The Europe Center is jointly housed in the Freeman Spogli Institute for International Studies and the Stanford Global Studies Division.
Ronald I. McKinnon is an applied economist whose primary interests are international economics and economic development-with strong secondary interests in transitional economies and fiscal federalism. Understanding financial institutions in general, and monetary institutions in particular, is central to his teaching and research. His interests range from the proper regulation of banks and financial markets in poorer countries to the historical evolution of global and regional monetary systems. His books, numerous articles in professional journals, and op-eds in the financial press such as The Economist, The Financial Times, and The Wall Street Journal reflect this range of interests.
Event Summary
Professor McKinnon first outlines the two major assumptions behind his paper (available on this page). First, that from December 2008 to August 2011, an inflow of "hot money" to emerging economies resulted from low U.S., European, and Japanese interest rates. Since then, the trend has reversed in the wake of the European banking crisis and bank lending has fallen. Second, the dollar remains the widespread central bank reserve currency despite instability in the U.S. system.
McKinnon voices concern about Federal Reserve Chairman Ben Bernanke's zero interest rate policy, calling it an overreaction to the crisis and a "lose-lose" policy as it deters investment in the U.S. while simultaneously spurring destabilizing hot money flows to surrounding emerging markets. These countries are in turn forced to suppress interest rates to mitigate the inflows, and to build up dollar reserves to keep exchange rates in check. The zero interest rate policy also stimulates carry trades in commodities by speculators.
The belief that under a zero interest rate regime, inflation will stimulate the economy by bringing real interest rates to negative levels, is misplaced in McKinnon's view. He argues that this simply adds uncertainty and interferes with efficient bank intermediation, as banks hold high excess reserves and tighten lending, causing a procyclical contraction as has been seen in the United States and Europe. He contrasts this approach with China, which stabilized its economy following the “dot-com” bust by expanding rather than contracting bank credit. He criticizes U.S. pressure on China to appreciate or float its currency, asserting that these strategies would fail to reduce China's trade surplus.
McKinnon suggests that international reforms should target interest rates instead of exchange rates. He recommends coordination between central banks of the major industrialized countries, especially the United States, European countries, and Japan - to collectively raise interest rates to approximately 2%. This would improve overall bank intermediation, and would benefit both central and peripheral countries in Europe.
A question and answer session following the talked addressed topics including: the likelihood of a coordinated effort between central banks; the potential effects of Kucinich's monetary reform proposal; the potential negative effects on real growth from carry trades, and whether this is a cause for concern; and the effects of bank borrowing trends in Europe on the European monetary system.
CISAC Conference Room
Encina Hall
Stanford University
Stanford, CA 94305
Klaus Mittenzwei is an agricultural economist at the Norwegian Agricultural Economics Research Institute in Oslo, Norway. He completed his doctorate at the University of Life Sciences, Norway in 2001. His dissertation focused on the role of political institutions as a significant source for explaining agricultural policies. In a current follow-up research project funded by the Norwegian Research Council, he will analyze these findings in greater detail. Other areas of research include modeling the effects of agricultural policies on the economic, environmental and societal objectives of society. In particular, the CAPRI modeling system (covering world agricultural trade and the details of the agricultural policies in the EU-25, Norway and Turkey) is used to understand how agricultural policy reforms affect the often conflicting agricultural policy objectives like farmers’ income, productivity and public goods provided by the agricultural sector.
Synopsis:
Robin Niblett, Director of Chatham House, delivered the following talk in The Europe Center series “The European and Global Economic Crisis”.
With measured optimism about the prospect for a way out of the current Eurozone crisis, Dr. Niblett argues that the introduction of the common Euro, seen by many in past years as a vanguard tool for European integration, is now potentially a functional wedge between ‘debtor’ and strongly capitalized nations.
