Humanitarian challenges in North Korea

Posted in Nathaniel Haas - June 17, 2019 - 0 Comment

June 11 the Cato Institute hosted an event on North Korea giving a humanitarian perspective from individuals who have worked in North Korea. The panel featured Heidi Linton, Executive Director of Christian Friends of Korea, Randall Spadoni, North Korea Program Director for World Vision, and Daniel Jasper, Public Education and Advocacy Coordinator for Asia for the American Friends Service Committee (AFSC). The panel was moderated by Doug Brandow, a senior fellow at Cato.

Jasper gave an overview of the AFSC’s 66-year effort in North Korea since the organization first answered calls for NGOs to help with reconstruction in 1953, shortly after the cease-fire was agreed upon. Jasper said food security is integral to the current conflict, but sanctions put in place to pressure North Korea restrain humanitarian missions. Travel is disrupted and organizations need to apply for special waivers, which are costly and take up to several months to receive. More than ten million North Koreans are estimated to be food insecure. Jasper also touched on cultural exchanges, reuniting families, and returning the remains of fallen soldiers from the Korean war as efforts that can help build bridges and improve relations without much cost. AFSC recommends removing travel restrictions, adhering to humanitarian exemption clauses, and seeing humanitarian issues as bridges instead of a stick.

Heidi Linton shared personal stories from her recent trip to North Korea with the Christian Friends of Korea, during which she helped set up a hepatitis-B clinic and treat over 360 patients. She too emphasized the unintended consequences of sanctions on ordinary civilians. Last fall’s flooding caused widespread infrastructure damage. Replacement parts for construction and farm equipment are limited due to sanctions. Linton said the US has the capability to help the suffering population through humanitarian missions and show North Koreans that America has good intentions.

Randall Spandoni’s work in North Korea focuses on disaster relief and providing clean water to North Korea’s population, of which 40% does not have regular access to clean water. By building water wells, time is freed up for individuals to work on trade or business and spend time with their families. The health implications of access to clean water are significant. Spandoni echoed his fellow panel members’ view that sanctions and import restrictions hamper NGO humanitarian efforts in North Korea, saying his organization’s latest shipment of well-building equipment took 1.5 years to approve.

Asked in what way the missions have been hampered or restricted by the North Korean government, Linton said that everything done in North Korea is managed by North Korean counterparts and that trust and freedom to act have been built slowly over the past decades. Spandoni added that the general lack of trust makes everything take longer than it would elsewhere. “The bureaucratic system in North Korea is just not structured well to receive aid,” Spandoni noted, adding that the US also imposes many hurdles.

Asked to what extent the aging infrastructure and lack of services is due to capacity issues and to what extent the government just prioritizes other projects, no one on the panel had a clear answer, but Linton restated that the lack of resources, money, and general know-how definitely play into it.

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Paying later will cost even more

Posted in Daniel Serwer - June 17, 2019 - 5 Comments

I spent last week in Kosovo, where the presidency hosted Bill Clinton and Madeleine Albright for a celebration of the country’s liberation by NATO forces 20 years ago. For the 90% of the population that is Albanian, half of whom were expelled in 1998 and 1999, the NATO deployment was a source of great joy, enabling them to return en masse. For Serbs and Roma, the moment was terrifying, as some returning Albanians sought revenge on them for Serbian President Milosevic’s depredations.

The main event last week consisted of speeches in the main square, followed by lunch in the fine Swiss Diamond Hotel and a stroll down Mother Teresa Street to dedicate a bust of former Secretary of State Albright, followed by a motorcade to a statue of former President Clinton. I skipped the Clinton statue, as it was beastly hot and sunny, and I needed to prepare for the evening’s conference on Balkans security 20 years after the NATO/Serbia war.

The Kosovars were out in force for the stroll, anxious to show their affections for the United States. American flags were at least as apparent as Kosovo flags, and chants of “USA” broke out with enthusiasm. President Clinton enjoys pressing the flesh and did it with a big smile on his face. Kosovo President Thaci got far less attention and a few boos. Secretary Albright was in good spirits I knew from a chat we had getting off the plane from Munich, but to tell the truth I rarely caught a glimpse of her short stature during the celebration due to the surrounding crowd.

