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quinta-feira, 7 de abril de 2016

Conflict Resolution in Latin America and Europe - Paulo Roberto de Almeida

My brief notes for an open discussion in an academic meeting in Rio de Janeiro, April 7, 2016 (not reviewed; not for publication)

Conflict Resolution in Latin America and Europe

Paulo Roberto de Almeida
Notes for a debate in an academic workshop
Rio de Janeiro, April 7, 2016

“Each participant will have about 10 min to do an initial statement, and then the Chairs will guide the discussions. We prepared some questions that we would like to address:”

1) What are the most important challenges currently facing Latin America and Europe (migration, social inequality, corruption, terrorism, territorial disputes)?
PRA: Challenges, both in Latin America and in Europe, can be similar or very different; in most of the cases they are very different in nature, scope and dimension. Just to mention the issues selected by the organizers of this session, let us separate the relevant questions affecting, for one side, Latin America, and in the other side, Europe.
Migration, for instance, is a general phenomenon, carrying different aspects according to concrete cases. Latin America is in general as emigrant region: it sends millions of starved people toward more affluent shores, normally in North America, but also for Europe. Europe, of course, is an immigrant region, receiving millions of economic migrants, refugees from conflict zones, politically persecuted people from dictatorships and many other cases, including fake refugees. Most countries, in the Latin American region, are exporting people, due basically for economic reasons, despite some special cases derived from political conflict or civil war: Venezuela and Colombia are examples of both processes: economic migrants and political refugees; Brasil, during its high economic times, ten years ago, was receiving some economic migrants from neighboring countries, but it started again, like in the 80s, to send its brightest sons to other countries, as it is facing one of the most important structural crises in its history, both economic and political. The trend can and will accelerate, if the current recession turns into a depression, as the government seems unable to tackle the source of the crisis.
It is not in my intention to comment about migration, or immigration problems in Europe, but I am perfectly able to discuss migration, or emigration, problems in Latin America. Just to express now, in short words, my opinion about those issues in general: all cases of emigration, historically, are an evidence of a fundamental failure in some region or countries, either because of war, or economic distress; every case of immigration, in its various forms, is a symptom of success, of economic performance, of political stability, of social peace. All countries that receive immigrants, either out of a distress outwards, or out of an individual decision to look after a better life for oneself of his family, will be in a better situation in the near future, because immigrants represent one of the best inflows, in the medium time frame, in terms of human capital.
We do not have in Latin America big territorial disputes, despite some remaining cases between Bolivia and Chile, and between Venezuela and Guyana, but there is no sign that those conflicts will turn to open armed wars. We do not have, either, a terrorist problem, even if in some cases, countries in Latin America – let’s say Argentina, Colombia, Mexico – suffered from terrorist attacks, and even Brazil, in its triple frontier (with Paraguay and Argentina), can be involved in some side effects of terrorism network (money laundering, arms and drugs traffic, etc.). Europe, and marginally the United States, are, of course at the most evident victims of terrorist actions, outside Middle East, Northern Africa, and Southern Asia: it is the historically delayed effect of its past colonialism over millions of people in those region, and its current opening to human inflows coming from them. Either in Latin America, or in Europe, terrorism is a menace that should be tackled more by and with intelligence that with armed operations, but in some cases (in Libya, for instance, both “solutions” are likely).
As for social inequality and corruption, we, in Latin America, are champions in every world ranking that can be conceived to deal with those two relevant questions of political governance and economic performance. Social inequality is a prime and a top subject in social science and economic studies in the region and in the most important think tanks and international organizations dealing with social issues around the world. Either you choose rankings from the Fraser Institute and the Heritage Foundation, such as the annual reports on Economic Freedom of the World, or the Indexes about corruption from Transparency International, you are perfectly able to rank Latin American countries, with very few exceptions (such as Chile, Uruguay and Costa Rica, for instance), among the worst cases of social inequality and corruption in the world. There is no linear correlation between, for one side, income levels and or relative riches and, for the other side, the evidences arising from the high concentration of income and/or high levels of corruption. Corruption is a pervasive phenomenon, and can be found in poor and middle-income countries, as it depends much more of the role of the State and the functionality of the public institutions. Social inequality is inherent of our economic and social processes of nation building and State formation, including because State creation precedes and dominates the process of nation building.

2) How are Latin America and Europe coping with these challenges? How effective are the Latin American/European conflict resolution mechanisms/policies?
PRA: As the challenges are very different, in those two regions, both in nature and dimensions, we necessarily have very different responses in face of those issues. Letting terrorism and immigration questions aside, that are irrelevant in and for most Latin American countries, we can tackle our two most important problems, respectively corruption and social inequality.
Corruption, as already said, is a pervasive phenomenon in our countries, and of course, actually in Brazil, sometimes more evident than in other times. We are traversing one of our worst case of corruption in al times, and nobody can deny that the political mess in which we are submerged today derives from our single most important corruption case. As we also have remarked, corruption is always linked to a huge role of the State not only in the economic realm, but also in every other aspect of the social life. The State in Brazil is a comprehensive and all encompassing body, a Hobbesian persona that covers every space in the life of the country, not only in regulatory matters but also in some areas, of minor impact, that in other countries are let for individual choices of the people. In Brazil, the State pretends to be a baby sitter, telling you where and when, and to whom, you can buy as aspirin or soda drinks, or even if salt recipients can be laid down in restaurant tables. That’s our State, and many Brazilians are proud of it.
Corruption is at the core of the current impeachment dealings being dealt by the Chamber of the Representatives in the Brazilian Congress, but not only and not especially corruption; formally, the accusation is indicting the president because of responsibility crimes against the Constitution, the Fiscal Responsibility Law of 2000, and the budget legislation for the fiscal year of 2015 (even if a previous budget, 2014, was also a part of the entire piece). There are other accusations, but the indictment piece is limited to those “fiscal wrongdoings” during the current mandate. But all this is taking place in the midst of the worst, at all levels, including in the world context, case of corruption never before seen in Brazil, and probably in every other country in the region, in Europe, in the world. The government of PT, Workers’ Party, is being accused of being a mere puppet for a criminal organization, as some evidences arising from investigations by the public prosecutors have already shown.
We cannot talk about a conflict resolution process of any kind in this case of corruption in Brazil: 80% of the Brazilian population wants the dismissal of current government, and have proved its mood by huge manifestations in 2015 and now; only a minority, probably less that 10% of the population, is actually supporting the government and its hegemonic party. Curiously, if we are to consider the recent “manifests” by academic associations, including of Political Science, Historians and Defense Studies, it seems that 90% of the academic community is supporting the government and its party, or at least the boards of those associations intend to make us believe so. More curiously encore, those manifests proclaim their attachment to legality, their strict defense of democracy, their opposition to a supposed coup being conducted by the political opposition and rightist sectors of the society, and the need to preserve some vague “social rights and gains” that could be undermined by an impeachment of the president. In no one of those manifests I found references to the vast corruption scheme being revealed by the investigations, or the already dozens of entrepreneurs or politicians indicted and/or condemned in this context. It is really a shame that manifests by academic people can be so partial and one-sided. History, and the criminal process will prove them wrong.
As regards, social inequality in Latin America, I do not pretend to even tackle the subject, because I would have to deal with plenty of studies and analysis. I can refer for this matter, not to the current studies by sensible economists, but to one single work, written some 180 ago: Democracy in America, by Alexis de Tocqueville. At the start of his sociological essay, Tocqueville states that his vision of the United States was strongly impacted, since the beginning, by what he called the “equality of conditions”. Well, we are all aware that equality of conditions does not exists in Latin America, either in colonial times, or during the building up of the new independent nations, and for the rest of the times, including our times. Some progresses were made, in terms of social and educational improvements, but those were not enough to erase the profound divide between the elites (including academia) and the common people, the poor.

