ESM would become an effective vehicle for risk sharing.

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Bill Clinton, Capital Markets Union, Financial Crisis, interest rates, Jon Cunliffe

The latest research of the McKinsey Global Institute (MGI) suggests that unless increases in labor productivity compensate for an aging workforce, the next 50 years will see a nearly 40 percent drop in GDP growth rates and a roughly 20 percent drop in the growth rate of per capita income around the world. Globally, the potential for diminished growth varies considerably among countries.

A useful precedent can be found with the monetarist revolution (Weingast & Wittman, 2008). In the 1960 and 1970s, monetarist proposed monetary targeting rules arguing that monetary policy matters rather than fiscal policy (their Kenyanesian opponents argued the opposite), and that stabilizing the money supply would serve to stabilize employment and output. In other words, monetary targeting rules were celebrated for their economic properties and not their political properties.

The reason why policy-makers adopted monetary targeting regimes in the 1970s, however, was because in the oil price shock era monetary targeting rules turned out to be a useful political device to fend off political pressures to inflate.

In the political implementation of monetary targeting rules, their political properties prevailed. And so it went with macro political economy. The message that filtered through to policy-makers and central bankers was that money cannot systematically raise employment and output. Moreover, political attempts to stimulate employment and output are futile and damaging, all they do is create inflation. For this reason, policy-makers themselves are better off delegating monetary policy to an independent central bank. Macro political economy thus made a successful case for the depoliticization of monetary policy.

In history the initial steps in opening up the global economy were made in the 1950s and 1970s as the desire to avoid the economic and political mistakes of the interwar period led to the gradual dismantling of trade barriers. Some of this was done within specific geographies notably with the formation of the European Coal and Steel Community in 1951, the forerunner of the European Union. The question is now what role monetary policy will play in EU. Is is simply to say that Monetary policy always has redistributional consequences. Because monetary policy is such a powerful toll of redistribution, and likely to get dragged into the distributional conflict over the split of the GDP.

After the Great Depression and World War II, the financial system in many countries was tightly controlled. In the United States, the United Kingdom, and elsewhere this was partly to encourage the holding of public debt, which had been such an important part of paying for the war effort. From the 1950s, however, interest rates were liberalized, and a broader array of financial instruments became available. By 1970s which marked the beginning of a wave of deregulation, capital flows into developing countries also became increasingly liberalized.

Until recently, high income countries were thought to have become less vulnerable to severe banking crises that have lasting negative effects on growth. Between 1970 and 2011, 80 percent of G20 nations experienced at least one systemic banking crisis. As mentioned, in Speech by Vitor Constancio, VP of ECB, at Warwick Economic Summit “monetary policy cannot cope with two different objectives and the need for macro-prudential policy has become more acute with the realisation that advanced economies are very likely faced with a prolonged period of low real and nominal growth.” The trend for lower GDP and productivity growth and for ever lower real interest rates has continued for quite some time. For instance, the U.S. annual productivity growth was 2.36% from 1890 to 1972. Then it declined to 1.67% from 1972 to 2004 and to 1.33% from 2004 to 2013. However, this development cannot be explained by the absence of structural reforms, as often done by economists in relation to other countries.

Across advanced economies, Germany currently stands out as a nation where sound fiscal policies are publicly supported. However, even Germany has built up large public debts, while letting its banking system sink into crisis, during the last three decades. It was German and French governments that initially backed efforts to weaken Europe´s stability and growth pact in the early 2000s.

Its hard to to know how much debt any government can safely issue before risk premiums start rising in dangerous manner. But, if debt levels continue to drift upwards, then eventually all nations will reach their debt capacity, and at that point every nation would be on a a path to crisis.

The crisis experience suggests that, in times of extreme market tensions, even a sound initial fiscal position may not offer absolute protection from spillovers

When crises occur, central banks and governments step in to ensure the system is stable. They lower interest rates, bail out institutions and they increase fiscal spending. Low interest rates reduce incentives to cut budget deficits. Business and households with mortgages are key actors who pressure governments to cut deficit, hoping to reduce interest rates. This practical lessons was major factor behind Bill Clinton´s steps to reduce the deficit during his first term in office. The astonishing nature of monetary policy becomes clear once you understand that essentially the same apply to fiscal policy.

One of Clintons priorities was to reduce the budget deficit using a combination of cuts in spending and increases in taxes. President Clinton was worried, however, that by itself, such a fiscal contraction would lead to a decrease in demand and trigger another recession. The right strategy was to combine a fiscal contraction so as to get rid of the deficit, with a monetary expansion to make sure that demand and output remained high. What triggered the recession was not, as in 1990-1991, a decrease in consumption demand but a sharp decline in investment demand. 

Lower interest rates also buttress the lobbies that call for more spending. Given high levels of leverage, it is no surprise that, in the aftermath of crises, companies and households try to rebuild their equity capital. This drives up savings rates, and lowers interest rates. It becomes then reasonable to argue there is no better time for governments to invest in the future, as well as support demand, since the costs of such support are small compared to the benefits.

Private sector-led financial development can also play an important role in sustaining economic growth and improving welfare. However, the lessons from developing countries is there are advantages from keeping regulation tighter and capital requirements higher. This was the lesson drawn, for example, from the experience in 1982 in Chile and from 1997-1998 in Korea and other Asian countries. But the financial sector in those places is smaller and less powerful than in today´s rich countries. Its much hard to do in countries where finance has a great deal of political power and cultural prestige, and where leverage is already high.

Models of the political monetized economies are politically vulnerable for two reason. The first consists of the incentive to fund government spending with increases in the money supply, the second, of the incentive to inflate to increase employment and output. First, political pressures for government spending can translate into an excessive use of the money printing press. The second source of political vulnerability consists of sticky prices, or contracts denominated in nominal currency that are not inflation indexed and cannot be quickly adjusted.

Political business cycle (the time-consistency problem and opportunistic and partisan political business cycles) depends on the time horizon of the party in office. The promise of economic voting is after all that voters would be able to use economic conditions as a measure of the success or failure of governments, the anticipation of being thus measured would induce politicians to improve economic conditions on their watch. But, once growth resumes, the case for financial sector reform seems less pressing. Banks, however, often have multiple contracts. Unfortunately, the dynamics of this system are not entirely stable. The high cultural prestige of finance, combined with the government´s need to sell debt, means that financial sector executives continue to run fiscal policy. This contributes to the fact that once the crisis is over, the regulatory system relaxes, and new risks build up. Financial development or the move from public choice to political economy transforms the political economy of finance.

Experience over the past decade suggests we have built a global financial system in which there is an incentive to build up unsustainable and dangerous levels of both private and public debt. Jorda, et al (2014) show in a historical overview spanning 140 years that the link between loose monetary conditions and booms in mortgage lending and house prices has become stronger post-WW2. A large housing bubble preceded the 2008 crisis in the hardest-hit countries (the US, the UK, Ireland, Spain, Portugal, and Italy).

The strong rise in aggregate private debt over GDP in many Western economies in the second half of the 20th century has been mainly driven by a sharp increase in mortgage debt. Mortgage credit has risen dramatically as a share of banks’ balance sheets from about one third at the beginning of the 20th century to about two thirds today.

In the wake of the Global Financial Crisis, Ireland faced its worst banking crisis after the bursting of the property bubble. The property boom, fuelled by domestic and cross-border banking credit, did not only lead to unsustainable residential and commercial real estate prices but also to massive new construction. Not only macro factors, but also a weak supervisory approach played an important role.

To restore the capital base of the Irish banking system, the Irish government provided up to € 64 bn to the banks (amounting to about 40 per cent of GDP). The Irish taxpayers have been brave in shouldering the full costs of re-capitalising the Irish banking system. In the depths of financial crisis, the taxpayers are the main losers from such crisis, but advanced countries have managed to postpone costs by issuing public sector debts, so ultimately it is future generations who pay for the damage caused by financial sector excess risk-taking. 

There was considerable volatility in the public finances around the time of the contentious intervention in the banking system, but since 2012 the deficit has followed a gradual falling trend, against a backdrop of ongoing austerity and, more recently, a rebound in economic output. Strengthening activity and a recovery in the labour market have underpinned a marked upturn in government revenue and in nominal GDP, both of which have helped to bear down on the headline fiscal deficit (in absolute terms and as a share of GDP). The Central Statistics Office (CSO) data suggest that the public finances remained on track last year to achieve the government’s latest estimate (in its 2015 budget) of a deficit of 3.7% of GDP in 2014, down from 5.7% in 2013 (The Economist Intelligence Unit 2015:Special report Where next for the euro zone?). This CBI-CEPR-IMF Conference paper provides a high-level overview of the crisis management by the Irish authorities and lessons from its Recovery from the Bank-Sovereign Loop.

As Friedrich Hayek warned back in the 1930s, the consequences of such a process of misplaced investment take time to resolve, owing to the subsequent oversupply of specific capital (in this case, of the housing stock). The housing bubble was the financial panic that gripped capital markets worldwide after the collapse of Lehman Brothers. The panic was sharp and severe, requiring central banks to play their fundamental role as lenders of last resort.

2012 when those political failures came close to ripping apart the euro, ECB´s Draghi stepped into the breach. Just 20 words from him were enough to simultaneously shock and soothe the markets threatening the currency´s destruction.

“The ECB Governing Council is ready to do whatever it takes to preserve the euro”, he told delegates at a London investors conference. “And believe me, it will be enough”

Properly managed sovereign debt is helpful to financial development because it provides a relatively low risk and liquid asset for both individuals and firms. It can also play an important role in stabilizing the macroeconomy when and if it enables the the government to increase its budget deficit as the financial system comes under pressure and credit conditions tighten.

To allow national fiscal stabilizers to work, governments must be able to borrow at an affordable cost in times of economic stress. A strong fiscal framework is indispensable to achieve this, and protects countries from contagion. Governments need to assess whether and how to go on opening up their economies and integrating them into the world economy.

There is a robust debate about how much growth is actually desirable, Yet without growth, the world is a poorer place—and fulfilling social and debt commitments becomes harder. So there is a strong case for sharing more sovereignty in this area – for building a genuine economic union. This means governing together. In this case, the European Stability Mechanism (ESM) would become an effective vehicle for risk sharing and cut the bank-sovereign loop.

It is also clear that our monetary union is still incomplete. This was the diagnosis offered two years ago by the so-called “Four Presidents” (the European council president in close collaboration with the presidents of the European Commission, the European Central Bank, and the Eurogroup).

In the euro area, stability and prosperity anywhere depend on countries thriving everywhere. And, though important progress has been made in some areas, unfinished business remains in others. A key part of the solution is to improve private risk-sharing by deepening financial integration. Indeed, the less public risk-sharing we want, the more private risk-sharing we need. A banking union for the euro area should be catalytic in encouraging deeper integration of the banking sector. But risk-sharing is also about deepening capital markets, especially for equity, which is why we also need to advance quickly with a capital markets union. Limiting the potential for servere financial crisis through well-designed regulation is a sensible goal and an important lesson from the Great Depression.

Financial Stability depends on working together of EU rules and well-aligned national authorities.

Monetary policy operation always has some fiscal implication, and for the Central Bank what matters first and foremost is that monetary policy is effective. Usually, these fiscal implications are dealt with easily within a one-country framework, between the central bank and the treasury. But in the euro area, there is no European treasury, and each national treasury gives an implicit or explicit indemnity to its own central bank, but not the euro system as a whole. The US Treasury has argued that its recent bailouts were profitable for US taxpayers, because they managed to get back more than what they directly gave out.

Indeed, it required new leaders to break the panic in both institutions – Haruhiko Kuroda at the BOJ and Mario Draghi at the ECB – finally to set monetary policy right. Yet, The Bank of Japan and the ECB were, characteristically, the slowest to react, keeping their policy rates higher for longer, and not undertaking QE and other extraordinary liquidity measures until late in the day. So, too, did the Bank of England, though it was too a bit slower to react.

The good news is that, even near the zero lower bound (ZLB), monetary policy works. QE raises equity prices; lowers long-term interest rates; causes currencies to depreciate; and eases credit crunches, even when interest rates are near zero

Now, the expected announcement by Mr Draghi, will bring the bank closer into line with the US Federal Reserve and the Bank of England, which adopted QE in the wake of the global financial crisis. But QE has split the central bank’s 25-strong governing council, with both German members voicing their opposition in recent weeks. Today, Germany´s new demands reflect its role as a large creditor to other EU nations.

Under the securities markets programme, the ECB’s first bond buying scheme, the national central banks shared responsibility for losses and profits according to the ECB’s capital key, which reflects member states’ economic size. That made Germany, the region’s powerhouse, the biggest potential loser — and winner. To appease QE’s German opponents, which include the chancellor Angela Merkel herself, Mr Draghi is expected on 22nd Jan 2015 to say that bonds bought will remain with national central banks, so losses will not be spread among eurozone members.

The ECB´s governing council includes representatives from each central bank of the euro-zone nations to ensure price stability, and to supporting economic activity in Europe. The ECB decisions are being taken by the ECB´s Governing Council with a euro area focus, and the decisions are meant to affect monetary and financial conditions across the whole euro area.

Given the very different circumstances and risks faced by different member states, it is also important that the rules allow sufficient flexibility to recognise national financial stability responsibilities. And that they are applied by national authorities that have responsibility for financial stability.

Capital Markets Union:

Monetary policy is focused on maintaining price stability over the medium term and its accommodative stance contributes to supporting economic activity. However, in order to increase investment activity, boost job creation and raise productivity growth, other policy areas need to contribute decisively.

In particular, the determined implementation of product and labour market reforms as well as actions to improve the business environment for firms needs to gain momentum in several countries.

Turning to the issue of Capital Markets Union, in a speech on Tuesday to a conference organised by the City of London Corporation and Open Europe, Jon Cunliffe discusses how the European Union has achieved and should continue to achieve a balance between developing a single market for financial services and the need for financial stability. Jon sets out how the establishment of a Capital Markets Union can help to further the objective of encouraging the free movement of capital in the EU by promoting the development of market-based financing.

He notes that the regulatory framework for openness and for managing the financial stability risk around the single market in financial services in the EU was built on the principles of common rules – with force of law – commonly applied and on mutual recognition.

This is key, because to be confident of maintaining financial stability in a single market with free movement of capital, each member state needs to be confident in the strength and in the application of prudential regulation in other member states.

The benefits of Capital Markets Union could be very large. Indeed, One reason the American economy recovered from the recession faster than Europe’s was that it “had an active capital market to help provide finance for businesses at the time when its banks were under strain. However, the American private placement market (a form of direct lending typically between institutional investors and midsize firms) is almost three times bigger than that in the European Union, and debt securities markets, including the market for corporate and government bonds, are three times larger in the United States.

Bankers in London, (which has the largest, most internationally active and most complex financial sector in the EU) and Europe have long called for the region to shift from a bank-lending economy to one driven by capital markets. The political and economic events taking place in Greece and across Europe are shaking confidence in the future of the euro zone, and the spotlight has been focused on where the economic future of Europe lies.

Sir Jon, who has specific responsibility within the Bank for the supervision and oversight of Financial Market Infrastructures recommends that the objectives should be: first, to put European savings to better use by deepening and diversifying the sources of finance available to business and offering more investment choices and portfolio diversification to savers. Companies must seize the opportunity to accelerate productivity growth and the value-creation potential it holds. 

The focus on productivity needs to go hand in hand with improving skills. As the new wave of innovation hits, jobs are becoming more skilled. Thus, Innovation has become the central driver of national economic wellbeing and competitiveness

Second, to enable greater risk sharing across the EU by creating deeper cross-border markets. And third, to create resilience by ensuring that if the banking system is damaged, there is an effective alternative channel of finance to the real economy. Reforms will be needed to both supply and demand to achieve those Capital Markets Union objectives. On the supply side, measures will be needed that enable household and corporate savings to flow to vehicles that will invest in capital markets, and investors will need to be encouraged to allocate capital across borders, reducing their “home bias”.

On the demand side, Cunliffe suggests that more diverse forms of borrowing will be needed and could include forms of finance in which investors directly acquire assets, such as equity and corporate bonds, and indirect forms of finance in which banks and markets work together through securitisation markets to lend to the real economy.

Domestic demand should also be further supported by ECB´s monetary policy measures, the ongoing improvements in financial conditions and the progress made in fiscal consolidation and structural reforms. Furthermore, demand for exports should benefit from the global recovery.

The move toward embracing deeper capital markets also mirrors a widely held sentiment in financial circles that regulators and policy makers should shift their focus from regulating the markets to encouraging their growth.

A more integrated capital market would provide deeper equity markets that could enable a wider range of corporates to issue equity. As equity provides the most efficient forms of risk-sharing, Sir Jon suggests that this area should be a priority for CMU.

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Federalists and Jeffersonians.

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collective action problem, Federalists, government officials

To understand America, you have to know its origin and Constitutional law, especially the separation of powers, its three great provinces: the legislative, executive, and judiciary; and the privileges and powers of the different legislative branches. For a range of views of constitutional theory, (see 2004, Russell Hardin) a typical reason for having a constitution is to place limits on government. Among the early advocates of limited government are Locke, Hume, Adam Smith, Wilhelm von Humboldt and Mill. Locke and Sidney argued against the those who advocates with Hobbes, absolute power for the sovereign.

Hume generally supposes that the reason for the scheme of justice is to serve our interests. To achieve justice and social order we must design institutions or norms to bring about just resolutions (deliberately by design or by unintended consequence of various actions taken for other purposes). Hume´s task therefore is largely to show that government officials can be constrained to act for the general good. Why? In part because they act on general principles that do not directly affect their own interests.

Virtually all constitutions are ostensibly designed to secure democratic government and development. Advances in the “science of politics” and skill in the science of government had fostered principles that ensured that abuses of power could be prevented, such as the division of powers, legislative “checks and balances”, an independent judiciary, and legislators that were represented by electors. Constitutional democracy can manage the chaff of political conflict and these disputes over policy alternatives, but it cannot mange really deep conflict between large party groups.

In US political history, the problems of Federalist led by the Secretary of the Treasury Alexander Hamilton, against the Jeffersonians, represented by Secretary of State Thomas Jefferson in U.S. have helped to spur changes in the electoral and therefore in the governmental process.

Alexander Hamilton (in office September 11, 1789 – January 31, 1795) argued that “the sovereign duties of a government implied the right to use means adequate to its ends”.

Alexander Hamilton (January 11, 1755 or 1757 – July 12, 1804) was a founding father of the United States, chief staff aide to General George Washington, one of the most influential interpreters and promoters of the U.S. Constitution, the founder of the nation’s financial system, and the founder of the Federalist Party, the world’s first voter-based political party. His plans for money, banking, taxation, trade, manufactures, and control of the public debt set the course of American prosperity forever.

Alexander Hamilton became the leading cabinet member in the new government under President Washington. Facing well-organized opposition from Thomas Jefferson and James Madison, Hamilton took the lead in the funding of the states’ debts by the Federal government, the establishment of a national bank, a system of tariffs, and friendly trade relations with Britain.

Hamilton was among those dissatisfied with the weak national government. He led the Annapolis Convention, which successfully influenced Congress to issue a call for the Philadelphia Convention, in order to create a new constitution. Founded the Bank of New York and successfully argued that the implied powers of the Constitution provided the legal authority to fund the national debt, assume states’ debts, and create the first government-owned Bank of the United States.

Hamilton argued that “the propose of the constitution was to put in place a workabal government”. He argued that the sovereign duties of a government implied the right to use means adequate to its ends.”…all menans requisite and fairly applicable to the attainment of the ends of such power… not precluded in to the constitution and not contrary to the essential ends of political society”

Washington agreed with Hamilton´s argument and signed the act February 25, 1791. A government-owned Bank for commercial USA

As a penniless and illegitimate immigrant who rose to the highest positions of statesmanship, he is an especially fitting symbol of the American dream, representing the aristocracy of talent and hard work—not of birth. No one was more responsible for the calling of the Constitutional Convention, or for defending its work during the struggle for ratification. James Madison wrote two of the most celebrated of the Federalist Papers, but Hamilton originated the project and wrote most of the essays, including those on the presidency and the judiciary.

He almost single-handedly led the charge for ratification of the Constitution in New York, where anti-Federalist sentiment ran high. “If New York had not ratified, it is hard to see how the Union could have come into being.” writes Michael W. McConnell, a professor at Stanford Law School and director of the Stanford Constitutional Law Center, a senior fellow at the Hoover Institution.

Alexander Hamilton, whose picture appears on the $10 bill, is the worthiest and most appropriate person to honor in this way. It is not an exaggeration to say that, without Hamilton, there would have been no Constitution.

The Diplomacy of the Early Republic.

Almost all of the debate around the adoption of the U.S. Constitution supposes that representatives are to represent their own communities. Unfortunately, this is again a collective action problem. In a sense, what we ordinarily describe as democratic politics is merely the chaff. It is the surface manifestation, representing separated ideas and partisan political conflicts. And what was George Washington worried about as he left office?

The problem of The Federalists supported the development of a strong international commerce and, with it, the creation of a navy capable of protecting U.S. merchant vessels. The Jeffersonians favored expansion across the vast continent that the new republic occupied. The Federalists and Jeffersonians also disagreed over U.S. policy toward political events in Europe. After the outbreak of the French Revolution in 1789, the Federalists distrusted France and encouraged closer commercial ties to England, while the Jeffersonians preferred to support the new French Republic.

MILESTONES: 1784–1800

Following the end of the American Revolution, the United States struggled to define its foreign policy, to determine how to implement it, and to maintain necessary commercial ties with Europe without becoming embroiled in European conflicts and politics. A major issue splitting the parties was the Jay Treaty, largely designed by Hamilton in 1794. It established friendly economic relations with Britain to the chagrin of France and the supporters of the French Revolution. Hamilton played a central role in the Federalist party, which dominated national and state politics until it was overthrown by Jefferson in 1800.

Jefferson recast Washington’s warning against passionate attachments by setting out his new administration’s governing foreign policy principle: “ . . . peace, commerce, and honest friendship with all nations, entangling alliances with none. What’s striking about the latest recitation of the Farewell Address—a tradition followed in the Senate since 1896—is how little has changed in U.S. foreign policy since Washington wrote farewell address.” Lovingly preserved today in The New York Public Library, the first president’s 32-page handwritten “Letter to the American People” printed and reprinted after its first appearance on September 19, 1796 in Claypoole’s American Daily Advertiser (a Philadelphia newspaper).

Political parties and coalition

The prevailing view of political parties, and especially the two major parties in the United States, is that they are coalitions. Both parties clearly have ideological cores, but party coalitions need not coincide with ideological clusters at all.
Political parties are coalitions of actors who have interests that differ and who want very different things from politics ( here for some evidence data).

Partisan voters may diverge from the coalitions from time to time and force party leaders to react in some way, but the coalitions themselves are shaped by political elites—the party leaders and activists who sort out and articulate the issues around which the parties coalesce. The eventual nominee will, in some respects, stand in for the terms of the party’s coalition.

It can be useful to think of the members of these coalitions, being shaped during presidential nominations, as different elements of the party back different candidates, but the most traction comes from viewing them as comprising different social groups.

At the end of the nineteenth century, the Republican Party included protariff businessmen, those with free-silver mining interests, and blacks. These interests were often wildly in conflict with one another, necessitating clever maneuvering by party leaders to hold the party together. In the 1940s and 1950s, the New Deal coalition of the Democrats brought together the northern union members, Catholics, Jews, and ethnic whites, but also southern white segregationists. Republicans included those with business interests as well as Protestants, women’s rights groups, and groups on both sides of the emerging conflict over civil rights.

In the twentieth century these coalitions brought together the interests, ideas, and policy preferences that we today associate with liberals and conservatives. Liberals favor government economic intervention to encourage equality and labor interests; policies that advantage ethnic, religious, sexual, and racial minorities and disadvantaged groups; women’s rights; a multilateral and often less militaristic foreign policy; and a collection of many other positions. Conservatives favor free markets, business interests, a color-blind approach to race and ethnic issues, traditional religious and sexual norms, a foreign policy informed by American exceptionalism, and a number of other positions.

It also makes sense to think of these ideological movements as coalitions because they bring together potentially diverse actors, cementing their bonds with appeals to shared principles, values, and even symbols. But, as “American” there has to be common ground in the area of American Constitutional law and Separation of Powers, on which the type of authority granted and to whom it was granted, in order to govern.

As general principle that one branch of government (e.g. the legislature) may not “delegate” or give up its constitutional responsibilities to another branch of government (e.g. the executive branch), an administrative entity, or a private entity; to do so would be a violation of separation-of-powers. An examination of the history of those powers reveals how far separation-of-powers jurisprudence has departed from the original meaning of the Constitution.

What DON’T you know about Alexander Hamilton?

A rich old Scotland with terrible prospects.

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Scotland

It is generally assumed that if Scotland votes YES to become an independent country. It will inherit membership of both NATO and the EU, and will join the United Nations and Commonwealth. While the latter intention has attracted little adverse comment, the assumption about the EU and NATO is contested by London and in much of the think-tank and academic commentary. In its recent white paper on independence the Scottish government states that its foreign, security and defence policies will be rooted in a clear framework which focuses on ‘participation in rules-based international co-operation to secure shared interests …

The Scottish Nationalist Party (SNP) has stated that it would expect the nuclear bases to be closed in as short a time frame as possible, and certainly by the time of the Scottish elections scheduled for 2021. The SNP has argued that its non-nuclear stance is compatible with NATO membership, pointing out that the majority of NATO members have no nuclear weapons on their territory.

The arguments of recent months about currency union and the British nuclear deterrent, fashioned in the nuclear age, are now over. By a margin of 55% to 45%, people living in Scotland have decided to remain in the United Kingdom. It delivered a convincing result of unquestionable legitimacy, with an astonishing 84.6% of the eligible electorate voting. It did not result in the breakup of the country.

The campaign to devolve power to Scotland has deep roots in the Struggle for “Home Rule for all” in which autonomy for Ireland would be followed by a similar arrangement north of Carlisle. The term ”Home Rule”, first used in the 1860s, meant an Irish legislature with responsibility for domestic affairs. It was variously interpreted, from the 1870s seen to be part of a federal system for the United Kingdom: a domestic Parliament for Ireland while the Imperial Parliament at Westminster would continue to have responsibility for Imperial affairs.

In the 1870s a former Conservative barrister Isaac Butt who was instrumental in fostering links between Constitutional and Revolutionary nationalism through his representation of members of the Fenians Society in court, established a new moderate nationalist movement, the Irish Home Government Association. Under the later chairmanship of William Shaw, it reconstituted itself to become the Home Rule League in November 1873. Under it, Ireland would still remain part of the United Kingdom but would have limited self-government. Yet, the notion of Scottish independence would then have seemed absurd.

Scots were champion empire-builders able to operate at all levels of government in Britain and in the West Indies, a fact that was a function of their ever-increasing number in the house of Commons. Between 1761 and 1767 twenty eight MPs from the forty-five Scottish constituencies held state offices. More generally, the increase in the number of Scots MPs allowed Scottish networks greater access to Parliament and to political patronage. After 1800 the economy took off, and industrialized rapidly, with textile, coal, iron, railroads, and most famously shipbuilding and banking. Glasgow was the centre of the Scottish economy.

In several European countries mid-nineteenth-century nationalism spawned an historiographical revolution. But, this was not the case in Scotland. There were som sensitivities aroused, however, especially when the notion of Scotland as a full and equal partner in union seemed threatened as with the foundation of the National Association for the Vindication of Scottish Rights of 1833 or the Irish were thought to be obtaining unfair advantages at Scottish expense. For the most part, however, a nationalist challenge to the status quo failed to develop because there was no intrinsic political or economic rational for it to emerge in Scotland.

After 1832 most former Pittites described themselves as ‘Tories’, or more frequently, ‘Conservatives’, but loyalty to the memory of Pitt remained an important source of unity for Conservatives until the party split in 1846 over the repeal of the Corn Laws. And when the Tories split over Corn Law repeal in 1846, a new Liberal Party based on free trade and Nonconformity remained predominant until the 1880s. But when the Liberals broke up over Irish Home Rule in 1886, the Conservatives became potentially the major force in politics. The Liberals’ slow decline was suddenly accelerated after a split during the First World War led first to a coalition with the Tories and, when that broke up, to their replacement as the main anti-Tory party by Labour in the early 1920s. Labour’s rise was then crippled when it too split over supporting a coalition government in 1931. All this led to a long Conservative ascendency from Baldwin to Cameron – some 61 years in office compared to Labour’s 38 – an ascendency perhaps now petering out.

Since the Second World War, the economy has been fully integrated into the overall British economy, with the most distinctive feature being the discovery of oil offshore in the North Sea. The oil brought new wealth and new people to the most isolated areas. In fact, from 1672 Petty’s “political medicine” would embrace not only Ireland but England and the Atlantic colonies as well. In key respects, political arithmetic reformulated Petty’s Hartlibian aspirations as a project for an “improv’d Empire”. The most striking instance of this was Petty’s proposal “To transmute the Irish into English”, the transformation of Ireland’s idle, poor and fractious Catholic population into 800,000 loyal and industrious subjects, and of Ireland itself from a failed kingdom into a successful colony.

Petty targeted the households that instilled these characteristics. Designed like Petty’s other proposals to replace unnatural existing policies, the transmutation of the Irish into English relied in part on the same sort of material improvements Petty recommended for England. But at the center of it all was a crucial piece of demographic engineering. Framing policy thus required a thorough knowledge of the constraints situation imposed: a political anatomy. The Political Anatomy of Ireland tackled this for one island, and Petty proposed that the same be done for the other of all three kingdoms.

Political arithmetic gradually became less a specific project than a general ‘art of government’ by social engineering, suited to a multiple monarchy and a colonial empire. But the point is that the structure of politics and political parties often takes decades, as their leaders attempt to build coalitions of voters across, groups, classes, and regions to secure their election. Just as Scotland enjoyed the fruits of empire it also suffered the misery of deindustrialisation. Between 1979 and 1981 Scotland lost a fifth of its workforce. This police took hold in Scottish minds. The nationalism that marks politics in Scotland more generally in this vote has played a key role in Scottish minds of English.

Again, the old industrial cities of north and central England suffered similarly. The poll tax was introduces in Scotland first. This because Scotland was otherwise due an alternative tax rise, which the Tories wanted to forestall. Yet there was Margaret Thatcher´s most unpopular policy, the poll tax, in some context, changed Scotland in ways she never imagined. It combined with the rise in Scottish identity to form a new nationalist story.

Moreover, Scotland is different from England because it is more left wing. Alex Salmond’s, leader of the Scottish, impassioned plea to launch a new nation a cause he championed for some two decades fell short, with Scots choosing instead the security of remaining in union with England, Wales and Northern Ireland. The referendum’s result prevented a rupture of a 307-year union with England, bringing a huge sigh of relief to Britain’s economic and political establishment.