The mood in Pristina these days is anxious. Talks with Belgrade have been going nowhere. European Union member countries, especially France, have been trying to slow progress towards any further enlargement in the Balkans. Montenegro is too small and too far advanced in accession negotiations to stop, I think, but the consensus needed to open accession talks with Macedonia is not solid. Albania is likely blocked for now. Europe’s hesitation darkens the mood throughout the Balkans and perhaps especially in Kosovo, where NATO and EU membership are the country’s strategic goals.

Reaching them is far off. Kosovo legislation must be compatible with EU requirements, but implementation often lags and EU responsiveness is declining. Even after fulfilling elaborate requirements, Kosovo has not been given the EU visa waiver it was promised. President Thaci and Prime Minister Haradinaj, both products of the wartime Kosovo Liberation Army, are at odds, mainly over how to approach “normalization” with Belgrade. Thaci had indicated he was ready to exchange some Serb-populated territory for Albanian-populated territory in Serbia, but that deal has evaporated under examination by critics (including me). Haradinaj opposed Thaci’s unconsummated deal and has imposed tariffs on Serbian goods imported into Kosovo, stalling the talks with Belgrade. Meanwhile, governance in Kosovo is lamentably corrupt and young people are leaving (as they are from most other countries in the Balkans).

So the celebration of NATO liberation was happy, but Kosovo is not. I was stopped in the street one night by three strangers, two brothers and a cousin, and asked to chat with them in a cafe. They lamented the current situation and tried to convince me that all Kosovo’s ills would be solved by union with Albania. They were uninterested in my questioning whether they would be happy to be governed from Tirana, whose politics are even more contentious than Pristina’s. Nor did they want to discuss my suggestion that neither Kosovo’s politicians nor Albania’s were likely to agree to move their capital. They were content with the notion that Serbs would need to move out of Kosovo if Greater Albania comes into existence.

I am not. There is no reason why, if governed fairly, Serbs and Albanians can’t both enjoy a future in Kosovo. But the current international mood–ethnic nationalism and xenophobia–piled on top of Kosovo’s history of the same is making a liberal democratic outcome there and in the rest of the Balkans less likely than at any time during the past 25 years. Europe and America need to find a way of renewing their promises or face the loss of the statebuilding projects in Kosovo as well as in Bosnia and Herzegovina on which they have spent a good deal of time, money, and effort. Their collapse will certainly cost a great deal more.

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Peace Picks June 17-23

Posted in Nathaniel Haas - June 16, 2019 - 0 Comment

1. Transatlantic Cooperation in an Era of Crisis and Competition|June 17|3:15pm-5:00pm|Hudson Institute|1201 Pennsylvania Ave NW, Suite 400, Washington, DC 20004|Register Here

Hudson Institute will host distinguished scholars from France’s Institut Montaigne for a discussion on transatlantic relations. Founded in 2000, Institut Montaigne is a pioneering independent think tank dedicated to public policy in France and Europe. Panelists will include Michel Duclos, special advisor on Geopolitics at Institut Montaigne and former French Ambassador to Syria and Switzerland; and François Godement, senior advisor for Asia at Institut Montaigne.

Against a backdrop of surging populism in democracies and rising authoritarianism worldwide, Europe finds itself at the center of a return to great power rivalry between China and the United States. Disputes over trade and security are straining longstanding areas of cooperation even as global power centers shift and new partnerships beckon. How should policymakers in Washington, Brussels, and capitals across Europe respond to these challenges? What is the future of the transatlantic relationship in a rapidly changing world?

Speakers:

Michel Duclos, Special Advisor, Geopolitics, Institut Montaigne and former French Ambassador to Syria and Switzerland

François Godement, Senior Advisor for Asia, Institut Montaigne

Ben Judah, Research Fellow, Hudson Institute

Peter Rough, Fellow, Hudson Institute

Ken Weinstein, President and CEO, Hudson Institute

2. South Sudan’s Stalled Path to Peace|June 18|9:30am-11:30am|United States Institute of Peace|2301 Constitution Ave NW, Washington, DC 20037|Register Here

In early May, South Sudan’s ruling and opposition parties agreed to extend the pre-transitional period of the South Sudan peace agreement leading to the formation of a unified Government for an additional six months. The extension of this period presents an opportunity to reflect on the progress and challenges to establishing a just peace in the country. South Sudanese citizens are desperate for peace, but many are asking what channels exist to support a meaningful reduction of violence. Between January and March alone, 25,000 people fled the country, adding to the already two million South Sudanese refugees worldwide. Without full implementation of the peace process, national- and local-level conflicts will continue to threaten hard-won development gains and require greater investments in lifesaving humanitarian aid.

