High oil prices have upsides. A positive outlook on climate, the future of Porsches and energy policies for Christmas

Climate change and energy were the major topics this year. The grand Mass under spiritual guidance by a Nobel Prize Winner Albert Gore – whose carbon footprint is an inconvenient truth – in Bali did the political feel-good job. Russian, Iranian, Venezuelan, Sudanese and other oil country politics were the feel-bad factor in headlines this year. How will 2008 be in this regard?

Let me start with a provocative statement: the current excessively high oil prices are a good, a very good thing.

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Tycoons

Globalisation has brought with it its breed of new super-rich. Forbes recently released its new rich list. The richest man in the world now is a Mexican telecoms magnate, Carlos Slim, worth US$ 59bn. He just overtook so far unbeatable Bill Gates. The new super-rich appear in the world’s booming emerging markets. Mexico. China. Russia. The Middle East. India. The existence of such super-rich and powerful men (yes, they are generally male) feeds into the debate about inequality: is the appearance of such a class of billionaires normal, morally and socially acceptable, …. and economically sound?

An excellent book by the Swedish economist Anders Aslund takes stock of transition to the capitalist system in Central and Eastern Europe and Eurasia. One chapter analyses “The Role of Oligarchs”:

Worried about French protectionism? Look at the US!

I’ve been bashing French protectionism all along. But as good Frenchwoman I will now do some US “bashing”….In Europe, one can say that individual member states’ protectionist impulses are tempered in Brussels and the liberal interests of other member states. But who can stop the US government? Maybe the sense of statehood of political advisors? Or an undestanding that if the US wants to continue leading the world protectionism is certainly not the right policy to embrace since that means a straight road to economic decline. So here a few morceaux choisis:

Republicans:

In the WSJ, found on Greg Mankiw’s site:

By a nearly two-to-one margin, Republican voters believe free trade is bad for the U.S. economy, a shift in opinion that mirrors Democratic views and suggests trade deals could face high hurdles under a new president.

At a seminar held yesterday by the libertarian think tank Centre for the New Europe on the current online gambling case in the WTO won by Antigua and Barbuda, I learned that the US are now trying to pull out of the express committment in the WTO to allow cross-border supply of gambling services.

Democrats:

Hillary Clinton announced she would consider revising NAFTA if she comes to power. The FT reports:

Hillary Clinton, frontrunner for the Democratic party’s presidential nomination, yesterday said that all US trade agreements should be evaluated every five years and, if necessary, amended.

The process should start with the North America Free Trade Agreement, which was the signature trade pact of her husband, Bill Clinton, when he was president.

And as we know, the Democrats have been delaying the ratification of the bilateral agreements with Peru, Colombia, Korea, etc…

Here is an excellent analysis, again from the FT.

Towards a new position for Europe in the world

This year 2007 the EU celebrates its 50th anniversary. European integration is overall an unprecedented success on a grand scale – achieving both lasting peace on a traditionally war-prone continent, and high levels of prosperity thanks to the progressive creation of a Common, then Single Market. With the recent accession of Central and Eastern European countries Europe is, finally, united. Except where it really matters in today’s world. What is more, Europe at 50 is brooding. Brooding over its relative “decline”. And it suffers from a sense of not really performing on the world stage as it could.

Recently, a powerful product was put onto the market of ideas on how to make things move forward for our good old Europe.