Dr. Niblett, arriving directly from participating in the World Economic Forum in Dubai, and based on Chatham House research, described the “perfect storm” of the past two decades of credit-driven growth, divergence within the EU, rising debt-to GDP ratios of member nations especially in the cases of Italy and Greece. His analysis combines these economic details with the following:
The totality of the above paints a grim portrait of Europe under the weight of nearly impossible conditions. And yet, Dr. Niblett underlines evidence for measured optimism:
These are the structural side of what Dr. Niblett sees as Europe’s tools for recovery.
On the side of European practice, the Franco-German proposals for European Central Bank “bailout funds” include new rules for transparency of internal government operations. This promises innovation to make the EU into an area of political and financial transparency, and to enable the EU to engage in direct investment, as evidence is beginning to show, in the world’s emerging economies. In this sense, Dr. Niblett sees for Europe a competitive edge over the US in engaging in world markets.
Perhaps most sanguine of Dr. Niblett’s analysis is his reading of the Eurozone crisis as a force to push the member nations of Europe further towards supra-national economic strategies. In order to participate in the investment in emerging markets, the Benelux countries, not to mention France, Germany, and neighboring European states, are responding to the crisis by considering policy that promotes investment and outsourcing for service-sector employment, instead of export commodities which have been undercut in recent years.
There is a risk, in Dr. Niblett’s view, that Europe will respond to the Eurozone crisis by fracturing into rival “clubs” of small and large or debt-restructuring and creditor nation-states. But the European nations, especially those currently participating in the Eurozone, have untapped capacities for growth:
Those interested in further detail and analysis are invited to visit the work and productivity at:
The Europe Center, at Stanford’s Freeman Spogli Institute for International Studies: http://tec.fsi.stanford.edu
Chatham House, at the Royal Institute for International Studies: http://www.chathamhouse.org/
Speaker bio:
Robin Niblett became the Director of Chatham House (the Royal Institute of International
Affairs) in January 2007. Before joining Chatham House, from 2001 to 2006, Dr. Niblett
was the Executive Vice President and Chief Operating Officer of Washington based
Center for Strategic & International Studies (CSIS). During his last two years at CSIS, he
also served as Director of the CSIS Europe Program and its Initiative for a Renewed
Transatlantic Partnership.
Most recently Dr. Niblett is the author of the Chatham House Report Playing to its
Strengths: Rethinking the UK’s Role in a Changing World (Chatham House, 2010) and
Ready to Lead? Rethinking America’s Role in a Changed World (Chatham House,
2009), and editor and contributing author to America and a Changed World: A Question
of Leadership (Chatham House/Wiley-Blackwell, 2010). He is also the author or
contributor to a number of CSIS reports on transatlantic relations and is contributing
author and co-editor with William Wallace of the book Rethinking European Order
(Palgrave, 2001). Dr Niblett is a frequent panellist at conferences on transatlantic
relations. He has testified on a number of occasions to the House of Commons Defence
Select Committee and Foreign Affairs Committee as well as US Senate and House
Committees on European Affairs.
Dr Niblett is a Non-Executive Director of Fidelity European Values Investment Trust. He
is a Council member of the Overseas Development Institute, a member of the World
Economic Forum’s Global Agenda Council on Global Institutional Governance and the
Chairman of the World Economic Forum's Global Agenda Council on Europe.
He received his BA in Modern Languages and MPhil and DPhil from New College,
Oxford.
CISAC Conference Room
Why did Sweden choose, in the late 1960s, to abandon its long-standing nuclear weapons plans? A number of historical investigations have analyzed some aspects of this issue, particularly as it related to the public political debate in Sweden and the formulation of the Swedish defense doctrine in the postwar years. Some studies have attempted to explicate, from a more overarching perspective, why Sweden opted not to develop anuclear weapons capability, but these efforts have generally been hampered by heavy dependence on secondary source materials consisting of published English-language works. Taken together, these studies provide a far-from-complete picture of Sweden’s historical nuclear weapons plans. The main reason for this lack of a comprehensive picture has been the paucity of primary sources. Today, however, the end of the cold war and the declassification of large parts of the relevant documentary record, especially concerning the technical preparations for nuclear weapons production, have created the prerequisites for a more penetrating analysis of this important historical issue. The purpose of this presentation is to summarize the research on Sweden’s plans to acquire nuclear weapons based on primary sources. This overarching analysis is then tested against International Relation theories which have sought to explain factors of proliferation and non-proliferation.