Please join USIP for a look at South Sudan’s peace agreement and the measures required to build peace in the young nation. In this live-streamed discussion, experts from USIP, the Enough Project, and Democracy International will offer concrete, evidence-based recommendations for how to mitigate conflict, promote peace and advance accountability.

Speakers

David Acuoth, Founder, Council on South Sudanese-American Relations

Brian Adeba, Deputy Director of Policy, Enough Project, @kalamashaka

Mark Ferullo, Senior Advisor, The Sentry

Morgan Simpson, Deputy Director of Programs, Democracy International

Susan Stigant, Director of Africa Programs, U.S. Institute of Peace, @SusanStigant

3. Is the US Decoupling from Asia’s Economic Architecture|June 19|9:00am-1:30pm|Center for Strategic and International Studies|1616 Rhode Island Ave NW, Washington, DC 20036|Register Here

The CSIS Japan Chair, the CSIS Simon Chair, and JETRO cordially invite you to join us for the annual CSIS-JETRO conference.

9:00-9:05        Welcoming Remarks
John J. Hamre, President and CEO, CSIS
9:05-9:35        Opening Remarks (TBD) 
9:35-10:00      Keynote Address
 Nobuhiko Sasaki, Chairman and CEO, Japan External Trade Organization (JETRO)
10:00-11:15     Regional Perspectives on Indo-Pacific Economic Integration
China:
Xinquan Tu, Dean and Professor, Center for WTO Studies, University of
International Business & Economics, Beijing
Japan:
Yasuyuki Todo, Professor, Graduate School of Economics, Waseda, University
ASEAN:
Deborah Elms, Founder and Executive Director, Asian Trade Centre,Singapore
Moderator: Matthew P. Goodman, Senior Vice President; William E. Simon Chair in Political Economy and Senior Adviser for Asian Economics, CSIS
11:15-11:30   Break
11:30-12:30   Status and Impact of U.S. Trade Policy
Charles Freeman, Senior Vice President for Asia, U.S. Chamber of Commerce
Lorraine Hawley, Senior Director, International Government Relations,Archer Daniels Midland Company
Aaron Cooper, Vice President, Global Policy, BSA | The Software Alliance  
Moderator:
Michael J. Green, Senior Vice President for Asia and Japan Chair, CSIS;Director of Asian Studies, Edmund A. Walsh School of Foreign Service,Georgetown University
12:30-13:30   Luncheon Address (TBD)                       

13:30              Adjourn

4. 2019 Atlantic Council-East Asia Foundation Strategic Dialogue|June 19|9:30am|Atlantic Council|1030 15thSt NW, 12thFloor, Washington, DC 20005|Register Here

Please join the Atlantic Council’s Asia Security Initiative, housed within the Scowcroft Center for Strategy and Security, for the 2019 Atlantic Council-East Asia Foundation Strategic Dialogue. This day-long conference will explore the current state of the United States and Republic of Korea’s ongoing negotiations with North Korea and the broader strategic picture developing in the Indo-Pacific. The Strategic Dialogue will feature keynote addresses by US Special Representative for North Korea Stephen Biegun and ROK Special Representative for Korean Peninsula Peace and Security Affairs Do-hoon Lee. This will be H.E. Lee’s first public address in the United States, as well as the first time both Special Representatives will speak on the same stage.

One year ago, President Donald Trump and Chairman Kim Jong-un met in Singapore for an unprecedented, historic summit that concluded with a promise to deliver lasting peace to a denuclearized Korean peninsula. Today, the question remains: will this promised future become a reality? Will the coming months see a continued stalemate in negotiations, a major crisis, or a dramatic breakthrough? Ultimately, how will developments on the peninsula shape the Republic of Korea’s role in the broader Indo-Pacific under intensifying US-China strategic competition?

Breakfast and lunch will be provided.

Agenda:

WELCOME REMARKS (9:30 a.m. – 9:50 a.m.)

