulations, is still worth borrowing. Europe is a vast and lucrative market. It is a nice place to travel. High technologies are still there. However, access to them amid the current U.S. policy of sanctions is limited.

It is quite possible, though, that 2014 saw not just a stop to the further expansion of Western unions, fraught with a big war, but also an end of the Petrine period in Russian history. Europe will remain a neighbor. Russia is to stay on friendly terms with it wherever possible. But the chances Europe will continue to be a benchmark are slim. Russia’s turn to Europe and its technologies from the 17th and 18th centuries was logical: Asia was far away and sliding into a period of relative decline for several reasons, including colonial expansion by a better armed Europe. These days the situation is changing. Asia is destined to become the most important source of capital and advanced technologies.

Many in Russia are still unaware their country happened to be the midwife of history that facilitated the rise of Asia and other newcomers to the world scene. It was Russia-the Soviet Union that put an end to nearly five hundred years of the West’s military supremacy – the pillar of its economic, political and cultural domination. Nuclear parity, once created and preserved over the years, leaves no chance for anyone to win a big war. That is why the today’s world is freer and more democratic. The Asian countries have obtained an opportunity to capitalize on their competitive advantages. The realization that the days of uncontested supremacy are gone and will never return is probably the main reason for the animosity towards Russia that makes the U.S. and some other Western elites see red.

Some in Russia have begun to argue that its strategic loneliness is inevitable. Meanwhile, the word ‘loneliness’ in Russian does not necessarily have a negative connotation. My inner voice prompts me, we run no risk of getting lonely at all – we will not be left to ourselves. More important is the emerging opportunity to establish (without turning our back on Europe) tight cooperation with Asia. Russia can become the center of a Greater Eurasia partnership, an initiative proposed by Moscow and supported by Beijing, especially as it is 90-percent consonant with China’s One Road-One Belt project.

Problems on the way to building Greater Eurasia will be many.

For the people of Russia’s Far East the turn has not yet become an idea they wholeheartedly share. This proposal came from Moscow, for which the central authorities should be thanked. But it has not yet filled the hearts and minds of Far Easterners, who incidentally are far more inclined to think and act big than the other Russians – with drive and passion crucial for the success of any ambitious pursuit. (Incidentally, the lack of drive for big accomplishments and the famous Russian valor is a flaw of current home policies in general.) The locals’ experience and potential of communicating with China and other neighbors has not been tapped to the full yet.

The Eastward turn is beginning to confront ideological and psychological constraints. Efforts to do away with them should enjoy unflagging attention over years to come.

Another, no less important task on Russia’s way to new Eastern horizons is to bring back the history of Siberia and the Far East – glorious and thrilling in many respects – to the fold of historical self-awareness of the entire Russia. It will be likewise crucial to overcoming the attitude of a certain part of Russia to Siberia and the Far East as something different. Sometimes I am asked why it is worth investing into the Far East first and foremost, and not, say, into European Russia’s northern regions. My reply is this region has been Russian land for the past four to five centuries. There one finds superb wildlife and mammoth resources. Moreover, booming neighbors offer vast development opportunities, incomparable to those available in other regions. The competitive advantages that have emerged there for the first time in the Russia’s history can be used for fast-tracked development. Also, something should be done at last to soothe the Siberians’ wounded pride, for in the 1990s those people were undeservedly abandoned and neglected, and in a far stronger way than the other Russians.

In developing the human capital of Siberia and the Far East, which by and large are better than Russia’s average, it will be not enough to just provide assistance in mastering new technologies. It would be reasonable to create moral incentives, to let the people feel themselves again as trailblazers, as leaders who are steering Russia towards new economic, political and cultural frontiers – this time Eurasian ones. The people of Russian culture are open to other cultures and remain very tolerant towards other faiths. This major competitive advantage will give the advantage   in a new Eurasian megaproject.

Painstaking consistent efforts are required to overcome the eurocentrism of a considerable part of Russian elites – certainly a regressive factor in the modern world. Amid the havoc of the 1990s and the chaotic recovery of the 2000s the Eurocentric sentiment soared, as many Russians of means took their newly-appropriated gains out of the country – to Europe in the first place – and as their compradorian attitudes inevitably gained strength.

Russian society should by no means abdicate from its mostly European culture. But it should certainly stop being afraid, let alone feel ashamed, of its Asianism. It should be remembered that from the standpoint of prevailing social mentality and society’s attitude to the authorities Russia, just as China and many other Asian states, are offspring of Chengiss Khan’s Empire. This is no reason for throwing up hands in despair or for beginning to despise one’s own people, contrary to what many members of intelligencia sometimes do. It should be accepted as a fact of life and used as a strength. The more so, since amid the harsh competitive environment of the modern world the authoritarian type of government – in the context of a market economy and equitable military potentials – is certainly far more effective than modern democracy. This is what our Western partners find so worrisome. Of course, we should bear in mind that authoritarianism – just like democracy – may lead to stagnation and degradation. Russia is certainly confronted with such a risk.