Thomas Jonter is Professor in International Relations at the Department of Economic History, Stockholm University. His research is focused on nuclear non-proliferation and energy security. He is also project leader for different educational and research programs in Russia with the aim to initiate academic courses and programs in nuclear non-proliferation at different universities in the regions of Tomsk and Jekaterinburg. These projects are carried out in a cooperation between Swedish Radiation Safety Authority, International Atomic Energy Agency (IAEA), James Martin Center for Nonproliferation Studies (CNS), Monterey, United States, and Stockholm International Peace Research Institute (SIPRI). Professor Jonter is also chair of the ESARDA (European Safeguards and Research Development Association) working group for Training and Knowledge Management. Currently he is a visiting scholar at The Europe Center at Freeman Spogli Institute for International Studies, Stanford University.
Audio Synopsis:
First, Professor Jonter explains that Sweden initiated nuclear weapons research in the 1950’s because of the presence of a large uranium supply, ample technological and scientific knowledge, and concerns about self-defense. He cites wide support for nuclear research during that time, including from Prime Minister Tage Erlander, the Defense Ministry, and the military. In 1945 the Swedish National Defense Research Establishment created plans for a nuclear weapons program within a civilian nuclear power program, necessitating high levels of cooperation between military and civilian entities. Despite pressure from the United States to abandon nuclear research, uranium production began in 1955 along with the construction of two reactors. Eventually, social groups within Sweden protested and a debate emerged within Parliament, resulting in a decision that Sweden would only pursue research related to self-defense against the Soviet Union. Behind the scenes, however, nuclear weapons research carried on covertly for some time. Jonter addresses questions of whether the program was really weapons-based or simply scientific research, how the debates in Sweden were influenced by criticisms at home and abroad, the role of private investors in the Swedish nuclear research program, and the factors that ultimately allowed Sweden to publicly back away from a weapons program.
Professor Jonter then examines implications for the international system by analyzing the Swedish nuclear case in light of several international relations theories. He also considers the argument that "outward looking" states which are active in international trade are less likely to develop nuclear weapons. Jonter asserts that research on this topic would benefit from more historical analysis of primary resources, although the secret nature of nuclear records make them difficult to access.
A question and answer period following the presentation addressed such issues as: How does the Swedish case study compare with the Danish case? Did the Swedish government tie its hands with a public decision not to pursue weapons development? Is there evidence of Sweden having to balance nuclear weapons research with other military expenses? Why did the government switch from high levels of secrecy about the nuclear program decisions to a policy of openness and public discussion?
CISAC Conference Room
Department of Economic History
Stockholm University
SE-106 91 Stockholm
Sweden
Thomas Jonter is Professor in International Relations at the Department of Economic History, Stockholm University. His research is focused on nuclear non-proliferation and energy security. He is also project leader for different educational and research programs in Russia with the aim to initiate academic courses and programs in nuclear non-proliferation at different universities in the regions of Tomsk and Jekaterinburg. These projects are carried out in a cooperation between Swedish Radiation Safety Authority, International Atomic Energy Agency (IAEA), James Martin Center for Nonproliferation Studies (CNS), Monterey, United States, and Stockholm International Peace Research Institute (SIPRI). Professor Jonter is also chair of the ESARDA (European Safeguards and Research Development Association) working group for Training and Knowledge Management. Currently he is a visiting scholar at The Europe Center at Freeman Spogli Institute for International Studies, Stanford University.
The number one topic around the globe has been the world after Bin Laden and the appropriate ways for democracies to dispose of terrorists. From Washington, to Brussels, to Tel Aviv and Islamabad, pundits and average citizens have weighed in on the debate.
