Benn Steil

Geo-Graphics

A graphical take on geoeconomic issues, with links to the news and expert commentary.

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Showing posts for "International Institutions"

Trump’s NATO Spending Demands Will Spur an EU Deficit Battle

by Benn Steil and Emma Smith

President Trump and Defense Secretary Mattis are putting unprecedented pressure on European NATO members to boost military spending, threatening to reduce America’s support for the alliance if it is not forthcoming.  Whereas the United States spent 3.6 percent of GDP on defense in 2016, its European allies spent a mere 1.3 percent—well below the 2 percent minimum they agreed to in 2006.  Among EU NATO members, only Greece, Estonia, and Poland meet the target. (We’ve left out the UK owing to impending Brexit.) Read more »

Greece and Its Creditors Should Do a Guns-For-Pensions Deal

by Benn Steil and Dinah Walker

IMF Chief Economist Olivier Blanchard has said that Greece needs to slash pension spending by 1% of GDP in order to reach its new budget targets.  The Greek government continues to resist, arguing that Greeks dependent on pensions have already suffered enough.  But it has yet to put a compelling alternative to its creditors. Read more »

Should the United States Encourage Japan to Join the AIIB?

by Benn Steil and Dinah Walker

On April 15, China’s finance ministry revealed the 57 “prospective founding members” of the new Asian Infrastructure Investment Bank, of which China is the architect.   The likely founders include many U.S. allies, such as the UK, Australia, and South Korea, which the Obama Administration had lobbied not to join, seeing the AIIB as a Chinese alternative to the U.S.-architected World Bank. Read more »

Will China Bail Out Russia?

by Benn Steil and Dinah Walker

Russia’s foreign exchange reserves have fallen by nearly 1/3 since October 2013; they’ve fallen 20% just since September 2014.  Whereas the country still has over $300 billion in reserves, about $150 billion of this may be illiquid; it also has close to $700 billion in external debt. Read more »

The Politics of IMF Crisis-Country Growth Projections

by Benn Steil and Dinah Walker

IMF GDP growth “projections” accompanying emergency lending programs are nothing of the sort; they are targets the level of which is necessarily set high enough to enable the interventions.

Take Greece.  After committing to lending of €30 billion over 3 years in 2010, the Fund projected that the crisis-mired nation would return to growth by 2012.  As shown in the left figure above, Greece’s economy actually plunged by 7% that year – the year it completed the world’s largest sovereign restructuring, covering €206 billion of bonds. Read more »

Can Russia Escape Dollar Dependence?

by Benn Steil and Dinah Walker

Russian president Vladimir Putin is determined to wean his country off the dollar, or so he says.

In July, after insisting that the international monetary system depended too much “on the U.S. dollar, or, to be precise, on the monetary and financial policy of the U.S. authorities,” Putin signed off on a new BRICS development bank whose initial paid-in capital would be entirely in dollars – unlike the World Bank, where only 10% of paid-in capital was in dollars.  So the new BRICS bank actually creates a new source of demand for dollar assets. Read more »

Is the BRICS Contingent Reserve Arrangement a Substitute for the IMF?

by Benn Steil and Dinah Walker

Russian President Vladimir Putin has hailed the new BRICS contingent reserve arrangement (CRA) as a substitute for the IMF, saying that it “creates the foundation for an effective protection of our national economies from a crisis in financial markets.” But does it? Read more »

Is the BRICS Bank More “Democratic” Than the World Bank?

by Benn Steil and Dinah Walker

The launch of the new BRICS development bank “reflects the disparity and democratic deficiency in the global governance and is trying to restart, to rethink that,” according to Nobel economist Joseph Stiglitz.  But is the BRICS bank really more “democratic” than the World Bank, whose governance legitimacy its founders are challenging? Read more »