3) What can Latin America and Europe learn from each other?
PRA: Very few, in fact, or almost nothing. I will not deal with conflict resolution in the political domain, because there are no parallels, of any kind, between Latin America and Europe in this realm, and if each region, and each country, exhibits mechanisms for this sort of settlement of conflicts, I think that are few examples that could serve for a comparative exercise in this field. I prefer to deal with economic issues, such as macroeconomic stability, microeconomic competitiveness and sectorial policies, political governance, quality of human capital, and economic opening to trade and foreign investments.
There are no models or receipts for any aspect of political governance, or economic policies, for any country or region. And, even if there were such models, they cannot be transferred or even adapted in other contexts and for other polities. Of courses, we do have some things that we could call “lessons of History”, or we do have nowadays some stuff matters in terms of political and economic governance that are being synthetized by such organizations as OECD and the Bretton Woods institutions, entities that are at the core of contemporary globalization.
If we could try to abridge some prerequisites for a sustained process of economic growth, which is a fundamental condition for social and economic development, with structural transformation and the distribution of its benefits for the population as a whole, perhaps we should indicate some areas of crucial relevance for both economic and political governance, some features that could help to guide the evaluation of the quality of public policies, in each region, that could be able to increase growth (and riches and incomes), reduce the levels of social inequality, and also reduce levels of corruption.
Here are my suggestions, in the fields already summarized above:

(A) Macroeconomic stability: which means, precisely, fiscal responsibility, domestic accounts in order, interest rates in accordance with economic fundamentals (that is, more market based than government fixed), exchange regime also in line with market equilibrium (that is, floating rates, with minimum intervention by Central Banks), and other main features of macroeconomic policies.
Where Latin America and Europe remain, as regards those mains indicators of a “good” macroeconomic performance? Well, Europe, more specifically European Union, has been much more responsible than Latin American countries in those macroeconomic guidelines. Despite some deviants – let’s not name the Mediterranean countries that acted in a irresponsible way in the last few years – most of the countries pertaining to the Euro areas, and many outside this currency zone, performed reasonably well, preserving the economic fundamentals under acceptable conditions. Growth was not formidable, but at acceptable levels, and, more relevant, stability was preserved.
What we could say, in this matter, about Latin America? Well, I can talk about Brazil, during my own generation, that is, young generation during the 1960s, and old people nowadays. Which other country do you know that have changed SEVEN times its currency in a single generation, with a three zeros cut in almost occasions (less once, but last time, much more than three zeros, exactly 2.750 times)? If I disregard the change from the old Portuguese currency, the Mil-Reis to the Cruzeiro, in 1942, here are the currencies that I have had to use since 1967: from Cruzeiro to New Cruzeiro (with a 3 zeros slash), the Cruzado in 1986 (again 3 zeros cut), the New Cruzado in 1988 (new hair cut, because of a accelerating inflation), return to the Cruzeiro in 1990 (without a new cut), the introduction of the Cruzeiro Real in 1993 (again slashing 3 zeros), and finally the Real in 1994, starting with an indexed currency (like the Schacht plan with the new Reich mark in 1923) called the URV, Real Unity of Value, valued at 1:1 against the dollar, and exchanged for the Real after a cut of 2.750 points in July 1994. So, we have had, in Brazil, 8 (EIGHT) currencies in the last two or three generations, against the background of an inflation impossible to evaluate in normal numbers, because it goes to astronomical digits, more than a quadrillion percent from 1986 to 1994. Already the Real, our only currency in the last 22 years, has probably accumulated an inflation of 400%, which is accelerating in the last ten years. Let’s go forward.

(B) Microeconomic competition: It’s very well know that we, in Latin America, especially in Brazil, we live by state monopolies, sectorial cartels, restricted public utilities in the hands of decades-old big companies living in promiscuity with the people who are responsible for those concessions by the Government. Why, if this were otherwise, we like to call some happy few people “kings” of something? King of Soya, king of Meat, king of Cement, king of Steel, king of Telecommunications, and so on. Who are, in fact, those Kings of this or that sector? May be are they brilliant capitalists, exceptional farmers, especially bright people who are able to thrive in a very competitive environment, open to all, and conquering large tracks of the market by their own capacity and spectacular managerial skills? More probably, they are the same old capitalists and bankers who, since the Renaissance (according to Fernand Braudel), engage in the same kind of conspiratorial parlance, against the consumers, that Adam Smith immortalized in unforgettable passages of his Wealth of Nations. Brazil is a typical case of this nature: we have plenty of kings of any sort, some old families controlling entire sectors of the economy, and new barons of emerging sectors in the telecommunications or else, as well as, of course, the inevitable bankers, who support and finance any type of politicians.
There are plenty of examples of this kind of situation in Latin America: if we consult any annual report about competitiveness, by the World Economic Forum, for instance, or some studies by the World Bank about economic concentration in Latin America, especially in Brazil, we would verify the extreme high levels of vertical integration in many sectors, and the important role by the State for this configuration. If you want to learn a little more about the economic concentration and anti-competition practices in the Brazilian business, a feature established totally in line with governmental lines of action, with a particular strength in the last ten years, I would suggest that you read the book by Aldo Musacchio and Sergio Lazzarini, Reinventing State Capitalism: Leviathan in Business, Brazil and Beyond (Cambridge: Harvard University Press, 2014).
There are much more examples, in Latin American, of this special detrimental characteristic of our capitalism. For instance, the richest man in the world: Carlos Slim, of the telecommunications sector in Mexico, and in many other countries, including in Brazil and in Europe. So I stop here about microeconomic competitiveness.