Mr. Barry Pavel, Senior Vice President, Arnold Kanter Chair, and Director,Scowcroft Center for Strategy and Security, Atlantic Council

Minister Sung-hwan Kim, Former Minister of Foreign Affairs and Trade, Republic of Korea; Board Member, East Asia Foundation

KEYNOTE REMARKS (9:50 a.m. – 10:50 a.m.)

The Hon. Stephen Biegun, US Special Representative for North Korea,US Department of State

H.E. Do-hoon Lee, ROK Special Representative for Korean PeninsulaPeace and Security Affairs,ROK Ministry of Foreign Affairs

PANEL DISCUSSION: SEEKING A POST-HANOI BREAKTHROUGH ON THE KOREAN PENINSULA(11:00 a.m. – 12:30 p.m.)

Dr. Toby Dalton, Co-Director, Nuclear Policy Program,Carnegie Endowment for International Peace

H.E. Jong-dae Kim, Member, 20th National Assembly; Head of the Foreign Affairs and Security Division;Member of the National Assembly’s National Defense Committee;Head of the Foreign Affairs and Security Division; Member, Justice Party

H.E. Jae-jung Lee, Member, 20th National Assembly; Spokesperson, Democratic Party of Korea

Amb. Joseph Yun, Former US Special Representative for North Korea Policy, US Department of State; Senior Adviser, Asia Program, United States Institute of Peace

Mr. Barry Pavel (Moderator), Senior Vice President, Arnold Kanter Chair, and Director,Scowcroft Center for Strategy and Security, Atlantic Council

LUNCH CONVERSATION (1:00 p.m. – 1:45 p.m.)

Amb. Paula J. Dobriansky, Former US Under Secretary of State; Senior Fellow, The Future of Diplomacy Project, JFK Belfer Center for Science and International Affairs, Harvard University

Dr. Chung-in Moon, Special Adviser to the President for Unification, Foreign, and National Security Affairs, Republic of Korea

PANEL DISCUSSION: CHARTING KOREA’S ROLE IN US-CHINA STRATEGIC COMPETITION IN THE INDO-PACIFIC(2:00 p.m. – 3:30 p.m.)

The Hon. Ami Bera, US House of Representatives (D-CA); Chair, Subcommittee on Oversight and Investigations, House Foreign Affairs Committee; Co-Chair, Congressional Caucus on Korea

H.E. Ihk-pyo Hong, Member, 20th National Assembly; Vice Chairman of the National Assembly’s Public Administration and Security Committee; Chief Spokesman, Democratic Party of Korea

Prof. Jaeho Hwang, Director of Global Security Cooperation Center, Hankuk University of Foreign Studies

H.E. Sun-suk Park, Member, 20th National Assembly; Member, National Assembly’s Science, ICT, Future Planning, and Communications Committee,Member, Bareunmirae Party

The Hon. Ted S. Yoho DVM, US House of Representatives (R-FL), Lead Republican, Subcommittee on Asia, The Pacific, and Nonproliferation; Member, Subcommittee on Western Hemisphere, Civilian Security, and Trade, House Foreign Affairs Committee 

Dr. Miyeon Oh (Moderator), Director and Senior Fellow, Asia Security Initiative,Scowcroft Center for Strategy and Security, Atlantic Council

CLOSING REMARKS (3:30 p.m. – 3:45 p.m.)

Mr. Barry Pavel, Senior Vice President, Arnold Kanter Chair, and Director, Scowcroft Center for Strategy and Security, Atlantic Council

5. Sixth Annual Building a Competitive U.S.-Mexico Border Conference|June 20|8:30am-4:30pm|Woodrow Wilson Center|1300 Pennsylvania Ave NW, Washington, DC 20004|Register Here

The Wilson Center’s Mexico Institute and the Border Trade Alliance invite you to save the date for our sixth annual high-level “Building a Competitive U.S.-Mexico Border” conference, which will focus on improving border management in order to strengthen the competitiveness of both the United States and Mexico. Topics covered at the conference will include the USMCA (the renegotiated NAFTA), strengthening security and efficiency at border ports of entry, the impact of tariffs and reduced staffing on trade, and growing crossborder cooperation for regional economic development.