Sweden’s contribution to the question of how to deal with terrorism was to provide a welcome mat - in the form of a taxpayer-funded lecture tour - for the notorious Popular Front for the Liberation of Palestine (PFLP) airplane hijacker, Leila Khaled.
Khaled literally burst onto the world scene in 1969 when she boarded TWA’s flight 840 in Rome with hand grenades taped around her waist. She stormed the cockpit, declaring she belonged to the Che Guevara Commando Unit of the Marxist-Leninist PFLP. Terrified passengers were held hostage and only released after Israel agreed to free Palestinian prisoners held in Israeli prisons. One year later, she masterminded a new brutal hijacking after undergoing plastic surgery to conceal her identity.
In 2002, in the wake of the 9/11 attacks, The European Union through its European Council decided to include the PFLP on its list of terrorist groups.
The people of Israel are all too familiar with the savagery of the PFLP. It took responsibility for the 2001 assassination of Tourism Minister, Rehavam Zeevi. On Friday night, March 11th 2011, two PFLP members butchered the Fogel family in Itamar, including four-and eleven-year-old children and a three-month infant.
Ms. Khaled sits on the PFLP Central Committee and has not expressed regret for her involvement in terrorism. Because of her history of aiding and abetting terrorism, a police complaint was recently issued against her in Sweden for gross violations of international law.
But that came too late. During her tax-payer funded visit to Sweden, Khaled spoke at the May Day demonstrations of the Stalinist Swedish Communist Party and the Anarcho-syndicalist Trade Union Federation. She held publicly funded lectures at an Art Gallery and spoke on developments in the Middle East at the publicly- funded Södertörn
University College.
Incredibly, Khaled also participated at a seminar on political activism arranged by the Left Party represented in Sweden’s Parliament.
The organizers of her appearances had nothing but praise for the PFLP leader. Anna Ahlstrand, Project Manager at Konsthall C, which is funded by the government’s Arts Grant Committee, declared “she is an icon for many people”. Jonatan Habib Engqvist, Project Manager at the Governmental Arts Grants Committee that financed her tour described the arch terrorist as “a very established feminist thinker.”
Irresponsible behavior
Unfortunately, Leila Khaled isn’t the first member of a Palestinian terrorist group to get special treatment from Stockholm. In 2006, the Swedish consulate in Jerusalem, in contravention of EU regulations, granted a Schengen visa to Hamas’ Minister of Refugees, Atef Adwan. Such a visa makes it possible for the bearer to travel across 15 European Countries. That decision provoked protests from Israel, which said it lent legitimacy to Hamas, and from France, which had rejected earlier visa requests by Hamas leaders.
So far Sweden’s decision to grant entry to Khaled – a leading representative of an organization deemed a terrorist group by more than 30 countries, including Sweden, all EU Member States and the United States – hasn’t spurred protest from the US or other
European countries.
But the decision to allow her into Sweden could have broader consequences. It comes at a time when many European nations want to take back direct control of their national frontiers. Indeed, the European Commission is currently debating the re-imposition of border controls within the so-called Schengen region.
Leila Khalid’s taxpayer-funded trip comes even as Swedish authorities continue to turn a deaf ear to repeated calls from the Jewish Community and the Simon Wiesenthal Center to fund security for Jewish institutions facing increasing anti-Semitism and global Islamist threats.
The irresponsible behavior of Swedish authorities will likely doom any future role in Israeli-Palestinian negotiations. Back in 2000, following a more even-handed Middle East policy under then Swedish PM Goran Persson, Stockholm did help facilitate Israeli Palestinian negotiations.
According to leaked WikiLeaks reports, Carl Bildt, the current Foreign Minister is characterized, as a “medium size dog with big dog attitude.” But his government hasn’t even bothered to present a veneer of neutrality when it comes to the Holy Land, as evidenced by the fact that not a single minister visited Israel during the Swedish EU Presidency.
On the Iranian front, Bildt distinguished himself as one of the EU leaders most opposed to increased sanctions against Tehran. The very same diplomat rushed to Istanbul in June 2010 to personally greet and have his picture taken with Swedish participants in the infamous Turkish Gaza Flotilla.