As well as being old Scotland, rich and nationalist, it is Scotland with terrible prospects. The Economist provocatively displayed on its front cover a picture of Scotland suggesting that a vote for independence would be tantamount to economic suicide. More recently, 2014 study by the ONS examined life expectancy across 404 local authority areas in Britain, Scotland where on the bottom. In the recent OECD study, Scotland in a club of rich countries, put in the bottom third, based on health outcomes. The people of eastern Slovenia are healthier.

As the population of Scotland gets older and sicker the cost of pensions and generous health-care provision will increase. The trends those study observed suggest that, over the next 50 years, the Scottish workforce will actually shrink and the number of pensioners will rise. The biggest problem would be demography and nationalist party intent on overspending, and Scotland´s economic prospects would be bleak.

This would add pressure to an already profligate public sector. Even if prices rally of oil and production improves, Scottish industry´s best days are behind it. Independent fiscal Office for Budget Responsibility reckons that revenues form oil taxes will dwindle by 2017-18. Allthis means warm glow of independent Scotland with the end of oil in sight. More over Scotland will face huge clean-up costs after the oil has gone.

Salmond had argued that Scots could go it alone because of its extensive oil reserves and high levels of ingenuity and education. A vision of its economic future in which oil solves most ills, and innovative policy spurs rapid growth. Oil and gas accounted for €14 billion out of €40 billion in Scottish exports in 2012, according to data compiled by the Scottish government. The projection, however, rests on rosy forecasts of both oil prices and quantity firms will be able to extract.

Second, the future Scottish government will have little capacity in the commitment to the protection of its citizens overseas. Scotland, like the rest of the United Kingdom, has a significant number of citizens working overseas, many of them connected to the oil and gas industry or the Scottish churches.

Excluding oil, Scotland ran a public sector deficit of €14 billion in 2012-2013. At 11% of GDP that is a bigger gap than crisis stricken Greece and Ireland. In truth, with its twin budget and current-account deficits, the new nation would have face much the same challenges as Britain, only more acutely. Similarly, UK is likely to inherit its most favoured defence trading status with the United States, but this will not apply to Scotland, at least initially, and if congressional approval is obtained. This will probably result in a number of defence firms moving their businesses from Scotland simply to retain access to the US market, where they contribute to various programmes. The same effect is also likely to occur in areas such as warship building, where the majority of business would be for UK and the United Kingdom has traditionally insisted on retaining the ability to manufacture at home.

It is generally assumed that UK would inherit all the United Kingdom’s current treaty commitments and obligations. By contrast, an independent Scotland is not viewed as inheriting these commitments, and would have to negotiate any agreements afresh. This will have a number of consequences. For example, membership of the ‘Five Eyes’ intelligence community (UK, US, Australia, Canada and New Zealand) is unlikely to be offered, at least initially, to Scotland, and whether it is granted at all will be entirely dependent on the acquiescence of the existing members.

The issue of Scottish independence has been settled for the foreseeable future. Big promises of more devolved powers were made to Scotland to keep it in the union.

But it is not only in Scotland that the campaign stirred passions. The outcome is that Scotland will have more control of its own affairs and greater tax-raising powers, but less influence over England. Prime Minister David Cameron, under pressure from within the Conservative Party, has announced that a new ‘balanced settlement’ is to be worked out.

Britain had agreed to grant the Scots considerable new powers to run their own affairs. Prime Minister David Cameron— a great opportunity — to change the way the British people are governed,” he said, “and change it for the better.”

He gave no specifics, but said: “Just as Scotland will vote separately in the Scottish Parliament on their issues of tax, spending and welfare, so too England, as well as Wales and Northern Ireland, should be able to vote on these issues. This will mean more power for the English over English affairs, and similarly in Wales and Northern Ireland. The challenge, now that Scots have voted for the union, will be to create a structure that retains a real union both in fact and in spirit.

Positions on the shape of the new settlement will need to be established within each major party. The discussion will be complex. It could also entrench more rightist government in England, since most Scottish MPs (41 of 59, out of a total of 650 Westminster seats) represent Labour.

What lies ahead is a federal Britain. A related argument is that federalism makes it harder to pass new legislation because it has to be ratified in two legislative assemblies. The implication is a status quo bias. But while federalism does appear to have associated with smaller governments, there is in fact a striking amount of variance across federalist states. Swiss and US federalism seems to be linked to low spending, but this is not true of German or Austrian federalism. To the variety of regionalisms that exist correspond different modes of regional government and governance. To account for this variation, Rodden (2003, 2005) has proposed to distinguish between federalist systems with different fiscal institutions.

Federalizing, or federal can be seen as a complex interplay of centrifugal and centripetal pressures. But it would be an oddly unbalanced federalism, given that England represents 85 percent of the population, as the consulting firm Oxford Analytica pointed out. This kind of democracy would be fairer than the existing arrangements, but it may also have consequences beyond the United Kingdom, as noted by Egmont Institute “Cameron’s logic calls for eurozone democracy”. The promises of decentralization “made by London to Scotland will also lead to claims for similar powers from Wales and Northern Ireland. Rules make sense.

A more democratic and bolder alternative (see here) would be to set up a separate English parliament. It would handle domestic policy, leaving foreign affairs and economic co-ordination to a federal parliament. This is a logical solution: everyone, including the English, would then have an assembly. English MPs would be accountable for English policies, British MPs for British ones, and voters would know whom to blame for what.

Prime Minister David Cameron now faces a broader debate over the centralization of power in London, intense budget pressures, and fissures within his own Conservative Party as he heads toward a general election campaign in the spring.

The vote riveted the world. In Washington, President Barack Obama welcomed Scotland’s choice, and congratulated Scots for their “full and energetic exercise of democracy.”

The vote against independence keeps the United Kingdom from losing a substantial part of its territory and oil reserves and prevents it from having to find a new base for its nuclear arsenal, now housed in Scotland. It had also faced a possible loss of influence within international institutions including the 28-nation European Union, NATO and the United Nations. It would have reduced UK’s representation in the European Parliament and other institutions. The Scottish referendum result is a poke in the eye for those around the world who mocked London’s weakness in agreeing to allow it.

The vote in Scotland, however, has great implications for Britain’s membership in the European Union. Scotland is adamantly pro-European, and should Mr. Cameron remain prime minister after the May elections, he would have a better chance of winning a 2017 referendum he promised on British membership in the European Union with old Scotland voting on it.

What dragged India down, compared to China.

Tags

capitalism versus socialism, Public choice theorists

This year, as we celebrate the Great War 1914, including the 25th anniversary to the fall of the Berlin Wall and supposed end of history, capitalism and liberal democracy having won out, it is easy to forget that the big ideological debate of the first half of the twentieth century was about capitalism versus socialism, often used ideology by Communism. People from all walks of life, not just the communists in the Soviet Union believed that capitalism is inherently unstable and requires central planning to make it work.

Hayek said that government planning would make society less liveable, more brutal, more despotic. Socialism in all its forms is contrary to freedom.

At the end of the Second World War, F. A. Hayek´s ideas, as expressed in “The road to Serfdom” proposed that central planning was unworkable because central planners, as opposed to markets, cannot hope to pick up all of the distributed information they need to make good decisions, that government intervention, especially the surgical type, as opposed to the type that stands for the rule of the Law, tends to make things worse, and that National Socialism is a form of “socialism.”

Hayek´s idea launched an important debate on the relationship between political and economic freedom. And though it appeared in 1944, it continues to have a remarkable impact. No one can consider himself well-schooled in modern political ideas without having absorbed its lessons.

It would take close to half a century before the Berlin Wall fell, and Hayek´s ideas triumphed over John Maynard Keynes. Pointing to the success of this, in the second half of the twentieth century, western Europe was, blissfully, at peace. The process of European integration included repeated pushes for monetary integration. The introduction of the euro was one of the most important steps in the European integration process.

If it sounds like an impossible, the answer is that, most European voters in many countries, especially Germany, were negatively disposed towards a common currency and central bank. But policy-makers like Helmut Kohl pushed ahead against both expert and voter opinion. Many people remember him as the “Chancellor of Unity” because it was during his term in office that West and East Germany were reunified.

By any reasonable measure, Kohl´s actions were non-opportunistic and non-partisan. But, were motivated by the idea:as he would say, that the people of Europe, who over the centuries have gone to war with each other to the tune of million lost lives will find peace if they are tied together by a common set of institutions, including a common currency and central bank. But, in reality, there is also another international organization, a collective security solution, the forces of democracy NATO, that has kept the peace in Europe since 1945. To be sure, given Europe´s violent past, the European Union´s greatest contribution to international security has been to ensure stability in its own region. Today, nearly a century after the outbreak of World War I, peace and stability are firmly entrenched in Europe. Eastern Ukraine is the only danger zone.

Kohl may well be right, and the issue here is not just war. The issue is that any extreme event that will require a coordinated response on the part of the European countries will now meet upon an elaborate set of institutions that can deliver such a response.

This is not to say that the institutions of the European Community and European Monetary Union are a pretty sight, they are cumbersome and costly, and impossibly bureaucratic. And a fundamental flaw in the present system is that when voters vote in Europe elections they are voting for the candidates of their familiar national parties but they do not realise who they are voting in the system of European parliament. Some voters rarely know their candidate for the European Commission presidency. It is simply to say that they will probably help avert large scale disaster in Europe.

• True democracy, real prosperity, lasting security – these are nether simply given.

Realizing a long-term vision for Europe is much more difficult than ever when so many short-term imperatives reviving growth and employment, winning elections, and re-engaging a distrustful public amid growing populist sentiment, materialize simultaneously.

To experience the full “model of integration” today, the center of the world is the United States. And we all both in Europe and U.S can look back at a century´s worth of immense technological progress and an increase in material standards of living for which there is no precedent in history. At the same time, the ideas of economics can not be understood without the political context of power relationships that surround commercial activity.

In much of the post-war period, however, these arguments were dominated by powerful counter-arguments. In Western countries, the rise of Keynesianism, the increasing legitimacy of social welfare institutions and labour unions, and the acceptance of the need to regulate financial institutions provided justifications for interventionist policies and weakened the ideological support of the Western example for free trade policies in the Third World. The importance of the Western experience was further undermined by the example of socialist countries which appeared to be succeeding in bringing about a dramatic structural transformation of their economies through central planning and pervasive government intervention.

The remarkable success of German and Japan after WW II was, after all, in large part the result of the complete destruction intricate systems of special relationships allowing a fresh start along clean free market lines, but of course, at the great social cost of war.

Of course, Germany owes its post-war recovery and wealth to its people and their hard work, innovation, and devotion to a united, democratic Europe. But Germans could not have staged their magnificent post-war renaissance without the support signified by the “Speech of Hope.” Hope was a force for good in post-war Europe, and it can be a force for positive transformation now in the case of Ukraine, as well as Greece. Byrnes’ address marked America’s post-war change of heart vis-à-vis Germany and gave a fallen nation a chance to imagine recovery, growth, and a return to normalcy.

Why did Russia fail? Collectivist institutions under socialism failed because central planning could be successful only during the first investment “generation.” As Russia did between Peter the Great and Pyotr Stolypin’s early twentieth century reforms. To be ahead of the curve in the 1930s, you had to build dams, which central planning did pretty well; to be ahead of the curve in the 1970s, you had to build cars to please consumers, which planning could not do.

And why did China succeed? Because it waited (obviously not consciously) to start modernization until the early twentieth century, and because it kept planning for thirty years only. Thus, China, largely accidentally, on both counts did exactly what was best: it did not start modernization too early and it jettisoned central planning just as it was becoming inefficient. But perhaps the best rebuttal of the “do nothing until the time is right” hypothesis comes from the success of Japan.

Japan modernized well, preserved most of its own institutions, generated investible surpluses, and basically played according to the Western textbook. (Vladimir Popov, 2014). The Western “big push” In Popov’s view, the Malthusian trap is broken through “elimination of collectivist institutions and replaced them with individualistic profit-maximizing agents, markets, intellectual property and human rights in the free trade era. But it was also a costly approach because it increased poverty and mortality, but it eventually worked.

Planning economy failed, not because of its intrinsically different efficiency in the 1930 versus the 1970s, but because the nature of technological progress changed and growth. Lawyers and economist have recently paid a great deal of attention the globalizations of intellectual property rights. The 1994 Agreement on trade-related aspects of intellectual property rights, the TRIP agreement, established minimum standards for intellectual property protection in all member states of the World Trade Organization.

• The Rise of China and Japans dreams of more powerful Japan.

In the 1830s the British tried to prise open the China market with opium—something people could be made to want, and keep wanting, whatever their previous inclinations. The Chinese tried to stop the trade; the British forced a war upon them and won it. In the subsequent Treaty of Nanjing, concluded in 1842, Britain grabbed Hong Kong and forced China to open its doors. At the time China was unaware that an economic, technological and cultural revolution was taking place in Europe and being felt throughout the rest of the world. Today, the country has become what Macartney was looking for: a relatively open market that very much wants to trade. Macartney’s embassy would learn what the Chinese wanted. Macartney’s request that more ports in China be opened to trade.

A better approach may be is to focus on our time and the risk of catastrophe and security in the Southeast Asia region and then update the models as more information emerges. The dangers should not be exaggerated. But, with strategic competition between the US and China as delicately poised as it is, and with the economic interests of Australia, Japan, and many others in the region bound up just as intensely with China as their security interests are with the US, rocking the boat carries serious risks.

This time is different, for several reasons, especially when China has achieved what policymakers call “capture” a condition in which economic or security dependence of one country on another allows the more powerful to drive the other´s policy making. Based on the size of their commercial relationships with China as a share of their overall economies, the governments next closest to China capture are Pakistan and Myanmar. But even in China´s backyard, emerging powers like Indonesia, Thailand and Vietnam with Beijing ties hope an expanded U.S presence in Asia will help them hedge against too great a reliance on China´s good will.

In 1980, Chinas economy was less than one tenth that of the United States. Beijing adopted a low profile as it emerged as a world power. In 30 years, 2011 China rose to become NO. 2 in the world, without disrupting the world order. Thus, the disruptions of the world economy during the last decade have had relatively little impact on the pace of Chinese economic expansion. Essentially, the Chinese economy has not been constrained by its balance of payments during this period. The central long-term factor responsible for this happy situation is that the Chinese over the last thirty years have built up their own industrial capacities and capabilities, which enable them to have sustained high rates of economic growth without being affected by the state of the world economy. There are, however, other points about China’s recent international relationships which deserve attention. Suddenly, with little warning, three decades of careful management of its external challenges have been replaced by three years of assertive and occasionally reckless actions.

Chana’s explosive transformation from a planned economy to a more market-oriented one over the past three decades owes much to the chaismatic reform by Zhu Rongji. China began liberalizing much earlier and has been able to attract a much higher level of foreign investment.

In the last 35 years, after the Chinas Communist leadership embarked on a course of economic liberalization, China´s real GDP increased close to eightfold, its real GDP pre capital close to sixfold. This increase, with its speed and size, along with the huge number of people involved, has got to count as the single largest explosion in standards of living in human history. Several hundred million people were lifted out of the poverty of living on the purchasing-power-parity equivalent of one dollar a day, and some got very rich. The biggest of these made their fortunes from the rapid expansion of the banking sector. Economic globalization in the country has also led to serious environmental problems because rapid economic growth takes place with little or no attention to the environment.

Today China stands out as the country with the population, ahead of India, and the second-largest economy, after the United States. Recent IMF WEO, July update, Growth in China is forecast to average 7,4 percent in 2014 as recent measures show, growth will moderate to 7.1 percent in 2015. For India it is expected to pick up gradually in the rest of the year. Only a few years ago, India was rivaling China for the title of worlds fastest-growing major economy. But that potential has been squandered. Growth in fiscal 2013-14 tumbled to 4,7%, a rate far too slow ti lift the 400 million Indians still trapped in desperate poverty.

The nagging question is why China has outperformed India, which in contrast to China is a democracy. But if India is politically liberal, economically it is not, or rather, it was not until recently when it, too, caught the economic liberalization bug, not doubt in response to China´s glowing success. For decades, India suffered from what some called the “Hindu rate of economic growth”: a little more than 1% per year. It might more properly have been called a 1930s British socialist rate of growth.

After independence in 1947, India pursued an inward-looking planning system policies that reflected a philosophy of government planning and economic self-sufficiency. Its policy makers, influenced by the Soviet Union and the anti colonial struggle, implemented a state-heavy economic model. This tied up private enterprise in a web of controls that came to be nicknamed the License Raj. Its economy was relatively stagnant until piecemeal economic reforms in the 1980s and some measure of economic liberalization in the 1990s when India finally, with Manmohan Singh, woke from its slumber improved economic growth rates.

What dragged India down, compared to China, were special interest of the kind that have been described by public choice theorists, including Mancur Olson. Beacause of its skepticism about the supposedly benign nature of government, public choice is sometimes viewed as “conservative or libertarian” branch of economics, as opposed to more “liberal” (that is, interventionist) wings such as Keynesian economics.

But not all public choice economists are conservatives or libertarians. More recently, Olson wrote The Rise and Decline of Nations, which concludes that Germany and Japan thrived after World War II because the war destroyed the power of special interests to stifle entrepreneurship and economic exchange. But Olson still favors a strong government. Advanced democracies with complex economies have been reluctant to implement the institutional proposals coming out of public choice theory. The years since World War II world have seen rapid shifts in the relative positions of different countries and regions.

The point that is here to make for now is that public choice dominates political economy when it comes to explaining the comparative performance of China and India. Economic liberalization combined with some degree of political stability, in which people know that they can keep the fruits of their entrepreneurial efforts, outperforms political liberalization combined with central planning. This is Hayekian thinking rather than Keynesian, and this is roughly the public choice credo: free the markets, limit the government, put in place a couple of simple and transparent rules, and let the people do their thing.

In contrast, political economy comes across as fussing over market failures and deriving optimal institutions that will surgically correct the problem. This is partly correct. The emergence of public choice economics reflects dissatisfaction with the implicit assumption, held by Keynesians, among others, that government effectively corrects market failures. Those political disagreements between government intervention (Keynes) and free markets (Hayek) are important, but they arose from crucial differences in economic theory, as British journalist Nicholas Wapshott writes in his Keynes vs Hayek clash book.

According to IMFs governments review, Transition to New Growth Model: which is more inclusive, environment friendly, and sustainable growth path. The aim is to use resources more efficiently and unleash new sources of productivity growth, in a way that better protects the environment and ensures that growing prosperity is widely shared.

Key principles include giving the market a more decisive role, taxing broader range of economic activity, reforms that will promote more inclusive growth.

India, a land of the million mutinies, is too diverse and fractious to speak with one voice. But it´s safe to say all Indians want what anyone anywhere would: the freedom to choose, so long as it does not impinge on the rights of others, the chance to pursue a better life and the space to live that life in dignity.

In recent decades, economists and political scientists have theoretically mapped out a range of issues such as the political vulnerability over time and across countries. Of all thousand roles of general rule of government success is a effective and accountable government.

Modi will need to take on entrenched interests that have successfully thwarted change in the past, from the recalcitrant bureaucracy to militant unions. Ministries and regulatory agencies that distrust and seek to control private enterprise would be better if transformed into facilitators that support investment and development. The most important factor is the acceleration in India’s economic growth, which the International Monetary Fund projects will exceed 7.5% through 2020. Much of the excitement that the new Modi government has generated in India, around the world, and most notably in the business community, has been around this idea of accountable and effective government that can unleash India´s economic potential. If India is to achieve its potential, it will need to address its economic and governance challenges, but also its security interests in the region to a greater extent than has been the norm for decades.

India and China are fellow members of the BRICS (along with Brazil, Russia, and South Africa). But cooperation within that caucus is limited. While Indian officials are often discreet in public about relations with China, and wisely want bilateral trade and investment to grow, their security concerns remain acute. As part of the group of Asian countries that will tend to balance China, India has already begun to strengthen its diplomatic relations with Japan on issues that has become an issues in the international arena and for India, a peaceful and prosperous neighborhood is vital if India is to achieve sustained economic growth and true national security. This thinking was evident in PM Modi´s invitations to the heads of governments of the South Asian Association for Regional Cooperation (SAARC) to attend his swearing in ceremony.

On top of this, China along with Pakistan, Bangladesh and a number of other countries have set up a regional partnership organization called the Asia-Pacific Space Cooperation Organization, with projects that include sharing data, establishing a space communication network, and tracking space objects. The unavoidable strategic reality is that any nation or alliance which can control the sea lanes of the Indian Ocean can hold much of Asia hostage, including China. Control of western Indian Ocean closes the chokepoints in the Indonesian archipelago. China has invested heavily in special relationships with both Pakistan and Burma and has actively cultivated Iran despite the political risks involved. That is frequently described as the String of Pearls strategy, whereby a chain of bases is built along China´s most critical strategic SLOCs.

China is helping set up a space academy/satelite ground station alongside the lunch of telecommunications satellite in 2015 for Sri Lankan firm Suprema SAT Pvt. Ltd., and signed an agreement with the Board of investment of Sri Lanka for the purpose. Bangaladesh and Maldives were also expected to pursue a similar path. Meanwhile, Pakistan is expected to receive military grade positioning and navigation signals form China´s BeiDou system.

These developments have shocked the Indian establishment, but still New Delhi has yet to sign a memorandum of understanding or agreement with any of the other SAARC members. Under those circumstances, on June 30, India celebrated another successful launch of the Polar Satellite Launch Vehicle (PSLV), the workhorse of the Indian Space Research Organization ISRO. This time, India´s new Prime Minister Narendra Modi was in attendance. His SHAR speech emphasized the role of technology. Among the may points he made, two were geopolitically significant.

First, he observed that the satellite being launched, SPOT 7, belonged to a developed nation: France. Second, he challenged the ISRO to develop a satellite that would serve the South Asian Association for Regional Cooperation nations. Those thoughts coincide with of three major foreign policy issues that confront India, as noted by Shivsankar Menon: its relation with major power and its need for a peaceful and prosperous neighborhood. With the support of the new Modi government. ISRO is expected to reverse the trend and be proactive space diplomacy.

If we scratch, the remarks of Narendra Modi do not merely represent a developmental initiative for creating a digital India, they are a signal to to enhance national security through neighborhood development and create an incentive to establish a robust foreign policy after the many misadventures seen during the tenure of the previous government.

An agreement on cooperation in Science and Technology which included space technology is one of the foremost partnerships the US established immediately after its historic diplomatic recognition of the People´s Republic of China.

Western Australia and the Cocos (Keeling) Islands, then British and now an Australian offshore territory, played an important role during the Second World War, as a staging area and basing area for air and naval operations across South East Asia. While Australia has traditionally defined its place in the world, as the Asia Pacific, this Government now looks west to encompass India as a crucial part of our region.

There are no guarantees that the future will resemble the recent past. But a significant drop in the potential treat posed by China is also possible if the Chinese economy falters and Beijing redirects its attention and resources toward maintaining internal stability.

Some analysts say that China´s economic role will limit the sort of strategic partnership India might form with the United States, including policies aimed at curbing Beijing´s growing military power in the region.

Another challenge consists of the high likelihood that and extreme unforeseeable event will occur. However, there are no “silver bullets,” Noregional or alliance response can single-handedly deliver a stable security, or political balance at minimal cost to all parties involved.

To this end, the Carnegie Endowment has offered up an extraordinary contribution: China´s Military and the U.S-Japan Alliance in 2030: A Strategic Assessment. Increased Chinese military spending and the build-up of its naval capacity suggest to many American strategists that China intends to challenge the U.S. as a Pacific power, and we are now seeing an arms race between China and Japan, two countries in the Asia-Pacific region.

China’s then foreign minister, Yang Jiechi, vocally pointed out at a meeting of regional powers in Hanoi in 2010, “China is a big country and other countries are small countries and that is a fact.” The China’s armed forces are, if not technologically first-rate, certainly large and impressive, not least because they include a nuclear-missile force. But some of Mr Yang’s small countries have a big friend. With troops and bases in Japan and South Korea, America has been the dominant power of the western Pacific for 70 years. Its regional presence has not declined much since it won the cold war a quarter of a century ago. On a trip to Asia in 2011 Barack Obama announced a “pivot” of his country’s policy away from the Middle East and towards Asia.

China’s leaders are convinced that America is determined to prevent their country from increasing its strategic and military influence in Asia—that it is trying to contain China as it once sought to contain and eventually crush the Soviet Union. The irony is that China is the only country that really believes the pivot is happening. South-East Asian nations express a fair amount of scepticism at the idea that America’s attention has been newly fixed on their region, and his opponents in America claim Mr Obama has done far too little to follow through on what he said in 2011.

• China´s rise is increasingly seen by the U.S as a challenge to its dominant position in the region.

Japan´s unease has been accentuated by poor relations with China that are partly the result of historical animosities emanating from its predation of China and its invasion of that country in 1937 and partly due to the increasing strategic competition between the two countries.

To this day, the emergence of the People´s Republic of China as an increasingly significant military power in the Western pacific presents major implications for Japan, the U.S.-Japan alliance, and regional security. Japan´s new self-defense initiative is the right move at the right time. The future security and prosperity of the Asia-Pacific region may very well be defined by the content of this assessment.

Now let us look what lies ahead.

On July 31, 2014 Secretary of State John Kerry is to visit India to strengthen U.S-India economic ties. This visit marks the first U.S cabinet-level visit to New Delhi since the new Indian Government was elected, and it underscores the strategic importance of the U.S.-India relationship.

• India has a vital role to play in Asia´s growing importance to America´s security and prosperity.

From security in the Asia-Pacific there is no better time for India than now to re-examine the U.S.-India relationship. As delivered before the house Foreign Affairs Committee, Subcommittee on Asia and the Pacific Washington, DC july 24 2014 India. India increasingly sees its future in a secure, connected, and prosperous Asia Pacific. Testimony Nisha Desai Biswal.

The true potential of this relationship was best characterized by India´s Prime Minister Modi himself when he said two weeks ago that “it is not just benefits to the Indian people and the American people, but that the true value of the U.S.-India relationship is that when the world´s oldest democracy and the worlds largest democracy come together, it is the world that stands to benefit”.

Given India´s own growth problem and its problematic relations with China and its warming toward the United States, there appears to be momentum a Quadrilateral Security Dialogue involving India as well.

Such development should not come as a surprise.

Since 9-11, the United States and its regional allies, Japan and Australia, have coordinated their regional approaches through the Trilateral Security Dialogue process. The strategic concern over a rising China, the emergence of terrorism, and maritime security challenges and the initial reluctance of littoral states in the region to coordinate their counterterrorism strategies (The Japan, Australia, and U.S – The Trilateral Security Dialogue 2001) provided impetur for a more coordinated approach among the United States and its allies in the region. Although the main concerns were over maritime security and the challenges posed by terrorism, there was unstated unease in the three countries over China´s emergence.

The U.S and India entered a watershed when they agreed to establish a strategic relationship under the New Framework for the U.S-India Defence Relationship in 2006. This was followed by the expansion of the U.S-India Malabar naval exercises in the Indian Ocean in September 2007 to include Japan and Australia, Singapore, a junior ally of the three powers, also participated. A papers issued by the members of the QSD have specifically suggested that China is a potential threat. But, we have not yet seen any renewed attempt to re-establish the QSD comprising Japan, Australia, the US, and India, which conducted joint military exercises in 2007 and was seen by China as a hostile containment enterprise. But it is not hard to imagine that this is still very much on Abe of Japan´s wish list.

Japan is right to be concerned about China´s new regional assertiveness, and Abe´s recent diplomatic push to strengthen Japan´s relations in Southeast Asia, and with Australia and India, is understandable in that context. Of course, if China becomes aggressive, Asian countries like India and Australia, which are already disturbed by China´s assertiveness in the South China Sea will join Japan in the effort to offset China´s power. But, as Joseph S. Nye´s recent article suggested “a more effective approach, spearheaded by the US and Japan, would focus on integration, with a hedge against uncertainty.” And he sugges that “..American and Japanese leaders must shape the regional environment in such a way that China has incentives to act responsibly, including by maintaining strong defense capabilities”.

Accordingly, there is a tension in Chinese foreign policy. The country wants to have as little involvement abroad as it can get away with, except for engagements that enhance its image as a great power. It will act abroad when its own interests are at stake, but not for the greater or general good. Its navy has started to take part in anti-piracy operations off the Horn of Africa and in UN peacekeeping in Africa. In 2011 it sent a ship to co-ordinate the evacuation of 36,000 Chinese workers from Libya. More such actions may follow as its companies get more deeply involved in the world, but only if they are seen as either low-cost or absolutely necessary. Acute awareness of its domestic weaknesses acts as a restraint, as does Chinas view of America’s foreign policy. In a wide range of fields, what China is against is a lot clearer than what it is for. It vetoed the interventions Western powers sought in Syria and Darfur and has taken no position on the Russian annexation of Crimea. The former argument suggest that the world needs more Chinese engagement and initiative, not less.

Austrian Gemuetlichkeit and Russian Druzba.

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Austria, Germany, Russia

Austrian relations with European union and Russia is undergoing a dramatic  transformation, over the crises in Ukraine and after last week´s downing of flight MH17. While Austria is a member of the European union and should, therefor, endorse the bloc´s sanctions against Russia particularly after Russian aggression, Austria´s President Heinz Fisher has rejected the U.S and EU´s criticism and signed a deal for Austrian of the controversial South Stream gas pipeline that bypases Ukraine.

Defying all Western critique, such as from Sweden´foreign minister Carl Bildt, who said “Austria views itself as an intermediator between East and West. ..It may regard actions or sanctions against Russian aggression as understandable, but would rather let others be publicly confrontational, Vienna prefers remaining in the shadows, doing business and offering permanent “open dialogue”

What´s more, the Trans – Atlantic unity had been essential in discouraging further Russian aggression and that the Austrians should consider carefully its relationship with Russia, said the US embassy in Vienna on the Austrian move. It came just hours before Russian President Vladimir Putin arrived in Vienna for a one-day visit.

Putin and Fischer also emphasized Russia’s and Austria’s close business ties, with Putin calling Austria an “important and reliable” partner. Traditionally, Austria has been an importer of both Russian crude oil and natural gas, although the relative share of russia in these two product groups is vastly different. Its is rather modest when it comes to oil

Austria and Russian friendship is built on history.

Before the First World War, most of Europe was ruled by monarchs related to George V, King of the United Kingdom, but during after the war, the monarchies of Austria, Germany, Greece,a Spain like Russia, fell to revolution and war. George himself inherited the throne at a politically turbulent time.

