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October 26, 2017

On Germany‘s confused foreign policy

in an essay in Die Zeit, Jorg Lau and Bernd Ulrich give an excellent overview of the multiple delusions in German foreign policy. Germany has been benefiting from the US security umbrella, both as a guarantor of global democracy and global stability. This umbrella has obviated the need for a German strategic foreign policy. The authors argue that strategic thinking in German foreign policy circles is completely absent. We would agree. German foreign policy discussions are always about relationships, not about interests.

We have made the argument before that the idea of Angela Merkel as the leader of the western world is utterly ridiculous. We see this as an outcry of wounded soft-headed liberals who couldn‘t get over the fact that Donald Trump won the US presidency. The key point the authors are making is the delusion that the problems will go away by themselves, that Trump is some kind of aberration.

The authors recall the serial misjudgements of the German transatlantic establishment. First they were confident that the Republicans would never nominate Trump. That gave way to the certainty that he could never be elected president. The next misjudgement was that he would change once in office. The state-of-the-union speech ended that illusion. Then came the hope that what they called the "adults“ in the Trump administration would run policy. 

"The Atlantic community is now down to its last hope: that the Trump phenomenon is a temporary aberration. There’s not much to support this because Barack Obama had already begun to withdraw from the conflicts involving Europe’s neighbors. He saddled Merkel with the Ukraine crisis. In the Middle East, he did as little as possible (which allowed the Russians to penetrate.) He also left the EU alone with the refugee crisis, which was a result, not least, of the chaotic U.S. policy in the Middle East."

So this leaves Germany in a position where it can no longer rely on the US for its security, nor is it in a position to replace the US. Where the article falls short is a strategic answer to the dilemma. There is no mention of the role of the EU, but we see no possibility - or desirability - that Germany on its own will be in a position to provide a solution.

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October 26, 2017

On why globalisation is failing

We believe the debate among the left about the role of the nation state is hugely important - which is why we have devoted a couple of news items to this issue. For one thing, it explains the rise of the anti-European left in the UK, a phenomenon that was massively underestimated by journalists and political observers who dismissed Jeremy Corbyn as merely a blast from the past. The anti-European arguments of the British left in the 1970s have returned with renewed force because of serious ill-effects of globalisation and European integration. While we have strong disagreements with the Left, we also have been critics of the eurozone governance arrangements since the beginning of the monetary union - and we are not surprised to see that the failure to provide a political dimension to the monetary union is resulting in a wider backlash that is only now just starting. The argument in the UK is, of course, not about monetary union, but about trade and regulation.

In this context we find the following new article by Dani Rodrik most illuminating. This is not an ideological criticism of globalisation, but an argument that globalisation has produced real losers, who are now starting to look after their own interests. Rodrik is not opposed to the idea of globalisation, but to unbalanced globalisation, one that prioritises freedom of capital over freedom of workers. Here is what we see as his key proposal of how to fix globalisation:

"In practical terms, this requires reconsidering which multilateral institutions set the agenda of the global conversation, and who sits at the bargaining table when trade agreements are negotiated. Giving labor a bigger say would not necessarily produce greater worker mobility across borders; workers in advanced and poor nations have conflicting interests. But it might at least lead to the rejection of the current norm in which capital is globally mobile while labor is not. I believe this norm should be replaced by the idea that capital and labor mobility must go hand-in-hand, with the degree of overall mobility determined by other policy considerations. At present capital is too mobile, while labor is not nearly as mobile as it should be. So such a rebalancing would be a good thing – and for efficiency as well as distributional reasons.“

This is a constructive argument, but it is worth pondering the consequences of persistent failure to fix the problem, which we believe is going to be a more likely outcome than the solution that Rodrik advocates. The eurozone has taught us that governments have a tendency to prefer procrastination over solutions - and rebalancing of the global trading system is likely to be even more difficult than changes in the governance of a monetary union. A far more likely development is a Hegelian political process as part of which the current regime is successfully challenged from the Left (Corbyn, Sanders) and the right (Trump, Orban). What the two have in common is the renationalisation of politics. We believe that this is going to be the next big trend in global politics. We are not optimistic that this solves any of the problems, and may create many new ones, but at least it means a strengthening of democratic control, which has weakened in the age of supranational institutions, global trade agreements, and monetary unions. Rodrik‘s notion of a balanced form of globalisation will ultimately win out - but not before we have tried everything else.

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