(C) Good governance: Well, there are few parallels that could be put in line in order to allow us to establish analytical comparisons between Europe and Latin America in terms of governance, or perhaps if not by recovering old historical records about the extreme centralization of the Iberian kingdoms, the traditional patrimonialism that was transplanted to the colonies of the New World, and also, stretching a little more the historical record, some specific characteristics of the European ancient Régime, in what it can offer examples of the Absolutist State and even some despotic tyrants. We could start by the simple record, of high historical significance, that Latin America has not had any such thing comparable with the Magna Carta, and the Bill of Rights and equivalent instruments very well known in the European history (and in some of its off-shots). Latin American started as an independent region, free from the old European colonialism, at the same time that democratic revolutions were undertaken in Europe and North America, which were brought together, by some historians, under the concept of Atlantic democratic revolutions.
Perhaps there are few parallels, historical or other, between the two regions, but there are many lessons that Latin America could and can learn from Europe in terms of governance, political or economic. After having beheaded some kings, dethroned others, during the ancient Régime, and engaged in democratic revolutions all-over the 19th century, Europe still continued to produce the worst political experiments at least during the first half of the last 100 years, including bolshevism, fascism, Nazism and some other minor genocidal initiatives. Some totalitarian theories produced in Europe during that period also expanded to other continents, like Maoism in Asia, and variants of Stalinism in North Korea and other countries. It seems that Europe, exhausted, has been vaccinated against outbursts of political cholera such as those described above.
At least, the principles of constitutionalism, rule of Law, political representation, Human Rights, and above all democratic values, all invented or developed in Europe, expanded to other continents, including Latin America. Those features and elements of a normal good governance were brought to, or were imported by many countries in Latin America, countries that, with other counterparts in Southern Europe – Greece, Spain, Portugal – surmounted, around the 1980s, the heavy heritage of previous dictatorships and authoritarian regimes in both sides of the Atlantic. Countries like Argentina and Brazil accomplished some kind of transition from military regimes of the 60s and the 70s, to start new constitutional and political arrangements in the 80s, which included projects of economic integration, a somewhat political deterrent against new falls into authoritarian regimes (as we have saw in the case of Paraguay, and the subsequent democratic clause of Mercosur’s Ushuaia Protocol).
But, at the same time, the ancien Régime-like political constituencies in some countries, with all its side-effects in terms of corrupt governments and the structural features of the eternal social inequalities, produced some less desirable consequences, such as the return of populism in countries already characterized by huge differences between rich and poor people (Andean countries, for the most, but even in Brasil and Argentina). Bad economic governance in many countries of the region, and the poor quality of the new democratic institutions as well as fragile systems for accounting and control of the public finance in almost every country combined with external shocks, or underperformance in the global economy, to precipitate crises of political or economic nature. Immediate or delayed effects of all this mess in the political and economic realms sprayed with less or more virulence in most of the Latin American countries, at simultaneous or various periods of the last four decades (since the 80s): high inflation rates, even hyperinflation in many countries (Brazil, Argentina, Bolivia, Venezuela, Peru), change of currencies, wage and price freezes (non sustained and unsustainable in every country), capital flight, extensive (and inefficient) controls in transaction and capital accounts, successive emergency agreements with the IMF, Paris Club or private and official creditors, black markets, shortages in domestic supply, disinvestment of national and foreign entrepreneurs, trade protectionism and distorted sectorial policies, rupture with global markets, and the list is not complete.
Of course, not all countries underwent the whole array of truly schizophrenic measures at the same time or went through the disaster scenario to the point of political breakdown, but some were more unhappy than others. Venezuela, for instance, seems to be one of the unhappiest country of Latin America, despite the fact that, due to huge oil resources, it exhibited, historically, one of the highest per capita incomes in the region. Rent-seeking behavior of its corrupt political parties created the whole set of conditions for political upheaval and a tentative coup d’État (a Leninist fashioned attempt) in 1992, by a young colonel, Hugo Chávez, who succeeded in becoming elected president at the end of that decade. Despite being considered a “progressive” or leftist leader by many in the academia, in the political spectrum and by its personal behavior Chávez (dead in 2013) was much more alike an European predecessor, Mussolini, and many of his devices for controlling elections, suppressing political adversaries and bailing the press were directly inspired by Hitler comparable expediencies (without concentration camps) during the 1930s. Some other countries took the new “Bolivarian” model as a new way to monopolize political power without resorting to open dictatorships, by manipulation of some old populist tools: distributive policies, “purchase” of a complacent media, and what the Italians call the lotizzazione of the State apparatus, including Supreme courts.
Argentina, after many decades of a continuous political decay, is trying to overcome its “contagious disease” since the Second World War, Peronism, with its many wings, including a whole set of mafia-like trade-unions. In Brazil, finally, the traditional patrimonialism of the old elites gave way of a new kind of a gangster-like patrimonialism, as revealed in the judicial investigations about the criminal practices of the PT against State companies, such as Petrobras, and all other public agencies. The (poor) democratic system is being tested at this very moment by an impeachment process that could top the inept and corrupt government by institutional means.

(D) Human capital of good quality: This is the most suitable lesson that Europe could afford to teach to all Latin American countries, but even here is not easy to see how to transplant and transform very different educational systems, in all three levels of learning, taking into account heteroclite social and administrative structures (and its various kinds of combination State-private supply of education). What is a fact is that Latin America reached an acceptable compulsory first level education enrollment rate many decades after European societies achieved an almost complete universal literacy. Nevertheless, the backwardness in terms of quality of this learning is appalling, as the PISA (mid-level exams in language, science and mathematics) results reveal. This poor quality of the education affects, of course, the productivity gains in the productive sector, but, much more important, the high levels of inequality in income distribution.
Most of the European societies, less than in the United States, but at impressive levels also, are already engaged in a knowledge-society, which constitute another field that could offer opportunities for Latin American countries in bilateral or plurilateral cooperation with Europe. I personally think that is the most promising possibility for the intensification of all kinds of scientific and educational cooperation between the two regions. But the scenario is already changing: during the recent decades, Chinese investors seem to be overcoming the massive inflow of European FDI that was the most important aspect of the European presence in Latin America historically.