The origins of modern day Austria date back to the time of the Habsburg dynasty when the vast majority of the country was a part of the Holy Roman Empire of the German Nations, which had included more than 500 independent states. The house also produced kings of England, Germany, Hungary, Croatia, Ireland , Portugal and Spain as well as rulers of several Dutch and Italian countries. Although today closely associated with the Habsburg dynasty, until 1246, Austira was a feudal possession of the younger House of Babenberg. Margrave Leopold the Generous (1136-1141) was loyal liensman of the Imperial House of Hohenstaufen in the struggle against the Bavarian Welf dynasty.

The office of Holy roman Emperor was traditionally elective, (German prince-electors usually elected one of their peers as King of the Romans) although frequently controlled by dynasties.

The precise term Holy Roman Empire was not used until the 13th century but the concept of transiatio imperial (transfer of rule) was fundamental to the prestige of the emperor, the notion that he held supreme power inherited from the emperors of Rome.

The history of diplomatic relation between Russia and Austria goes back to the 15th century, when the Austrian kaiser, Maximilian and the Russian tsar, Ivan III exchanged legations. An Sustrian noblemen, Sigismund bon Herber-stein, twice led embassies from the Hasbrug Holy Roman emperor to Basil III (1505-1533) in Moscow.

The Thirty Years War (1618-1648) one of the most destructive conflicts in european history, and one of the longest continuous wars in modern history, influenced the Kingdom of Sweden and Kingdom of France, the rise of the Kingdom of Prussia, and the Napoleonic invasions and all weakened the power of the Emperor in the North of Germany. (It also made the Russian Empire a permanent force in the European balance of power).

In 1719 John Carteret, a British Lord, became ambassador extraordinary and minister plenipotentiary to the Queen of Sweden. In that post he ensured continuing freedom of trade in the Baltic, mediated between Sweden and Denmark to achieve a treaty, and brought about peace between Sweden, Prussia, and Hanover in March 1720 . He also played a similar role in France before being appointed secretary of state for the Southern Department (equivalent to the post of home secretary) by Sir Robert Walpole, the First Lord of the Treasury and the prime minister.

Carteret was the only minister who could converse with George I, who spoke only German. In other words, although the Peace of Augsburg created a temporary end to hostilities it did not resolve the underlying religious conflict, which was made yet more complex by the spread of Calvinism throughout Germany in the years that followed.

Austria and Prussia had also a long standing conflict and rivalry for supremacy in Central Europe during the 18th centuries, termed German dualism. The rivalry is held to have begun when upon the death of the Habsburg. Emperor Charles VI in 1740, King Frederick the Great of Prussia launched an invasion of Austrian controlled Silesia, starting the Silesian Wars against Maria Theresa.

Uncertainty of wars outcome and settlement of deadly conflict of borders – The Austrian diplomat Klemens von Metternich, who worked on territorial disputes in the aftermath of the Napoleonic Wars, was one of the most important diplomats of his era, serving as the Foreign Minister of the Austrian Empire form 1809 until the liberal revolutions of 1848 that forced his resignation.

Austria maintained an alliance with Russia for most of the eighteenth century, because its rival, France, was seeking aid from Russia´s neighbors Poland and Turkey. Austria and Russia prevented Stanislaw Leszczynski, a French supported candidate to the Polish throne, form unseating the Saxon dysnasty in the War of the Polish Succession (1733 -1735). Russia also supported Maria Theresa´s claim to the inheritance of her father, Emperor Charles VI, in the War of the Austrian Succession and the Seven Year´s War (1756-1763).

During the Revolutionary and Napoleonic wars, Russia and Austria were allies in the War of the Second Coalition. French victories forced Austria to make an alliance with Napoleon. Wen the invasion failed, however, Austria joined Russia, Prussia, and Great Britain in the final coalition that defeated Napoleon in 1814 and occupied Paris.

The Duke of Wellington´s victory over Napoleaon´s army in 1815 put an end to Napoleon´s ambitions to rule all of Europe.

Wellington at Waterloo is interesting, becouse its won by the forces of reaction and Blucher and Wellington are supreme reactionaries. The French ruler had ambitions to invade and rule Britain. A decade earlier from 1803 to 1805 Napoleon has gathered at Boulogne but it never made across the English Channel because of the supremacy of the Royal Naval.

In PHOTO Kleamens von Metternich, one of the most important diplomats of his era, serving at the time as the Foreign Minister of the Austrian Empire form 1809 until the liberal revolutions of 1848 that forced his resignation. One of his first tasks was to engineer a détente with France that included the marriage of Napoleon to the Austrian Arch-Duchess Marie  Louise. Soon after, however, he engineered Austria´s entry into the War of the Sixth Coalition on the Allied side, signed the Treaty of Fontainebleau that sen Napoleon into exile and led the Austrian delegation at the Congress of Vienna.

His supporter point out that he presided over the Age of Metternich when international diplomacy helped prevent major wars in Europe. His qualities as a diplomat have also been commended some add that his achievements were all the better given the weakness of his negotiating position. His decision to oppose Russian imperialism is also seen as a good one.

1st Chancellor of Germany office.: Upon his 1862 appointment by King Wilhelm as minister President of Prussia, Otto von Bismarck provoked three short, decisive wars against Denmark, Austria and France, aligning the smaller German states behind Prussia in defeating his archenemy France. In 1871 he formed the German Empire with himself as Chancellor, while retaining control of Prussia. His diplomacy politics (based primarily on power and on practical and material factors and considerations, rather than explicit ideological notions or moral or ethical premises) “realpolitik” and powerful rule at home gained him the nickname the iron Chancellor”.

Otto von Bismack used his unrivaled diplomatic skills to maintain Germany´s position and used the balance of power to keep Europe at peace in the 1870s and 1880s. German unification and its rapid economic growth was the foundation to his foreign policy.

In his speech “Blood and Iron” when an increase in military was refused to approve ..Bismarck as Minister President concluded his speech following statement; before the Budget Committee ,

The position of Prussia in Germany will not be determined by its liberalism but by its power …Prussia must concentrate its strength and hold it for the favorable moment, which has already come and gone several times. Since the treaties of Vienna, our frontiers have been III-designed for a healthy body politic. Not through speeches and majority decisions will the great questions of the day be decided that was the great mistake of 1848 and 1849 but by Iron and blood

Germany, prior to the 1860s consisted of a multitude of principalities loosely bound as members of the German Confederation, Bismarck used both diplomacy and the Prussian military to achieve unification, excluding Austria from a unified Germany. Not only did this make Prussia the most powerful and dominant component of the new Germany, but also ensured that it remained authoritarian, rather than a liberal parliamentary regime.

Historians debated.. and they concluded that factors in addition the strength of Bismarcks Realpolitik led a collection of early modern polities to reorganize political, economic, military, and diplomatic relationships in the 19th century. Reaction to Danish and French nationalism provided foci for expressions of German unity. Military successes especially those of Prussia in three regional wars generated enthusiasm and pride that politicians could harness to promote unification.

Prussia´s victory over Austria increased tensions with France. Its emperor, Napoleon II, feared that a powerful Germany would change the balance of power in Europe; opposition politician Adolphe Thiers had observed, it was France, not Austria, who was really defeated at Königgrätz.

The Austro-Prussian war provided a great opportunity for Prussian statesman, by clearing a path toward German unification, in particular with Little Germany (Germany without Austria) solution, with the subsequent foundation of the North German Confederation.

The outcome also ensured that Prussia would have a free hand when the inevitable war with France came to pass in 1871. With the rise of Prussia the Austrian-Prussian dualism began in Germany. Austria participated, together with Prussia and Russia. This German dualism presented two solutions to the problem of unification the small German solution (Germany without Austria) or greater Germany solution (Germany with Austria).

Historian Paul Schroeder argues that the old formulas for balance of power were in fact highly destabilizing and predatory. He says the Congress of vienna avoided them and instead set up rules and system that produced a stable and benign equilibrium.

The congress of Vienna was the first of a series of international meetings that came to be known as the Concert of Europe, which was an attempt to forge a peaceful balance of power in europe.

The model of diplomatic spheres of influence resulting from the Congress of Vienna 1814-15 after the Napoleonic Wars endorsed Austrian dominance in Central Europe. After Congress of Vienna. At Congress of Vienna 1814 settlement, Astria and Russia made major territorial gainsu. During 17th and 18th centuries Austria was able to retain its position as one of the great powers of Europe. However, the negotiators at Vienna took no account of Prussia´s growing strength within and among the German states and so failed to foresee that Prussia would rise up to challenge Austria for leadership within the German states.

More sustained relations between Austria and Russia began , after the Thirty Years war meeting 1698, when the russian tsar Peter the Great I visited Vienna and met Kaiser Leopold I, that regular diplomatic contacts between the two countries actually started.

After the collapse of both the Russian and the Austro-Hungarian Empires (1918) following World War I, when Austria-Hungary was defeated by the Allied Powers, one of which was the United States of America, it used the name the Republic of German-Austria in an attempt for union with German, but was forbidden due to the Treaty of Saint-Germain-en-Laye (1919).

For nearly a century since, historians have debated the causes of the war. Some have cited the assassination of Archduke Franz Ferdinand, other have, as war is, concluded it was unavoidable. To explain the causes of World War I. West German historian Andreas Hillgruber argued that in 1914, a calculated risk on the part of Berlin had gone awry. Hillgruber argued that what the imperial German government had attempted to do in 1914 was to break the informal Triple Entente of Russia, France and Britain by encouraging Austria-Hungary to invade Serbia and thus provoke a crisis in an area that would concern only St. Petersburg.

Hillgrube argued that the Germans hope that both Paris and London would decide the crisis in the Balkans did not concern then and that lack of Anglo-French support would lead the Russians to reach an understanding with Germany.

Other authors, such as Taylor´s opinion, is that none of the great powers wanted a war but all of the great powers wished to increase their power relative to the others.

Hillgruber argued that when the Austrian attack on Serbia caused Russia to mobilize instead of backing down. In Hillgrubers´s opinion the German government had pursued a high-risk diplomatic strategy of provoking a war in the Balkans that had inadvertently caused a world war. Recently, American historian David Fromkin has blamed elements in the military leadership of Germany and Austria-Hungary (a first formulated by Austria-Hungarian and the second by German) to start a war with Serbia to reinvigorate a fading Austro-Hungarian Empire. the second secret plan was that of the German Military leadership to provoke a wider war with France and Russia.

He thought that the German military leadership, in the midst of a European arms race, believed that they would be unable to further expand the German army without extending the officer corps beyond the traditional Prussian aristocracy. Rather than allowing that to happen, they manipulated Austria-Hungary into starting a war with Serbia in the expectation that Russia would intervene, giving Germany a pretext to launch what was in essence a preventive war. Part of his thesis is that German military leadership were convinced that by 1916-18, Germany would be too weak to win a war with France, England and Russia.

Diplomatic relations between the Soviet Union and the Republic of Austria resumed in 1924.

following World War II, Austria and Vienna similarly to Germany and Berlin were divided into four sectors falling under the responsibility of the United States, the United Kingdom, France and the Soviet Union, respectively. However, unlike Germany, Austria was not divided into two separate counties and continued to exist as a single state.

In economic terms, it remained a market economy and was trading extensively with the countries of the European Communities. The Soviet Union was also one of the four signatories to the State Treaty of Austria in May 1955.

Austria was the first western European country to sign, in 1968, long-term gas supply deals with Moscow. Russia is Austria’s third-biggest non-EU trading partner after the United States and Switzerland. There are important mutual business interests and somewhat tangled Austrian foreign policy, oscillating between its commitments to European and Western allies and a longing for a long bygone intermediary position between East and West.

The relatively high dependence of Austria on Russian gas is explained by the relative geographical proximity and the existing infrastructure, given that some of the major gas pipelines from Russia to Europe run via the Austrian territory. More importantly, Austria is a crucial gas supply hub for a number of European countries through Ukraine and Slovakia and transits to Italy, France, Hungary, Germany, Slovenia and Croatia.

Austria has a domestic transmission and distribution pipeline network. There are three Transmission System Operators (OMV Gas, BOG, Trans Austria Gasleiturng) From Baumgarte, one of the most important natural gas hubs in Europe, to Germany, France and from West to Wast to Central Europe.

Traditionally, Austria has been an importer of both Russian crude oil and natural gas, although the relative share of russia in these two product groups is vastly different. Its is rather modest when it comes to oil: according to the Austrian Statistical Agency Russia accounted for just 6.6 per cent of Austria´s oil imports.

Thus, statistically, Russia is Austria´s fifth biggest oil supplier, although its real role is probably higher given that some top spots are occupied by the transit rather than the oil producing countries, for Germany alone accounted for 38.4 per cent of Austria´s oil imports in 2006.

In terms of natural gas, the importance of Russia for Austria is much greater, standing at 62.7 per cent of Austria´s natural gas imports. Another important supplier is Norway with share of 15.3 per cent in 2007.

Over the past few years, bilateral investments between Austria and Russia have been developing relatively dynamically, partly due to the investment-related provisions of the Russia-EU partnership and Cooperation Agreement. Austria has investment worth €8, 5 billion in Russia, while Russian investment in Austria run to about €10,15 billion. Meanwhile Austrian banks have more than €36 billion outstanding loans to Russian borrowers which makes Austria´s financial sector a strong opponent of harsher Western financial sanctions.

There is sense of Austrian (Gemuetlichkeit) cosiness and Russian (Druzba) friendship which survives unperturbed by any geopolitical storm, domestic upheaval or historic change. Because for Austrians and Russians alike, no matter what currently sets the world on fire, there is always some time for a good ski-run whether in the Alps or Caucasus.

While this may have been a well-functioning, if sometimes dubious, foreign policy during the Cold War, when Austria really was a neutral country between two blocs (albeit quite closely integrated with the West) today this policy looks increasingly outdated, particularly in view of the country´s EU membership.

Russia needs to commit to defusing tension. This means securing borders, withdrawing all military forces and preventing further violence in eastern Ukraine, and cooperate with the government of Ukraine to meet its Geneva commitments. The Trans – Atlantic unity had been essential in discouraging further Russian aggression and that the Austrians should consider carefully its relationship with Russia. There may be a small chance that Austria offers Russia a smooth way back into the global community if the Russian president de-escalates the crisis –

Raoul Wallenberg a diplomat who chose not to be indifferent and to rise to a higher moral calling.

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American Congress, democracy, Diplomat, Honoring Congressional Gold Medal Recipient, HUMAN RIGHTS, Raoul Wallenberg, Swe-US, WW II

Around the world there are monuments, statues, and other works of art that honour Wallenberg. Raoul Wallenberg 100th anniversary in London 2012

Two years ago marked the centennial of the birth of a truly remarkable man, the Swedish diplomat Raoul Wallenberg. In 2012, the year “Raoul Wallenberg Year 2012″ was spent celebrating his life and achievements — and not just in Sweden and the United States, but in Hungary, in Israel, and in countless other locations around the globe.

In Jerusalem there is a memorial, Yad Vashem, dedicated to the six million Jews murdered by the Nazis during World War II. A street named ‘Avenue of the Righteous’ runs through the area, bordered by 600 trees planted to honour the memory of non-Jewish individuals who risked their lives to save Jews from the Nazi executioners.

His courageous and brilliant actions in Budapest during World War II that saved tens of thousands of Hungarian Jews from the Holocaust deserve our respect, admiration and emulation.

In 1944, the United States established the War Refugee Board (WRB), an organisation whose task was to save Jews from Nazi persecution. Once the WRB understood that Sweden was making serious attempts to save Jews in Hungary, it set out to find someone who could launch a major rescue operation in Budapest. Wallenberg was offered the job and accepted.

A diplomat and businessman, Wallenberg was appointed legation secretary of the Swedish diplomatic mission in Budapest in June 1944. His job was to launch a rescue operation for Jews, and he became head of a special department. By issuing protective Swedish passports and renting Buildings – ‘Swedish houses’ where Jews could seek shelter.

Wallenberg demonstrated a sense of self-sacrifice to the greater good of his fellow human beings that is a lesson to us all.

Few Swedes have received as much international acclaim and attention as Raoul Wallenberg. In 1981, he became the second of a total of just seven people to be named honorary citizens of the United States. The others include Winston Churchill and Mother Teresa. In 1985, he was made an honorary citizen of Canada, and in 1986 an honorary citizen of Israel.

Today on July 9, the American Congress will speak for all Americans and convey a powerful message through the bestowal of the Congressional Gold Medal to remember the courageous acts of Raoul Wallenberg.

Raoul Wallenberg was a diplomat who chose not to be indifferent and to rise to a higher moral calling.

We remember and revere this courageous man whose efforts saved tens of thousands of Hungarian Jews from the Holocaust. Wallenberg risked his life, and ultimately gave his life, for his commitment to basic values. We all have the obligation to ponder the full measure of Wallenberg’s personal sacrifice and tragedy.

A number of diplomats chose to risk their careers and even their lives, and defied official protocols, rules and immigration “policies” to rescue Jews. Many of these diplomats were censured or punished for their acts of courage. Some were fired. Some were stripped of their ranks and pensions. Others were ostracized in their home countries. Their rescue efforts took many forms. Among other selfless acts, they issued visas, citizenship papers and other forms of documentation that allowed Jews to escape the Nazis. These diplomats chose not to be indifferent and to rise to a higher moral calling.

Even today, Raoul Wallenberg is a strong role model and a symbol the common European values. Because of his efforts in Hungary, because of the lives he saved, but also because of his courage to stand up for democracy, freedom and HUMAN RIGHTS.

On 22 January 2013 the European parliament inaugurated one of its MEETING ROOMS (ASP 5 G-2, the The Raoul Wallenberg room in the middle european parliamenttemporary PRESS ROOM) in memory of Raoul Wallenberg.

“The importance of not being indifferent” is a timely and relevant operating principle in our relationship with the world today. Advancing human dignity and promoting universal rights is at the core of American values. It is also relevant to the challenges of our times, be they in Eastern Europe, the Middle East and elsewhere”.writes Mark Brzezinski, U.S. Ambassador to Sweden.

During his historic visit to Sweden last September, President Barack Obama captured the essence of Wallenberg’s legacy:

Wallenberg’s life is a challenge to us all — to live those virtues of empathy and compassion, even when it’s hard, even when it involves great risk. He came from a prominent family, but he chose to help the most vulnerable. He was a Lutheran, and yet he risked his life to save Jews. “I will never be able to go back to Stockholm,” he said, “without knowing inside myself I’d done all a man could do to save as many Jews as possible.”

So when Jews in Budapest were marked with that yellow star, Wallenberg shielded them behind the blue and yellow of the Swedish flag. When they were forced into death marches, he showed up with the food and water that gave them life. When they were loaded on trains for the camps, he climbed on board too and pulled them off. He lived out one of the most important mitzvot, most important commandments in the Jewish tradition — to redeem a captive; to save a life; the belief that when a neighbor is suffering, we cannot stand idly by.

Read ..Honoring Congressional Gold Medal Recipient Raoul Wallenberg: One Man Who Made a Difference; by Mark Brzezinski, U.S. Ambassador to Sweden.

How was it possible for one person to save so many lives? Raoul Wallenberg was the right man in the right place at the right time.

Wallenberg’s fate remains an intriguing mystery. There is still no clear picture of what happened to him after his arrest on 17 January. In April 1945, it became clear that Wallenberg really had disappeared. Information from the Russians indicated that Wallenberg was not in the Soviet Union.

On 20 November 1944, Adolf Eichmann instigated a series of death marches, in which thousands of Jews were forced to leave Hungary on foot under extremely harsh conditions. Wallenberg helped them by distributing passports, food and medicine. In January 1945, the Russians arrived in Budapest. , Wallenberg was arrested by Soviet forces.

In the early 1950s, returning prisoners of war testified that they had met Wallenberg in prison in Moscow. This led to renewed Swedish efforts. In 1957, the Soviet government gave a new answer. They had found a handwritten document dated 17 July 1947, stating that ‘the prisoner Wallenberg [sic]… died last night in his cell.’

Sweden was skeptical but Russia stuck to this story for more than 30 years. In October 1989, demands from the Swedish government and Wallenberg’s family led to a breakthrough. Representatives of the family were invited to Moscow for a discussion. On that occasion, Wallenberg’s passport, pocket calendar and other possessions were handed over to the family. They had apparently been found during repairs at the KGB archives.

Two years later, the Swedish and Soviet governments agreed to appoint a joint working group to clear up the facts about Wallenberg’s fate. Their reports were published in January 2001. The group’s work did not produce any definitive answers; they concluded that many important questions were still unanswered, and that Wallenberg’s dossier could therecould therefore not be closed. In October 2001, the Swedish government appointed an official commission of inquiry, the Eliasson Commission, to investigate the actions of Sweden’s foreign policy establishment in the Raoul Wallenberg case. In 2003, a report was issued in which Swedish political moves were summarised under the heading ‘A diplomatic failure’.

Raoul Wallenberg was not the heroic type in the conventional sense, but he was fearless and a skilled negotiator and organiser. That was how the Swedish diplomat Per Anger (1913-2002) described him. Anger was stationed in Budapest during the war as a secretary at the Swedish Legation. Furthermore, Wallenberg’s background and upbringing furnished him with unique skills.

How close did the world come to peace in 1914?

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Archduke Franz Ferdinand, Austro-Hungarian, Austro-Hungarian Empire, Europe, France, Germany, Russia, Serbia

When students of world politics seek to make genralizations based on state behavior during the last two centuries, they implicitly assume that the actors and processes of the early nineteenth century are essentially the same as those operating now. “Human nature and how politics been affected has not changed during history of civilization”. However, when we seek to put forward explanatory propositions, we are in danger of selecting our cases on the dependent variable, which will bias our inferences.

Much of what stands form modern “realpolitik” today deviates form the original meaning of the term. Realpolitik emerged in mid-19th Century Europe form the collision of the enlightenment with state formation and power politics. The study of the powers that shape, maintain and alter the state is the basis of all political insight and leads to the understanding that the “law of power” governs the world of states just as the “law of gravity” governs the physical world. The advantage of justice as foundational idea connects politics and low with ethics and other ideas that theorists have used to bring coherence to the subject, the ideas of interest, agreements, rights, and morality (natural law).

There are many responses to the threat of war. We are being encouraged to accept that the First World War was inevitable. But to say that the outbreak of the First World War was inevitable “is to ignore the importance of the key decision-makers who had the power to say Yes or No to policies and actions”.

Wars and crises are rare events. Quite naturally, scholars seeking to understand them focus much more on these events than on the situations of peace, especially situations lacking crises at all.

There had in fact been a peace settlement a half-century before the fighting broke out – an effort to organize peace. Emperor Charles V engineered the Peace of Augsburg in 1555, which was based on an agreement that sovereign states could choose for themselves which version of Christianity to adopt. When that treaty fell apart, the killing started; Chris Patten Can an understanding of the mistakes made in 1914 help the world to avoid another major catastrophe? To be sure, the global order has changed dramatically over the last hundred years. But the growing sense that we have lost control over history, together with serious doubts about the capabilities and principles of our leaders, lends a certain relevance to the events in Sarajevo in 1914; Dominique Moisi Margaret Macmillan, fellow of the Royal Society of Literature and professor of international history at Oxford University, Questions about events in Sarajevo June 28 a century ago and how close did the world come to peace in 1914?

She looks at the accidents of history in summer 1914. On 28 June 1914 Archduke Franz Ferdinand, heir to the throne of the Austro-Hungarian Empire, was assassinated by Gavrilo Princip, a young Bosnian Serb nationalist in the city of Sarajevo. One of seven Bosnian nationalists supported by Serbian terrorist organisation, ‘the Black Hand’. Franz Ferdinand wanted to visit an officer wounded in the earlier attack. So, General Potiorek, Governor of Bosnia and Herzegovina, decided they should travel along the now empty and safer Appel Quay. At 10:45 am they left the city hall. But it seems that perhaps the new route had not been given to the driver. What happened next changed history forever. One of the Serbian terrorists, Gavrilo Princip, was on the corner of Appel Quay and Franz Josef Street. For nationalists, the 28 June was a day of great significance, the anniversary of the Battle of Kosovo in 1389 – a symbol of Serbian national resistance. The worst possible day for a visit by an Austrian overlord. Leader of the Black Hand, Dragutin Dimitrijević, ordered Gavrilo Princip to assassinate Archduke Franz Ferdinand. Dimitrijević was also a prominent member of the Serbian General Staff. But for an extraordinary sequence of events that day, the assassination might have been avoided. At first, British diplomats dismissed the assassination as a minor incident in a troubled part of Europe. But as the weeks passed, the crisis began to grow at a frightening pace. In the final days of July and first few days of August, the five Great Powers of Europe – Austria-Hungary and Germany on one side; Britain, France and Russia on the other – declared war on one another. The First World War had begun.

Even at the time, the full horror of what was to come was clear to many. The British Foreign Secretary, Edward Grey, argued forcefully for war in Parliament on 3 August. That evening he is reported to have said that ‘The lamps are going out all over Europe. We shall not see them lit again in our lifetime.’

After the war, Grey was one of many politicians and diplomats in the so-called July crisis, who felt the events of summer 1914 made war unavoidable. The July Crisis was a diplomatic crisis among the major powers of Europe in the summer of 1914. But looking back at what unfolded in those 37 days, it seems there were moments when events could have taken a different course. If they had, could war have been avoided?

The UK Foreign Secretary, William Hague, launches a series of 8 podcasts of diplomatic communication and policy-making at time, in which he, and senior British Ambassadors from key European countries involved in the First World War Austria, Belgium, France, Germany, Russia, and Serbia.

The Serbo-Bulgarian war in 1885 ended in defeat for Serbia as it had failed outright to capture the Slivnitsa region which it had set out to achieve. The Bosnian Crisis of 1908–1909 (also referred to as the Annexation crisis) permanently damaged relations between Austria-Hungary on the one hand and Russia and Serbia on the other. The annexation and reactions to the annexation were contributing causes of World War I.

The political objective of the assassination was to break the Austro-Hungarian south-Slav provinces off from the Austro-Hungarian Empire. Assassination of Archduke Franz Ferdinand triggered a chain of international events that embroiled Russia and the major European powers. War broke out in Europe over the next thirty-seven days.

Russia’s support for Serbia against Austria-Hungary was critical in turning the July crisis into a full-blown war. If Austria-Hungary had struck quickly against Serbia, Russia might not have responded. Farming needs in Austria-Hungary may have delayed a response against Serbia – and in doing so allowed Russia to harden in its determination to support Serbia. The Austro-Hungarian leadership blamed Serbia for Franz Ferdinand’s death. Encouraged by their ally, Germany, they wanted to move quickly and attack, before Serbia and more importantly Russia had a chance to mobilise their own forces. Conrad von Hötzendorf, the Austro-Hungarian Chief of Staff and Commander in Chief, initially insisted an ultimatum to Serbia be given within two days. This ultimatum was part of a coercive program meant to weaken the Kingdom of Serbia as a threat to Austria-Hungary’s control of the northern Balkans which had a significant southern Slavic population, including a Serbian community in Bosnia.

This was intended to be achieved either through diplomacy or by a localized war if the ultimatum were rejected.

Austria-Hungary preferred war, though István Tisza, the prime minister of the Hungarian part of Austria-Hungary, hoped that the ultimatum would be reasonable enough that it would not be rejected outright. According to the British ambassador in Russia, the reaction to Franz Ferdinand’s assassination was initially one of horror. Ferdinand was, after all, a future king. The head of the Russian royal family, Tsar Nicholas II, had been a boy when his grandfather had been assassinated, and had already survived an assassination attempt on his life. And he was the only person who could order Russia’s army to be mobilised.

Before his murder, Archduke Franz Ferdinand had planned to save the Austro-Hungarian Empire by centralising power and creating a federated state to include Hungarians, Germans, Czechs, Poles and South Slavs. He also wanted to improve relations with Russia, as another conservative monarchy.

After the First Balkan War of 1912, Kosovo was internationally recognised as a part of Serbia and northern Metohija as a part of Montenegro at the Peace Treaty of London in May 30th 1913, during the London Conference. It dealt with the territorial adjustments arising out of the conclusion of the First Balkan War. In 1918, Serbia became a part of the newly formed Kingdom of Serbs, Croats and Slovenes, later named Yugoslavia.

In the previous Balkan conflicts of 1912 and 1913, he had argued that although a war with Serbia would be over quickly, if Austria-Hungary were to enter a war with Russia ‘it would be a catastrophe’. ‘God help us,’ he said, ‘if we annex Serbia’

What might have happened if Austria had declared war and invaded Serbia quickly? Would Russia have accepted another brief war in the Balkans, like those that had come before it in 1912 and 1913, and stood aside? Socialist movements in the early 1900s strongly argued against war in Europe. Could the workers of the world have united in 1914 and refused to fight? But as the weeks passed, the Russian view began to change. Sympathy for a royal murdered by terrorists, was replaced by political calculations about the balance of power in Europe, and support for Russia’s traditional ally, Serbia. By the time Austria-Hungary finally came to declare war on Serbia, at the end of July, Russia had decided that this meant war against Austria-Hungary. As Europe’s leaders took the decisions that pushed them towards war, the circles of power in Russia, France and Austria-Hungary were missing some influential figures. If they had been there, it’s possible that these men could have steered the course of history away from war.

Ever since it was fought, the question of why the world went to war in 1914 has been vigorously debated, but did it have to happen? After the assassination of Franz Ferdinand, was war inevitable?

Dr Heather Jones, London School of Economics, says War was far from inevitable after Franz Ferdinand was assassinated. In the years before 1914, the assassination of leading political and royal figures was not unusual. The days following Franz Ferdinand’s assassination saw a debate between the hawks and the doves in the Austro-Hungarian leadership with some figures such as the Hungarian Prime Minister Istvan Tisza not initially supportive of war. It was only once the Viennese hawks, such as Conrad von Hötzendorf, chief of staff of the Austro-Hungarian army, won the debate that war was necessary to crush Serbia, using the assassination as an excuse, that war became inevitable – and then only a local Austro-Hungarian-Serbian war. It only became a European conflict because Germany, Austria-Hungary’s ally, offered it unconditional support in its decision to attack Serbia. Russia, Serbia’s supporter, then mobilised to support Serbia. As Russia was allied to France, Germany now feared a Franco-Russian war against it and Austria-Hungary so invaded France pre-emptively, partly via neutral Belgium.

This greatly escalated the conflict, as it brought in Britain in defence of France and Belgium. Prof. Gary Sheffield, University of Wolverhampton War, in the shape of a local conflict between Austria-Hungary and Serbia, was inevitable because Vienna decided to use the pretext of the assassination to crush Serbia. This decision was taken, and given explicit backing by Germany, in the full knowledge this was likely to bring about a general European war. Many in the German elite welcomed an expansionist war of aggression. While a general war was not inevitable, the Austrian and German decisions made it highly likely.