If Sweden is serious about opposing terrorism and promoting Mideast peace, it must reveal the circumstances behind Leila Khalid’s entry and departure from Swedish and EU Territory and who approved the allocation of taxpayers’ funds for a woman who stands for everything Osama Bin Laden lived and died for.
About the speaker:
Dr. Franz Cede is a retired Austrian diplomat who served as the Austrian Ambassador to Russia (1999-2003) and to NATO (2003-2007). He also was the Legal Advisor to the Austrian Foreign Ministry. He has a strong California connection dating back to the time when he was the Austrian Consul General in Los Angeles 20 years ago. Dr Cede holds the degree "Doctor of Law" from Innsbruck University. He received an M.A. in international affairs from the School of Advanced International Studies (SAIS) in Washington, D.C., and is currently an associate professor at the Andrassy University in Budapest, Hungary. Dr. Cede has published several books and articles in the field of international relations, international law and diplomacy.
Jointly sponsored by The Europe Center at the Freeman Spogli Institute for International Studies, and the Center for Russian, East European and Eurasian Studies.
Audio Synopsis:
In this talk, Dr. Cede details his views on Russia's evolving relationships with the EU, NATO, and the US, drawing on his experiences as Austrian ambassador to the Soviet Union from1999 to 2003. Cede first outlines his perceptions of present-day Russia-US and Russia-NATO relations. Russia, he explains, still thinks in Cold War terms of bilateral relations and considers the United States to be its primary strategic partner on global security issues, especially in light of the Obama administration's recent "reset" of relations and ratification of the new START treaty. In contrast, Russia views NATO as outdated and yet still a threat. Its expansion to the East is viewed with suspicion by Putin's administration, which considers these developments to be distinctly anti-Russian. Russia engages with NATO only to the extent that it believes it can influence the organization's behavior and policies toward Moscow. Still, in Cede's experience, the NATO-US-Russia triangle continues to be at the forefront of Russian policymakers' dialogue. Russian leaders prefer to avoid dealing with the EU because it lacks a coherent foreign policy, and also because Russia prefers bilateral relations with countries that offer a strategic benefit. Dr. Cede quotes Timothy Garton Ash, who wrote in a recent op-ed that "much of the Russian foreign policy elite treats the European Union as a kind of transient, post-modern late 20th century anachronism: flawed in principle, and feeble in practice. What matters in the 21st century, as much as it did in the 19th century, is the...determination of great powers." Dr. Cede cites the Georgian military intervention and recent Ukrainian gas crisis as examples of Russia's renewed attempts to reestablish dominance in its neighborhood.
In the second portion of his talk Dr. Cede traces the evolution of Russian views of the EU and NATO. Ten years ago, the EU-Russia relationship was largely ignored in the Russian media. When Cede asked Russian citizens for their views on the EU, they "either didn't know or didn't care." As Ambassador, Dr. Cede found Russian officials better informed, but disdainful of being given orders by EU donors and "treated like a developing country." Cede illustrates this dynamic by recounting the 2004 incident in which the EU forced the residents of Russia's Kaliningrad Oblast region to apply for EU Shengen visas, which then required special permits to travel throughout Russia. Western assurances that EU expansion to the east was not an attack on Russia but rather an attempt to extend stability to the Eastern bloc fell on deaf ears. Cede believes that notwithstanding Russia's attitude, the country is too big to ever join the EU, or to be influenced by Europe in its policy decisions. Because Russia still views itself as "one of the poles in a multipolar world," Dr. Cede insists that any change must come from within the country. However, Cede views Russia's candidacy to the WTO, which would require a clearer commitment to democracy and open economic policies, as a glimmer of hope.
Finally, Dr. Cede outlines several "permanent" features of Russia's relationship with the world, including economic interdependence, lack of cooperation on security policy, and weak relations with stateless organizations like the EU and NATO. He lays out several recommendations, which are elaborated on during the Q&A session:
Reuben W. Hills Conference Room
