European Council on Foreign Relations

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Sofia view: back to growth in the Balkans

As ECFR’s scorecard showed, the Balkans have been a qualified success for the EU. Not least because the area has managed – thus far –to weather the economic crisis. That was the message of a one-day conference (Current Economic Challenges and Regional Cooperation in SE Europe) I pleasure to attend in Tirana, hosted by Ardian Fullani, Governor of the Bank of Albania, in partnership with South East European Studies at Oxford (SEESOX).  That despite Jean-Claude Juncker’s doom-and-gloom assessment that the likes Bulgaria, Romania and Macedonia (Albania could be added to the list) are exposed to the ongoing Greek crisis, with Athens capital prominent across in the Balkan banking sector. But the participants, coming chiefly from the region’s central banks, agreed that the worst might be over. As Fullani himself put it: “firefighting is over but it is time to look at the architecture”.

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Germany in Europe: Escaping the Greek tragedy

The tragedy has its origins in ancient Greece – 2500 years later, once again, Greece seems to be the place where it all began. So it’s time to take care of the legacy of the crisis!

Recently I had the privilege to partake at the 10th Munich economic summit, where I could listen to Hans Werner Sinn’s (the head of the ifo (one of Germany’s most important economic research institutes)) apocalyptic calculations on the European debt crisis. €1,000 billion were mobilised for the crisis and €4,900 billion credit facilities for the banks. The public debt in Greece is about 143% of GDP, in Ireland 96% and in Germany 83%, and if one is to include the hidden liabilities (e.g. the social system or pension rights), Germany holds a whopping 334% implicit debt. Mr. Sinn did not, however, draw any political conclusions out of these results. Should Greece be kicked out? No, he would not go as far

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Why Belarus could do with a dose of IMF medicine

Belarus’ economy is – once again – sinking, this time perhaps deeper than ever before. In less than 30 days the country devalued its currency by 36% (the biggest devaluation in 2011 globally) and froze the prices for items such as tea, coffee, cheese and fish. After the government failed to obtain a direct loan from Moscow, on 1 June, Minsk officially applied for an emergency loan from the International Monetary Fund, stating that a loan from the IMF would be under more favourable conditions than the Russia-backed $3.5 billion rescue package from the Eurasian Economic Community (Eurasec), which was offered to Belarus last week.

Provided that Minsk’s IMF request is not just a bluff to nudge its Eurasec partners into granting more favourable conditions for Belarus (which it may well be – the decision will be taken on 4 June), it is the ‘perfect storm’ for beefing up the EU and the US

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Europeans united in misjudgement over the IMF

In the debate about the next head of the IMF, the EU is looking surprisingly united and decisive in putting forward one candidate only three days after Dominique Strauss Kahn resigned. This sounds like good news for the struggling EU foreign policy given the experience of frequent division and ineffectiveness.

The bad news is that this time it is unity for the wrong reason, i.e. to defend a 20th century privilege that the IMF chief should be a (West) European. (This is Richard Gowan's blog post on the issue.)

The message the EU sends to the world is: we find it difficult to get our act together on issues like climate change, the Arab uprising, migration, the Iraq war. But when it comes to defend our outdated privileges, united we stand.

This unity of today will backfire tomorrow. If the future global powers in Asia and South America replicate our behavior in the future, we will

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What does Europe have to hide from the IMF?

Do the EU’s leaders actually want to undercut confidence in the eurozone?  The strident European response to the idea that, whisper it, a non-European might replace Dominique Strauss-Kahn as Managing Director of the IMF could prove counterproductive.  Angela Merkel and a string of EU officials have argued that, given the IMF’s role in helping faltering eurozone economies, the Fund should remain under European leadership.  

Do they fear that the situation in Greece or Portugal could get so dire that only a true EU believer can be trusted to assist?  If so, do they imagine that the markets will not notice?

Strauss-Kahn’s fall has come at an especially bad time for the eurozone, with the markets’ confidence in Greece back in free-fall.  Yet the heavy-handed EU drive to keep control of DSK’s former position is indicative of longer-term problems for Europe at the IMF.

Last year’s

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