These two states bear the burden of war guilt. Prof. Margaret MacMillan, St Antony’s College To say that the outbreak of the First World War was inevitable is to ignore the importance of the key decision-makers who had the power to say Yes or No to policies and actions. It is true that there were considerable tensions in Europe in 1914, between Britain and Germany for example who were vying for naval and economic power, or between Austria-Hungary and Russia both of whom had ambitions and interests in the Balkans. It is also true that nationalism was on the rise and that it helped to drive nations apart and, in the case of Austria-Hungary, threatened its very existence. And there were, unfortunately, many in Europe, often in positions of influence, who thought that a general war was inevitable and perhaps even desirable.

We should remember though that there was also a very large peace movement in Europe. I think war could have been avoided after the assassination of the Archduke but that became less and less likely as the days went on.

King Christian X and peace treaty.

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Central Powers, German occupation of Denmark, Germany, King Christian X, United States President Woodrow Wilson

Today is Icelandic National Day which commemorates the foundation of The Republic of Iceland on 17 June 1944 and its independence from Danish rule. The date was chosen to coincide with the birthday of Jón Sigurðsson, a major figure of Icelandic culture and the leader of the 20th century Icelandic independence movement and and Sveinn Björnsson, who became the first president of Iceland.

The formation of the republic was based on a clause in the 1918 Act of Union with Denmark, which allowed for a revision in 1943, as well as the results of the 1944 plebiscite.

German occupation of Denmark meant that the revision could not take place, and thus some Icelandic politicians demanded that Icelanders should wait until after the war. The British and U.S governments, which occupied Iceland at the time, also delayed the declaration by asking the Icelandic parliament to wait until after 1943. Although saddened by the results of the plebiscite, King Christian X sent a letter on 17 June 1944 congratulating Icelanders on forming a Republic. Today, Icelanders celebrate this holiday on a national scale.

King Christian X character as a ruler has been described as authoritarian, and he strongly stressed the importance of royal dignity and power, in spite of the growing importance of democracy. His reluctance to embrace democracy resulted in the Easter Crisis of 1920, in which he dismissed the democratically elected cabinet with which he disagreed, and instated one of his own choosing.

The immediate cause was a conflict between the king and the cabinet over the reunification with Denmark of Schleswig, a former Danish fiefdom which had been lost to Prussia during the Second War of Schleswig. Danish claims to the region persisted to the end of World War I, at which time the defeat of the Germans made it possible to resolve the dispute.

Treaty of Versailles was one of the peace treaties at the end of World War I. It ended the state of war between Germany and the Allied Powers. It was signed on 28 June 1919, exactly five years after the assassination of Archduke Franz Ferdinand. The other Central Powers on the German side of World War I were dealt with in separate treaties. Although the armistice, signed on 11 November 1918, ended the actual fighting, it took six months of negotiations at the Paris Peace Conference to conclude the peace treaty.

The treaty was registered by the Secretariat of the League of Nations on 21 October 1919, and was printed in The League of Nations Treaty Series. An intergovernmental organisation founded as a result of the Paris Peace Conference that ended the First World War. The first international organisation whose principal mission was to maintain world peace.

The U.S. under President Woodrow Wilson intended to stay out of the War, which, in the eyes of many Americans, had nothing to do with them. But in 1917, German submarine attacks on U.S. shipping and attempts by the German government to encourage Mexico to invade the U.S. enraged public opinion, and Wilson sorrowfully asked Congress to declare war. American resources and manpower tipped the balance against the Central Powers of Germany and Austria-Hungary, and on Nov. 11, 1918, what everyone then called the Great War finally came to an end. It is tempting to think about what would have happened had US President Woodrow Wilson adhered to his original resolution to keep the United States out of the war.

On 8 January 1918, United States President Woodrow Wilson issued a statement which became known as the Fourteen Points. This speech outlined a policy of free trade, open agreements, democracy and self-determination.

It also called for a diplomatic end to the war, international disarmament, the withdrawal of the Central Powers from occupied territories, the creation of a Polish state, the redrawing of Europe’s borders along ethnic lines and the formation of a League of Nations to afford “mutual guarantees of political independence and territorial integrity to great and small states alike”.

Wilson’s speech also responded to Vladimir Lenin’s Decree on Peace of November 1917, immediately after the October Revolution, which proposed an immediate withdrawal of Russia from the war, calling for a just and democratic peace that was not compromised by territorial annexations, and led to the Treaty of Brest-Litovsk on March 3, 1918.

The Treaty of Brest-Litovsk was a peace treaty signed on March 3, 1918, between the new Bolshevik government of Russia (the Russian Soviet Federated Socialist Republic) and the Central Powers (Germany, Austria-Hungary, Bulgaria, and Turkey), that ended Russia’s participation in World War I.

• At the start of the negotiations, the two sides were far apart.

German plans for Eastern Europe included annexing most of Russian Poland, with Austria to receive a smaller piece. A rump Polish state would be established to act as a buffer between Germany and Russia. In addition, Ukraine would be detached as an independent state under German protection, while the Baltic states were to be annexed directly into Germany and ruled by German princes. The Bolsheviks however declared that they sought a peace without any indemnities or territorial concessions.

• after two months of negotiations the treaty was signed at Brest-Litovsk (now Brest, Belarus)

Of the many provisions in Treaty of Versailles , one of the most important and controversial required “Germany [to] accept the responsibility of Germany and her allies for causing all the loss and damage” during the war (the other members of the Central Powers signed treaties containing similar articles). This article, Article 231, later became known as the War Guilt clause. The treaty forced Germany to disarm, make substantial territorial concessions, and pay reparations to certain countries that had formed the Entente powers. In 1921 the total cost of these reparations was assessed at 132 billion Marks (then $31.4 billion or £6.6 billion.

According to the terms of the Treaty of Versailles, the disposition of Schleswig was to be determined by two Schleswig Plebiscites: one in Northern Schleswig (Denmark’s South Jutland County), the other in Central Schleswig (part of the German state of Schleswig-Holstein). No plebiscite was planned for Southern Schleswig, as it was dominated by an ethnic German majority and, in accordance with prevailing sentiment of the times, remained part of the post-war German state.

Many Danish nationalists felt that Central Schleswig should be returned to Denmark regardless of the plebiscite’s results, generally motivated by a desire to see Germany permanently weakened in the future. Christian agreed with these sentiments, and ordered Prime Minister Zahle to include Central Schleswig in the re-unification process. As Denmark had been operating as a parliamentary democracy since the Cabinet of Deuntzer in 1901, Zahle felt he was under no obligation to comply. He refused the order and resigned several days later after a heated exchange with the king.

Subsequently, Christian dismissed the rest of the government and replaced it with a de facto conservative care-taker cabinet under Otto Liebe.

The Easter Crisis of 1920 was a constitutional crisis and a significant event in the development of constitutional monarchy in Denmark. It began with the dismissal of the elected government by the reigning monarch, King Christian X, a reserve power which was granted to him by the Danish constitution. As a result of the crisis a revision of the Danish constitution specified that when new elections are called the sitting cabinet remains until after the elections, but the monarch still has the right to dismiss the government today

This was nominally his right in accordance with the constitution, but facing the risk of the monarchy being overthrown he was forced to accept democratic control of the state and the role as a nominal constitutional monarch.

The dismissal caused demonstrations and an almost revolutionary atmosphere in Denmark, and for several days the future of the monarchy seemed very much in doubt. In light of this, negotiations were opened between the king and members of the Social Democrats. Faced with the potential overthrow of the Danish crown, Christian stood down and dismissed his own government, installing as a compromise cabinet under Michael Pedersen Friis until elections could be held later that year.

This was the most recent time that a sitting Danish monarch took political action without the full support of parliament; following the crisis, Christian accepted his drastically reduced role as symbolic head of state.

In spite of becoming unpopular due to his resistance to democracy, during the German Occupation of Denmark he did become a popular symbol of resistance to German occupation, particularly because of the symbolic value of the fact that he rode every day through the streets of Copenhagen unaccompanied by guards.

He also became the subject of a persistent urban legend according to which, during Nazi occupation, he donned the Star of David in solidarity with the Danish Jews. This is not true, as Danish Jews were not forced to wear the Star of David. However, the legend likely stems from a 1942 British report that claimed he threatened to don the star if this was forced upon Danish Jews. This is also supported by the king’s personal diary, where the following entry can be found:

When you look at the inhumane treatment of Jews, not only in Germany but occupied countries as well, you start worrying that such a demand might also be put on us, but we must clearly refuse such this due to their protection under the Danish constitution. I stated that I could not meet such a demand towards Danish citizens.

If such a demand is made, we would best meet it by all wearing the Star of David. In addition, he helped finance the transport of Danish Jews to unoccupied Sweden, where they would be safe from Nazi persecution. With a reign spanning two world wars, and his role as a rallying symbol for Danish national sentiment during the German Occupation, he has become one of the most popular Danish monarchs of modern times.

•  World War I began 100 years ago this month, and in many ways, writes historian Margaret MacMillan, it remains the defining conflict of the modern era.

Many of the now-familiar political boundaries in Europe and the Middle East still reflect the peace settlements that followed the war I.

These resulted in a smaller Russia and Germany and wound up the great multinational empires of Austria-Hungary and the Ottomans. New countries appeared on our maps, with names such as Yugoslavia and Iraq.

What is harder to pin down and assess are the war’s long-term consequences—political, social and moral. The conflict changed all the countries that took part in it and old regimes collapsed, to be replaced by new political orders. In Russia, czarist autocracy was succeeded by a communist one, with huge consequences for the rest of the century. The scale and destructiveness of the war also raised issues—many of which we still grapple with today—and spread new political ideas.

President Wilson talked about national self-determination and making the world safe for democracy. He wanted a League of Nations as the basis for international cooperation.

The armistice of 1918 ended one gigantic conflict, but it left the door open for a whole host of smaller ones—the “wars of the pygmies,” as Winston Churchill once described them. Competing national groups tried to establish their own independence and to push their borders out at the expense of their neighbors. Poles fought Russians, Lithuanians and Czechs, while Romania invaded Hungary. And within their borders, Europeans fought each other. Thirty-seven thousand Finns (out of some 3 million) died in a civil war in the first months of 1918, while in Russia, as many as a million soldiers and many more civilians may have died by the time the Bolsheviks finally defeated their many opponents.

The end of hostilities in 1918 also brought the challenge, one we still face, of how to end wars in ways that don’t produce fresh conflict. The first World War didn’t directly cause the second, but it created the conditions in which it became possible. President Wilson was for a peace without retribution and a world in which nations came together for the common good; his opponents, such as Sen. Henry Cabot Lodge, thought that only a decisive victory over Germany and its allies would lay the groundwork for a lasting peace.

As Wilson once said, “America is an idea, America is an ideal, America is a vision.” In his great speech to Congress in April 1917, when he asked for the declaration of war on Germany, he made it clear that the U.S. wanted nothing for itself from the war, that its goal was to defeat militarism and build a better world.

From Russia, Lenin and his Bolsheviks offered a stark alternative: a world without borders or classes. The competing visions helped fuel the Cold War, which ended just 25 years ago.

• Russia has unilaterally redrawn a European border for the first time since the end of World War II.

Before 1914, Russia was a backward autocracy but was changing fast. Its growth rate was as high as any of the Asian tigers in the 1960s and 1970s; it was Europe’s major exporter of food grains and, as it industrialized, was importing machinery on a massive scale. Russia also was developing the institutions of civil society, including the rule of law and representative government.

Without the war, it might have evolved into a modern democratic state; instead, it got the sudden collapse of the old order and a coup d’état by the Bolsheviks. Soviet communism exacted a dreadful toll on the Russian people and indeed the world—and its remnants are still painfully visible in the corrupt, authoritarian regime of Vladimir Putin.

Warsaw 25 years since recovery of democracy – Forward-looking course of history.

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Baltics, Carl Bildt, Lech Walesa, Poland, Solidarity Prize, The 25th anniversary, the foreign minster of Sweden, Transition to democracy

Mr Carl Bildt, the foreign minster of Sweden, Engaging discussion with young Polish diplomats together with Martin Lindegaard, foreign minister of Danmark.

In Warsaw today Poland is celebrating the 25th anniversary of the rebirth of Polish democracy after historic 1989 election. And this year also marks the 15th anniversary of Poland’s membership in NATO.

History was made here. The victory of 1989 was not inevitable. It was the culmination of centuries of Polish struggle, at times in this very square. The generations of Poles who rose up and finally won independence.

It was the beginning of the end of Communism across Europe. A Europe that is more integrated, more prosperous and more secure. On this historic day, the first global award dedicated to an individual fighting for freedom and democracy will be awarded for the first time.

In his remarks Carl Bildt, the foreign minster of Sweden, at the Award Ceremony for the inaugural Solidarity Prize, Royal Castle, Warsaw, June 3, 2014, said “What happened here a quarter of a century ago created a new Poland, paved the way for a new Europe and changed the course of the world.

What was overcome was, of course, a rotten and evil system ready for the dustbin of history. our own age has once again demonstrated the key role played by individuals. We saw it here in Poland. We saw it all over Central Europe. We saw it in the Baltic States. We saw it – and this should not be forgotten – in Russia as well. Their names are part of the history of our Europe.

A truly dedicated individual has been chosen. (leader Mustafa Dzhemilev, in Warsaw) And it is indeed appropriate that this is happening here in Poland, and that it is happening on this very day. It will be important Award for the future, said Mr Carl Bildt in Speech.

The danger that once emanated from the Communist part is not there any more, the bipolar world has ceased to exist and Europe is no longer unnaturally cut in two by the Iron Curtain. But it is a fact that the fall of the Iron Curtain was not the end of history. It was neither the end of human suffering or conflicts nor the beginning of a paradise on Earth. It was just the end of one historical era, and our generation has been called upon to build on its ruins the foundations of a new era with perseverance and patience, using the best of our knowledge and conscience, and with the boldness which this historic moment requires.

Post-Communist cases demonstrate the key to political elite action in the post-Communist both structure and agency based democratization. Transition to democracy take place when the elite controlling the existing regime change political institutions and extend voting rights. Since, like economic institutions, political institutions are collective choices. As a result, it is not only democrats who can establish democracy.

The actors most likely to support the transition to democracy, no matter what their political pedigree, are those with portable resources, skills, reputation, and networks that allow these elites to function easily in both authoritarian and democratic regime. Such elites can be found both among the functionaries of the old and established democracy and and new regimes with skilled elites and resources that are highly portable to the new democratic regime.

For example, those communist elites in east-central Europe who were recruited into the party (strengthening as essential to democracy-building) on the basis of their managerial skills and put in charge of implementing liberalizing reforms have proven to be the most successful democratic competitors of post-Communist political contests. In Hungary, Poland, Slovenia, and Lithuania, highly experienced and worldly technocrats took over the party leaderships, centralized power within the parties, streamlined extensive memberships and organizations, and committed themselves to democracy.

The result was that these parties re-entered power within a few years of the Communist collapse, this time by winning democratic elections with appeals to secularism, moderation, and technocratic competence. Moreover, the more the state had grown independent of the party during Communist role, and the more it developed the capacity to administer economic reforms, co-opting potential opposition, etc, the more successfully it could navigate the simultaneous transition to market and democracy, And a more apolitical state whose representatives have experience in administering liberalizations has been a key contributor to the success of democratization.

There are several cases, Lech Walesa in Poland is perhaps the most illustrious example. A popular leader of opposition to Communist rule and Nobel Peace Prize winner.

In August 1980 he was instrumental in political negotiations that led to the ground-breaking Gdańsk Agreement between striking workers and the government. He became a co-founder of the Solidarity trade-union movement and was prominent in the establishment of the 1989 Round Table Agreement that led to semi-free parliamentary elections in June 1989 and to a Solidarity-led government.

The most essential elements of democracy are the critical component of having an opposition; as former Secretary of State Madeleine Albright and chair of the National Democratic Institute, said recently when Brookings hosted the 10th annual Sakıp Sabancı lecture.

Representative competition is one key to the successful introduction of both market reform and democracy. But this is not simply a question of elite turnover (Weingast and Wittman , 2008). As both Latin American and African cases show, political fragmentation per se can pose major obstacles to liberal economic reforms. In contrast, an active and well-organized opposition limits the excesses of the governing elites, by creating a credible threat of replacement to the government.

Similarly, committed democrats may sometimes not be the best ones to establish and consolidate democracy. If the legacies of the pats undermine democratization, and that the survival of actors form the previous regime makes the transition to democracy more difficult. Critically, Lech Walesa was unable to adapt successfully the transition to liberal democratic politicians and to his new role as Poland´s democratically elected president, fomenting a destructive war at the top, fragmenting elites, negating foreign policy commitments, and questioning the legitimacy of other elected officials.

Democracy is once again proving to be the best, most stable way of dealing with political challenges. And yet, at the same time democracy, more than any other system, demands statesmanship and courageous leadership.

Our Baltic world was always a world between the East and the West. There was a past: And our task together is to build a better future. For our own countries. For Ukraine and definitely for Russia. A world where the values of Europe should stand even stronger than today. But it is only by truly seeing the lessons of the past, and by working together, that we as Europe can grasp all of these possibilities.

Looking forward is Europe coming together and be a true partner to the rest of the world for both peace and prosperity. From Speech by Swedish Foreign Affairs Minister Carl Bildt’s personal contribution to the restoration of the Baltic countries’ freedom.

A key theme that emerged during the day was the link between Poland’s recent past and Ukraine’s current challenge. Specialists on defense, economic reform, and democratic development noted that Poland’s growth and democratization in the post-Soviet era serves as a model for a Ukraine that continues to struggle with changing its Soviet-built institutions.

At  the Wroclaw Global Forum, Estonian President Toomas Hendrik Ilves opened the Forum’s deliberations noting the contrast between this week’s celebrations in Poland of the 1989 elections that set the country firmly on a path to democratization, and the reality in 2014 that Russia is waging war to prevent that same process from advancing in Poland’s neighbor, Ukraine. Europe’s “liberal order is being challenged by authoritarian, illiberal, yet often successful market economies in ways we did not foresee when the first free elections were held in Poland twenty-five years ago, said Ilves.

A bigger Europe is a stronger Europe – 10th anniversary of the 2004 enlargement

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Europe, European integration

European integration is by far the most advanced experiment in managing issues that cut across borders, through a combination of international and supranational arrangements. 65 years ago, the founders of the EU decided that we could only achieve results if we were united in facing common problems. At the time, the problem was war and the objective was peace. And it worked.

The EU’s historical contribution to peace and security in Europe is well-known – for which it has even been granted a Nobel peace prize. The enlargement of the Union towards former Soviet republics remains in line with this major heritage. This policy is perhaps the EU’s most absolute contribution to regional and global security. It has allowed the EU to expand in a peaceful and voluntary manner, making obsolete the concepts of colonialism and conquest.

Ten years ago, on 1 May 2004, the EU enlarged from 15 to 25 Member States (and with two subsequent enlargements to 28). It brought stability and reunited Europe after years of artificial division during the cold war; it made the EU the world’s biggest single market and increased trade between Member States, thus contributing to economic growth and strengthening further Europe’s weight in global affairs.

Countries that have joined the EU have developed positively, economically and politically. Overall, the European continent has become more prosperous and secure – even if imperfections subsist here and there. The EU’s enlargement policy has not ended, and it continues to leverage a positive conditionality on candidate countries.

Every EU enlargement has been opposed by some fearing it would weaken us. Each one has afterwards been seen as strengthening the EU. The EU helped transform the Baltic States, Poland and a number of Central and Eastern European countries. Other countries – that are willing and capable – should also be allowed to follow the same path. “We need an even stronger, broader and deeper European Union to meet the regional as well as global challenges ahead.”writes Foreign minster Carl Bildt.

In a globalised, interconnected world, the EU is stronger when it works together.

Stronger because the economies of Member States are becoming more competitive to face global competition. And stronger because at the European level, our economic and financial governance has been spectacularly reinforced. There is a lot to build on from here. A unique project.

The current EU enlargement policy is based on strict but fair conditionality, with each country treated on its own merits. This means each country moves towards the EU at a pace determined by its own performance in meeting the conditions and reaching EU standards. No shortcuts or easy fixes are allowed, as in the long run they would serve neither the countries aspiring to join, nor the EU itself.

Putting fundamentals first and being fair but firm has increased the credibility of the enlargement process, which focuses on values, principles and thorough reforms. This ensures that countries are fully prepared before joining the EU.

Croatia’s accession is evidence of the transformative power and credibility of EU enlargement policy, which has benefited not only Croatia but the entire EU. It sends a powerful signal to the whole of the Western Balkans that the prospect of European integration remains open to all aspirant countries which show the necessary will to implement political and economic reforms and prove their respect for European values, such as the rule of law, democratic principles and human rights.

The result may lead adopted democratic practices to become deeply embedded even after prize of positive reform conditionality such as EU membership has been won and its incentive power has obsolesced. Democracy assistance is usually consensual. It comprises grantaided support that can take the form of technical, material, and financial assistance to pro-democracy initiatives. Including “institutional modelling” attempts to transfer blueprints of democratic practice, procedure, and organizations that resemble working models already familiar in the established democracies.

In Europe there is some political commitment to present democracy as core european value. The EU´s role in promoting democratic political reform in central and Eastern European countries in the 1990s, and Balkans, just as many people in the transition and post-communist societies saw democratization as an aid to recovering national independence, freedom both from authoritarian rule and from political domination by the Soviet Union.

So Western Europeans saw democratic reform in the near abroad as a plus for their own security.

European integration has long fascinated scholars of political economy to understanding the political and economic initiatives at the heart of this process. In the early period of the EU´s development, social scientists attempted to explain the process of economic and political integration in Europe.

Several scholars expected in the 1950s and 1960s that regional integration would happen in many parts of the world, as relations between states changed dramatically in the aftermath of the Second World War and with the onset of the cold war

The Treaty establishing Constitution Architecture of the EU, which was signed by the member states in October 2004 and renegotiated in June 2007, was an effort to simplify and codify the existing rules governing the allocation of competences between the EU and the member-states and the operation of the EU institutions.

Even before this treaty, however, the EU already had a basic “constitutional architecture” because there is and established division of policy competences and institutional power which results from the existing treaties and how these treaties have been interpreted over the years. The character of the European project is reflected in a series of treaty discussions. The EU was in more recent times considerably strengthened by the Maastricht Treaty in 1992, in which the EU decided to adopt the euro as a common currency. Maastricht have dominated the debate. Since then, the financial and economic crisis has again raised a series of treaty questions. The constitutional question for Europe has not been laid to rest.

The precursor to the modern European Parliament was the Assembly of the European Coal and Steel Community. The European Parliament initially only had the power to be consulted on legislation. By the end of the 1990s, however, in most important areas of legislation, the European Parliament had equal power with the government ministers in the Council. The Treaty of Rome established that the Commission has the sole right to initiate legislation in all areas.

As far as the European Parliament in concerned, the Treaty of Rome established the so-called consultation procedure, whereby the European Parliament is required to be consulted on the Commission´s proposed legislation before it is adopted by the Council. The first major development in the European Parliament´s legislative powers was the introduction in 1970 and 1975 of a new procedure for adopting the annual budget of the then European Community. Yet, the size of the EU budget is small relative to 28 national government budgets, constitution about 1 per cent of EU GDP, which is approximately 3 per cent of the total public expenditure in the EU. In other words, compared with national parliaments, the formal powers of the European Parliament to tax and spend remain limited.

Executive power in the EU, in terms of the right to set the policy agenda, is split between the European Council and the Commission. Whereas the European Council, which brings together the heads of government of the member states, sets the long-term policy agenda, the Commission sets the short-term agenda, via a formal monopoly on the right to initiate legislation.

Nevertheless, the legislative powers of the European Parliament were substantially extended by treaty reforms in the 1980s and 1990s. In sum, the European Parliament has developed significant independent legislative amendment and agenda,-setting powers. Despite the Commission´s exclusive right of initiative, the European Parliament is and elected body that is independent of the executive and shows this independence. It has also repeatedly shown its independence form the Council.

2007 was considered to be a decisive year for the EU for the coincidental reason that fifty years earlier the EU took its second daring step with the approval of the Rome Treaty of March 1957. This decision complemented the initial European Coal and Steel Community (ECSC), officially born in 1951, by incorporating the European Economic Community (EEC) and the European Atomic Energy Community (EUROATOM).

Looking back half a century, the Treaties of Rome featured little with regard to parliamentary powers or human rights provisions. Fifty years after the signing of the Treaties of Rome, both processes of constitutionalization – parliamentarization and the institutionalization of human rights – have thus progressed remarkably. Today, the European Parliament has “significant legislative and executive investiture/removal powers and all the trappings of a democratic parliament”

The European Union should react by showing greater unity, solidarity and courage. We should be guided by the spirit of those Treaties and not just letter. We should be able to go beyond national interests when the gravity of times so requires. The European year of Citizens 2013 was an excellent opportunity to bridge the gap between European and the European institutions. Twenty years after EU citizenship was first enshrined in the Maastricht Treaty, we can now rightly claim that what was initially regarded rather superciliously as a mere appendage to national citizenship is gradually acquiring greater strength, meaning and legitimacy.

European integration:

May 9—Europe Day—is celebrated each year as the birth of today’s European Union. On May 9th 2014, the European Union celebrates ones again the Europe Day to commemorate the day in 1950 when French Foreign Minister Robert Schuman proposed consolidating the coal and steel industries of Europe, binding nations so closely together that renewed war would be unthinkable. The “Schuman Declaration” is considered to be the beginning of the creation of what is now the European Union of 28 Member States with half a billion people living in peace together.

When he proposed the creation of a community of peaceful interests to Federal Germany and any other European countries that wanted to join in, Robert Schuman performed a historic act. In extending a hand to recent enemies he wiped away the bitterness of war and the weight of the past.

While contributing to postwar economic recovery, this plan would also control the raw materials of war. The Schuman Declaration was regarded as the first step toward achieving a united Europe—an ideal that in the past had been pursued only by force.

Early studies of European integration focused on national governments and leaders engaged in negotiations with their foreign counterparts, logically enough insofar as the most visible early manifestation of European Community were agreements between governments.

Quickly, however, there developed an alternative approach focusing on the institutions of European integration themselves. These two approaches acquired the sobriquets “intergovernmentalism” and “institutionalism” as a way of distinguishing them form one another. Already in discussions of the first integrationist initiative of the 1950s, the European payments Union EPU, there had been hints of the tension between these competing views.

In a sense, the economic ties of the euro were meant to replace the political ties of Cold War alliance. A secondary goal was economic: to create a region of relative currency stability to encourage regional economic growth in a world of increasing financial instability.

The EPU was negotiated to address the payments problems associated with the restoration of current account convertibility following the Second World War. The EPU addressed the coordination problem facing countries seeking to liberalize. It also involved cold war politics. While the arrangement was intergovernmental, it also had a prominent institutional component, notably a managing board comprised of financial experts reporting to the Council of the Organization of European Economic Cooperation, which oversaw the policies of member states and made recommendations regarding the provision of temporary financial assistance.

The question, then, was how to understand this institutional dimension. One answer was framed in purely instrumental terms.

The EPU addressed the coordination problem facing countries seeking to liberalize the fact that it paid to relax restrictions on imports only if other countries did likewise so that the newly liberalizing country had to markets to which to export.

In more theoretically oriented terms, it was a mechanism to facilitate the coordination of liberalization initiatives across countries and to lock in the commitment to avoid backsliding by monitoring the compliance of governments with the terms of their agreement, by sharing information on such compliance, and by providing adjustment assistance.

The continents next regional initiative was the European Coal and Steel Community (ECSC) the Treatey of Paris was signed in April 1951, and in July 1952 the European Coal and Steel Community came int existence. The six members states (France, West Germany, Italy, the Netherlands, Belgium, and Luxemburg) agreed to the creation of a range of institutions, of which the most significant was the supranational regulatory body, the High Authority.

The position of the iron and steel industry was more complex. The initial reaction was one of caution and uncertainty. There had already been efforts in 1949 t reestablish cartel agreements and the key issue was, therefore, whether the Schuman Plan represented an attempt to restore something like the interwar cartel or something else. Central here was the potential powers and purpose of the High Authority. Most of the steel industry has not been party to the interwar cartel arrangements but had reached agreements with them. Ideally, this was what the British steel industry wanted to see emerge once more, protecting ins overseas markets in the Commonwealth and maintaining the heavily protected domestic market.

The story of Britain´s decision not to enter the negotiations over the Schuman Plan and the later negotiations which led to association with the ECSC has been well documented from a variety of angles. Coal and steel remained consequential industries in the 1950s, but that the cratin a European free trade area started with these sectors reflected not so mucyh their economic significance per se as their importance for collective security.

Studies of European integration is such as the use of regional arrangements to solve coordination problems and the role of institutions informing credible commitments.

There was also a sense that the institutions associated with this initiative had a deeper and wider impact that suggested by instrumentalitst perspective. For one thing, while the EPU was first and foremost an economic initiative directed at problems of trade and payments, it also involved cold war politics, since seed money was provided by the United States through the Marshal Plan.

This observation suggested that neither textbook economic models, which explain policy decisions on the basis of distributional interests, nor political analyses framed exclusively in terms of security concerns, sufficed to account for the initiative. Instead, some new more distinctive analysis blending politics and economics might be required.

Europe having been at the heart of two world wars and one cold war in the twentieth century alone. The major European states agreed to create a free trade area, or an exchange rate mechanism, or a single market, or a monetary union, because they saw doing so as in their peace and economic self-interest, pure and simple. From the start, European integration was always a way to deal with such changes, a way to help states adapt to historic challenges that surpass their individual power.

The European Union’s founding fathers reacted to the bloodshed and destruction of World War II by developing a plan designed to inextricably link Europe’s coal and steel industries and prevent wars from ravaging the European continent in the future.

The key to Europe’s economic future lies with reform and openness.

To explain European integration is thus sought to explain changes over time in these economic conditions, pointing for example to the rise in capital mobility in the 1980s and 1990s as an explanation for the growing urgency of discussions of monetary cooperation, especially as decision-making became increasingly structured. The specific terms of their bargain depended on the leverage that governments exercised over negotiations, together with their fallback options or threat points (the credibility of their threat to withdraw from negotiation if certain terms were not met).

Once the process of integration and expansions of the E.U started, it was driven forward by the founding generation of intellectual and political leaders, dynamized by the operation of positive feedbacks provided by economic operators. Today, the European union remains a union of sovereign nation states, and it´s progress of integration accelerates with changes in the external environment and in the structure of the European economy and policy.