What to watch out for this autumn

Slowly but steadily the world’s decision-makers are coming back from their summer breaks. While the summer remained busy in terms of trends and events that are related to this blog, the hot economic globalisation topics for this autumn will probably be the following:/font>

• World financial markets, what next? The subprime mortgage crisis in the US has had interesting ramifications. Hedge fund and investment vehicles bankrupt or in crisis, German banks stumbling, central bank interventions on money markets including a big one by the European Central Bank today, etc. After several years of relative calm and buoyant growth, the current turbulences could still become a hurricane. I am not a specialist, and it seems that for the moment the crisis is being weathered not too badly. Yet who knows? 
• World trade – growth trends. China continues growing, EU economies, except France’s are still doing well, commodity markets boom. The autumn will see the release of new world trade figures by the WTO (here the latest available). We’ll see what is really happening on the ground. 
• World trade – Doha round and future of the multilateral system. Sounds incredible, but Doha talks are still going ahead (the ICTSD newsletter confirming this will soon be online). Can anybody believe that people still believe it’s going to happen? One never knows after all. 
• World trade – EU policies. The EU is changing tack in many areas, and especially Asia. It is going further down the bilateral path and launched negotiations with South Korea, ASEAN, India. (Here a post, here more on the strategy on EU Commission’s website), Economic Partnership Agreements with African and Caribbean Countries should normally be concluded by the end of the year to replace the preferential Cotonou-Agreements. The negotiations are in dire straits. For nerds, to note, the EU is changing its anti-dumping policies. Very important in terms of clarification of how it deals with its imports from poor countries and namely China. The first time I actually started to understand something about is was when I read this paper.
• World trade – US policies. The US isn’t giving in on agricultural subsidies. Hillary Clinton does not want to extend the Trade Promotion Authority to the Bush administration which could help finalise the Doha Round. US-Americans and the Democrats are trade-sceptics at best. The climate in the US is one of anti-China, anti-trade, and anti-immigration hysteria (not only France, hey, is having its crisis..!). As it is a pre-election year things will not be getting better.
• Geopolitical consequences of globalisation – emerging powers. China and Russia. This blog has written quite extensively on the matter, to be monitored closely. The German Die Zeit had an interesting analysis last week-end on the matter. Turkey – Turkey’s recent election and the rise of Abdullah Gul as president with an Islamist background is actually very good news: a new prosperous if very conservative middle-class has emerged as Turkey integrates with Europe and the world and plays by the rules of democracy, the role of the military is dwindling. This bodes well in many ways: integration into world markets and economic growth is good for democracy and stability in appears in the case of Turkey, and Islam can be compatible with democracy and modernity. Let’s see where things will ultimately be heading in this crucial country. Maybe Sarkozy will end up wanting Turkey into the EU (he he)?
• The global economic fuel – Energy geopolitics. The EU is revising its strategy and integrating energy into its Neighbourhood policy. Oil countries are tightening their grip on their oil reserves (see Kazakhstan recently. Russia, Venezuela have received coverage in the blog), and generally also on their populations.
• Global institutions and globalisation – the controversies over the successions of Wolfowitz at the World Bank and of De Rato at the IMF reflect a profound malaise over the discrepancies between a changing economic power balance and the institutional setting governing the economy based on a post-1945 order. The malaise is going to last. Will anything happen? Surely not this autumn, but the debate will need to be followed closely.
• Europe’s political, economic policy, social and welfare systems adapting to globalisation – watch out for reforms (or not) happening in France. Will Germany and Italy ever be able to shake themselves up? EU-level policis. In 2008 – i.e., in a few months, we will celebrate ten years of the so-called Lisbon agenda that pledged to make Europe the world’s most competitive economy by 2010. Anybody seeing it happening?
• Keeping open minds, borders and political systems – the current globalisation backlash in the rich countries, and the revisionist trends within the rich-country-based economics profession (even Paul Krugman is going down the path of pop-antiglobalism…!) are a sign of the deeper sense of crisis of a part of the world that feels it no longer is in control. There is no reason to think one is doomed. It is about reinventing oneself. On the other side of the spectrum, the current emerging nations could go down a dangerous path of militarisation, and reversal of political democratisation. Russia comes to mind. But China isn’t reassuring either. The middle-income countries haven’t found yet a way out of their impasse. There must be shrewd methods to climb up the economic ladder. In Latin America especially: Chavismo, US-FTA-“ismo”, or a Chileanismo (the most effective so far) – what will prevail? A book I am currently enjoying reading at the moment for the description of the political mental state and a turn to pragmatism in economic policies in Latin America is Santiso’s Latin America’s Political Economy of the Possible published last year at the MIT press.
• Africa – it will certainly not join the global era this autumn. But its marginalisation needs to be tackled. Urgently.  