Confirmed Speakers*

Senator John Cornyn (R-TX)

Congressman Will Hurd (R-TX 23)
Ambassador Martha Bárcena, Ambassador of Mexico to the United States

C.J. Mahoney, Deputy United States Trade Representative 

John Sanders, Acting Commissioner, U.S. Customs and Border Protection

Gustavo de la Fuente, Executive Director, Smart Border Coalition

Lance Jungmeyer, President, Fresh Produce Association of the Americas

Mario Lozoya, Executive Director, Greater Brownsville Incentives Corporation

Federico Schaffler, Director, Texas Center for Border Economic Enterprise Development, Texas A&M International University

Christopher Wilson, Deputy Director, Mexico Institute, Wilson Center

Britton Clarke, President, Border Trade Alliance

6. Russian Influence in Venezuela: What Should the United States Do?|June 20|9:00am|Atlantic Council|1030 15thSt NW, 12thFloor, Washington, DC 20005|Register Here

As a wave of public support for democratic transition is sweeping Venezuela and the international community, Moscow continues to stand by Nicolás Maduro. Displays of military force, Rosneft’s ownership of 49.9 percent of CITGO shares, and billions in loans to Maduro, showcase Russia’s rooted geopolitical and economic interests in Venezuela and the hemisphere.

What drives Russian support for Maduro? What is its role in the unfolding humanitarian, economic, and political crisis? How can the United States counter Russian involvement in Venezuela?

Join the Atlantic Council’s Adrienne Arsht Latin America Center and Eurasia Center on Thursday, June 20, 2019 from 9:00 to 10:30 a.m. for a public event that will discuss the extent of Russian involvement in Venezuela, Moscow’s motivations and possible next moves, and how the United States should react.

Breakfast will be provided.

Speakers to be announced.

7. The Global Peace Index 2019 Launch|June 20|9:00am-10:30am|Center for Strategic and International Studies|1616 Rhode Island Ave NW, Washington, DC 20036|Register Here

The Human Rights Initiative of CSIS invites you to a public launch event of the 2019 Global Peace Index (GPI). The Global Peace Index is the world’s leading measure of global peacefulness, ranking 163 countries and territories according to their level of relative peacefulness. Created by the Institute for Economics and Peace, the report presents the most comprehensive data-driven analysis to-date on trends in peace and its economic value.

The report findings will be followed by a panel discussion considering the implications of closing civic space and inequality for peace. It will look particularly at the factors that IEP has found to be necessary preconditions for peace in its Positive Peace Report, many of which rely on an active civil society and limits on inequality.

This event is made possible by the Institute of Economics and Peace (IEP).

Featuring:

Stephen Lennon, Senior Policy Adviser to USAID’s bureau of Democracy Conflict and Humanitarian Affairs (DCHA)

Shannon Green,Senior Director of Programs at the Center for Civilians in Conflict (CIVIC)

Jonathan Drimmer, Senior Adviser at Business for Social Responsibility (BSR)

Laurie Smolenski, Outreach and Development Officer, Institute for Economics and Peace (IEP)

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Your Saturday video

Posted in Daniel Serwer - June 15, 2019 - 1 Comment

President Trump this week reached a new low saying that he would take dirt on an electoral opponent from a foreign government. I found this video a particularly good treatment of the legal and moral issues this presidential commitment to collusion raises:

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20 years on

Posted in Daniel Serwer - June 12, 2019 - 2 Comments

I spoke today at a conference in Pristina commenmorating the 20th anniversary of the NATO deployment in Kosovo. These were my speaking notes, but time restriction meant I started around point 11.

I underlined in addition that solid US/EU agreement is vital to getting things done in the Balkans. It does not exist for swapping people and territory on an ethnic basis, as the Americans have said they would entertain the idea but Germany and the UK have ruled it out.