European policies are no longer foreign policies. European policy is internal policy today in our Member States. Today there is need to develop a new relationship of cooperation.

European integration will always be a step-by-step process. The early analyses of European integration noted that one rational for the highly institutionalized nature of European integration was the fact that not all linked policies could be undertaken simultaneously. This made a key linkage arguments of that integration in one functional sphere increased the likelihood of integration in others.

The single market required the removal of technical barriers to the free movement of goods and services, such as separate national product standards that could be used as non-tariff barriers.

As the EEC becoming the E.U., economists generally agree that regional integration like that can spur growth. The principal goal in creating the single currency was political. The single market nationally started on January 1993, after the passage of almost 300 pieces of legislation to enable the basic elements of the single market to be established. The aim of regulatory state is to benefit all citizens more or less equally.

“We don’t realise how much we owe to the real father of Europe. In the ECSC, the important thing was already there, European executives which spends every day thinking about Europe, which had more power under the ECSC Treaty than under the Common Market Treaty. But it was all there, it was all seen by Jean Monnet and others and the people who worked with him, and it is still needed if Europe is to work.

The main objectives since the creation of the European Communities – peace and prosperity – are still of essence for us today. Recent developments confirm it.

For sure, the EU is the first genuine supranational polity to exist in human history, and as such is certainly unique. However, in practice the single market is an ongoing project, as major area of the economy such as the provision of services and the professions still operate in separate national markets rather than in a single European -wider market.

In these areas, policies are make at both the national and European levels and the European-level policies usually aim to supplement existing or ongoing policies at the national level. One might even say that the EU possesses the most formalized and complex set of decision-making rules of any political system in the world. Second, EU policy outcomes are highly significant and are felt throughout the EU. Third, EU political system is a permanent feature of political life in Europe.

The EU level has exclusive responsibility for the creation and regulation of the single market, and for managing the competition and external customs and trade policies that are inherently derived from this task. The EU level is also responsible for the monetary policies of the member-states whose currency is the euro. The introduction of the euro was one of the most important steps in the European integration process.

A wide array of policy competences are shared between the EU and the member-states. This is the case, for example, in the areas of labour market regulation, regional spending and immigration and asylum. A second area of policies can be described as “coordinated competence” in that these are policies where action remains primarily at the member state level, but the governments have accepted that they need to coordinate their domestic policies collectively at the European level because there are inevitable effects on each other form keeping these policies at the national level.

Fiscal and macroeconomic imbalances will have to be addressed at EU level, and additional solidarity might be needed to cope with the severe social toll in the countries most hit by the crisis.

For example, for the states with a single currency there is a need to coordinate their macro-economic policies, and with the freedom of movement of persons inside the EU there is a need to coordinate some policing and criminal justice policies. However, all the major areas of taxation and public spending such as education, health care, transport, housing, welfare provision, and pensions, remain the exclusive preserve of the member-states, with very little EU interference in how these policies are managed. The relations among Member States are also very different as a result of the different dynamics between 28 now as compared to 12 in 1992 or 1994 for instance.

We are, however, more than ever in recent history on the road to deepening our Economic and Monetary Union, whilst fully upholding the principles that preserve the integrity of the European Union at large. Indeed, the European Union Institutions, from the European Commission to the European Central Bank, saw their competences and power reinforced. Some of these competences were unimaginable some years ago, before the crisis. The European level has only gained in relevance. Concerning the economic substance, it was the biggest institutional transformation since the creation of the Euro.

Enlargement extends the internal market. It opens trade and financial flows thus giving opportunities to firms in the EU and in the incoming countries.

A larger single market is more attractive to investors: Foreign direct investment from the rest of the world to the EU has doubled as a percentage of GDP since accession (from 15.2% of GDP in 2004 to 30.5% of GDP in 2012) with the enlarged EU attracting 20% of global FDI. The EU15 FDI stock in EU12 reached €564 billion in 2012, 357% up from 2007.

The Commission has taken a series of initiatives to guarantee free movement of people, goods, services and capital; to ensure choice and fair competition for consumers and companies; and to increase investment in infrastructure, able to bring down roaming charges even further; to bring fairer prices and rights for travellers and consumers; to agree ‑ after over thirty years of negotiation ‑ the European patent, which introduces savings in cost and time for researchers and businesses; and to improve the visibility of job opportunities across the EU.

In many ways Europe is as rich as it is because of the E.U. Starting with the European Coal and Steel Community, and later, the European Economic Community, the process of European integration dramatically reduced tariffs and other trade barriers between countries.

Multiple recent studies have confirmed this, one of which estimated that per-capita income in E.U. member states would be one fifth lower without European integration. Another 2008 paper found that expansions of the E.U. in 2004 and 2007 greatly increased immigration from poor to rich countries, which helped growth in the continent as a whole. Since the end of the Cold War in 1998, the EU proceeded to execute the most spectacular broadening in its history-nearly doubling in population and size. The EU then proceeded to complete its legal framework with the approval of a “constitutional treaty.”

Progress during a country’s accession process is assessed on the basis of a proven track record, i.e. what counts are the concrete results and impact of the reforms on the ground. Strong emphasis is put on economic governance, competitiveness and growth to help the countries meet the economic criteria and facilitate economic convergence. Technical and financial pre-accession assistance is targeted to support these two priorities.

Today, the enlargement policy continues to drive transformation and anchor stability in the countries of Southeast Europe aspiring to EU membership.

The pull and influence of the EU is helping them implement democratic and economic reforms, improve the rule of law and build bridges with their neighbours, thus overcoming the legacy of the past.

The European Commission has introduced an incentive-based approach of cooperation through the principle of ‘more for more’, meaning more reforms and progress leading to more support and closer ties. Through its European Neighbourhood Policy (ENP), the EU works with its southern and eastern neighbours to achieve the closest possible political association and the greatest possible degree of economic integration.

What is then, 10 years after the historic reunification of Europe, the impact and significance of the EU’s enlargement policy?

The current enlargement policy is based on strict but fair conditionality, with each country treated on its own merits.

This means each country moves towards the EU at a pace determined by its own performance in meeting the conditions and reaching EU standards. No shortcuts or easy fixes are allowed, as in the long run they would serve neither the countries aspiring to join, nor the EU itself.

The implementation of the new rules will require sometimes difficult and painful reforms nationally. Structural reforms will not bear fruit overnight, but reforms are the most effective and most sustainable economic stimulus in the long run.

The EU helps its neighbours with:economic integration and access to EU markets. building on common interests and values such as democracy, the rule of law, respect for human rights, social cohesion, market economy principles and sustainable development. The rule of law is tackled early in the accession process and reforms are consistently followed up.

• Four strategic benefits of enlargement

(1) makes us more prosperous. A bigger Europe is a stronger Europe. In 2012, EU GDP was 23% of world GDP, amounting to €13 trillion. Accession benefited both those countries joining the EU and the established member states. As the EU expands so do opportunities for our companies, financial investors, consumers, tourists, students and property owners.

(2) helps improve the quality of people’s lives through integration and cooperation in areas like energy, transport, rule of law, migration, food safety, environmental protection and climate change. Enlargement helps us ensure that our own high standards are applied beyond our borders, which reduces the risks of EU citizens being affected for example by imported pollution.

(3) makes Europe a safer place. Through the accession process, the EU promotes democracy and fundamental freedoms and consolidates the rule of law across the aspirant countries, reducing the impact of cross-border crime. Current enlargement policy is reinforcing peace and stability in South East Europe and promoting recovery and reconciliation after the wars of the 1990s.

(4) gives the EU more influence in today’s multi-polar world: we need to continue projecting our values and interests – beyond our borders. An enlarged Union enhances the soft power needed to shape the world around us.

Forces of democracy NATO pact signed.

Tags

Europe, NATO, Soviet Union, United States, Western European countries

This day in History April 1949, the United States and 11 other nations establish the North Atlantic Treaty Organization (NATO), a mutual defense pact aimed at containing possible Soviet aggression against Western Europe. NATO stood as the main U.S.-led military alliance against the Soviet Union throughout the duration of the Cold War.

NATO’s primary significance stemmed from its character as an alliance of democratic countries. Forces of democracy a mutual defense pact “a shield against aggression.”

NATO was the first peacetime military alliance the United States entered into outside of the Western Hemisphere. After the destruction of the Second World War, the nations of Europe struggled to rebuild their economies and ensure their security. The former required a massive influx of aid to help the war-torn landscapes re-establish industries and produce food, and the latter required assurances against a resurgent Germany or incursions from the Soviet Union.

The international turbulence of the period also had its impact. Churchill (The grand alliance principal architect) said the Russian danger … is our danger”.

The United States viewed an economically strong, rearmed, and integrated Europe as vital to the prevention of communist expansion across the continent. As a result, Secretary of State George Marshall proposed a program of large-scale economic aid to Europe. The resulting European Recovery Program,

or Marshall Plan, not only facilitated European economic integration but promoted the idea of shared interests and cooperation between the United States and Europe. Soviet refusal either to participate in the Marshall Plan or to allow its satellite states in Eastern Europe to accept the economic assistance helped to reinforce the growing division between east and west in Europe.

In 1947–1948, a series of events caused the nations of Western Europe to become concerned about their physical and political security and the United States to become more closely involved with European affairs. The ongoing civil war in Greece, along with tensions in Turkey, led President Harry S. Truman to assert that the United States would provide economic and military aid to both countries, as well as to any other nation struggling against an attempt at subjugation.

A Soviet-sponsored coup in Czechoslovakia resulted in a communist government coming to power on the borders of Germany. Attention also focused on elections in Italy as the communist party had made significant gains among Italian voters. Furthermore,events in Germany also caused concern. The occupation and governance of Germany after the war had long been disputed, and in mid-1948, Soviet premier Joseph Stalin chose to test Western resolve by implementing a blockade against West Berlin, which was then under joint U.S., British, and French control but surrounded by Soviet-controlled East Germany.

This Berlin Crisis brought the United States and the Soviet Union to the brink of conflict, although a massive airlift to resupply the city for the duration of the blockade helped to prevent an outright confrontation. These events caused U.S. officials to grow increasingly wary of the possibility that the countries of Western Europe might deal with their security concerns by negotiating with the Soviets.

To counter this possible turn of events, the Truman Administration considered the possibility of forming a European-American alliance that would commit the United States to bolstering the security of Western Europe.

Relations between the United States and the Soviet Union began to deteriorate rapidly in 1948. There were heated disagreements over the postwar status of Germany, with the Americans insisting on German recovery and eventual rearmament and the Soviets steadfastly opposing such actions. In June 1948, the Soviets blocked all ground travel to the American occupation zone in West Berlin, and only a massive U.S. airlift of food and other necessities sustained the population of the zone until the Soviets relented and lifted the blockade in May 1949.

The Western European countries were willing to consider a collective security solution.

In response to increasing tensions and security concerns, representatives of several countries of Western Europe gathered together to create a military alliance. Great Britain, France, Belgium, the Netherlands and Luxembourg signed the Brussels Treaty in March, 1948.

To reaffirm their faith in fundamental human rights, in the dignity and worth of the human person and in the other ideals proclaimed in the Charter of the United Nations;

Their treaty provided collective defense; if any one of these nations was attacked, the others were bound to help defend it. At the same time, the Truman Administration instituted a peacetime draft, increased military spending, and called upon the historically isolationist Republican Congress to consider a military alliance with Europe.

In January 1949, President Harry S. Truman warned in his State of the Union Address that the forces of democracy and communism were locked in a dangerous struggle, and he called for a defensive alliance of nations in the North Atlantic—U.S military in Korea.NATO was the result.

In spite of general agreement on the concept behind the treaty, it took several months to work out the exact terms. The U.S. Congress had embraced the pursuit of the international alliance, but it remained concerned about the wording of the treaty. The nations of Western Europe wanted assurances that the United States would intervene automatically in the event of an attack, but under the U.S. Constitution the power to declare war rested with Congress. Negotiations worked toward finding language that would reassure the European states but not obligate the United States to act in a way that violated its own laws.

Additionally, European contributions to collective security would require large-scale military assistance from the United States to help rebuild Western Europe’s defense capabilities. While the European nations argued for individual grants and aid, the United States wanted to make aid conditional on regional coordination. A third issue was the question of scope. The Brussels Treaty signatories preferred that membership in the alliance be restricted to the members of that treaty plus the United States.

The U.S. negotiators felt there was more to be gained from enlarging the new treaty to include the countries of the North Atlantic, including Canada, Iceland, Denmark, Norway, Ireland, and Portugal. Together, these countries held territory that formed a bridge between the opposite shores of the Atlantic Ocean, which would facilitate military action if it became necessary. In April 1949, representatives from Belgium, Canada, Denmark, France, Great Britain, Iceland, Italy, Luxembourg, the Netherlands, Norway, and Portugal joined the United States in signing the NATO agreement.

The signatories agreed, “An armed attack against one or more of them… shall be considered an attack against them all.” President Truman welcomed the organization as “a shield against aggression.”

This collective defense arrangement only formally applied to attacks against the signatories that occurred in Europe or North America; it did not include conflicts in colonial territories. After the treaty was signed, a number of the signatories made requests to the United States for military aid. Later in 1949, President Truman proposed a military assistance program, and the Mutual Defense Assistance Program passed the U.S. Congress in October, appropriating some $1.4 billion dollars for the purpose of building Western European defenses.

Soon after the creation of the North Atlantic Treaty Organization, the outbreak of the Korean War led the members to move quickly to integrate and coordinate their defense forces through a centralized headquarters.

The North Korean attack on South Korea was widely viewed at the time to be an example of communist aggression directed by Moscow, so the United States bolstered its troop commitments to Europe to provide assurances against Soviet aggression on the European continent.

In 1952, the members agreed to admit Greece and Turkey to NATO and added the Federal Republic of Germany in 1955. West German entry led the Soviet Union to retaliate with its own regional alliance, which took the form of the Warsaw Treaty Organization and included the Soviet satellite states of Eastern Europe as members.

NATO lasted throughout the course of the Cold War, and continues to play an important role in post-Cold War Europe. In recent years, for example, NATO forces were active in trying to bring an end to the civil war in Bosnia. This step forward has allowed the EU to respond by opening accession negotiations with Serbia, and by launching Stabilisation and Association Agreement negotiations with Kosovo.

The EU:s External Action Service is a genuine asset whose professionalism and expertise is widely respected around the world. Looking back four years ago EU had to establish a European External Action Service to focus on the Neighbourhood – both South and East Europe. The EU:s external service is more than the sum total of its parts.

The ideas of Europe and and many success story of Europe also shows that individual interests in Europe are better protected by acting together through common institutions. In Europe there is some political commitment to present democracy as core european value. This centres on the conviction that Europe offers a model of political harmony both within and among states that is highly relevant to some other parts of the world, not least the zones of conflict, because it shows how to rise above centuries of interstate violence.

Today, the developments in and around Ukraine are seen to constitute a threat to neighboring Allied countries and having direct and serious implications for the security and stability of the Euro-Atlantic area.

The European Union has declared that Russia’s actions are to be regarded as an act of aggression.

On Friday 21th March 2014, prior to the European Council, EU signed the political provisions of the Association Agreement between the European Union and Ukraine.

Russian military intervention in Ukraine is clearly against international law and principles of European security. Any possible movements, action and stationing of forces must be in accordance with international law and commitments, notably under the UN Charter and the OSCE Final Act, the Budapest Memorandum of 1994 as well as bilateral treaties such as the one regulating the stationing of the Black Sea Fleet.

Military action against Ukraine by forces of the Russian Federation is a breach of international law and contravenes the principles of the NATO-Russia Council and the Partnership for Peace. Russia must respect its obligations under the United Nations Charter and the spirit and principles of the OSCE, on which peace and stability in Europe rest. All nations, including Russia, depend on a rules-based international system. For those rules to remain credible there must be costs attached to breaking international agreements.

One of the very fundamental principles that everyone decided upon at the end of the Cold War, at the end of the Soviet Union, at the end of Yugoslavia, was: don’t change the borders,”The leaders of the G-7 nations said they will not recognize the results of a coming referendum on Crimea’s status.

The main issues remain border disputes, refugees and displaced persons as well as the war crimes. All these issues are a part of the broader concept of maintaining good neighbourly relations and ensuring the stability.

Russia’s annexation of Crimea and its efforts to destabilize the transitional government in Kyiv have reframed the relationship between Europe and Russia in Europe’s eastern neighborhood from an uneasy geopolitical balancing into full-on systemic conflict.  The unity, sovereignty and territorial integrity of Ukraine must be respected at all times and by all sides. Any violation of these principles is unacceptable. More than ever, restraint and sense of responsibility are needed.

Obama Renewing U.S. Commitment to NATO Alliance. President Obama and European leaders have pledged that Russia would not be allowed to run roughshod. U.S. President Obama was worried by declining defence budgets in many Nato nations and said the alliance should examine its members contributions.

Every Nato state must step forward and carry its share of the burden by showing the political will to invest in our collective defence” Obama said after a full day in Brussels meeting EU and Nato leaders (24-27 March 2014).

His words will resonate in the EU, quite necessary for the Heads of State and Government of the EU to address defence.

Everything has to be approached with restraint, with composure, with dialogue, within the framework of international law and the existing contractual texts that link Ukraine with Russia and with the international community.

On 28th March 2014 the North Atlantic Council decided to appoint Mr. Jens Stoltenberg as Secretary General of NATO and Chairman of the North Atlantic Council, in succession to Anders Fogh Rasmussen.

Mr. Stoltenberg will assume his functions as Secretary General as from 1 October 2014, when Mr. Fogh Rasmussen’s term expires after 5 years and 2 months at the helm of the Alliance.

While Mr Stoltenberg was Prime Minister, Norway’s defence spending increased steadily, with the result that Norway is today one of the Allies with the highest per capita defence expenditure. Mr Stoltenberg is a strong supporter of enhanced transatlantic cooperation, including better burden-sharing across the Atlantic. He sees NATO and the EU as complementary organisations in terms of securing peace and development in Europe and beyond.

Strong defence and deterrence have ensured peace and stability in Europe for almost 70 years. The political, economic and military bonds between Europe and North America remain as important as ever in the defence of our common values shared by the United States and Europe.

Monnet Plan, “slowly and with concentration”. The familiar story of path dependency.

Tags

Brookings President Strobe Talbott, European Union, Germany, Jean Monnet, Shimon Peres, Treaty

Thirty-five years ago today, a man named Jean Monnet passed away in northern France while writing his memoirs. Though few among us know his name, his legacy as the father of the modern eurozone deserves remembrance.

At the end of his long life, Monnet described his birthplace as a “brandy town [where] one did one thing, slowly and with concentration.” That could have served as a motto for the singular purpose of his own life: but also the familiar story of path dependency. The cultivation and marketing of a grand plan that would bring lasting peace to Europe.

The method that guided him throughout his long life put a premium on the careful sequencing of innovations in economic policy so as to make irreversible the overall process of political integration. Unlike Monnet, however, the leaders responsible for the adoption of the euro in the 1990s failed to ensure that the necessary political conditions and institutions were in place, thus making the current troubles of the European Union all but inevitable.

As President Shimon Peres of Israel noted, In an interview with Strobe Talbott – “Monnet’s vision was political, but his means were economic. A political vision inevitably generates opposition, so a pragmatic visionary must dress it up in a way that stresses its economic advantage.”

“Who do you see as the greatest Frenchman?” Without waiting for Peres’s reply,‘No. I think Jean Monnet’s greater than Napoleon. Why? Because Napoleon left after him a tomb while ..Monnet left a cradle in which a new, peaceful Europe was born.”;Peres.

Jean Monnet’s idea was to move by consensus, by an intelligent perseverance on the other members of the European Union.- Javier Solana
Former foreign policy chief of the European Union

The relevance today of this historical figure is all the more striking in the light of his idiosyncratic career. Monnet spent much of his life as a private citizen. He never held elective office or a ministerial post. He was an effective advocate, who used his carefully cultivated mellifluous speaking voice and forensic skills to good effect in interviews and declarations. But it was primarily from behind the scenes that he influenced generations of major actors on the world stage: in his youth, Georges Clemenceau, Arthur Balfour, Neville Chamberlain, Winston Churchill, and Franklin Roosevelt; in his middle years, Dean Acheson, Konrad Adenauer, and John F. Kennedy; in old age, Willy Brandt, Helmut Schmidt, and Shimon Peres.

At crucial moments and on vital issues, these leaders and others took his counsel and adopted his ideas as their own.

Monnet —a key figure in the transformation of the concept of statehood itself. Modernization, he believed, was more than the exploitation of new technologies to improve industry, transportation, and communication; it also meant adjusting to the ways in which individual nations were joined by an ever-thickening skein of economic transactions, increasingly unobstructed by physical distance and national boundaries. Truly modern nations needed to learn how to retain their independence where they must, while making a virtue of their interdependence where they could.

Monnet’s principal task in 1940 and the early months of 1941 was to urge President Roosevelt to come to the aid of Britain, and to pave the way for America’s entry into the war. Keynes believed that Monnet’s arguments were particularly effective with FDR.

EVEN IN THE DARK HOURS when the Axis dominated most of the Continent, Monnet was thinking ahead about how to break the cycle of total war followed by a false peace. In 1943, he declared at a meeting of the French government-in-exile in Algiers,

“There will be no peace in Europe if the states are reconstituted on the basis of national sovereignty…. The countries of Europe are too small to guarantee their peoples the necessary prosperity and social development. The European states must constitute themselves into a federation.”

There are few instances in history when a single statement of prescription and prophecy would so soon come to pass, and fewer still when the prophet himself would be a major agent in making that happen.

Which became the European Coal and Steel Community under the Treaty of Paris a month later. Hallstein headed the German delegation and Monnet the French.

Two years later, after Germany and its allies surrendered, Monnet had his chance to begin the process of realizing his vision, though he got off to a rather uncertain start. As commissioner-general of the French National Planning Board, Monnet advised de Gaulle, the president of the provisional government, on how to reconstruct the French economy.

One obvious means was to tap into Germany’s industrial potential, much of which was still intact. The sweeping recommendations he proposed are collectively known as the Monnet Plan.

Its most conspicuous feature—the expropriation of coal from German mines in the Ruhr and Saar areas to fire the furnaces of French steel factories—was euphemistically called l’Engrenage (The Transmission). In addition to hastening the recovery of France, it inhibited Germany’s ability to rearm, a measure that was intended to be both punitive and preemptive.

Jean Monnet’s life’s work, on innovations in economic policy and political integration, inspired the introduction of the euro 15 years after his death. It’s also the subject of the latest Brookings Essay by Brookings President Strobe Talbott.

In promoting that belief, Monnet revised for the better the consequences of a seminal event in European history: the Peace of Westphalia of 1648. That treaty, which ended the Thirty Years War, attenuated the sway of the Holy Roman Empire over subsidiary domains that were roughly unified by shared language and culture while separated by borders approximating those on the map today.

The term scholars later assigned to these autonomous territories was “nation-states.”

The hyphen suggested that nationality and statehood were closely aligned. There was an element of willful delusion in the concept. Monnet’s own homeland is a case in point. France is often cited as the archetypal Westphalian nation-state, but it also illustrates the elusiveness of the construct. Centuries of conquest and accretion fused Normandy, Brittany, and Gascony, which had been distinct and often combative nations until they were suppressed and absorbed into France.

The Treaty of Westphalia also ceded to France most of Alsace on the west bank of the Rhine. The local élites—notably including Charles de Gaulle’s ancestors—learned French, while the common folk continued to speak German. As a result, for the next 300 years Alsace, and later its neighbor Lorraine, would be a source of tension between France and Germany and, on several occasions, a casus belli.

Westphalia brought nationalism to the surface in two troublesome forms: secessionism within nations and animosity between them. In both cases, the result was often political violence, which Monnet regarded as the ultimate evil.

Westphalia also perpetrated the fallacy of absolute national sovereignty. Even in the 17th century, and much more in the 20th, borders were porous; nations’ economies were intertwined, their populations intermixed, and their fates bound together, for good and ill

Monnet believed that the ideal way to correct both these flaws in the Westphalian system was federalism, a layered system of governance whereby authorities at various levels have responsibility for those issues in which they have the most legitimacy and competence.

In Monnet’s view, American federalism proved itself during the 1930s as the best system of governance for countering the depredations of the Great Depression. The New World offered the Old World a model for its own future in another respect as well: the United States was the opposite of a Westphalian nation-state (France for the French, Germany for the Germans)

Monnet’s Federalism was a European concept going back centuries. It usually operated within individual states, where power and responsibility were distributed among local, provincial, and national levels of government. Monnet, however, wanted to elevate it to being the basis for a federated Europe. It was a radical, distant goal, which he helped make possible through the practical, iterative steps he prescribed during his lifetime.

The place to start, he believed, was in the spheres of finance and commerce, particularly in mineral resources, where independence and sovereignty are most contingent, and where interdependence is most beneficial and comes most naturally to all parties.

Because Monnet concentrated on this aspect of the endeavor, he came to be regarded as an economist – and arguably one of the most important of the 20th century, along with his contemporary John Maynard Keynes. Yet he had no formal training in the dismal science.

MONNET’S TRANSITION to what would become his life’s work occurred in the summer of 1914, shortly before the guns of August shattered the grand illusion that global interdependence would keep the major powers from ever again going to war. On his way home from London he learned, during a stop at the Poitiers railway station, that Germany had declared war on Russia and begun moving troops into Luxembourg, and France was mobilizing. With the help of a family friend, Monnet went straight to the top of the French government to volunteer his services. Premier René Viviani was so impressed that he authorized the 25-year-old to negotiate the terms of an agreement between France and Britain to coordinate their production of armaments. Within three years, Monnet was helping Étienne Clémentel, the French minister of commerce and industry, to develop a proposal for a post-war “new economic order” based on Franco-British cooperation but open to other European countries as well.The allies rejected that proposal at Versailles, but by then Monnet had patrons at the highest levels in Paris and London. When the League of Nations was established in 1919, they arranged for him to become its deputy secretary-general.

At the core of Monnet’s driving passion—the integration of Europe—was his hope for national economies to mesh in a web over Europe more powerfulthan national hatreds that had brought the continent to war; Strobe Talbott interviewed by Steven R. Weisman:

Monnet had long feared that the interwar period would be just that—a respite between global conflagrations. Like Keynes, he came to view the “war guilt” clause in the Versailles Treaty, which demanded reparations in the form of payments and transfers of property and equipment from Germany, to be a mistake. It was based, he believed, on “discrimination,” a violation of the core principle that “equality is absolutely essential in relations between nations, as it is between people.” For Monnet, this was not just an ethical principle but a pragmatic one.

He helped several Central European countries stabilize their currencies and advised Chiang Kai-shek on how to upgrade the Chinese railway system. Operating in a private capacity, Monnet had found a way to promote the integration of national economies as a basis for international commerce and peace.

MONEY IS AN INSTRUMENT OF GOVERNANCE as well as commerce. It enables citizens to participate in the economic life of their societies while reminding them where political authority resides and where their loyalties belong. So it has been since ancient times, when visages of Nebuchadnezzar and Caesar were stamped on the coins of their realms, and so it is today. In almost all 195 countries on Earth, the change in people’s pockets and the banknotes in their wallets are an assertion of national sovereignty.

But today there is an exception to that general principle: the euro, which is the common currencyof 18 of the member states of the European Union. The eurozone puts them in the vanguard of the greatest experiment in regional cooperation the world has ever known.

However, that venture has had a rough five years. In the wake of the global financial and economic meltdown in 2008, the euro has become economically disruptive and politically divisive, pitting the states of northern and southern Europe against each other.

The crisis is not over, but Chancellor Angela Merkel of Germany, President François Hollande of France, and their fellow heads of government and state are determined to keep the eurozone intact. They are reinforcing accords on national budgets, spending, and financial regulation, pushing ahead with a banking union, and tackling unemployment.

In taking those and other remedial measures, today’s European leaders, like their predecessors in the middle of the last century, are heeding the wisdom of Jean Monnet. He died 35 years ago, long before the euro went into circulation. Still, he would have understood the purpose that monetary union is meant to serve:

binding up the wounds of the most bloodstained continent in modern history and turning it into a zone of peace, prosperity, democracy, and global clout, animated by common values and governed by common policies and institutions. That is the European Project. As its master architect, Monnet would also have understood the mistakes, dilemmas, and dangers that threaten the project now.

The biggest challenge for both Member States and the EU institutions is now to ensure stability in the euro area. There are signs of greater levels of stability, opportunity to focus on what Europe’s economy really needs. All Member States have committed to a common growth strategy the Europe 2020 Agenda — as a comprehensive response to the challenges the EU is facing.

These needs require long-term financing. Ensuring our economy and our financial sector – including banks and institutional investors such as insurers and pension funds – are capable of funding long-term investments is an important but complex task. One main lesson of the crisis is that appropriate regulation and supervision of the financial sector is necessary to restore financial stability and confidence in the markets. The EU has been pursuing a comprehensive programme of financial reform in this context, complementing broader fiscal and economic reform.

February was a good month for the eurozone, the group of 18 countries that have adopted the euro as their currency, with Markit’s monthly Eurozone Composite Purchasing Managers’ Index—a measure of the economic health of the manufacturing sector—coming in at 53.3, beating a preliminary estimate of 52.7. (Any number above 50 indicates expansion.) The figures indicate more eurozone grow by about 0.5 percent in the first quarter of 2014—the highest growth numbers in three years.

World of Liberty Under Law.

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Churchill’s speech, Foreign Policy, ideas, Liberal theory, Order in World Politics, The English School, world government

Winston Churchill, who was the conservative Prime Minister from 1940- 1945, had played a major part in helping the Allies to win the war. “for the world to be stabilized, there has to be a stabilizer—ONE stabilizer.”

The rules-based international order is founded on relationships between states and through international institutions, with shared rules and agreements on behaviour. It has enabled economic integration and security cooperation to expand, to the benefit of people around the world. It has done much to encourage predictable behaviour by states and the non-violent management of disputes, and has led states to develop political and economic arrangements at home which favour open markets, the rule of law, participation and accountability.

However, this virtual world is invariably divided into a number of hard entities (“states”) of different levels of material capabilities whose relationships peace or war or something in-between are governed by the “balance of power”, which has its own inherent rules of practice. This basic approach is devised to explain what happens among the state entities as levels of military and economic capability among them change. It could be extended to the organization of a full range of nonmilitary as well as military resources for the purposes of the state – a notion wrapped up in the idea of “grand strategy” and “Grand Alliance,”.

This inclusion of liberty, economic, psychological, moral, political, and technological factors of the modern state., which was especially relevant to the all-encompassing conflict of the Second World War, intensified the relationship between strategy and international politics in times of both war and peace.