(E) Opening to trade flows and foreign direct investments: That is the last and perhaps most important mark of the advanced countries in the world, and of the rapid emerging economies in the developing world: there is an almost perfect correlation between the high income and socially advanced countries and their indexes of economic opening, that is, the coefficient of external trade and a less restrictive framework for foreign direct investment. Latin American countries have been somewhat introverted since the inter-war crises, and engaged, after the Second World War, in a series of experiments of import substitution, subsidies to national industries, and a clear protectionist commercial policy (high tariffs or complete prohibition of imports, with a set of mercantilist-like trade patterns). Besides a much more responsible behavior in fiscal matters, Asian countries (especially in the Pacific basin) were much more open than Latin American ones in terms of external trade and inflows of FDI, even if some of those countries also practiced industrial policies with State-led measures in order to strengthen national champions in the manufacturing sector. But it is also clear that those countries were much more enlightened than Latin American counterparts in terms of mass education and huge private and official investments in science and technology.
If we look at Latin America today there seems to be three very distinct groups of countries, in terms of their integration into the global economy:
(a) A small bunch of globalizers, starting by Mexico and Chile, which were joined more recently by Peru and Colombia; they created the Pacific Alliance, which is less a Latin integration bloc, that is, dedicated to reciprocal trade, than a coordination group to insert themselves in the vast experiment of constitution of an economic integrated space in that basin, which can overcome the last five centuries of world economic dominance by North Atlantic countries in terms of trade, finances, technology and knowledge-based production networks;
(b) At the other extreme, the so-called Bolivarian countries, with the old mix of populist and Statist policies, who are refusing globalization and putting again the central government at the heart of the decision making system, distancing themselves from the market based democratic systems that form the core of the public policies in vigor in the most advanced societies in the world (that is, the OECD club, which has already accepted Mexico, Chile, and many ex-socialist countries);
(c) In the middle, the “reticent” countries, such as Argentina and Brazil, and some other small societies (Paraguay and Uruguay, for instance), where there is no clear definition or choice for either an old “developmentalist” way – with all the retrocession to dirigiste and interventionist policies – or a more open-minded orientation, both in domestic economic policies and with a closer interaction with developed and market-led economies. Due to more than half century-long introverted policies, industrialists and bureaucrats are somewhat reticent to led an unrestricted opening of the economy and a full insertion into a global economy. More than a change in the political leadership of these two countries, what they really need in a mental revolution, which comprises also the so-called “intellectual class”, in fact a large bunch of Gramscian academicians, who have a very heavy influence over the public opinion and the whole educational system.

4) How can civil society and academia contribute to conflict prevention in the region?
PRA: Very briefly, the role of civil society is indeed important in many ways, but the modes of intervention, especially of academia, are too much diverse, depending on the issues that could be involved, and on which kind of civil society and academia we are talking in connection to concrete solutions, or conflict prevention. What are the most important problems in Latin America, historically and event today?
Poverty is still a problem, of course, but also poor education, which is at the basis of the poverty and the high unequal income distribution. Land concentration was the most significant indicator of those social differences, but today less than in the past. The old oligarchs were replaced, in the age of urbanization and mass democratization, by a “bureaucratic estate” that constitute the new patrimonialism: magistrates, high officials, even the academia, and especially the political class, who became a class in itself, with rent-seeking behavior and self-centered.
The State has grow much more than it is needed, and it extracts and absorbs a huge fraction of the riches created by workers and entrepreneurs of the private sector, and create, by its own macroeconomic and sectorial measures, distributive conflicts because of the contradictory policies the political class implement from the Executive and the Legislative bodies. In fact, State policies preserve, maintain and increase poverty, by pushing inflationary decisions, a too protective domestic supply, a clear preference for the higher levels of education strata, the litterati (who grab a much larger fraction of the budget that the millions at the primary levels of education), and a political system serving all these “corporations” linked to the State.
Drug trafficking, drug consumption, widespread violence are the most common problems in most of the Latin American countries, and there are no clear signs that the academia is engaged in thinking about adequate diagnostics for those acute fleas or is seriously engaged in finding solutions. Many in academia are in fact proposing decriminalization or liberation of drugs, any kind of them, and still consider urban delinquency as a mere consequence of poverty and inequality, adopting a “victimist” approach to this question that tend to put the blame on the society, not on individuals.

5) How have Latin American countries and regional organizations responded to major international crisis such as Syria?
PRA: Really, being a diplomat, I do not see a clear role for Latin American countries in such a major crisis as Syria’s. We can at most have a secondary or an auxiliary role, in terms of UNO resolutions, and humanitarian relief. Brazil is admitting a certain number of Syrian families, because of a large historical community of the same stock, immigrants from a century ago, or less. Besides that, I do not see any relevant support from the Latin American region as a whole for a comprehensive solution to this terrible war. Middle East, as a region, is the most intractable situation in the whole world, and a global solution to its social, economic, political and geopolitical problems is not in sight in the near or the middle-range future.

6) How can they contribute to conflict resolution and peace-building at the international level?
PRA: Not originally, I would just recommend a little more home work, at its best: first of all, we have to overcome the “menaces” to world peace arising inside the region. What are they?
Emigration of its own people, first of all, I mean of the economic type. Exporting poor people can be an individual solution, but it is also a clear sign of failure to solve the most important problems in a society: education and employment opportunities. Latin America has to improve hugely its educational and economic (macro and micro) policies. Connected to that, put a clear end to populism, which of course is linked to the electoral and party systems, but those initiatives depend on a mentality change. Here, the academia could help, if it was not so self-centered.
Urban violence, and the residual guerrilla warfare in some countries (Colombia, of course, but also Peru, and some Central America countries), huge problems that are clear linked to drug production and trafficking, with enormous consequences even in transit countries, obviously already in Mexico, but also a growing problem in Brazil.
Corruption is also a local, national, and a continental problem, that has many international connections and consequences. Those are the most important problems, which Latin America is “exporting” to the rest of the world.
Solving those huge problems, by its own means, could be a positive contribution of the region for the world. Becoming “normal” countries – in economic policies, in education performance, in employment opportunities – could be the most relevant help the Latin American countries can offer to the world. Do not be a problem, be a solution.
It is simple, it is naïf, but it is needed. The world, the UNO, or the Middle East crises, for instance, are not waiting for a Latin America huge help in any kind of geopolitical or economic support for the most urgent and pressing problems in the current juncture. Not being a problem is already a big help. Let’s do it…

Paulo Roberto de Almeida
Brasília, 7 de abril de 2016.

sábado, 18 de maio de 2013

A Franca como pais "periferico", na Europa, certamente, no mundo, talvez - Jacob Funk Kirkegaard