I believe that in several years’ time the whole of Russia will realize that it is no longer an oriental periphery of Europe. We will see that Russia’s road to Asia, to new riches, to power and progress is “our road home.” That having borrowed from Europe its high culture and made it still richer Russia now takes its own civilized niche of a great Eurasian power – an original blend of many civilizations in its own right. (This thought was prompted to me by L.E. Blyakher, a wonderful Russian historian and philosopher in Khabarovsk).

Our knowledge of Europe, especially of its older part, is good enough. But we still know very little about Asia – a continent of rising cultures, civilizations and technologies. We should hurry right away to introduce extensive courses of Asian history and languages to our school curricula and to train specialists in oriental affairs at our universities on the massive scale. In any case, the history of the human race, hitherto written mostly by Europeans, will undergo revision in a couple of decades. Glittering Byzantium, which the successors of crusaders tend to portray as an embodiment of intrigues and ineffectiveness, will appear in its true disguise: that of a marvelous civilization that has preserved and developed European culture throughout the dark Middle Ages to mate it with the Oriental ones. Chinese, Indian, Japanese and Korean dynasties will take a worthy place next to the Plantagenets, Habsburgs, Bourbons, Stewarts and Romanovs. It is very important for us, Russians, to become the first Europeans in Asia or even the first Asians in Europe to play the inherent role of a civilizational bridge, and not just of a transport link.

This is the right moment to use the experience of the Far Easterners, who have long had close relations with the Chinese and other neighbors, to brush aside what is still left of the “Yellow Peril” myth, which was imposed on us some time ago and which continues to be fueled by  forces, scared to see Russia’s further emancipation from the West. It takes good knowledge of Asian history and of one’s place in it to remember that anti-Japanese sentiment is very strong not only in many Asian countries, but also in the Pacific areas of Russia, where memories of Japanese invaders’ atrocities are still alive. Knowledge is crucial to preventing old-time insults and phobias from hindering reasonable Russian-Japanese rapprochement and dialogue with other countries. Such knowledge will be very useful in concrete diplomacy, too. For instance, it remains unclear why in the dialogue with Japan the latter invariably appears as the injured party. History was complex. It is to be studied and sensed. And it will be a whole lot better to do so using the intellectual capital and experience of the Far Easterners.

The importance of some of the instruments of enhancing the national and local motivation for accelerating progress towards the most promising markets of the future is obvious. These are the already mentioned mandatory school and university courses in Oriental studies, films about the glorious and dramatic history of Siberia, its incredibly brave and determined people and its marvelous riches. It is also important to actively involve the local elites in the promotion of Russia’s national policy in Asia. It will be essential to extensively study the experience, however critical, of Asian countries and to create permanent clubs uniting business and intellectual elites of Russia and the Asian countries. It will be useful to pool efforts with the Asian neighbors to study and compare the value systems of Russians and Asian peoples. It looks like there is a great deal more in common in this respect than one may anticipate. Likewise, efforts should be made to intertwine Russia’s central and Siberian-Far Eastern elites to let the former better understand the needs of Russian Asia, and the latter, feel its involvement in shaping and implementing Russia’s Eurasian policies. The sooner Asia, including Russian Asia, comes into vogue for Russians, the better for the country.

Lastly, some final remarks.

First. Time is overripe for ending the artificial bureaucratic division of Russian land lying east of the Urals into Siberia and the Far East. All the way Siberia developed as an integral region. It has similar human resources and mentality. Central Siberia, suffering from what some describe as “continental curse,” that is, its remoteness from the markets, will benefit a lot from such unification and the use of advanced economic instruments, which are now being used to boost the development of the Far East. The latter will derive its own tangible benefits from integration with the powerful industrial and scientific potential of Central Siberia.

Second. For the sake of economic development, for bolstering morale and for rejuvenating Russia’s entire governing class it is an imperative of the day to set up a third and, possibly, fourth capital city east of the Ural Mountains and on the Pacific Ocean and to move there some of the federal agencies and head offices of major corporations. Such decisions were taken a while ago, but nothing has been done to act on them to this day.

And third. It is a bitter irony of history that we still refer to Pacific Russia as the Far East, using a name coined by the British. For them this part of the world was surely a faraway one. Also, in their scheme of things, there was the Near East and the Middle East, sandwiched in-between. In the meantime, for us the Far East is the closest…

The article originally was published in « Rossiyskaya Gazeta » (#7585 (122) on June 06 2018.