Ambassador to the Court of St. James’s The Honourable Louis Susman, in his first formal address after his appointment, told the Pilgrims Society in London: “In war and peace, in prosperity and in time of economic hardship, America has no better friend and no more dependable ally than the United Kingdom.”

Issues of war and peace were central in the arrival of international relations as a fully-fledged academic discipline, symbolized after the First World War by the establishment of the Woodrow Wilson Chair of International Politics at University College of Wales in Aberystwyth in the United Kingdom (at that time called University College, Wales).

But, the modern understanding of political origins of war, conflict and politics can be linked above all to the early nineteenth century thinking of the Prussian philosopher of war Carl von Clausewitz, whose commentary on the enduringly political nature of war helps us understand also the strategy as the connecting ligament between war and politics. On the whole, war is inherently political, it has the capacity both to reflect and to intensify the often messy and fiery relationships of power.

These features became supremely important in the Second World War. Clausewitz’s analysis could not have been more relevant:

…”The more powerful and inspiring the motives for war,… the more closely will the military aims and the political objects of war coincide, and the more military and less political will war appear to be. On the other hand, the less intense the motives, the less will the military element’s natural tendency to violence coincide with political directives. As a result, war will be driven further from its natural course, the political object will be more and more at variance with the aim of ideal war, and the conflict will seem increasingly political in character”.

Historian Paul Schroeder argued that the old formulas for “balance of power” were in fact highly destabilizing and predatory. The Congress of Vienna set up rules that produced a stable and benign equilibrium.

The goal was not simply to restore old boundaries, but to resize the main powers so they could balance each other off and remain at peace. The leaders were conservatives with little use for republicanism or revolution.

The establishment of the League of Nations and these war aims were central to a ‘liberal’ approach to International Relations. While Wilson can be seen as a hero to liberals in his views on International Relations, in other respects his ideas have not worn so well. As President, his time in the White House (1913-21) was dominated by the First World War. Wilson’s desire to ‘make the world safe for democracy’ has resonated in American foreign policy ever since. After the war, Wilson’s energies were devoted to the establishment of a League of Nations. His peace-making efforts won him the Nobel Prize in 1919.

Today, Modern liberty rests upon three pillars. They are representative democracy to solve the difficult problem of combining the liberties of the subject with the necessary authority of the modern state. Ultimately, the representative political institutions cannot alone guarantee our liberties. It is economic liberty that nourishes the enterprise of those whose hard work and imagination ultimately determine the conditions in which we live. It is economic liberty that makes possible a free press. It is economic liberty that has enabled the modern democratic state to provide a decent minimum of welfare for the citizen, while leaving him free to choose when, where, and how he will make his own contribution to the economic life of the country.

The third guarantee of liberty is the Rule of Law. Rule of law and institutionalization is a broad, overarching term. They affect how political actors are enabled or constrained and the governing capacities of a political system. For good reason it has become a popular recommendation in the arena of development. The thought that no-one in the state can escape the law is, after all, a daring one. Governors and governed, groups and individuals, soldiers, policemen, and civilians, each must bow to a higher principle.

Effective rule of law is foundational to successful development, and any political economy with the potential to become a Liberal has to overcome barriers to development.

Successful growth policies nearly always create institutions that develop around powerful vested interests, and just as these vested interests oppose and substantial change in the growth model, the institutional structure that develops around the growth model, including the financial system, the distribution of power between the central government and other important agents, the allocation of the benefits of growth, and so on – constrains the ability of the system to adjust.

Throughout history, liberalizing reforms almost by definition are aimed at undermining institutional constraints that benefit the elite at the expense of overall productivity, such reforms have always generated political opposition form powerful groups.

The few countries that have been able successfully to implement such major economic reforms have always been either politically competitive liberal democracies, or highly centralized autocracies. Countries that are not on one end of the political spectrum or the other, form the Ottoman Empire in the 1840s and 1850s to the Soviet Union in the 1970s and 1980s, have never been able to successfully implement liberalizing reforms to any significant degree, except after unleashing tremendous political instability.

Countries that have been economically successful over the long term tend to be countries that have most successfully managed the adjustment process and countries that have reversed the economic imbalances associated with rapid growth relatively quickly and with a manageable amount of political and social disruption.

It is also a belief that continues to permeate the thinking of states or their defense throughout the world. Yet careful research makes it clear that the distribution of power, whether balanced or not, by itself bears neither a logically nor an empirically compelling relationship to the likelihood of international instability or conflicts.

Successful political leaders overcome such dilemmas when they develop adjudication mechanisms that settle disputes with perceived consistency and fairness.

The rule of law is found in all countries whose populations enjoy a high standard of living. No country that did not endorse the rule of law has ever developed a high standard of living. Freedom under the law and successful economic development occur together.

Rule of law, in its essence, is a concept as least as old as the Magna Carta, According to this principle, the government and the people are governed by a knowable and predictable set of written principles that apply equally to everyone within the jurisdiction of the government. Only if those principles are knowable and predictable can people optimally organize their affairs to pursue happiness.

The bishops and barons who had brought King John to the negotiating table understood that rights required an enforcement mechanism.

Magna Carta has also been a bigger deal in the U.S. In whay Americans, like Britons, have inherited their freedoms from past generations and should not look to any external agent for their perpetuation. The rights we now take for granted—freedom of speech, religion, assembly and so on—are not the natural condition of an advanced society. They were developed overwhelmingly in the language in which you are reading these words. When we call them universal rights, we are being polite. Suppose World War II or the Cold War had ended differently: There would have been nothing universal about them then. If they are universal rights today, it is because of a series of military victories by the English-speaking peoples.

In this tradition, institutions are imagined to organize and to have an ordering effect on how authority and power is constituted, exercised, legitimated, controlled, and redistributed. Rules and practices specify what is normal, what must be expected, what can be relied upon, and what makes sense in the community; that is, what a normal, reasonable, and responsible, yet fallible citizen, elected representative, administrator, or judge, can be expected to do in various situations.

Charles Kindleberger, an economic historian, views a successful leader, in the international community, as one that can unilaterally establish and support rules of the game that stabilize expectations, manage risk, and promote cooperation and mutually beneficial exchange across national borders in good and in bad times.

Preferring the term “responsibility” he argues that during uncertain times, when the system hits significant shocks, “for the world economy to be stabilized, there has to be a stabilizer—ONE stabilizer.”

By the early nineteenth century Britain had become the richest nation in the world and remained so for most of the century. What drove these processes and how were they interrelated? The origins of British economic supremacy stem from a series of institutional changes which took place from the middle of the seventeenth century onwards.

These changes emerged out of the Civil War of 1642-51 and Glorious Revolution of 1688 and led to a dramatic change in the political institutions. At the same time, after 1832 a series of Reform Acts were passed which eventually culminated in democracy. The UK has a proud tradition of promoting civil liberties, upholding the rule of law, and building diverse, integrated communities tolerant of different faiths and beliefs

Although it is argued that much of the established wisdom about the effects of political institutions is very fragile (Rothstein 1996), scholars who deal with political institutions are generally less concerned with whether institutions matter, than to what extent, in what respects, through what processes and system, under what conditions, and why institutions make a difference (Weaver and Rockman 1993; Egeberg 2003; Orren and Skowronek 2004).

During Pax Britannica the British used their wealth, markets, and capabilities to provide key collective goods that endowed the United Kingdom with leverage to exercise global leadership,set the rules of the game, and promote a stable liberal international economic order. Charles Kindleberger,  blames the collapse in hegemonic leadership following World War I for a breakdown in cooperation, reversals in globalization, and the traumatic interwar years.

Under Pax Americana, the ability of the United States to establish the rules of the game and provide collective goods (militarily and economically) to its bloc during the Cold War reduced uncertainty, encouraged exchange and cooperation, and advanced a liberal international economic order that enhanced stability and growth in the postwar era. Americans have a big stake in the role diplomats play in opening markets abroad, strengthening the economic rules of the road, ensuring a level playing field for U.S. companies, attracting foreign investment, and advocating on behalf of U.S. businesses.

• World politics

Students of world politics and international affairs have made theoretical progress in recent decades on issues of war, cooperation, and the role of multilateral institutions and conceptual progress on issues of sovereignty. International relations is a deeply interdisciplinary enterprise. Impressive empirical work, guided by improved technical and methodological sophistication, has been carried out on a variety of problems, including warfare. Although we are living in a period of unprecedented change, our understanding of change is very inferior to our understanding of fundamental long-term regularities.

Whether discussing grand strategy in peacetime or that of war or political economy, change in material capabilities takes place within a “system”, but the nature or basic structure of the system never changes. Yet, the explanation of change lies within the process in the system itself. An older perspective sees the world as a realm of continuous and chaotic change with no ultimate final state “no end of history”. With a team of leading historians (see here), Williamson Murray and Richard Hart Sinnreich examine how, and to what effect states, individuals and military organizations have found a solution to complex and seemingly insoluble strategic problems to reach success.

Lessons of the past can inform how we understand and confront the future.

The effects of changes in the ideas in which people believe are by no means necessarily benign, as illustrated by nuclear weapons and the recent militancy of fundamentalism. We should expect no simple answer to questions about progress, often asked urgently in the wake of disasters, but they are nevertheless important questions to ask. I think we can rise to the challenge. But improving life chances only gets you part of the way there. You can have a great start in life and work hard, but still be held back — often invisibly power — because of your background or the colour of your skin. These problems go deep elsewhere too. World wars and the Holocaust generated great disillusionment, but in the 80s hopes for progress, through learning or changes in principled ideas, were revived.

Regardless of how successful one becomes, we can all benefit from the mechanisms to achieve peak mental performance and the fortitude to persevere through difficult circumstances. Life will always have unique challenges. Recurring failures lead us to try to understand the conditions under which states and other diplomat actors can achieve their collective purposes rather than engage in destructive and often self-destructive, behavior. Behind all these issues lurks the concept of power.

Material resources are significant not just for war and threat, but also for the politics of economic relationships.

Oxford handbook of Political Economy by Weingast and Wittman (2006) debate regarding international affairs and the ways about studying conflict and peace. “The West’s approach to the realities of the post–Cold War world has made a great deal of sense, and it is hard to see how world peace can ever be achieved without replacing geopolitical competition with the construction of a liberal world order”.

Since world politics is not beautiful, a productive line of work has stressed the role of reciprocity in creating incentives for cooperative behavior. These theoretical contributions are beginning to be linked to the literature on the democratic peace, and institutional design, which I do not have space to discuss here. To be worthwhile for a democrat, institutions have to be accountable as well as effective.

The International relations scholarship can loosely be divided into these who focus on such structural aspects of the international system as the global distribution of power, or the alignment of nations into two blocs, the bipolar world of the cold war- or many blocs and those who attend to the ways in which domestic political dynamics shape international relations.

For much of the post-second World war years, structural perspectives including neorealism, liberalism and power transition theory have contended for domination as explanations of variance in cooperative and conflict-prone behavior. By structural perspectives (Weingast and Wittman, 2006) mean theories, such as which the central concern is how aggregate characteristics of the international system such as the distributions of power or distribution of wealth among states (as rational unitary actors) determines interactions leading to international conflict or cooperation.

• The study of “world politics” begins with the study of war.

In March 1915, during World War I (1914-18), British and French forces launched an ill-fated naval attack on Turkish forces in the Dardanelles in northwestern Turkey, hoping to take control of the strategically vital strait separating Europe from Asia. The failure of the campaign at the Dardanelles, along with the campaign that followed later that year in Gallipoli, resulted in heavy casualties and was a serious blow to the reputation of the Allied war command, including that of Winston Churchill, the British First Lord of the Admiralty, in early 1915.

As we continue: Going to War offers reflections from political, academic and military practitioners in an attempt to discover the search for peace and the goodness hidden in the madness of war.

Why is war a perennial institution of international society and what variable factors affect its incidence? A growing body of work in experimental psychology has revealed, that people are often willing to make substantial sacrifices to punish those who violate shared foundational values and those who fail to punish cheaters. From this standpoint, the logic of international institutions built on shared values of distributive and procedural justice should be able to perpetuate themselves in the absence of strong central authority as long as members perceive the specific norms and normenforcement to be anchored in these shared values. This is true if there is a security gap in the sense of inability of protection.

Hugo Grotius, the 17th century jurist and father of public international law, stated in his 1625 magnum opus The Law of War and Peace that “Most Men assign three Just Causes of War, Defense, the Recovery of what’s our own, and Punishment.”

International law recognizes a right of self-defence. The right of self‑defence as recognised in Article 51 of the UN Charter may be exercised individually where it is necessary to defence.

The Caroline incident, beginning in 1837 that strained relations between the United States and Britain, has been used to establish the principle of “anticipatory self-defense” in international politics, which holds that it may be justified only in cases in which the “necessity of that self-defense is instant, overwhelming, and leaving no choice of means, and no moment for deliberation”.

This formulation is part of the Caroline test. The Caroline affair is also now invoked frequently in the course of the dispute around preemptive strike (or preemption doctrine).

In the last decade, two models have been offered that are easier to work with in this context of world policy spaces. It is useful to distinguish: The two formalizations of theory, power transition and balance-of-power theory. There is support for the central tenets of the power transition theory or for balance of power theory. When we focus on individuals rather than states the number of rationalist explanations for war proliferates still further.

In understanding this problem, as well as other issues in world politics. Political Theory, the oldest subdivision of the discipline, tackles the eternal questions of politics. Students become acquainted with the basic ideas of Western political thought through great thinkers (such as Plato, Machiavelli, Locke, Rousseau, Marx, and J.S. Mill) and through inspirational speeches of great leaders, in particular moment in time and a particular way of thinking.

As Britain prepared for battle, the emphasis on resolve and solidarity continued to pervade Churchill’s speeches. A few days after his first broadcast, Churchill again addressed the people, this time emphasizing the impending attacks on their homes. His realistic yet determined manner served as a model for all the people tuned in on their radios.

The theme of the British homeland became increasingly important, because it gave the people a cause worth fighting for.

4 June 1940: “I have, myself, full confidence that if all do their duty, if nothing is neglected, and if the best arrangements are made, as they are being made, we shall prove ourselves once again able to defend our Island home, to ride out the storm of war, and to outlive the menace of tyranny, if necessary for years, if necessary alone.”

Winston Churchill’s speech ‘we shall fight them on the beaches’ is one of the defining speeches during the second world war. It uses the technique of repetition to very good effect.

we shall fight on the beaches,
we shall fight on the landing grounds,
we shall fight in the fields and in the streets,
we shall fight in the hills;
we shall never surrender, and even if, which I do not for a moment believe, this Island or a large part of it were subjugated and starving, then our Empire beyond the seas, armed and guarded by the British Fleet, would carry on the struggle, until, in God’s good time, the New World, with all its power and might, steps forth to the rescue and the liberation of the old.”

Churchill took advantage of British nationalism in his speech: “there will come the battle for our Island – for all that Britain is, and all that Britain means. That will be the struggle.” He continued on by encouraging the people to devote all their resolve and effort into the war and asking them to “perish in battle than to look upon the outrage of our nation.” He was requesting total devotion to the country.

Winston Churchill, who was the conservative Prime Minister from 1940- 1945, had played a major part in helping the Allies to win the war.

After the Soviet Union and the United States entered the war in 1941, he worked to build what he called a “Grand Alliance,” traveling tens of thousands of miles to meet with allies and coordinate military strategy. With them he redrew the map of Europe as Germany collapsed in 1945. Almost immediately, he saw the threat that had arisen in Hitler’s place, and warned the West of the Soviet “Iron Curtain” in his famous speech in Fulton, Missouri, in 1946. Churchill could claim to be its principal architect.

The question of war, freedom and the relationship of the individual to humanity has been central to the discourses of political theory in Western history. Critical theory has sought to provide a further elaboration on the nature and possibilities of freedom understood as moral universalism in the international realm.

Critical theory is first and foremost distinguished from traditional or problem solving theories. Traditional theory is modeled on the physical sciences and is concerned with explaining social processes form a disinterested or value free position in order better to predict human behavior and therefore control it. As a result, traditional the theory exhibits a system-maintenance bias. At best it compares to what the Greeks called “techne” (the classical understanding of reason).

During the past decade there has been a shift away from structural perspectives toward ones that look at how domestic political institutions constrain and create incentives that shape cooperation and conflict. According to the power transition theory, which was first developed by A.F.K Organski in 1958, Tammen (2000) and other view international politics as hierarchic rather than anarchic.

The theory assumes that all state´s are interested in imposing international organizations, institutions, rule, and regulations that govern international intercourse on the international system.

States are assumed to maximize their control over “the rules of the game” or the status quo norms and policies in the international system. Power or relative material resources is taken as exogenously given and is assumed to be the determinant of who controls international affairs. The most powerful state sits at the apex of a power pyramid in which those below the apex aspire to rise to challenge the dominant state for control of “the rules of the game”.

States are assumed to be divided into two broad coalitions.
Those in the satisfied coalition find the dominant state´s rules and norms acceptable while those in the dissatisfied coalition do not. The opportunity to challenge for control arises when a dissatisfied state´s internal growth rate is fast enough relative to the dominant state´s that the challenger can be expected to pull equal in power to and then overtake the dominant state.

In the temporal window during which this power transition occurs, war is predicted to be likely if the challenger is dissatisfied, as in the Franco-German War, also called Franco-Prussian War of 1870. France’s determination to regain Alsace-Lorraine would subsequently be a major factor in France’s involvement in World War I.

A peaceful transition is anticipated if the challenger is part of the satisfied coalition as the UK and the USA in the twentieth century.

Who will move first and whether the contenders will fight or resolve their transition peaceful depend on their respective willingness to take risks as it is the degree of asymmetry in the shape of their utility functions, and not growth rates per se, that determines the trade off between fighting now , fighting later, or never fighting.

The biggest contribution of critical international relations theory is that it keeps the question of individual and its relationship to political community from disappearing from the language of the study of international politics.

Following the First World War, and with the creation of the League of Nations and the emergence of international law, the field necessarily focused on international organizations. And it is perhaps from that point that we can start to orient us through this discussion on politics, International politics along institutional World of Liberty.

Following the Second World War, there was even more of a brad-scale effort to construct international organization. The UN was created, as were the World Bank (initially called the International Bank for Reconstruction and Development) and the IMF, among others. The UN is the one truly multilateral organization of great note that is prominent in international democracy promotion.

The one-100 anniversary of 1914. The original multilateral moment—

The 44 nations gathering at Bretton Woods were determined to set a new course—based on mutual trust and cooperation, on the principle that peace and prosperity flow from the font of cooperation, on the belief that the broad global interest trumps narrow self-interest. Their plan was nothing less than the reconstruction of the global economic order. This was the original multilateral moment—70 years ago. It gave, then birth to the United Nations, the World Bank, and the IMF—institution.

The world we inherited was forged by these visionary gentlemen—Lord Keynes and his generation. They raised the phoenix of peace and prosperity from the ashes of anguish and antagonism. We owe them a huge debt of gratitude.

Moreover, the steps taken toward European integration, especially the creation of the European Economic Community, also constituted important institutional development. Scholars took note and international organizations and regional integration became established subfield of international politics.

Until the 1960 the study of regions in social science was dominated by modernizations paradigm and development theory. The emergence of the nation-state had generated a focus on functionalism and national integration as the hallmarks of modern societies. These concepts were theorized and applied by a long line of social scientists, such as Weber and modernization theorists as Shils.

Regions and regionalism were seen as remnants of pre-industrial, pre-modern societies, fated to be eclipsed by the inexorable march of pro-organized, nationally integrated nation-state (Caramani, 2004). That regions and regionalism exist politically is an irrefutable fact of political life, in most if not all states. Therefore their study is an important part of the collective effort to understand politics in all its complexity at the local, national, an supra-national levels.

A second source, relevant to foreign policy is the pattern of transnational market incentives a liberal tradition dating back Smith and Rchard Corden. A third source of relevant to international politics is the institutional structure of domestic political representation and interests related to globalization. For exempal Republican liberal theory emphasizes the ways in which domestic institutions and practices aggregate such pressures, transforming them into state policy.

Institutions exist typically in low politics domains or lesser importance such as transportation, communication, health, and in the high politics domains of national security and defense.

During the more than half-century since the end of the Second World War, the field of international organizations has undergone significant change, captured by the changing terms used to characterize it. In general, and consistent with broader changes i political science, the subfield became less normative and increasingly theoretical.

The original post-1945 focus was on international organization, concrete entities with a physical presence names, addresses, and so on. Atypical definition was that of a formal arrangement transcending national boundaries that provides for the establishment of institutional machinery to facilitate cooperation among members in the security, economic, social, or related fields.

International politics today is as much institutional as intergovernmental. International institutions can be found in every functional domain and in every region in the world. And the study of international relations has grown alongside international institutions and impacts a broad range of thoughts and ideologies.

Political theory of international relations is much more complex then it appears on the surface, so I want to explore whether it is likely that Liberal theory, as an independent tradition of thought, can offer serous points of departure for international relations. Liberal, because I believe that elites should not only serve the public good but should be accountable to deliberative public views through institutions that give publics power over leaders. Liberty as a crucial value for a good society.

• This is because “preferences” shape the nature and intensity of world politics that states are playing.

Accountability, human rights and the rule of law, transparency, tolerance, free trade, and open societies –they are the themes that will prove to be the most in tune with the trends of the 21st century, and the best basis for the fulfilment of human ambitions and dreams.

Liberal theory is a paradigmatic alternative theoretically distinct from, existing paradigms such as realism (focusing on coercive power resources), institutionalism (focusing on information), and most nonrational approaches (focusing on patterns of beliefs about appropriate means-ends relationships). Science has a great responsibility in this respect to provide a better understanding of multiple challenges facing the international community.

A “science” without a theory may still be a science with a paradigm;Stanley Hoffman (1977).

The field of international relations responds to real-world events and historically has shifted the substantive focus of investigation to reflect changing reality.

An important contributor to the shaping of political reality are the decision making processes that characterize political elites as well as ordinary citizens. The most popular descriptive theory of decision under risk is prospect theory (Kahineman & Tversky, 1979).

Prospect theory, developed by Kahneman and Tversky and their collaborators, shows that individuals make decisions under risk differently depending on whether they confront prospective gains or losses, and that individuals are much more risk acceptant when faced with losses and risk averse in the domain of gains.

Problems that are logically equivalent but framed differently, for example, number of lives saved versus numbers lost, are treated sharply differently by respondents.

Prospect theory deviates from expected-utility theory by positing that the way people frame a problem around a reference point has a critical influence on their choices, and that people tend to overweight losses with respect to comparable gains, engage in risk-averse behavior with respect to gains and risk-acceptant behavior with respect to losses, and respond to probabilities in a non-linear manner.

Theories and methodological approaches of political influences do not arise out of a blue sky. Methods of comparative politics proved  some scientific approaches influenced by political events.

The counter-movement emphasized the comparison of dynamics of politics and political behaviour. A shift towards interest groups and political movements.

Prospect theory has been particularly influential in the field of international relations, but scholars in other fields of political science have also begun to apply some of the theory’s key concepts.

Behavioral economists have embraced prospect theory´s findings to reshape their field. The theory is based not on personality predispositions but on situationally activated response tendencies, which should appeal to structural theorists in international relations.

Neurological work has shown that people think about cost and benefits with different parts of their brain, rather than making a single calculation as utility theorist would assume.
Prospect theory and associated work also explains a major difference between deterrence and compellence.

A recent attempt to marry explicit psychological theorizing with realist theory explain why great powers often initiate risk ventures in peripheral areas and persist even a prospects for victory dim and costs escalate (Taliaferro, 2004).

Certain difficulties from the point of view of psychological theorizing arise from the application of prospect theory to the analysis of political events.

The theory applies directly to a central debate within realism that between the defensive realists (e.g, Waltz) and the offensive realists (e.g,.Mearsheimer). Waltz and his followers have argued that states seek to maximize their security in an anarchic state system that requires them to practice balance-of-power politics.

Their main goal is to assure their survival, which requires accruing power by either building military might or finding allies, but states can become satisfied with the states quo if they feel sufficiently powerful vis-a-vis other states.

In Mersheimer´world, states are never satisfied short of hegemony. Prospect theory would suggest that Waltz is more corrects when states are faced with prospective gains. In either case, states have to form accurate representations of the world (Reus-Smit and Snidal, 2010) and respond to the actions of other powers in a timely manner, which makes them deeply suspicious and receptive to worse-case assumptions about the motives of other states in the system.

The study of the international system provides one with a fine framework, but no more precisely because the system may well put constraints on and provide opportunities for the actors, but does not “dictate” their behavior; and the study of the actors tells you, inevitably, more about the actors than about the interactions.

• International relations scholar and sometime diplomat Adam Watson defines diplomacy as “negotiation between political entities which acknowledge each other’s independence.”
• The dialogue may turn on compatible demands or on incompatible ones, in which case its function is “either the search for a compromise, or else is designed to transcend the dispute and to bring in a new element that makes a wider agreement palatable to both sides.” To him, it is in preparation to define roles and in the performance of this dialogue that diplomats formulate the national interest.

Roles, in my opinion, refer to patterns of expected or appropriate behaviour. Roles are determined by both an actor´s own conceptions about appropriate behaviour and by the expectations, or role prescriptions influenced by external perceptions.

Once a role is defined and has become institutionalized, it will act as a constraint, but also as an instrumment of empowerment, for the role player. In the nineteenth century we begin to see statesmen like Talleyrand consciously serving what they conceived to be the long-term interests of the state.

Roles ordinarily allow for certain freedom of manoeuvre and interpretation (sets of meaning that actors attribute to themselves while taking the perspective of others), albeit within limits. In this view, roles are often associated with certain positions (great power roles, presidency roles). Agency as well as structure are important besides role conceptions.

Looking at roles in this way, a direct connection can be made to neo-institutional theory and its emphasis on a logic of appropriateness. According to this logic, actors behave in the way they believe is expected from them in a particular situation or context. Variation may, however, also be linked to external policy context.

At the foreign policy level the main cluster has been that of strategic literature; and there is now a growing literature on decision-making. Applications of prospect theory to international relations have grown.

One of the many happy ironies of the study of the political theory of international relations is the recognition of odd couples in the History of ideas. Realism and Marxism, for example, are generally supposed to occupy different conceptual worlds and to be, in broad terms at least, completely opposed to one another. And so, at some levels at least, they are to really existing thoughts and ideologies. One example is the way in which Marxist thought engages with international relations.

And, In explaining patterns of war, for example, liberals do not stress inter-state imbalances of power, bargaining failure under incomplete information, or particular nonrational beliefs, but conflicting state preferences derived from hostile nationalist or political ideologies, disputes over stituencies.

For liberals, a necessary condition for war is that these factors lead one or more aggressor states to possess revisionist preferences so extreme that other states are unwilling to submit.

Similarly, in explaining trade protectionism, liberals look not to shifts of hegemonic power, suboptimal international institutions, or misguided beliefs about economic theory, but to economic incentives, interest groups, and distributional coalitions opposed to market liberalization.

• Perhaps the most important advantage of liberal theory lies in its capacity to serve as the theoretical foundation for a shared multicausal model of instrumental state behavior; thereby moving the discipline beyond paradigmatic warfare among unicausal claims (Reus-Smit and Snidal, 2010. Lake and Powell 1999, outline a similar vision).

Three specific variants of liberal theory focus are defined by particular types of state preferences, their variation, and their impact on state behavior. Liberal theories link state behavior to varied conceptions of desirable forms of cultural, political, socioeconomic order.

For example commercial liberal theories stress economic interdependence, including many variant of endogenous policy theory. Republican liberal theories stress the role of domestic representative institutions, elites and leadership dynamics, and executive-legislative relations.

Such theories were first conceived by prescient liberals such as Immanuel Kant, Adam Smity, John Stuart Mill, John Hobson, Woodrow Wilson, and John Maynard Keynes, writing well before the independent variables thy stressed (democratization, industrialization, nationalism, and welfare provision) were widespread.

What basic assumptions underlie the liberal approach? Two assumptions liberal theory make are the assumptions of anarchy and rationality. Specifically, states (or other political actors) exist in an anarchic environment and they generally act in a broadly rational way in making decisions.

The anarchy assumption means that political actors exist in the distinctive environment of international politics, without a world government or any other authority with a monopoly on the legitimate use of force. They must engage in self-help.

The rationality assumption means that state leaders and their domestic supporters engage in foreign policy for the instrumental purpose of securing benefits provided by (or avoiding costs imposed by) actors outside of their borders, and in making such calculations, states seek to deploy the most cost-effective means to achieve whatever their ends (preferences) may be.

The critical theoretical link between state preferences, on the one hand, and state behavior, on the other, is the concept of policy interdependence. Policy interdependence refers to the distribution and interaction of preferences—that is, the extent to which the pursuit of state preferences necessarily imposes costs and benefits (known as policy externalities) upon other states, independent of the “transaction costs” imposed by the specific strategic means chosen to obtain them.

Depending on the underlying pattern of interdependence, each of the qualitative categories, the form, substance, and depth of conflict and cooperation vary according to the precise nature and intensity of preferences.

• Universal Liberty

Drawing on a sample of geopolitical or economic realities to outsiders. The Commission on Growth and Development (2008) notes that inclusiveness – a concept that encompasses equity, equality of opportunity, and protection in market and employment transitions – is an essential ingredient of any successful growth strategy. Conventional wisdom suggests that growth comes at the price of rising inequality, but regions differ in their growth-equity trade-off. In some instances, strong growth has been achieved without compromising equity.

Across emerging markets as a whole, the heterogeneity in economic growth performance and income distribution outcomes provide insight to the growth-equity trade-off. The commission described its case. The limited gains in inclusiveness are explained by relatively low growth in some countries and widening inequality in others. A key issue is that when poverty is reduced, the condition of everyone, including women, improves, and second, gender inequality declines as poverty declines, so the condition of women improves more than that of men with development.

Liberals argue that the universal condition of world politics is globalization. States are, and always have been, embedded in a domestic and transnational society that creates incentives for its members to engage in economic, social, and cultural interactions that transcend borders. Demands from individuals and groups in this society, as transmitted through domestic representative institutions, define state preferences that is, fundamental substantive social purposes that give states an underlaying stake in the international issues they face.

To motivate conflict, cooperation, or any other costly political foreign policy action, states must possess sufficiently intense state preferences.

This is not a distinctively liberal claim it is the only procedure consistent with the assumption of instrumental behavior shared by realism, institutionalism, liberalism, and even many variants of constructivism.

The liberal focus on variation in socially determined state preferences distinguishes liberal theory from other theoretical traditions. This is because preferences shape the nature and intensity of world politics that states are playing; thus they help determine which systemic theory is appropriate and how it should be specified.