Creio que o autor tem razão, e eu até diria que ele está sendo muito condescendente com a França: como um país irreformável, a França não será (ou já é) apenas uma país periférico; ela será, também, um país irrelevante. Até que os chineses a ajudem a sair do buraco, mas eles vão ter de ceder alguns castelos e vários vignobles aos chineses, ah isso vão; e também vão ensinar algumas de suas técnicas aos chineses, que depois vão inundar o mundo com produtos franceses made in China. Não estou falando de Louis Vuitton, que isso eles já fazem: estou falando de foie gras, camembert, e coisas do gênero...
Paulo Roberto de Almeida

Is France a ‘Peripheral’ Country?

by Jacob Funk Kirkegaard
Peterson Institute of International Economics, May 8th, 2013 | 07:08 pm
A few weeks ago Reuters reported that the French finance Minister, Pierre Moscovici, fell asleep during the final late night negotiations over the Cypriot bank bailout on March 24. It apparently fell to the International Monetary Fund (IMF) managing director, Christine Lagarde—a former French finance minister herself—to wake him up. No doubt the grueling round-the-clock schedule of the Cyprus negotiations would have taxed the most vigorous participant, but that should not stop speculation about the meaning of what happened.
For any leading euro area finance minister to doze off during key negotiations to settle the economic future of another euro area member is an embarrassing dereliction of duty. Perhaps Mr. Moscovici was assured that his 70-year-old old German counterpart, Wolfgang Schäuble, would defend French taxpayers’ interests. Moscovici’s staff—which failed to wake him up—seemingly agreed. Or perhaps Paris simply viewed the German-led bail-in solution in Cyprus as a fait accompli about which they could do little. Or perhaps the French government’s support for costs imposed on creditors and uninsured depositors was stronger that it wished to acknowledge. Taking a nap during the negotiations could thus have been a subtle way of Moscovici stepping outside the door at the key decision moment.
The other euro area finance ministers could probably be forgiven for letting sleeping ministers lie. But by failing to wake Moscovici up, they effectively rendered France’s potential input as irrelevant. Probably to avoid that implication, Lagarde woke up her successor.
Whatever the underlying motives for Moscovici’s sidelining at the Cyprus negotiations are, the broader reasons for France’s evident loss of influence in the EU since the beginning of the crisis are several.
Paris has been hit by bad timing luck in European affairs. My colleague John Williamson once explained that a period of “extraordinary politics” follows serious crises, compelling leaders to establish new institutions, such as the so-called Permanent Five members (P-5) in the United Nations Security Council or the de facto clout wielded by U.S. and European members of the IMF Board resulting from their dominant global role in the 1940s. In European affairs today it matters for a country to be economically strong in a time of severe crisis.
Ironically, Chancellor Angela Merkel and Germany are reaping the unforeseen national benefits of reforms instituted by her predecessor, Gerhard Schöder, a decade ago in response to Germany’s status then as the “sick man of Europe.” Its weakness mattered little because nothing dramatic was happening at the time to the European institutional design following the collapse of the constitution treaty negotiated under the leadership of former French President Giscard de Estaing. Today Germany is strong when it matters, and able to play a leading role in the birth of important and permanent new European institutions like the updated fiscal surveillance framework (two-pack/six-pack, fiscal treaty), the European Stabilization Mechanism (ESM), and now the banking union. These redesigns have been largely devoid of obvious French fingerprints, even if France can take credit for helping to goad Germany into taking action at critical moments.
If Germany benefited from Schröder’s early reforms, France’s situation results from its profound misreading of the effects of the euro introduction, and the political dynamic of crises. Germany’s original agreement to give up the Deutsche mark for the euro back in the 1990s has historically been seen as a concession in return for France’s acceptance of German reunification. (Chancellor Helmut Kohl also saw the euro as a reunified Germany’s anchor in Europe.) With the euro’s advent, Paris was free from the yoke of having to pursue German monetary policies to defend the “Franc Fort” in the 1980s. The crisis, however, has bestowed disproportional political power to Germany, which as the euro’s anchor has been able to set the crisis response agenda.
For two decades, France has failed to reform its economy, yielding power to Berlin and the European Central Bank to demand domestic reforms in other euro area member countries. Meanwhile, the government of President Francois Hollande has done little to arrest France’s path of gradual decline since adoption of the Maastricht Treaty in 1992. Neither Presidents Jacques Chirac nor Nicolas Sarkozy succeeded from the center right, and the consensus seeking socialist Hollande does not seem to have the political will to face down entrenched special interests blocking reforms either. The alleged left-right divide in France is obsolete. Both sides favor the status quo and are fearful of street protests blocking any serious attempts at reform.1
The parallel with fears of “Arab street” protests blocking reforms in the Middle East is evident. But with its founding myth of storming the Bastille, France has embraced its identity as a place where farmers, truck drivers, and average citizens are easier to mobilize. By protesting, French citizens are engaging in an intrinsic element of being French. Like the National Rifle Association in the United States, French labor unions, public sector representatives and protected industries appeal to patriotic fervor to promote their political and economic interests. As a result, international competitiveness suffers, the size of the public sector continues to grow, unemployment rises and debt and deficits begin to approach damaging levels.
Unable to muster the political capacity to reform itself in the absence of a deep crisis, France fits the political definition of a peripheral country in the euro area, except that things have not gotten as bad as they have in Greece, Portugal, Ireland, and arguably Spain and Italy in recent years.
To be sure, France is far from an economic basket case. It has avoided the build-up of huge post-euro imbalances. It does not have Italy’s history of free-spending governments, and it enjoys some of Europe’s most favorable long-term demographics and a first-rate public infrastructure. Were it to experience a crisis, it is inconceivable that Germany (and the ECB) would not come to the rescue. As a result, despite the growing differentials in French and German economic competitiveness, unemployment and debt, France is likely to keep getting a pass from financial markets and tracking German interest rate levels closely.
Lacking financial market pressure, however, France’s status quo parties will likely continue to derive the functional equivalent of America’s “exorbitant privilege” and enjoy interest rates lower than its own economic fundamentals would dictate. France’s problem is not a sudden speculative attack, but rather continued malaise, stagnation, and decline.
Though he never used the word “malaise,” President Jimmy Carter described the American mood in 1979 in ways that seem suitable to the predicament in France: “The threat is nearly invisible in ordinary ways. It is a crisis of confidence. It is a crisis that strikes at the very heart and soul and spirit of our national will. We can see this crisis in the growing doubt about the meaning of our own lives and in the loss of a unity of purpose for our nation.”Hollande’s government continues to shun globalization by blocking foreign investments in France. The latest sad example is the blocking of Yahoo!’s proposed takeover of successful French internet start-up, Dailymotion. He has, on the other hand, overseen some new labor market rules accepted by the social partners, and has committed to reforms of the social insurance system later this year in return for a two-year delay in achieving a deficit target. But these consensus-driven steps are unlikely to shake France out of its paralysis or earn much respect elsewhere in the euro area, and especially not in Berlin.
The euro area’s required institutional reforms can be divided into two groups: one that is urgently required and one that takes the form of highly desirable institutional innovations. The most urgent steps that are needed to convince markets and voters that a euro collapse is not imminent include establishment of the ESM as a de facto European monetary fund to serve as a backstop if a euro area member loses market access; the ECB’s outright monetary transaction (OMT) program, serving as a conditional lender-of-last-resort; and the banking union, which will integrate banking supervision with resolution in cases of insolvent banks, and establish a system of deposit insurance. All these new institutions have been implemented under financial market pressure and in response to the political desires of Germany. France’s input has mattered little.
But neither financial markets, nor Brussels technocrats, nor central bank pressure can be factors in the other group of institutional reforms, such as deeper political and fiscal integration in the euro area and revisions of the EU Treaty. Only the democratically elected leaders of Europe can bring about these changes. These steps will be close to impossible to achieve without support and agreement from France and Germany, the two countries historically at the heart of the European integration project.
Regrettably, France’s lack of domestic economic reforms will ensure that Germany will likely refuse to discuss deeper fiscal and political union in Europe for the foreseeable future. The road to any potential form of euro area fiscal integration, whether in the form of debt mutualization or an increased euro area fiscal capacity, will have to pass through a French reform-driven domestic economic revival first. Germany will not agree to permanent-burden sharing with a France that does not reform itself first.
This does not mean the collapse of the euro or the European project, only an end to most longer-term progress on the project. Just as the United States political system can stagger through political crises with one of the two large parties on the political fringes, the euro area can stagger on under de facto German leadership for as long as France’s inaction exiles itself from real influence. As with the US fiscal negotiations, this state of affairs ensures that progress will be minimal, based on the least common denominator, rather than arrived at by a grand bargain between France and Germany.
France’s inability to reform itself puts Europe at risk, in short, and condemns France to subpar influence in Europe and thwarted aspirations. For its own sake and Europe’s, France must do better.
1. I have benefited from many discussions with my colleague Nicolas Véron about the “status quo party” in France.