The Asian Century – no longer an elusive reality

This week, Japan’s Prime Minister is visiting India, after a short stop in Indonesia to deepen ties with the South-East Asian democracy. In this context, let’s start with a quote from the FT in an article published yesterday:

“Japan has until recently been the missing link in India’s post-1991 engagement with the world. Now, however, relations that plunged into a deep freeze after New Delhi’s 1998 nuclear weapons test are being revived by a shared concern at the implications of a rising China.

To judge by the number of times Mr Abe’s speeches mention India, the world’s biggest democracy looms larger than ever in Tokyo’s strategic thinking. A frequent visitor to India, Mr Abe likes to talk about the countries’ “shared values” of democracy and respect for human rights as the basis for a “new Asian order” that pointedly sidelines China”.

Three questions come to mind:

1) When will Asia’s new economic might concretely translate into more political-military power generally (If one assumes that there is an automatic spill-over from one to the other – which is not obvious)

2) Will China be the trigger?

3) Should China emerge as a military power with major capabilities, what is the future for the current liberal world order based on the spread of democracy and the market economy?

Book review: Global Capitalism, Its Fall and Rise in the Twentieth Century

I haven’t so far happened upon a satisfactory book review available online, for free, of Jeffry A Frieden’s no longer so recent book Global Capitalism, Its Fall and Rise in the Twentieth Century. This a humble attempt to redress this untenable situation.

Weathering an uncertain summer, China and Russia

This summer a heatwave had murderous effects in Southern and Eastern Europe, while Britain was flooded. My Italian and Southern French holiday was just right in terms of weather, but it could have been a bit warmer. Global warming hits, but unevenly…

But back to the business of this blog. Before leaving I talked about the world feeling the heat

Fresh start for the World Bank?

Where will the World Bank be heading under its new president Bob Zoellick? What is the real extent of the damage done by Paul Wolfowitz to the Bank? The FT has today a quite amazing analytical piece on the matter (walled for non-subscribers).

Here a few extracts:

Random comments on last week’s events

• The non-event of failure of the EU, US, India and Brazil to resolve their divergences on agricultural and industrial tariff talks in the Doha Round in Potsdam. Agricultural negotiations are like ETA terrorists in Spain and other radicalized terrorist groupings in the world – not having accepted that the world goes on without them they still manage to spoil the game quite dangerously. “Globalisation lives” despite lack of understanding on multilateral rules within the WTO system. But the already questionable fairness of those rules is in serious jeopardy without a global agreement in the Doha talks. Both Brazil and India are not doing themselves nor the poorer developing countries they say to represent any favour in blocking liberalisation of their industries. The EU and the US are not doing any good to their own agricultural sector (from ending overproduction to securing market access in new markets) nor to their industries (India and Brazil are not going to open) if they remain timid in their offers on agricultural tariffs and subsidies.

• The agreement on the “reform treaty” in Brussels to replace the defunct “constitution”. A typical compromise text – the best you can get in current circumstances, and an impressive diplomatic achievement by Angela Merkel. Funny how a constitutional text that was meant to bring the EU closer to the heart of citizens who perceive it as aloof and technocratic is now watered down such as to maintain the EU’s same aloof and technocratic nature. It maintains many old inefficiencies, such as the lack of a proper foreign minister. The self-delusion of governments jealous of their sovereignty in an era of European decline that needs radical approaches to its engagement with the world, ranging from peacekeeping to dealing with Russia, is unbelievable. No comment on Sarkozy’s victory regarding competition – of course the issue is less sexy than human rights, but signalling that he sees the French business model as optimal worries me given the recent performance of the French economy (read two interesting editorials 1 and 2….)