• In solving particular inter-state collective action problems:

States, liberals argue, orient their behavior to the precise nature of these underlying preferences: compatible or conflictual, intense or weak, and their precise scope. States require a “social purpose” — a perceived underlying stake in the matter at hand — in order to pay any attention to international affairs, let alone to provoke conflict, inaugurate cooperation, or take any other significant foreign policy action.

If there is no such interdependence among state objectives, a rational state will conduct no international relations, satisfying itself with an isolated and autarkic existence. Conflictual goals increase the incentive for of political disputes. Convergence of underlying preferences creates the preconditions for peaceful coexistence or cooperation.

When you observe conflict, think Deadlock-the absence of mutual interest-before puzzling over why a mutual interest was not realized. Without controlling preference-based explanations, it is easy to mistake, notes (Reus-Smit and Snidal, 2010).

State behavior should thus be modeled multi-causally that is, as a multi-stage process of constrained social choice in which variation in state preferences comes firs. In modeling the process, however, states nonetheless first define preferences, as liberal theories of state-society relations explain, and only then debate, bargain,  or fight to particular agreements, and thereafter commit in subsequent stages to institutional solutions; explained by realist and institutionalist as well as liberal theories of strategic interaction. Of course, liberal theory is more powerful or that it explains more.

The necessary of preferences over strategic action is hardly surprising to many political scientists. Yet, this has been and is the fundamental lesson of Robert Dahl´s classic work on political influence.

His research focused on the nature of democracy in actual institutions, such as American cities. His influential early books included A Preface to Democratic Theory (1956), Who governs?: Democracy and power, arguing that many competing groups shared power.

Liberal international relations theory´s fundamental premise state preferences derived from the domestic and transnational social pressures critically influence state behavior -can be restated in term of three core assumptions.

1. The Nature of Societal Actors: Globalization generates differentiated demands from societal individuals and groups with regard to international affairs.

2. The Nature of the State: States represent the demands of a subset of domestic individuals and social groups, on the basis of whose interests they define “state preferences” and act instrumentally to manage globalization.

3. The Nature of the International System:The pattern of interdependence among state preferences shapes state behavior as an organization with many higher goals.

• International politics along institutional

One, more difficult is that institutional cooperation in international relations. Imagine how many coordination problems new states experience. Many coordination and collaboration problems, in which their autonomous self-interested behavior results in deficient outcomes.

Many situations, form trade to arms races, have been characterized as Prisoner´s Dilemma games, and these are precisely ones in which states have either created, or tried to create, international institutions. The Prisoner´s Dilemma game is the quintessential example of a situation in which autonomy results in poorer outcomes. In such cases, institutions can resolve the collective action problems and allow states to reach mutually preferred outcomes.

But remember the definition of a state as and organization, controlling the principal means of coercion within a given territory, which is differentiated from other organizations operating in the same territory, autonomous, centralized and formally coordinated.

If there is something to the trends of models of international politics of state behavior they can be significant in variation and in the attractiveness of cooperative or competitive means.

State behavior are rooted in power and they threaten almost every single one of these defining features of the state (the autonomy, the centralization, the formal coordination, the monopoly of coercion, the exclusiveness of control within ones territory).

In defining the security dilemma as consisting of the dilemmas of interpretation and response faced by policymakers. Here Bototh and Wheeler coined the term “security dilemma sensibility” to refer to the ability of policymakers to perceive the motives behind, and to show responsiveness towards, the potential complexity of the military intentions of others. In particular, it refers to the ability to understand the role that fear might play in their attitudes and behaviour, including crucially, the role that one´s own actions may play in provoking that fear.

When policymakers show security dilemma sensibility, they enter into the counterfears of other states, acknowledging how their own defensive military postures may have contributed to the fears of others. Under such circumstances, policymakers would be more inclined to seek diplomatic and security postures that assuage the security concerns of other states. Status quo states might, for example, implement Confidence and Security Building Measures (CSBMs) that adress the securty concerns of others and build trust to mitigate the effects of uncertainty in an anarchic world.

In a hugely influential article, Robert Jervis (1986) showed how “Security-dilemma” consequence of anarchy could lead security seeking states into costly spirals of mistrust and rivalry. He argued that the severity of the security dilemma depends on two variables: the balance between offense and defense, and the ability to distinguish offense from defense.

The best known theoretical proposition about international relations is balance-of-power theory.

Given the basic problem that under anarchy any state can resort to force to get what it wants, it follows that states are likely to guard against the possibility that one state might amass the wherewithal to compel all the others to do its will and even possibly eliminate them.

The theory posits that states will check dangerous concentrations of power by building up their own capabilities (internal balancing) or aggregating their capabilities with other states in alliances (external balancing).

Because states are always looking to the future to anticipate possible problems, balancing may occur even before any one state or alliance has gained an obvious power edge. Thus, Britain and France fought the Russian Empire in Crimea in the middle of nineteenth century less because they saw an immediate challenge to their position than because they reasoned that, if unchecked, Russian power might someday be a threat to them.

Balance-of-threat theory adds complexity to this picture. As its name implies, this theory predicts that states will balance against threats. Threat, in turn, is driven by a combination of three key variables: aggregate capabilities (that is, its overall military and economic potential), geography, and perceptions of aggressive intentions.

Most preemptors do not want war but believe it is imminent and unavoidable. Prevention is a response to a future threat rather than an immediate threat. It is driven by the anticipation of an adverse power shift and the fear of the consequences, including the deterioration of one’s relative military position and bargaining power and the risk of war—or of extensive concessions necessary to avoid war—under less favorable circumstances later. The incentive is to forestall the power shift by blocking the rise of the adversary while the opportunity is still available. Thucydides (1972) concept of preventive war has become a staple of realist thought, influencing modern analyses of the origins of war.

If one state becomes especially powerful and if its location and behavior feed threat perceptions on the part of other states, then balancing strategies will come to dominate their foreign policies. Thus, the United States began both external and internal balancing after the end of the Second World War.

The U.S.-led international order and the opportunity for cooperation and integration into it, both are alive and well in the current system, and the balance provides a continued ability to solve problems and to manage crises at roughly the same rate as when American dominance was unquestioned.

If there is one rule of international affairs that the Obama administration has forgotten, it is that mediated settlements reflect power balances. The principal way such balances are changed is through force of democracy. This is not a popular thing to say, but as the disasters in Syria illustrate, plenty of people can die when force is abjured and the place of military action in diplomacy is forgotten.

Mediated settlements reflect power balances and any effective peace agreement should not only eliminate the conditions which led to conflict, but should also seek to ensure that those conditions do not reoccur.

The imbalances that led to violence must be resolved. There was a moment in the Syrian conflict when decisive military aid to the opposition could have changed Assad’s calculation. The balance of power is associated with moral neutrality, manage crises and letting each nation follow core values. Maintaining that balance is central to the question of whether we will live in a stable or unstable system in the period to come.

Four years after the Bosnia bombing, a further NATO intervention in Kosovo changed the balance of forces there and led to Milosevic’s fall. Fifteen years later, there has been successful mediation of the long-festering Serbia-Kosovo conflict. The point, of course, is not to use force for its own sake. War is a terrible thing, as the 100th anniversary on 28 june 2014 of the outbreak of World War I reminds everybody. But diplomacy unbacked by any credible threat of force or attempt to change the balance of power is vain.

Promoting Security Responsibly U.S. policy for conventional arms transfer has an important role in shaping the international security environment. A Key Tool of U.S. Foreign Policy.

Great sense of the degree to which a theoretical picture of international system really applies is a matter of judgment. What began as the study of international organizations and regional integration took a dramatic turn in the early 1980s in what came to be called regime theory, and was subsequently rechristened neoliberal institutionalism.

Key to politics in any area is the interaction between social and material power, an interaction that unfolds in the shadow of the potential use of material power to coerce, as Waltz (1979) put it.

• If Moravcsik provides the theoretical muscle and Slaughter the descriptive power, then Forging a World of Liberty under Law (Ikenberry and Slaughter 2006 restatement and development of themes found in earlier work but this time conjoined, sometimes awkwardly, to a project to re-envisage US national security) is a full-blown set of policy prescriptions and application to join the rulership cadre of states, promoting wise and effective statecraft”(Reus-Smit and Snidal, 2010)

This is a world to be “forged,” sometimes through military intervention, sometimes through economic integration. It is a world of liberty in which states that practice the virtues of freedom and democracy will flourish. It is a world in which law is the handmaiden to liberty, promoting it at every turn.

A deeper contradiction lies at the heart of the democratic governance project in international law. There is a call for the creation of a world of mature liberal democracies and there is a Kantian tolerance of imperfect existing institutions combined with the promise and responsibility to protect. The latter a reaffirmation of the Rawlsian principle that liberal states ought to have the right to intervene in states (Rawls 1999; United Nations 2004.)

The Princeton project contains a great deal of good sense of the need to update conceptions of deterrence, liberal ethics concern for issues of global health, and so on. It may be that the purpose of international law is to restrain sovereigns, liberty under law, but if those sovereigns exercise authority as an expression of popular will, then international law must have to be, at times, antidemocratic and antilibertarian (Rabkiin 2004; Anderson 2005).

In Forging a World of Liberty, members of the Concert of Democracies are required to pledge not to use force against one another. If such pledges are necessary in a world of democratic states, it may be because the popular will can become bellicose or because liberal states might have good reason to attack one another (for example, over remaining oil stocks, in response to mass refugee flows, because of chauvinstic media cammpaigns.)

The deeper question about Moravcsik´s strategy is whether liberal states do behave differently?, as new liberalism predicts that they will.

Moravcsik argues that both war and intensified cooperation can be explained by configuration of domestic preferences. So, war in the twentieth century is marked by global conflict between rival ideologies (communism, liberalism, and fascism), while supranational cooperation (involving the pooling of  sovereignty) is a feature of regions in which there is uniform commitment to democratic norms.

Although the earlier general rules may have prohibited states from using force except in anticipation of an imminent attack, in more recent practice, the imminence standard has changed. States have initiated and cooperated in the use of force to extend self-defense to instances in which the possibility of an attack is not imminent, but merely expected.

International law sets properly, if not always effectively, enforceable limits on the freedom of states. Such an investigation seem especially appropriate to those mainly internationalists rather than realists or cosmopolitans who are more interested in understanding or reforming the world we actually inhabit than in advocating for an ideal world order.

Political realists typically claim to be part of a tradition that stretches back, through Thomas Hobbes and Niccolo Machiavelli. But the definitions of realism vary considerably in their details, but then reveal a striking family resemblance. Realists tend to converge around four central propositions:

1. Groupism, Politics takes place within and between groups.Group solidarity is essential to domestic politics and conflict and cooperation between polities is the essence of international politics. People need the cohesion provided by group solidarity, yet that very same in group cohesion generates the potential for conflict with other groups.
2. Egoism. When individuals and groups act politically, they are driven principally by narrow self interest. This egoism is rooted in human nature, but can be overcome by national and international political structures, institutions, and values.
3. Anarchy. The absence of government dramatically shapes the nature of international politics.
4. Power politics. The intersection of groupism and egoism in an environment of anarchy makes international relations, regrettably, largely a politics of power and security.

Perhaps the strongest realist arguments appeal to the nature of states and statesmanship. The doctrine of raison détat reasons of state.

In the study of international relations, neoliberalism refers to a school of thought which believes that states are, or at least should be, concerned first and foremost with absolute gains rather than relative gains to other states. Neorealism treats international affairs as anarchic, that is, as self-help system lacking a dominant power that can enforce agreements. It hypothesizes that political stability in the form of the survival of states is ensured by national efforts to maximize security through alignments. Although both theories use common methodologies—including game theory—neoliberalism is not the same as neoliberal economic ideology. what those interests are.

Neoliberalism is a response to Neorealism; while not denying the anarchic nature of the international system, neoliberals argue that its importance and effect has been exaggerated. Neoliberal international relations thinkers often employ game theory to explain why states do or do not cooperate; since their approach tends to emphasize the possibility of mutual wins, they are interested in institutions which can arrange jointly profitable arrangements and compromises.

The neoliberal argument is focused on the neorealists’ underestimation of “the varieties of cooperative behavior possible within a decentralized system  Both theories, however, consider the state and its interests as the central subject of analysis; neoliberalism may have a wider conception of what those interests are.

Robert O. Keohane and Joseph S. Nye, in response to neorealism, develop an opposing theory they dub “Complex interdependence.” Robert Keohane and Joseph Nye explain, “… complex interdependence sometimes comes closer to reality than does realism.” In explaining this, Keohane and Nye cover the three assumptions in realist thought:

1. First, states are coherent units and are the dominant actors in international relations;
2. second, force is a usable and effective instrument of policy; and
3. finally, the assumption that there is a hierarchy in international politics.

The heart of Keohane and Nye’s argument is that in international politics there are, in fact, multiple channels that connect societies exceeding the conventional Westphalian system of states. This manifests itself in many forms ranging from informal governmental ties to multinational corporations and organizations.

Here they define their terminology; interstate relations are those channels assumed by realists; transgovernmental relations occur when one relaxes the realist assumption that states act coherently as units; transnational applies when one removes the assumption that states are the only units. It is through these channels that political exchange occurs, not through the limited interstate channel as championed by realists.

• English School

The English School´s use a category international system of “inter-state system” that shares a great deal with the use of systems theory in realist thought. But, what sets them apart is that the English School are interested in the “system”, primarily, for what it tells us about the history of international society.

As when a system becomes a society what level and type of interactions are required in order for the units to treat each other as ends in themselves? And under what circumstances might a society lapse back into a system order in which their actions impact upon one another. One can find the English School the view that there is logic of balancing in the states system.

• The systemic interactions of world into a globalized society of sovereign states remain a possible future. Event in the cold war “A hypothetical case of a major nuclear confrontation could become a reality if great powers acted in ways that were catastrophic for international society. As a result, the society collapses back into the system idea of a states system”. This opens series of discussions in the system.

balance of power

Under conditions of anarchy, where there is no overarching power to disarm the units and police rules, it is in the interests of all states to prevent the emergence of a dominant or hegemonic power.

Those who take the balance of power seriously point to repeated instances in modern history where states with hegemonic ambition have been repelled by an alliance of powers seeking to prevent a change in the ordering principle of the system.

The English School argue that the states system demands “balancing states behavior.

Given the strategic interests and values shared by the United States and Europe, China’s remarkable rise in economic, political, and military power has the potential to significantly challenge some of today’s existing liberal international order. The international community, meanwhile, demands in principle that China should pay more respect to civil and political rights in order to become a fully legitimate member of international society.

China’s rise must become a central element to U.S.-Europe strategic and political dialogue and policy coordination.

“This coordination must be founded upon a shared U.S.-Europe understanding of mutual interests and the potential challenges and opportunities posed by an increasingly powerful China” Managing China’s Rise by Abraham M. Denmark. Stockholm China Forum October 2011.

The concept of a system plays three important roles in the English School´s theory of world politics.

1. First, system, the system/society distinction provides a normative benchmark for addressing the question of how far international society extends.

2. Secondly,by looking at the formation of the system, it is possible to discern mechanisms that shape and shove international and world societies.

3. Thirdly, the category of the system can be used to capture the basic material forces in world politics that flows of information and trade, levels or destructive capability, and capacities of actors to affect their environment. Tim Dunne examines each of these, Chapter 15 in Reus-Smit and Snidal (2010).

Dunne argue “The English School is the oldest and arguably the most significant rival to the American mainstream and the subject is becoming a global discipline.” and for that international relations is not longer an American social science, as Stanley Hoffmann (1977) proclaimed.

Political science has a much longer history than international relations. It was only the twentieth century that brought democratization to foreign policy. Diplomatic issues moved because more states joined in the game that had been the preserve of a small number of actors and (mainly European) and above all because within many states parties and interests established links or pushed claims across national borders.

Two literatures, often described separately, could be applied today´s use of institution and in effect redefine all international politics along institutional lines. One school is that of social constructivism, in which all social reality is constructed intersubjectively though interaction.

The very units of international politics, states, are social constructions, as is the sovereign state system in which they interact. Combining a broad view of institutions with a view of social and political reality as socially constructed leads to the argument that the sovereign state system is itself an institution of international political life.

In this view all international politics is subject to a set of rules that are human constructions and in which actors are subsequently socialized.

From the perspective of such principles, matters that are usually treated separately –  sovereignty and its limits, the morality of international law, cultural pluralism, economic inequality, and the user of force –  can be brought within an integrated theoretical framework. Rawls had proposed a principle of distributive justice in A Theory of Justice: Economic inequalities within a society are unjust unless they benefit everyone, including the least advantaged (the “difference principle”). But he did not apply the principle internationally.

Recognizing the importance of this mutual sensitivity to the rules and norms conditioning the actions of others is one facet of the changing role of professional diplomats and, consequently, the necessary skills and training strategies appropriate for the 21st century foreign service.

Sources and nature of diplomatic rules and norms Rules and norms are derived from two interrelated sources which locate the diplomat at the interface of: a transnational diplomatic community sharing a professional culture, language and recognized sets of working procedures; a national diplomatic community whose norms and rules are traditionally embodied in the organizational cultures and values of the foreign ministry.

At the transnational level, The Vienna Conventions on Diplomatic and Consular Representation continue to provide the formal constitution of the world of diplomacy codifying a system based on the assumption that sovereign, territorial states are, if not the only actors in international relations, by far the most significant.

Article 3 The text of the Convention lingers over definitions of sending and receiving states and diplomatic communications. Article 41 of the Convention also stipulates that diplomats have a ‘duty not to interfere in the internal affairs of the State’.

These documents reflect the power, interests and claimed privileges of states.

Perhaps the most apparent is that diplomacy is a search for peace. This system, with its attendant rules, conventions and norms, simplifies, clarifies, privileges and secures the work of professional diplomats. For diplomats, collaboration complements and reinforces the achievement of negotiation. Effective negotiations turn not just on a deal being done but on the expectation that it will be successfully implemented. This also means that agreements have to be supported more widely by key stakeholders and citizens.

Louis XIV made France the dominant power in Europe, however, his model of absolutist monarchy collapsed within less than a century after his death.

What was true for diplomacy under the reign of Louis XIV of France is as true today…Louis XIV may not have said, “I am the state”, but he ruled as if he had said it. Louis XIV broke with tradition and astonished his court by declaring that he would rule without a chief minister…

Officers also got regular training and were much more strictly under the rule. A diplomatic necessity more than anything else.

But what has changed is that diplomacy has expanded because of the multiplicity of stakeholders, the growth of the media and the rapid communication of information, privately and publicly.

A second literature is in many ways similar; (it is known as English School) it emphasizes the existence of international society. Although the School recognizes an international system that involves the mere interactions of states and that is subject to power politics, it argues that typically and international society, rather than system, constitutes international reality.

Communication is the essence of diplomacy, determining its purpose and operational modes.

One People Oration. The phrase “One People” was coined by Edward Carpenter (then Archdeacon, later Dean of Westminster) in 1965-6. The orations commenced in 1966, and were intended to make people “think not only of all Christian people but of all mankind”

Each phase in the long evolution of diplomacy has therefore been marked by the need to adjust to and seek to shape the dominant features of the communication and information environment.

The definition of international society provided by the School seems delimiting:

An international society exists when a group of states, conscious of certain common interests and common values, form a society in the sense that they conceive themselves to be bound by a common set of rules in their relations with one another, and share in the working of common institutions.

This idea is expanded by Bennett and Stam (2004) who argue that over long periods of time, cooperation though alliances can lead to “shared institutional structures over time that will provide incentives and /or mechanisms to avoid conflict.” Alliances arise from states attempts to maintain a balance of power with each other. NATO was the first peacetime military alliance forming a European-American alliance.

This definition of international society appears in a book titled  The Anarchical Society : A Study of Order in World Politics by Bull, H. (1977). Bull’s thesis is that a society of sovereign states exists in our world today and that this “international society” is anarchical in form given the absence of a central orderer.

Order in the contemporary “international system”. At various points he outlines the notion that order is a pre requisite for justice.

The English School is applied to the traditional notions of; the balance of power; international law; diplomacy; war; and the Great Powers. Although eventually concluding that the study of world politics is purely an intellectual pursuit.

This is an important caveat within The English School. Theirs’ is a tripartite outlook of an “international system, international society and world society” simultaneously coexisting.

Various changes in international criminal law have significantly restricted the circumstances in which state leaders can claim immunity form humanitarian crimes committed while they were in office. Similarly, the Rome Statute of the international Criminal Court adds another layer of international jurisdiction in whole, one authority on the English School argued that they may be interpreted as involving a clear shift from an international society to a world society.

Tens of thousands of women, girls and men were raped during the war in Bosnia. We can and must change the entire global attitude to these crimes. Serious violations of the law of armed conflict attract individual criminal liability for those who breach the law, including for commanders who order their subordinates to commit war crimes. The Rome Statute system aims to help prevent such crimes, to protect all peoples from them, and to uphold what is best, but also most fragile, within us: the shared sense of justice that is a common bond of all humanity.

Under the Geneva Conventions, all States are required to criminalise war crimes in domestic law, and to assert ‘universal jurisdiction’ over such crimes. While national criminal law usually only applies within that State’s own territory, the principle of universal jurisdiction allows States to criminalise war crimes which occur outside their territory, even where neither the victims nor the perpetrators are nationals of that State.

The international community regards such crimes as so serious that there should not exist safe havens or impunity for those who commit such crimes. This is a good example of how international law is primarily implemented through national law and national courts,

The idea behind universal jurisdiction is to ensure that perpetrators of war crimes cannot escape justice by fleeing to another country, which would not have jurisdiction if international law did not permit universal jurisdiction to be exercised.

International law plays an increasingly important role, even in cases once considered purely domestic. Courts around the world have important contributions to make towards bridging different political and legal cultures and doing the fundamental legal and institutional work required to shape law, especially as state, federal and international law become increasingly interconnected.

One way of illustrating what world society or “Global Society” the English School mean is by considering the effects of anarchy on their foreign policies, the patents of their interactions, and the organization of world politics. Particularly the identification of an increasingly dense fabric of international law, norms, and rules that promote forms of association and solidarity, the growing role of an increasing dense network of state and nonstate actors that are involved in the production and revision of multilayered governance structures, and the movement toward forms of dialogue that are designed to help identify shared values of humankind, issues such as environmental politics, security and human rights.

Although these issues remain on the agenda, they increasingly share the stage with small states and with a multitude of other actors. There are also a great many civilian UN staffers as well as members of NGOs from various countries.

This shift to “global society” is reflective of several important developments including multilateral form that are shaping global relations and structures focused on states as actors in order to maintain their security and generate wealth in an inhospitable environment. Simply put, the shift symbolize “Global Governance”, maintenance of collective order, the achievement of collective goals, and the collective processes of rule through which order and goals are sought (Rosenau 2000).

What makes system a”Systemic”?

Complex systems are hard to predict because they are hard to understand. The primary source of the complexity is the multiplicity of interactions within the “system”, or as Jervis (1997) calls them, “interconnections”.

The challenge is a meta-cognitive one: thinking systematically about when to engage in systems thinking; and weighing the costs and benefits of using simple or complex heuristics in policy environments that can shift suddenly from quiescence to turbulence. Based on the literature, it is hard to answer these questions. But, they are systemic in that for the most part they fall outside the institutional arrangement developed by states to regulate order and promote justice.

World society is not just about the growing importance of transnational values grounded in liberal notions of rights and justice. Transnational identities can also based upon ideas of hatred and intolerance.

Robert Jervis has long had a keen eye for our collective blind spots. In Perception and Misperception in International Politics (1976).

We expect pushback from at least two philosophical camps. Readers of an objectivist or pragmatic bent may suspect that we are trying to repackage as controversial an obvious and non-controversial hypothesis. All knowledge rests on relationships between causes and effects that we identify through the explanation of effects, and that we test through prediction.

When a prediction is confirmed, we become more confident in both the reliability of forecaster and the explanatory framework that produced the prediction; when a prediction fails, we dial back our confidence.

The ‘‘systemic’’ nature of the political world no more precludes confidence in predictions than does that of the natural world.

We suspect that Jervis is fundamentally right. However, a core precept of Jervis’s ‘‘systems thinking’’ is that causes are so interconnected that the historian can only with great difficulty imagine causation by subtracting all variables but one. Prediction, according to Jervis, is even more problematic. Thus, Jervis challenges our ability to make sensible political choices. And the challenge cannot be overcome simply by thinking about it.

In the political process it sometimes happens that new elites can down the work of their predecessors simply because it was the work of their predecessors. One constraint on such a process is the presence of technically minded professionals in the orbit of the political elites. Nearly any agency or legislative body has at least some such individuals who will be a ballast for technical rationality. And forums that mange to cut across opposed advocacy coalitions may be able to give technical rationality a better hearing than it otherwise might receive.

Historical analysis and policy making often require counterfactual thought experiments that isolate hypothesized causes from a vast array of historical possibilities. Among a significant body of world public opinion, the strongest identification is to the faith and not to the state.

This generates countervailing ideologies of liberation on the part of fundamentalist Christians and holy war on the part of certain Islamist groups. In English School thinking, such dynamics can usefully be considered in the context of earlier revolts against Western dominance that were apparent during the struggle for decolonization. After 11 September, the question is whether suicide bombers can be deterred, with some arguing they are the ultimate irrational actors,and would be difficult to locate following an attack, whereas other scholars are suggesting that deterrence is possible even with respect to terrorists networks, and thus many of the old theories of deterrence developed during the cold war remain relevant. The English School accepts the role that Great Powers play in determining the values and processes of international society and settling questions of stability, possibility of cooperation and change.

Both social constructivism and the English School characterize, if not define, the study of international institutions so broadly as to make all international relations institutional. In doing this, they in effect argue that recent developments do not constitute anything new but merely a continuation or a development.

• Institutional theory

The roots of institutional theory run richly through the formative years of the social sciences, enlisting and incorporating the creative insights of scholars ranging from Marx and Weber, Cooley and Mead, to Veblen and Commons.

Institutional theory attends to the deeper and more resilient aspects of social structure. It considers the processes by which structures, including schemas, rules, norms, and routines, become established as authoritative guidelines for social behavior.

It inquires into how these elements are created, diffused, adopted, and adapted over space and time; and how they fall into decline and disuse.

Institutions impose rules on the behavior of social actors – or they are supposed to do so. However, it cannot be assumed that those whose behavior is to be ruled, or governed, have always internalized the rule in question (i.e., adopted it as a “script”) or will follow it voluntarily out of self-interest.

Social science institutionalism considers social systems to be structured by sanctioned rules of obligatory behavior. Its perspective is one of collective ordering, or governance, through regularization and normalization of social action, either by public authority or by private contract.

• Political economy and knowledge system.

The development and diffusion of “knowledge system” is center stage in many fields. Modern theories of economic growth and international trade, for instance, place emphasis on the accumulation of tangible factors such  as capital and labor, focusing almost entirely on access to knowledge. Knowledge, as an intangible, seems ideally suited to overcoming spatial frictions, although there appear to be limits to the transfer of knowledge.

In The Wealth of Nations (1776) Adam Smith formulated the basis of what was later to become the science of human capital. Over the next two centuries two schools of thought can be distinguished. The first school of thought distinguished between the acquired capacities that were classified as capital and the human beings themselves, who were not. A second school of thought claimed that human beings themselves were capital.

For policy makers the development of a KBE is viewed as essential for economic growth in the face of increased global competition. This calls for a single-minded focus on improving education—and, in particular, on the potentially massive effects of technological change on employment.

Looking ahead, factors such as the internet revolution, the rise of smart machines, and the increasing high-tech component of products will have dramatic implications for jobs and the way we work. Yet governments are not thinking about this in a sufficiently strategic or proactive way.

Most countries develop their labour market (Developments Economics)  intelligence on current and future skills needs, though such observatories which bring together labour market and education and training. These models and analyses help even to shape qualification standards and adapt training systems to labour market needs. High human capital countries develop technologies and intermediates of relatively high skill intensity.

Institutional: Political economy looks at the interrelations between collective action in general and collective rule-making in particular, and the economy; it extends from economic and social policy-making to the way in which economic interests and constraints influence policy, politics and social life as a whole.

More precisely, there is a set of interrelated social institutions, and as a historically specific system of structured as well as structuring social interaction within and in relation to an institutionalized social order.

Recent progress in institutionalist political economy has involved a conception of institutions as Weberian Herrschaftsverbände linking rule makers and rule takers inside a surrounding society of “third parties” (Streeck/Thelen 2005). Rule makers govern the behavior of rule takers – the distinction being an analytical one, as the two may be identical– by creating and enforcing a normative order that is sanctioned by the society at large.

The new interdependence literature has useful things to say both about power and about the causal mechanism underlying institutional change in a globalized world. Adapted to the post–Cold War world, this argument was taken to mean that in the future, states would have to adopt the principles of liberal capitalism to keep up.

Closed, communist societies, such as the Soviet Union, had shown themselves to be too uncreative and unproductive to compete economically and militarily with liberal states. Their political regimes were also shaky, since no social form other than liberal democracy provided enough freedom and dignity for a contemporary society to remain stable. But, that process will not be peaceful, and whether or not the revisionists succeed, their efforts have already shaken the balance of power and changed the dynamics of international politics.

Good theory often takes us beyond our current knowledge. In short a central insight of postmodernism is that actors construct their identities through radical others and who we are is defined against an other who is everything we are not. Theories may as well become our social identities and in constructing these theoretical identities. Reus-Smit and Snidal, (2010) Handbook highlight two similarities among all theories, a style that integrates questions, assumptions and logical argumentation across existing theoretical differences, while focusing on developing explanations of how international relations is developed and professionalized as a field.

institutional variation resolve key puzzles in political economy as to the shifting influence of major powers despite stability in relative economic size.

In some cases, a key theoretical puzzle for example, why is there cooperation? or why democracies do not fight one another? has motivated enormous research effort and substantial advancement into a rich analysis of the institutions that surround cooperation.

psychology should be of greatest interest to different kinds of international relations scholars. New work in cognitive social psychology and behavioral decision theory simultaneously expands on and qualifies earlier error-and-bias portraits of the foreign policy maker, thereby enriching our understanding of internal divisions within the realist camp.

Work on bounded rationality in competitive markets and mixed-motive games, as well as the literature on the power of human emotions to shape judgments of what represents an equitable allocation of scarce resources or a just resolution of conflicts of interest, can inform neo-institutionalist and constructivist theories. Developments in cross-cultural social psychology shed light on constructivist arguments about the creation and maintenance of international social order that typically rest on assumptions about decision making that are qualitatively different from realist and institutionalist approaches to world politics.