  1. It is a pleasure to be back in Pristina, a city I have known since it was under Serb control.
  2. Whatever your preoccupations today—and I know they are many—let me assure you that this is a far more lively, free, interesting, youthful, and energetic place than it was in 1998.
  3. The Kosovo state that exists today is a product of an amazing, unlikely, and entirely unpredictable series of events. In addition to Kosovo’s own hard work, it involved
    • Albanian nonviolent and violent rebellion,
    • Serbian repression,
    • the dissolution of socialist Yugoslavia,
    • state collapse in Albania,
    • NATO intervention,
    • U.S. and EU support,
    • Russian weakness, and
    • ample international assistance and UN administration.
  4. Without one or another of these ingredients, it might never have occurred, and certainly not in the surprising way that it did.
  5. I underline this point for a reason: those who think they can predict the future of Kosovo, or of the region, are unlikely to be correct. That includes me.
  6. But I do think that we can hope to identify some factors that will either contribute to or detract from regional stability and sustainable peace.
  7. The Prespa agreement, for example, clearly improved regional stability, as it ended any prospect of partition there and opened the door to NATO membership for North Macedonia.
  8. I think normalization of relations between Pristina and Belgrade is the next important step towards sustainable peace.
  9. But like the Prespa agreement it needs to be done in a way that respects regional requirements, not only the desires of Belgrade and Pristina.
  10. This is one of many reasons why I believe all transfers of territory, except those technically required in the border demarcation process, need to be ruled out.
  11. Exchange of people and territory on an ethnic basis would not only demonstrate that neither Pristina nor Belgrade is able to treat all its citizens correctly. It would also destabilize Bosnia as well as Georgia, Moldova, and Ukraine. Only President Putin could welcome such a move.
  12. Land swaps would even cast doubt on the future of the Serbs south of the Ibar River and of remaining Albanians in southern Serbia.
  13. None of us should want to take such risks.
  14. So what is the alternative?
  15. First, Kosovars need to be patient. Pristina’s leverage will increase as Belgrade approaches EU accession. To get a good deal, you need to be able and willing to walk away from a bad one.
  16. But you also need to be prepared to put something on the table that Belgrade finds attractive. I’ve made several suggestions: limits on the capabilities of the Kosovo army, enhanced protection for Serb sites south of the Ibar, implementation of an Association of Serb Municipalities consistent with the Kosovo Constitutional Court decision.
  17. You also need to get the Pristina/Belgrade dialogue restarted, because the Americans and Europeans want it and you need it.  
  18. Here I am going to offend, in a single sentence, both your President and your Prime Minister: you need to forget about ethnic territorial division and get rid of the tariffs on Serbian goods.
  19. To your President I say this: Vucic cannot give you what you want in southern Serbia and you cannot give him what he wants in northern Kosovo. Neither parliament nor a referendum in either country will approve such a deal.
  20. To your Prime Minister I say this: the tariffs have succeeded in getting you back into the dialogue, but now you should stand on the well-crafted Platform that the political parties have generated. The tariffs have served your purpose and need at least to be suspended.
  21. But you should expect something in return: the EU should implement the visa waiver and the Serbs should end their campaign against Kosovo membership in international organizations. CEFTA should open a serious discussion of Kosovo’s concerns with trade barriers in Serbia.
  22. A mini-package of that sort could restart the dialogue on a more realistic basis, which means ending the discussion of territory but beginning the process of demarcating the border.
  23. A final appeal: you are going to need the Americans to cut a deal with the Russians for your UN membership, a deal that may involve serious sacrifice on the part of Washington.
  24. The Americans will only be ready and willing if you can carry over the incredibly friendly spirit of these two days celebrating the NATO deployment in Kosovo to the dialogue.
  25. That is one more reason for ending talk of ethnic division and tariffs and thereby making sure that the Americans will be ready to do whatever is necessary to ensure your UN membership.  
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Too big to fail or bail

Posted in Nathaniel Haas - June 10, 2019 - 0 Comment

On June 4 the American Enterprise Institute hosted a panel discussion titled “Europe’s Populist and Brexit Economic Challenge” moderated by Alex J. Pollock of the R Street Institute and featuring Lorenzi Forni (Prometeia Associazione), Vitor Gaspar (International Monetary Fund), Desmond Lachman (AEI) and Athanasios Orphanides (MIT). The panel discussion was centered around Italy’s rising populism and economic woes, with a short discussion about the possibility of a no-deal Brexit causing damage to the European economy.