quarta-feira, 10 de abril de 2013

Good-bye Maggie - Alvaro Vargas Llosa

Goodbye, Maggie

Margaret Thatcher’s death caught up with me in the worst of places: a speech in Argentina. What to do? Should I follow my conscience and say a few words in memory of her—and risk offending an audience sensitive to the legacy of the Falklands War—or should I keep silent? I opted for saying a couple of words, asking them not to take offense and expressing respect for their feelings. Some disapproving noises came back from the audience. After I finished speaking, I faced some aggressive reproaches.
In death, as in life, Thatcher is a polarizing figure. There are classical liberals who object to her excessive conservatism and conservatives who judge her to have been too libertarian; the left hates everything about her and Argentines consider her a war criminal. I spent a few years in London during her time in office. There are some things everyone, left or right, should value.
First, she transformed the British right, which was an oligarchic club, into a association in which merit rather than origin, and effort rather than lineage, became the dominant features. When she took over the leadership of the Conservative Party in 1975, being a grocer’s daughter from Grantham was a stigma among Tories; self-made success and social mobility were anathema to them. By 1990, those were emblems of a new Tory Party.
Thatcher brought back ideas into politics. Neither the left, which had been dominant since the end of WWII and accelerated Britain’s decadence, nor the right, which had accepted the fundamentals of a socioeconomic model imposed by the left, believed in ideas anymore. We can debate whether she went as far as she could in applying hers, but there is no debating her love of ideas. The ones she absorbed at the Institute of Economic Affairs and the ones she learned reading everything from Edmund Burke to Friedrich Hayek shaped her discourse and many, many of her actions.
Because her mission was not to do away with the state, she did not do so. In some areas, such as defense, she enlarged it. But she launched a process that devolved the responsibility for wealth creation and the pursuit of happiness from the state to civil society. In so doing, she transformed the right and the left. She instilled idealism and a reformist zeal into the political right; she helped modernize part of the left. Although Tony Blair’s Labor Party made government somewhat bigger, on the whole he maintained her legacy and reaped the benefits. This fostered the rebirth of the left under the banner of the “third way”, which impacted Europe, the United States (under Bill Clinton) and Latin America (with Brazil’s Lula da Silva).
Contributing to the implosion of Soviet communism, something that is often attributed to her, was no small feat. It required going up against vested interests and widespread perceptions in a democratic Europe that had lost all hope of change on the other side of the Iron Curtain. She was accused of being blinded by ideology; but when she understood that Mikhail Gorbachev was seriously interested in reform, she declared that the West could “do business with him” (and caused whispers among the American right). Thatcher was not an ideological animal, but a political animal with ideas. Both the right and the left owe much to what she did, in peaceful combat, to tear down the Berlin Wall. The right defeated an enemy, of course, but the moderate left shook off a dead weight.
Thatcher mistrusted European integration. Many of us thought she did so primarily for nationalistic reasons (and later a discomfort with a unified Germany) rather than because she feared the bureaucratic aspects. Time has shown she was right about some of what she said. The European construct has many flaws; the crisis of 2007/8 brought them into the open.
She was a rare politician. It will be decades before Europe produces anything like her. Rest in peace, Maggie.

quinta-feira, 31 de janeiro de 2013

Judisches Bildung: a construcao de um povo pela educao - Book review

Se existe um povo que só existe pela educação, ou fundamentalmente pela educação, mesmo que seja educação religiosa, este é certamente, seguramente, totalmente, o povo judeu.
Provavelmente, junto com os chineses Han, eles representam a mais longa continuidade cultural e étnica na trajetória histórica de toda a humanidade. Os chineses têm uma continuidade sobretudo cultural, já que falam vários dialetos e atravessaram dezenas de dinastias numa mesma área geográfica. Pela escrita asseguram essa continuidade (inclusive pelo despotismo imperial).
Com os judeus é diferente: foram escravizados, derrotados, dispersos, eliminados, sujeitos a todo tipo de exação e sofrimentos. E no entanto persistiram, graças precisamente à educação. São um povo livre, no entanto, já que preservaram sua cultura, sua religião, sua identidade, independentemente das destruições e tentativas de extinção a que foram submetidos ao longo da história. O calendário judeu é sobretudo uma construção política moderna, mas que reflete basicamente uma continuidade real, meio submergida na legenda bíblica, mas sobretudo garantido pela identificação desse povo com uma história escrita que não tem paralelo em nenhum outro povo, nenhuma outra cultura.
Se alguém ainda duvida da importância da educação para o povo judeu, apresento um teste muito simples: compare a magnitude da população judia (menos de 1% dos habitantes do planeta, e provavelmente menos de 0,01% de toda a humanidade desde a Antiguidade) e que representam, no entanto, mais de 25% dos Prêmios Nobel nos últimos 100 anos, e provavelmente boa parte da cultura científica e cultural, em geral, da Humanidade, desde muitos séculos. Algum outro povo chega perto desse desempenho? Duvido. Contestadores podem apresentar os seus dados...
Abaixo a resenha de um livro sobre uma pequena parte dessa história multissecular, com meus agradecimentos tanto aos autores do livro quanto aos que foram, e são, o seu objeto próprio: sempre devemos ser reconhecidos aos que nos tornam mais inteligentes...
Paulo Roberto de Almeida