As power relations have changed, so too has the logic of extraterritorial regulation and pathways to institutional change to produce asymmetric power. This fails to explain the kind of system change that  Robert Keohane and Joseph Nye observe a more “Complex interdependence.” Here, the new interdependence moves beyond simple definitions of power rooted in market size and underscores the critical role of different domestic institutional arrangements to produce regulatory capacity, so that decisions made in one polity or market have consequences in another – is ubiquitous in international and comparative politics. Arguments focusing on institutional variation resolve key puzzles in political economy as to the shifting influence of major powers despite stability in relative economic size.

The struggle to maintain that balance is central to the political life of all our democracies. In Central and Western Europe we have achieved far greater liberty than ever before, and in the most diverse spheres. But, the restoration of a military balance in Europe is not an end in itself. It is the necessary condition for the development of relations between East and West.

The challenge to our way of life represented by the Soviet Union is deep-seated. The Russians have equipped themselves with military forces whose capabilities and philosophy are better matched to the demands of an offensive than of a defensive policy and whose ambitions are global in scale.

Nor is the Russian challenge only military. It is also political and ideological.

The Russians talk loudly, and rightly so, about the need for peace. But they also proclaim the certain demise of the Western system of democracy. They claim the right to promote this end through what they call the ideological struggle.

Our democracies have proved themselves able to adapt to change—the immense changes of the twentieth century. They have adapted to universal suffrage, to the technological revolution in communications, to the most dramatic upsurge of prosperity in their history. Other places in the world dictatorships have succeeded in doing few if any of these things. Democracy may be less than perfect but, as Churchill forcibly pointed out, all the other systems so far devised by man are much worse.

Faced by these new challenges, over the years, the Alliance has proved an invaluable meeting place where the Atlantic nations could discuss their problems and affirm their purposes. In the years ahead discussions will also focus on improving the European security system. But the function of the Alliance is to hold a common line against a common threat. Its problems are those of keeping in good repair a machine which we hope will never have to be used.

History does give us valuable warnings.

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50th annual Munich Security Conference, American Civil War, Japan, John Kerry, Margaret Macmillan, Munich, Munich Security Conference, world of 1914 and 2014

Margaret_Macmillan_An eminent scholar compares the world today with the one that was shattered in 1914

We had Davos last weekend, and for this weekend we have the 50th annual Munich Security Conference. So we welcome to these discussions of the Munich Security Conference, built on the unique character of transatlantic meeting.

Both the USA:s Secretary John Kerry and Secretary Chuck Hagel, as well as EU Catherine Ashton will be In Munich together with European Council, Herman Van Rompuy, Carl Bildt and Swedish defense minister Karin Enström among others. Where Ukraine and Iran belong to the important topics.

In a very influential book and article,The Rhyme of History, by Margaret Macmillan, fellow of the Royal Society of Literature and professor of international history at Oxford University, compares the world today with the one that was shattered in 1914.

We have entered a new and potentially perilous era. There are now nine countries with nuclear arsenals, including Pakistan, a fractious if not failing state, and North Korea, which has proved itself as reckless as it is repressive.

Depending on whether Iran gets the bomb, numerous other states—including Japan perhaps— are likely to exercise their own nuclear options. That would make for a very dangerous world indeed, which could lead to a recreation of the kind of tinderbox that exploded in the Balkans a hundred years ago—only this time with mushroom clouds.

Like the world of 1914, we are living through changes in the nature of war whose significance we are only starting to grasp.

But even if all nations were to agree that nuclear war simply does not make sense, there are drawbacks and dangers to the wars being waged with conventional weapons, which many of our military leaders fail to understand.

Margaret Macmillan argue that World War I still haunts us,..we still cannot agree why it happened….but if we can see past our blinders and take note of the telling parallels between then and now, the ways in which our world resembles that of a hundred years ago, history does give us valuable warnings.

1914 was also the gateway to thirty years of disaster—marked by two world wars and the Great Depression. It was the year when everything started to go wrong. What happened?

The search for explanations began almost as soon as the guns opened fire in the summer of 1914 and has never stopped. Scholars have combed through archives from Belgrade to Berlin looking for the causes. An estimated 32,000 articles, treatises, and books on World War I have been published in English alone. Yet afterward Margaret Macmillan, professor of international history at Oxford University, could not stop thinking about this question that has haunted so many.

The seizure of power by a military organization or its leader is historically the oldest way of setting up a modern form of non-democratic regime. The modern historical precursor was the rule of Oliver Cromwell (leader of the New Model rule of Army) in seventeenth-centruy Britain but the more immediate and applicabe prototype was the way in which General Napoleon Bonaparte became military dictator of France in the aftermath of the French Revolution.

Margaret Macmillan, argue that , a hundred years ago, most military planners and the civilian governments who watched from the sidelines got the nature of the coming war catastrophically wrong. The great advances of Europe’s science and technology and the increasing output of its factories during its long period of peace had made going on the attack much more costly to human life.

There was plenty of evidence from the smaller wars fought before 1914—the American Civil War, the Franco-Prussian War of 1870-71, and the Russo-Japanese War of 1904-5—about what this would mean on the battlefield. Yet the best brains in Europe’s general staffs refused to face the new reality, explaining away or ignoring the uncomfortable facts, just as today many choose to ignore the overwhelming scientific evidence of global warming.

What happened was that the birth of the modern industrial society brought about massive dislocation. The world was rife with tension—rivalry between nations, upsetting the traditional balance of power, and inequality between the haves and have-nots, whether in the form of colonialism or the sunken prospects of the uneducated working classes.

By 1914, these imbalances had toppled over into outright conflict. In the years to follow, nationalist and ideological thinking led to an unprecedented denigration of human dignity. Technology, instead of uplifting the human spirit, was deployed for destruction and terror.

The European powers went into war in 1914 with plans that, without exception, were predicated on an offensive strategy. As a British major general said in 1914, “The defensive is never an acceptable role to the Briton, and he makes little or no study of it.” The British—and the soldiers of many other nations—paid a high price for that willful blindness.

The one-hundredth anniversary of 1914 should make us reflect anew on our vulnerability to human error, sudden catastrophes, and sheer accident. So we have good reason to glance over our shoulders even as we look ahead.

History, said Mark Twain, never repeats itself but it rhymes. The past cannot provide us with clear blueprints for how to act, for it offers such a multitude of lessons that it leaves us free to pick and choose among them to suit our own political and ideological inclinations. Still, if we can see past our blinders and take note of the telling parallels between then and now, the ways in which our world resembles that of a hundred years ago, history does give us valuable warnings.

Globalization—which we tend to think of as a modern phenomenon, created by the spread of international businesses and investment, the growth of the Internet, and the widespread migration of peoples—was also characteristic of that era. Then, as now, there was a huge expansion in global trade and investment. And then as now waves of immigrants were finding their way to foreign lands—Indians to the Caribbean and Africa, Japanese and Chinese to North America, and millions of Europeans to the New World and the Antipodes.

History does give us valuable warnings.

Last week at Davos the big take-away was that China-Japan was much more problematic than many of us thought and it causes real disruption on trades and hurting both economies is real. If you need evidence of the significance of this geopolitical clash, look no further than the surprising comment made at Davos by Prime Minister Abe of Japan, who said his country´s relationship with china was in a similar situation to the one between Germany and Britain before world War I.

China is displaying an increasingly belligerent streak in its territorial disputes with a number of other countries. Threatening other states in order to bend them to its will on issues of this kind is completely unacceptable and it is vital that Japan maintains its uncompromising stance for the good of the whole region. Protecting the territorial integrity of one´s state is a core responsibility for any government. Japan’s Abe worries a conflict could be sparked by something entirely unexpected that could become the flash point for conflagration. “There may be some conflict or dispute arising out of the blue, on an ad hoc level … or inadvertently,” he said.

It is also tempting—and sobering—to compare today’s relationship between China and the U.S. with that between Germany and England a century ago. Now, as then, the march of globalization has lulled us into a false sense of safety. Countries that have McDonald’s, we are told, will never fight each other. Or as President George W. Bush put it when he issued his National Security Strategy in 2002:

The spread of democracy and free trade across the world is the surest guarantee of international stability and peace; as President George W. Bush put it

How does democracy promote peace? In brief, Leaders of democracies as well as the citizens generally benefit from avoiding conflict, especially with one another because the political costs of fighting wars are higher for democratic leaders. If they lose the war, they almost certainly will lose power, but even if they win a costly war, the domestic political costs may be quite high.

During the course, interest in the democratic peace grew broader. Bruce Russett and John Oneal (2001), for example, analyzed whether there was a more general liberal peace. Drawing on long-standing arguments by Immanuel Kant and others, they hypothesized that democracy, high levels of economic interdependence, flow of trade between states and participation in international organizations combine to inhibitinter-state conflict.

According to Margaret Macmillan We are now witnessing, as much as the world of 1914, shifts in the international power structure, with emerging powers challenging the established ones. Just as national rivalries led to mutual suspicions between Britain and Germany before 1914, the same is happening between the U.S. and China now, and also between China and Japan.

Yet the extraordinary growth in trade and investment between China and the U.S. since the 1980s has not served to allay mutual suspicions. Far from it. As China’s (FDI) investment in the U.S. increases, especially in sensitive sectors such as electronics and biotechnology, so does public apprehension that the Chinese are acquiring information that will put them in a position to threaten American security.

China’s businesses have been encouraged to “go global” and invest abroad to find new markets, secure access to energy and raw materials, and enhance their competitiveness by acquiring new technologies, brands, and management skills. And for their part, the Chinese complain that the U.S. treats them as a second-rate power and, while objecting to the continuing American support for Taiwan, they seem dedicated to backing North Korea, no matter how great the provocations of that maverick state.

At a time when the two countries are competing for markets, resources, and influence from the Caribbean to Central Asia, China has become increasingly ready to translate its economic strength into military power. Indeed, Kevin Rudd, Former Prime Minister of Australia, in his recent IISS Alastair Buchan Memorial Lecture on 16 December 2013, predict that China is beginning to use its growing influence to reshape the rules and institutions of the international system to better serve its interests.

Increased Chinese military spending and the build-up of its naval capacity suggest to many American strategists that China intends to challenge the U.S. as a Pacific power, and we are now seeing an arms race between the two countries in that Asia-Pacific region.

History, never repeats itself but it rhymes. The past offers such a multitude of lessons that it leaves us free to pick and choose what suits our own political and ideological inclinations: Mark Twain

The world is changing both because of shifts in international problems and because of shifts in what we care about, democracy and liberal peace and values we in Europe and America cherish.

We are facing threats of terrorism and untamed growth in radical sectarianism and religious extremism, which increases the challenge of failed and failing governments and the vacuums that they leave behind. And all of this is agitated by a voracious globalized appetite and competition for resources and markets that do not always sufficiently share the benefits of wealth and improved quality of life with all citizens.

Just look at the actual and potential conflicts that dominate the news today. The Middle East, made up largely of countries that received their present borders as a consequence of World War I, is but one of many areas around the globe that is in turmoil, and has been for decades. Now there’s a civil war in Syria, which has raised the spectre of a wider conflict in the region while also troubling relations among the major powers and testing their diplomatic skills.

Many urgent security challenges confront the international community in early 2014 – from the catastrophe in Syria and Iran’s nuclear program to the NSA disclosures and European defense integration.

For the U.S, they are at the centers to push Syria to turn over its chemical weapons, the Israelis and Palestinians to resume direct peace talks, and the development of political orientation of the Syrian country.

On January 28, 2014, President Barack Obama delivered the State of the Union.

“From Tunisia to Burma, we’re supporting those who are willing to do the hard work of building democracy. … And we will continue to focus on the Asia-Pacific, where we support our allies, shape a future of greater security and prosperity and extend a hand to those devastated by disaster, as we did in the Philippines;” President Barack Obama

The President continued, emphasizing that in a world of complex threats, America’s security depends on all elements of its power, including a “strong, principled diplomacy.”

Today, American diplomacy: has rallied more than 50 countries to prevent nuclear materials from falling into the wrong hands, and allowed U.S. to reduce its own reliance on Cold War stockpiles; said U.S. President Barack Obama

In other words, the global world is differnt from 1914 and its implications for global governance and the possibilities of cooperation among many states of the world impacts upon todays world in a differnt way.

Three years ago Tunisia was the starting point for the upheavals that swept across the Arab world. In the years Tunisia has often looked as though it might descend into the same anarchy that has afflicted other states in the region.

During the past six months, however, the country´s politicians have hammered out a remarkable set of compromises that are now setting the country on a new path of development to democracy in which democratic principles and the rule of law must be respected.

The progress achieved in Tunisia’s transitional process, in particular on finalizing the approval of each article of the Constitution, which represents an important milestone for Tunisia. And, next week, in Tunisia, a new democratic constitution will be celebrated. Also Ukraine must have the freedom to choose its own path without external pressure.

In the midst of all these shifts, Europe is finding its role and place. “The future of Ukraine belongs with the European Union” said President of the European Council, Herman Van Rompuy, in his opening speech of first panel at the Munich Security Conference 1 February 2014.

“We all paid a price to live free. In the European Union, with many of our countries returned only relatively recently to the harbour of democracy, we know all about it”said President of the European Council, Herman Van Rompuy,

As today at the Munich Security Conference, people across the world – not least in nearby Ukraine – are voicing their aspirations for universal values we in Europe and America cherish.

We’re also talking about the post-second World War era and the early 1950s, in Europe, just to date. This was rebuilt with help from the Marshall Plan. An extraordinary ambition  (Read A Brief History) which helped deliver postwar reconstruction in a bid to avoid the mistakes. A programs strengthening the U.S.-German relationship in particular, when Europe rebuilt itself with American support.

As German President Richard von Weizsäcker would later write, Marshall‘s plan was “unparalleled in the history of world powers in generosity, selflessness, and vision. It was the work of a farsighted, highly responsible American administration”.

A key event that played an important role also in trade and financial negotiations with other countries, among which were the United States and United Kingdom. American-European partnership is Indispensable. In this phase of change, America’s presence in Europe is more necessary than ever.

“But it was more than just the rebuilding of a continent; it was the rebuilding of an idea, it was the rebuilding of a vision that was built on a set of principles, and it built alliances that were just unthinkable only a few years before that” said Secretary John Kerry at the opening of second panel this morning. Read more here.. the full speech.

2014 will mark the centenary of World War I. The one hundredth anniversary of something makes it no more relevant than any other marker of time. Yet, it is worth reflecting on at least one thing—the way in which an order that seems to work reasonably well can be suddenly brought to an end. The contemporary order is working reasonably well, and there are as many sources of optimism as concern. It is up to all of the states that benefit from it to ensure that it does not come to an end.

Many of today’s young leaders have no memory of those post-World War II events. Nor do they appreciate how they shaped vital political and economic relationships that are still needed.

2 minutes at Gettysburg and how oil is changing US in a period of turbulence.

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Foreign Policy, natural gas, President Abraham Lincoln, President Obama, President Richard Nixon, United States

let us strive on to finsih the work we are in, to bind up the nation¨s wounds,.. and a lasting peace among ourselves and with all nations. Democracy ins´t chaos, that there is a great invisible strength in a people´s union. Say we´ve shown that a peopel can endure awful sacrifice and yet cohere. Mightn´t that save at least the idea of democracy to aspire to?

Over the last half millennium different societies have moved on to distinct paths of political and economic development. What happened? One answer is collective action and political institutions.

Comparative political economists who pushed this story, or variants of it, naturally appreciated the fact that well-functioning market economies rely on well-functioning governments, just as they naturally appreciated the that government in the developed countries is functioning extremely well, in both historical and cross-country comparison.

Different elements may come into play at different stages of a country’s development. And not all aspects of governance carry equal weight at a particular point in time. Good governance—which requires transparency, accountability, rule of law, and effective and legitimate institutions—is believed to be an important piece of economic development, while poor governance can hobble growth in an otherwise vibrant system. Empirical evidence shows that, on the whole, better governance is correlated with higher growth and better development outcomes.

The few countries that have been able successfully to implement such major political economic reforms have always been either politically competitive liberal democracies, or highly centralized autocracies. Countries that are not on one end of the political spectrum or the other, form the Ottoman Empire in the 1840s and 1850s to the Soviet Union in the 1970s and 1980s, have never been able to successfully implement liberalizing reforms to any significant degree, except after unleashing tremendous political instability. Freedom under the law and successful economic development occur together. In our current period, a country like China cannot expect to achieve full development without adopting the rule of law.

Rule of law, in its essence, is a concept as least as old as the Magna Carta, According to this principle, the government and the people are governed by a knowable and predictable set of written principles that apply equally to everyone within the jurisdiction of the government. Only if those principles are knowable and predictable can people optimally organize their affairs to pursue happiness.

The huge variation we see in the world today in both economic and political outcomes is the result of long-run historical and political processes. For good reason, rule of law has become a popular recommendation in the arena of development. For democratic choices, institutional research provide guidelines for drafting policy procedures, involving not just making laws but the administrative decision making that inevitably follows. Implementation is worth studying precisely because it is a struggle over the realization of ideas of political feasibility.

Effective rule of law is foundational to successful development, and any political economy with the potential to become a Liberal has to overcome barriers to development.

History provides important evidence. Everyone knows about the Gettysburg Address, which turns 150 years old this month. They know it was President Abraham Lincoln’s signature speech, delivered at the site of the signature battle of the Civil War, one that turned back the highest Confederate tide as it rose violently into the North. Lincoln was extremely measured in his Gettysburg remarks.

Two hundred and fifty-years of unrequited toil shall be sunk, and until every drop of blood drawn with the lash shall be paid by another drawn with the sword, as was said three thousand years ago, so till it must be said “The judgments of the Lord are true and righteous altogether. With malice toward none, with charity for all, with firmness in the right as God gives us to see the right, let us strive on to finsih the work we are in, to bind up the nation¨s wounds,.. and a lasting peace among ourselves and with all nations.

The American Civil War of 1861 to 1865 claimed the lives of more than 550,000 people. During those years, many citizens began to place flowers on the graves of the war dead. This tradition continues on the last Monday in May,kown as Memorial Day:

The history behind the 13th amendments adoption is also an interesting one. It was then, President Abraham Lincoln who took an active role in pushing it through congress. He insisted that the passage of the Thirteenth Amendment be added to the Republican party platform for the upcoming presidential elections.

Lincoln correctly realized that as President, he had no legal grounds to single-handedly terminate the institution of slavery–but that this had to be done by a constitutional amendment. He used all of his political skill and influence to convince additional democrats to support the amendments’ passage. His efforts finally met with success, when the House passed the bill in January 1865 with a vote of 119-56. Finally, Lincoln supported those congressmen that insisted southern state legislatures must adopt the Thirteenth Amendment before their states would be allowed to return with full rights to Congress.

Thirteenth Amendment was was fully ratified by the necessary majority of the states in December of 1865, the Emancipation Proclamation was the document used to justify separating slaves from their masters, and by late 1865 there were no slaves remaining in the United States. Consequently, the Emancipation Proclamation was truly the beginning of the end of slavery.

150 years old on November 19, 2013 Harvard experts reflect on meaning of the Gettysburg Address, and cover five aspects of Lincoln’s address, a century and a half into its life as a somber national treasure. Also: a youth-infused reading.

President Abraham Lincoln speaking at the dedication of the Gettysburg National Cemetery on Nov. 19, 1863. Lincoln’s words that day marked a critical crossroads for a grieving nation. With his speech, the president linked the sacrifice of those on the battlefield to a higher cause, offering the living, including those in mourning, a sense of purpose and meaning.

He delivered just over 270 words in two minutes, and in the process helped a broken nation begin to heal. Many educators still teach the address.

EDITOR’S NOTE: On the night Abraham Lincoln was shot, April 14, 1865. Great National Calamity!

• New discourse on energy.

Newly accessible supplies of shale gas and oil—is now creating a new discourse on energy, that is changing US politics and policies. According to an recently published article, in POLITICO Magazine’s: 15 Nov 2013 by Daniel Yergin (IHS Vice Chairman and CNBC’s Global Energy Expert),.. all of this political discussion, partly, represents what U.S. Energy Secretary Ernest Moniz calls a “new mentality” about America’s energy position, with a new political language to match.

American politicians in both parties have long dreamed of energy independence — not only for its potential economic benefits, but also because it could free the United States from the vicissitudes of the outside world.

• Nixon´s energy “independence”

Exactly 40 years ago, in November 1973, President Richard Nixon went on television to promise the American people energy “independence” within 10 years. Just three weeks earlier, on Oct. 17, 1973, Arab petroleum exporters had instituted an oil embargo to punish the West and, in particular, the United States, for its support of Israel during the Yom Kippur War.

When Nixon made his energy independence speech, the United States was importing 35 percent of its oil. By 2005, it was importing 60 percent. Over the same period, U.S. oil production fell by more than a third. Natural gas output also declined. By 2005, it looked as though the United States was going to become a huge importer not only of oil but also of natural gas in the form of more costly liquefied natural gas (LNG).  In 1973, most Americans did not even know that the United States imported any oil. Nixon’s promise of energy independence became a standard pledge of every succeeding president, but with imports rising, it seemed an ever more distant hope.

Then came shale gas and tight oil and it’s now clear that a revolution has occurred: U.S. crude oil production is up 50 percent since 2008. petroleum imports have fallen from their high of 60 percent in 2005 to 35 percent today—exactly what they were in 1973. Thanks to U.S. innovation and technology, a wave of new technologies has made it possible to extract oil and gas from shale rock formations, and the results have been astonishing.

Shale-gas and -oil production. Powered by advances in horizontal drilling and hydraulic fracturing, the production of domestic shale gas and oil has grown more than 50 percent annually since 2007. But the economic impact of this revolution is broader even than those numbers suggest. By some estimates, the United States is on track to overtake Saudi Arabia as the world’s largest oil producer as early as 2017, start exporting more oil and gas than it imports by 2025, and achieve full energy self-sufficiency by 2030.

Obama’s own words are another way to measure the stark change in the politics of energy that has occurred on his watch. In his first two State of the Union addresses, the president mentioned the words “natural gas” just once. But in his 2012 address, he talked about the need for an “all-of-the-above” energy strategy and gave more time to oil and gas than to the promise of developing alternative sources like wind and solar. He has frequently cited the job creation resulting from shale (POLITICO Magazine Nov 2013).

This past June, Obama declared, “We should strengthen our position as the top natural gas producer because, in the medium term at least, it not only can provide safe, cheap power, but it can also help reduce our carbon emissions.”.a clear demonstration of just how much the way America talks and thinks about energy is changing.

Energy security, and geopolitical position of the political debate: Two recent developments have changed Washington’s approach toward energy: first, the substantial increase of affordable energy resources within the United States affects the country’s economic growth, energy security, and geopolitical position. With U.S. natural gas prices a third of those in Europe, it is also making the United States a much more competitive place for industry, helping to power what President Obama has called a “renaissance in American manufacturing”.

In 2012, Europe accounted for nearly two-thirds of Russian gas exports by volume and 12 percent of the country’s total exports by value, Russia has also proven itself willing to use gas as a foreign policy weapon against countries such as Ukraine, with little regard for the disruptions caused to customers further down the pipe in Western Europe. If he’s unable to buy loyalty through patronage, Mr. Putin could turn to more pernicious methods like bullying neighbors and fanning the flames of nationalism. These factors are dramatically changing the global gas landscape in ways largely unfavorable to Russian exports. Putin´s heavy-handed actions have catalyzed interest in shale gas throughout Europe.

Second, climate change, driven by the world’s use of energy, presents not just a transcendent challenge for the world but a present-day national security threat to the United States. Both forces should push the United States and other countries toward cleaner, more sustainable energy solutions.

Americans should cheer the energy revolution. It will do wonders for the American economy, and the democratic politics it could encourage in the Middle East and Russia may ultimately serve American interests. “But in the meantime, Washington should expect a world far less stable than the one it is used to — and, in turn, prepare to adopt an even more outward-looking foreign policy”. Alter & Fishman at Foreign Affairs.

Scarce resources have driven both commerce and conflict since time immemorial — and still do today. However, we are not necessarily headed into a world of scarcities, but policymakers and their private sector partners will need to be proactive to avoid such a future. The international economy almost certainly will continue to be characterized by various regional and national economies moving at significantly different speeds—a pattern reinforced by the 2008 global financial crisis. (Global Trends 2030:Alternative Worlds).

The United States has benefited as much as any other country from the free exchange of goods, the safety of global sea lanes, the spread of democracy and the great-power stability that have characterized the entire post-World War II era. None of this could exist without the steadying hand of American power.

Many will argue that an energy-independent America could simply retreat into isolationism during such a period of turbulence. But American engagement abroad has never been purely about securing access to energy. Energy is a profoundly important aspect of U.S. national security and foreign policy. President Obama’s plan to fight climate change was at the top of U.S. Secretary Ernest Moniz list on his first day in office.

America can advance its national interests more effectively by taking an integrated foreign policy approach. Energy supplies present strategic leverage and disposable income for countries that have them.

The challenge of accessing affordable energy is shared by people and businesses in every country, young democracies, emerging powers, and developing nations allies and adversaries alike. Disruptions in supply in one location can have global economic impacts. As these developments have taken place during the past few years, too many heterogeneous phenomena have been included in the term ‘globalization” and this has made the concept’s explanatory power loose its potency.

There are three major positions in the debate about globalization and states. First, there are scholars who think that states are losing power and influence as a result of globalization. There is a retreat of the state in the sense that the domain of state authority in society and economy is shrinking (what were once domains of authority exclusive to state authority are now being shared with other loci of sources of authority). because globalization erodes the power of states who they should trade with.

Foreign trade should be viewed as an opportunity, not a threat. Globalization is not simply a policy choice on which you can come down on one side of the other. It is a force driven not only by technology, but also by the aspirations of people around the world for opportunity and a better life.

In this way trade and Particularly Economic institutions matter for economic growth because they shape the incentives of key actors in society. In particular, they influence investment in physical and human capital and technology, and the organization of production. Economic institutions not only determine the aggregate economic growth potential of the economy and prosperity, but also how this pie is divided among defferent groups and individuals now and in the future.

Second, there are stat-centric scholars who believe that states remain in charge of globalization and have even managed to expand their capacities for regulation and control. At the same time, very few “retreat” scholars would claim that the state is losing out to the extent that states are withering away or becoming entirely powerless. And very few state-centric scholars would maintain that states are always winning and are all powerful. Therefore, most scholars support some version of a third pragmatist middle position, instead of a zerosum view of either “winning” or “losing “. It is accepted that both can take place at the same time.

Most of the social, economic, and other problems ascribed to globalization are actually due to technological and other developments that have little or nothing to do with globalization. Even though its role may have diminished somewhat, the nation-state remains prominent in both domestic and international economic affairs.

Studies on the globalization debate of the past two decades has brought non-state actors NSAs back into view (Baumann and Stenglel, 2013). As a result of globalization states are becoming stronger in some respects and weaker in others. There is a process of state transformation taking place and it plays out differently in different states.

In an age of globalization, the non-state actor is more important than ever before. One reason for this is that states in todays world partially thrive because of an international commercial network that, once disruptetd, has immediate and substantial effects.

Unlike the foreign policy studies inspired by the IR states as unitary actors, FPA scholars are already well-positioned to explain today´s more complex foreign police making, which involves networks of state officials, representatives of non-governmental organisations (NCOs), business companies, international organisations (IOs), and if (indirectly) terrorist.

However, it should be remembered that globalization has been changing U.S. foreign policy since the beginning of the American Republic. As the 2001 terrorist attacks on the World Trade Center radically demonstrate, NSAs are important autonomous actors that can have a serious impact on world politics. There is also an extreme diversity of view on globalization. Some see it primarily as an ideology designed to promote democracy around the world. Others put it in context of process of capitalist development and expansion.

The idea of democracy as universal commitment is quite new, and it is quintessentially a product of the twentieth century. In the general climate of world opinion, democratic governance has now achieved the statues of being taken to be right. Democracy promotion as a foreign policy goal has become increasingly acceptable throughout most of the international community, an international norm embraced by other states (than the US), transnational organisations, and international networks in the community of democratic (group of states from diverse regions, cultures, and religions, dedicated to a core set of democratic principles) states the normative burden has shifted to those not interested in advocating democracy promotion (McFaul 2004:148, 158).

The connections between globalization and democracy are a classic question in international political economy (IPE, a problématique, or set of related problems) and a topic much debated in foreign policy circles. It is hard to imagine a world without International Political Economy because the mutual interaction of International Politics, or International Relations, and International Economics is today widely appreciated and the subject of much theoretical research and applied policy analysis.

It seems impossible to consider important questions of International Politics or International Economics without taking these mutual influences and effects into account. Economic cooperation is emerging as an alternative to political violence elsewhere, too. Cyprus, Greece, and Turkey are discussing shared oil and gas pipelines despite their disagreements. So are Sudan and South Sudan, which have reluctantly accepted the need to cooperate in order to export both countries’ oil after splitting apart in 2011. Economic cooperation is not a cure-all in any of these places. But it does allow states to come together in new ways rather than risk falling apart.

• The political actions of nation-states clearly affect international trade and monetary flows, which in turn affect the environment in which nation-states make political choices and entrepreneurs make economic choices.

First and foremost, the United States is now leading at home, which is where energy and climate policy begins. The new U.S. energy posture and outlook will directly strengthen the nation’s economy. As Obama has said, a country’s political and military primacy depends on its economic vitality. Strength at home is critical to strength in the world, and the U.S. energy boom has proven to be an important driver for the country’s economic recovery — boosting jobs, economic activity, and government revenues.

The United States’ new energy posture allows Washington to engage in international affairs from a position of strength.

Increasing U.S. energy supplies acts as a cushion that helps reduce the country’s vulnerability to global supply disruptions and price shocks. It also affords Washington a stronger hand in pursuing and implementing its international peace and security goals. Demand for practical knowledge and lessons about how the United States and other countries can more effectively promote democracy around the world has never been higher.

Update:

We are living in extraordinarily Time. Despite the many challenges we face, we have many reasons for confidence.

The U.S. Secretery of State, John Kerry, visiting Indiana University, one of the finest public universities in America, convey an important message about the United States of America’s foreign policy: advancing global policy in four critical areas, global trade pact TTIP and TPP, global climate change, an historic nuclear agreement to prevent Iran from acquiring a nuclear weapon and U.S.-led counterterrorism Global Coalition in the fight against international terrorist organizations and about the difference that each of us can make in shaping a better world.

And as we look ahead, we seek not simply to address the immediate crisis of the day. Our strategy is to lay the groundwork for solutions that will strengthen the community of nations for decades to come. To succeed in that, we must mobilize the help and the support of allies and friends across the globe because we can’t do it alone. No nation can.