Gaspar showed that only 24% Europeans polled believe in the political system at both the national level and at the European level, while 38% of people said neither works. Voter turnout in both national and European parliament elections is going down, while the share of votes going to populist parties has increased. The mainstream parties are losing votes. In 2019 there was almost a 50/50 split between votes for populist parties and those for establishment parties. With parliament more fragmented than ever, coalitions of at least 4 parties are needed to get a majority, which makes governing difficult. The 2014 and 2019 voter maps of Germany show virtually no change, while Italy’s map shifted solidly populist. “Support for populism in Western Europe is strongly correlated with exposure to the shocks of globalization,”Gaspar said. Europe needs risk-sharing mechanisms.

Orphanides sees Europe stuck between two competing narratives. The technocratic elite believes the EU has been an economic success in the past decade or two. Others think the prescriptions by the technocratic elite have not served the European population as a whole and have instead acted for the benefit of one or two member states. In the latter view, the mainstream parties of the past have to be kicked out of government and replaced by new parties that will serve the people better. 

Orphanides believes there is some truth in both narratives, but people presenting them fail to talk directly with each other, causing tension. “Europe is not a club of equals” he said, citing mismanagement of the euro crisis as the root of many present crises such as Brexit. Elites in Brussels and Frankfurt drive the agenda and have to acknowledge what has gone wrong. “Instead,” Orphanides said, “they are still in the denial phase.”

Moving on to Italy, Orphanides declared “the fact that the euro has been a disaster should be acknowledged.” Italy is a rich country and has been running a primary surplus for twenty years, so there is no reason for the Italian economy to be doing as poorly as it is. Lachman agreed a primary surplus is necessary but said the current 1% surplus is nowhere near sufficient and has to be closer to 3-4% to have a noticeable impact.

Forni disagreed, saying Italy joined the European Union because its public finances, inflation, and debt were out of control in the 1980s. You should not take averages when looking at Italy’s economy over the past twenty years. The 2008 financial crisis and the euro crisis in 2011 were damaging. Since 2013, things have gotten better and Italy has strengthened its position.

In Forni‘s view, Italian economic performance was poor because the productive structure of Italy in 1998, built on small, family-owned businesses with limited IT capabilities, was not ready for globalization. Add an aging population and brain drain, and it is easy to see why Italy suffered economically. Italy’s current debt is sustainable given no further crises the likes of 2008 or 2011, but Lachman cautioned that the Italian debt issue has to be addressed because Italy is ten times the size of Greece and bailing it out in a crisis would be a massive undertaking. “We might find ourselves in a situation in which Italy is too big to fail, but too big to bail” Lachman said. 

Forni then mentioned three things Italy needs to thrive in Europe: A debt target of 90% of GDP (Italy’s debt to GDP ratio was 132.20% in 2018), a plan of structural reforms to address issues of tax evasion and corruption, and an increase in risk-sharing at the European level. Safe assets, the European Deposit Insurance Scheme (EDIS), and an increase in labor mobility could help reduce and share risks. 

Lachman noted he was pessimistic about Europe’s future for 4 reasons: 

  • Disappointing economic and political developments;
  • Fundamental flaws in the euro which he doesn’t believe can be fixed;
  • Major challenges in Italy and Brexit;
  • The limited room for policy maneuver in Europe.

Lachman also addressed the north-south economic divide in Europe, showing that Italy’s per capita income is lower now than it was twenty years ago while Germany’s has risen. Unemployment in the southern parts of Europe remains much higher than in the north. These differences cause political resentment between the north and the south which, combined with the weakened center in EU politics and the fragmentation of parliament, make reform difficult. “The euro is fundamentally flawed,” Lachman said. “A country with low productivity like Italy cannot survive in an economic policy straitjacket with a high productivity country like Germany.” A key issue is the lack of a European fiscal union. Germany requiring a balanced budget limits its expenditures in economic downturns, while Italy’s weak banking system and unsustainable finances hold it back. 

Lachman also mentioned Germany and the US trade war. “Germany has a highly export dependent economy” and cannot afford the resulting economic slowdown and falling exports. Adding a 25% tariff on German automobiles exported to the United States would be catastrophic.

On Brexit, Orphanides said a hard Brexit would be bad for the UK and the EU, but he accuses the EU of only negotiating deals that punish the UK for leaving instead of negotiating a win-win deal. To him the only light at the end of the tunnel is the possibility of stopping the clock on Brexit to keep negotiating or a second referendum. Lachman pointed out that both candidates to take over for Theresa May have talked about the UK leaving the EU on October 31 with or without a deal. 

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