The Chosen Few: How Education Shaped Jewish History,  70-1492

------ EH.NET BOOK REVIEW ------
Title: The Chosen Few: How Education Shaped Jewish History, 70-1492
Published by EH.Net (January 2013)

Maristella Botticini and Zvi Eckstein, The Chosen Few: How Education Shaped Jewish History, 70-1492.  Princeton, NJ: Princeton University Press, 2012.  xvii + 323 pp.  $39.50 (hardcover) ISBN: 978-0-691-14487-0.

Reviewed for EH.Net by Carmel U. Chiswick, Department of Economics, George Washington University.

The Chosen Few by Maristella Botticini (Bocconi University) and Zvi Eckstein (Tel Aviv University) reminds us – for those who need reminding – how Cliometrics can transform our understanding of historical events. They examine Jewish history from an economic perspective with results that are both innovative and insightful.

The book is structured around a skeleton of straightforward economic theory, fleshed out with data – quantitative and qualitative – obtained from an extraordinary array of documentary evidence.  The historical period covered is a few decades short of 1,500 years, requiring us to step back and look through a very broad lens, yet the proof offers details on everyday economic life and on the timing of events.  The economic model is simple but not simplistic, presented elegantly without bells and whistles, sophisticated but accessible to a general reader.  (Technical language is wisely confined to appendices that spell out the model mathematically and present details on statistics that are new or controversial.)  And the overall result is a new perspective that will change forever the way we understand the economic history of Jews over a broad spectrum of time and space.

The economic model developed by Botticini and Eckstein uses a human capital approach to look at the way investments in religious education interact with occupational choice and earnings.  At the beginning of their story, approximately in the first century, Judaism was in transition from a religion centered on the Temple in Jerusalem to a synagogue-based religion that could be observed anywhere that Jews lived.  Part of this transition required that every Jewish male learn to read from the Torah, making basic literacy a part of religious training that began at the age of 5 or 6 and encouraging further study for those so inclined.  This meant that even ordinary Jewish men (and sometimes women) could read, and perhaps write, at a time when literacy was rare among the common people.

Botticini and Eckstein develop a model placing Jewish literacy within its economic context.  When urbanization and commercialization raised the demand for occupations where reading and writing was an advantage, the religious training of Jews gave them a comparative advantage.  This meant that investments in Jewish religious education earned a reward in the marketplace as long as Jews moved into those occupations, which of course they did.  In contrast, when urban and commercial economies declined, Jewish religious training lost its economic advantage.  This deceptively simple model is the framework for understanding the economic incentives not only for Jewish occupational clustering but also for the strength of Jewish attachment to Judaism.

At the beginning of their story, in the year 70, Botticini and Eckstein estimate a population of some 5 million Jews (about the size of today’s American Jewish population), half of whom lived in the Land of Israel under Roman rule and the rest in various places in Mesopotamia, Persia, Egypt, Asia Minor and the Balkans.  Within the next century the Jewish population dropped by nearly half, and by the year 650 there were only one million Jews living mostly in Mesopotamia and Persia.  Throughout this period most Jews, like most non-Jews, were farmers, a fact that Botticini and Eckstein document in some detail. War and famine, including the exile that dispersed Jews after the Romans destroyed Jerusalem, explain no more than half of this decline, which was considerably greater than the general population decline during this period.  As long as Jews remained farmers, however, the literacy requirement provided benefits only in the religious sphere but not in the secular economy.  Many farmers responded by not investing in their children’s Jewish education, and most of their descendants assimilated into the surrounding (often Christian) populations.  Those who remained Jews would have been a self-selected group of people with either strong preferences for religious Judaism or a high ability for reading and writing.

The second part of their period, approximately from 750 to 1150, uses the same model to explain why Jews (most of whom still lived in Persia and Mesopotamia) shifted from rural to urban occupations, from a community of farmers to one of craftsmen and merchants.  Under the Muslim Caliphates cities grew, trade thrived, and the demand for occupations benefitting from literacy grew accordingly.  Literacy skills Jews acquired as part of their religious education transferred readily to these urban occupations and were rewarded with high earnings, generating an income effect that supported a Golden Age of Jewish culture.  Those Jews who remained as farmers were self-selected for persons who invested little in religious education and eventually assimilated into the general (Muslim) population.

Botticini and Eckstein look at demographic trends during this period of prosperity and cultural flowering, observing that the Jewish population not only grew in size but dispersed to cities all along the trading routes from India to Iberia, from Yemen to Europe.  They are at pains to show that these migrations were not motivated by push factors like discrimination or expulsion, but rather by the pull of new opportunities for urban craftsmen and merchants.  In most places the Jewish community concentrated in large cities, but in Europe – where the cities were too small to support much activity in high-level urban occupations – the Jewish communities were smaller and scattered more widely in many towns.  The Mongol invasions of the thirteenth century destroyed the cities of the Middle East, devastated its commerce, and dramatically reduced demand for urban occupations throughout the region.  Jewish religious education no longer yielded secular benefits in the impoverished Muslim economy, and the number of Jews declined as they assimilated into the surrounding population to avoid costly investments in religious human capital.

The Golden Age of Jewish culture in the Muslim world created a spiritual and intellectual legacy on which European Jewry could build.  In particular, the Talmud and Responsa literature (correspondence ruling on religious observance in everyday business and family matters) discussed the application of ancient (biblical) rules to contemporary activities.  This literature took Jewish religious studies well beyond basic literacy to develop literary sophistication and hone decision-making skills.  After the Mongol invasions destroyed the Muslim commercial economy, Europe became the new center of Jewish learning that nurtured these skills.  During the fourteenth century Spain had the most sophisticated economy in Europe and Spanish Jewry flourished in both religious culture and secular occupations.

Wherever they lived, Jewish communities maintained an active correspondence with each other on religious matters, creating networks that benefitted commercial activities as well.  These networks meant that urban Jews living in capital-scarce countries could borrow from Jews in more prosperous communities.  After the Mongol invasions, when European economies began to expand in the fourteenth and fifteenth centuries, imperfect capital markets created arbitrage opportunities that made money lending an especially profitable business.  Botticini and Eckstein argue convincingly that Jewish trading networks, mercantile experience, and universal literacy gave European Jews a comparative advantage in a very profitable profession for which few non-Jews had the relevant skills.  They thus argue that religiously-motivated education (creating literacy and decision-making skills transferable to secular occupations) and religiously-motivated correspondence networks explain why money-lending had become the dominant occupation of European Jews by the fifteenth century.

Botticini and Eckstein’s simple yet sophisticated human capital analysis provides new insights into Jewish history for the fourteen centuries covered in this book.  In the last chapter of The Chosen Few they promise us a new book carrying the analysis forward for the next 500 years, from 1492 to the present.  Judging from the economic success of modern Jews, 80 percent of whom now live in the United States or Israel, their model suggests strong complementarity between skills developed by a Jewish religious education and those associated with business management and scientific investigation.

Intentional or not, The Chosen Few follows an expositional style that suggests this very hypothesis.  Like the Talmud, each topic is introduced by a statement of fact (evidence) followed by questions about what those facts mean and how to explain them.  They then consider a number of opinions (hypotheses), including their own, and discuss the pros and cons of each with respect to internal consistency and historical evidence.  This methodology yields a very convincing Cliometric analysis that we can expect to inform all future economic histories of the Jews between 70 and 1492.

Carmel U. Chiswick is Research Professor of Economics, George Washington University, and Professor Emerita, University of Illinois at Chicago.  She has published widely on the economics of religion, especially on Jews, and much of her work on this subject is collected in C. Chiswick, The Economics of American Judaism (Routledge, 2008).

Copyright (c) 2013 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator (administrator@eh.net). Published by EH.Net (January 2013). All EH.Net reviews are archived at http://www.eh.net/BookReview

quarta-feira, 30 de novembro de 2011

Book review: birth of Benelux and IMF: Camille Gutt

Uma resenha bem feita sobre um livro que poderia ser melhor, mas que ainda assim merece ser consultado, talvez mais sobre o nascimento do Benelux do que propriamente do FMI, sobre o qual o livro do Richard Gardner -- Sterling-Dollar Diplomacy -- também constitui uma referência importante.
Paulo Roberto de Almeida 

------ EH.NET BOOK REVIEW ------
Title: Camille Gutt and Postwar International Finance

Published by EH.NET (November 2011)

Jean F. Crombois:

Camille Gutt and Postwar International Finance
London: Pickering & Chatto, 2011. xi + 192 pp. $99 (hardcover), ISBN: 978-1-84893-058-2.

Reviewed for EH.Net by Erik Buyst, Center for Economic Studies, University of Leuven.

The title of this book is somewhat misleading. Camille Gutt was the first managing director of the IMF (1946-1951), so the reader expects a thorough analysis of Gutt’s opinions, strategy, achievements and failures during that period. Unfortunately only the last chapter, about twenty pages, deals explicitly with this highly intriguing aspect of Gutt’s remarkable career. Most of the book is a kind of updated summary of Crombois’ earlier work published in 1999: /Camille Gutt. Les finances et la guerre, 1940-1945/. 

The first chapter provides an interesting biographical overview of Gutt until 1940 both as a successful businessman and as a politician. He was Belgian Finance Minister in 1934-1935 and from 1939 to 1945. Gutt became a staunch adversary of currency depreciation or devaluation. In his opinion devaluation would only lead to price increases and delay the necessary deflationary measures that ultimately had to be taken. These ideas were framed in the 1920s when the Belgian franc faced a difficult stabilization process. By the end of the 1930s however the gold standard had virtually disappeared. Nevertheless, Gutt stuck to his views.

The second chapter deals with his role as Finance Minister in the Belgian government-in-exile in London during the Second World War. Most governments-in-exile were cut off from their tax base and therefore highly dependent on British financial aid. This was not true in the Belgian case for two reasons. First, before the Nazi-invasion a large part of the gold reserves of the Belgian central bank had been shipped to London or the U.S. So Belgium could help to finance the British war effort by lending its gold. Second, Belgium still controlled the Congo which provided many raw materials crucial to war production, such as copper and cobalt -- not to mention the deliveries of Congolese uranium to the U.S., which gave rise to complex secret arrangements.

The next two chapters discuss Keynes’ plans concerning the setting-up of an International Clearing Union. The Belgian government saw these plans as a potential threat to national sovereignty. Gutt responded to the challenge by launching the idea of regional integration. These initiatives would eventually lead to the Benelux agreements. There are few publications available in English on the emergence of the Benelux, so these chapters are certainly of interest to the international reader.     

Chapter 5 tackles the Bretton Woods negotiations. Crombois notes that the Belgians were given important positions in the organization of the conference (p. 105), but unfortunately does not provide an explanation. Anyway, Gutt and several other Belgian delegates became “trustworthy intermediaries between the Americans and the British while keeping on good terms with the French, Dutch and Canadians in particular” (p. 107).  

The final chapter focuses on Gutt’s role as managing director of the IMF. The general picture largely confirms the view presented earlier by Harold James (1996) and Barry Eichengreen (2007). In the era’s most important challenges, such as the Marshall Plan, the sterling devaluation of 1949, and the setting-up of the European Payments Union, the IMF did not play a significant role. Was Gutt responsible for the side-lining of the IMF? Crombois concludes that Gutt failed to grasp the importance of the looming Cold War. Gutt’s views were still dominated by the legal commitments of the Bretton Woods agreements and their universal approach to monetary and convertibility issues.

Barry Eichengreen (2007), /The European Economy since 1945: Coordinated Capitalism and Beyond/, Princeton: Princeton University Press.

Harold James (1996), /International Monetary Cooperation since Bretton Woods/, Oxford: Oxford University Press.

Erik Buyst is professor of economics and history at the Center for Economic Studies, University of Leuven (Erik.Buyst@econ.kuleuven.be). His publications include E. Buyst and I. Maes (2008), “Central Banking in Nineteenth-century Belgium: Was the NBB a Lender of Last Resort?” /Financial History Review/15: 153-73 and E. Buyst et al. (2005), /The Bank, the Franc and the Euro: A History of the National Bank of Belgium/, Tielt: Lannoo.

Copyright (c) 2011 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator (administrator@eh.net). Published by EH.Net (November 2011). All EH.Net reviews are archived at http://www.eh.net/BookReview.