Europe and the impact of the Current Economic Crisis. What is it for security and the transatlantic relationship?
por Antonio J. Candil Muñoz, 17 de junio de 2009
Not longtime ago transatlantic security was extremely focused in East-West relations, and still is to a point but nowadays the disappearance of the Communist Bloc has changed the picture dramatically. Today itÂs not only where the threats to Western security lie what counts but what it is the new geopolitical landscape as well especially at the light of the present global economic crisis. Under the scope of this situation letÂs take a look first to where the transatlantic relationship is at stakes regarding security and let me tell you something later on geopolitical issues to end up this presentation.
There is little doubt that the economy is inextricably linked to security as a recent analysis of the impact of the global financial crisis on NATOÂs operations in Afghanistan shows, social conflict remaining a key issue for Alliance countries. However despite the global financial crisis NATO has reaffirmed its long-term commitment to Afghanistan at its Brussels and the Bucharest summits in 2008.
The Alliance is engaged in a highly complex struggle in Afghanistan in which it hopes to provide sufficient security for the rehabilitation of the Afghan state, civil society and economy.ÂIn a country as undeveloped as Afghanistan, the developmental work will never be finished, according to Michael Clark, Director of the Royal United Services Institute for Defense and Security Studies (RUSI). He added: ÂNew money cannot be spent until governance is addressed in Afghanistan, and governance cannot be addressed without significant amounts of new money. |
NATOÂs role is a key part of the Afghanistan Compact Plan - a five year plan between the Government of Afghanistan, and the international community-, which sets goals relating to security, governance and economic development of the country. No long-term economic goal in Afghanistan is possible without security, and thatÂs why NATO has a political interest.
Within the plan the relationship between security, governance, and economic and social development - the three interdependent Âpillars identified by the Compact Â- increases the potential for involving the international community. This assures new interests and NATO is cooperating with authorities on all levels to implement additional windows of security.
As far as official development aid is concerned, not everyone foresees a major decline. No UN agency has yet reported a slowdown in contributions, and no clear idea has yet been formed on the potential impact. |
Some governments, such as the U.S. and Canada, are pledging to stand by their commitments to Afghanistan while other countries such as Poland have announced an increase of their commitment.Each participating NATO nation manages the security resources and development financing in its own way, typically through their national ministry of defense and/or through their national development agency. In the case of the US, the US Agency for International Development (USAID) funds both short- and long-term reconstruction and development projects throughout Afghanistan.
No effect on USAID funding for U.S. effort in Afghanistan is foreseen in the wake of global financial slowdown, as long as the U.S. government stands firmly behind the reconstruction effort, and will continue to support AfghanistanÂs long-term progress in its efforts to provide basic services for its people, ensure economic growth led by the private sector, and maintain a democratic and capable state governed by the rule of law, as President Obama has mentioned several times. |
With a commitment of $1.3 billion until 2011 for development and reconstruction, Canada is also among the worldÂs top five donors to Afghanistan. However tensions arose during a NATO Parliamentary Assembly, with some Allied countries feeling that other nations are highly reluctant to commit forces in regions where the insurgency is active, while forces from their nations were on the line. A recent International Crisis Group (ICG) report quoted a diplomat as saying that certain nations with considerable resources are Ânot feeding into the problem solving and were even Âthe opposite of helpfulnessÂ. The report continued, saying that Âthey refuse to share the burden but insist on seats at the decision-making table, while countries with more limited resources such as Finland, Portugal, Denmark, Hungary and Poland are responding to the call.ÂIn the end it looks like if the question here could be asked whether the war in Afghanistan is nothing but a money making business which could last for years to come.
When President Obama appeared on the CBS programme Â60 Minutes for his first televised interview since being elected he reiterated his determination to Âdraw down troops in Iraq, but only to Âshore up the US war in Afghanistan. The real shape of the military agenda that will likely be pursued under President Obama was spelled out in some detail in a lead editorial in the New York Times which noted ÂMuch of the savings from withdrawing troops from Iraq will have to be devoted to repairing and rebuilding the force. With ongoing warnings that increased social spending plans will need to be shelved, it is significant that there is no questioning of the need to pour hundreds of billions of additional funds into the US war effort.
The political momentum is here in Afghanistan, but the question remains about whether the country can survive both the grinding struggle against ongoing insurgency and likely reduced funding with the onset of a looming global recession.
At this point there is no other option than asking: What are the geopolitical consequences of the current economic crisis? Who are the winners and who are the losers? Let's review quickly the most likely winners.
Russia might be the most obvious contender for the title. It has been sitting on a pile of cash for a long time thanks to the boom in commodity markets, particularly those of oil and natural gas. There is no doubt that Russia is intending to use its reserves of foreign currency to further its political and military influence at a time when global markets are starved of capital.
The Gulf states, particularly Saudi Arabia, will probably benefit from the economic crisis, too. They are also sitting on large piles of cash and thanks to their sovereign wealth funds have already started to acquire assets, financial and physical, all around the world. In times of such crisis 'money is power and cash is king.' The main concern for the Saudis is the rise of Iran; the return of the Taliban in Afghanistan in the form of a power-sharing agreement could serve as a counterbalance against the increasing influence of Iran in the Middle East.
Lastly, the US might emerge as one of the geopolitical winners of this economic crisis in the long term. This might seem counterintuitive at first but there are three main reasons why it could be so. Firstly, despite the hype in the media about this crisis being the worst since the Great Depression, the reality is it doesn't even come close that. Today the US is a $14 trillion economy and we are talking about a $1 or 2 trillion problem at most, if we believe the worst estimates. Furthermore, we are still expecting a growth of 2 percent in US gross domestic product (GDP) this year, not a huge contraction reminiscent of 1929. Secondly, as investors start looking for safe-havens for investment they turn to treasury bills and gold. In other words, investors across the world buy the debt of the US government (and in US dollars) despite the low interest rates offered, and not euro-denominated bonds when they want to park their cash in safe assets. As the crisis spreads, more and more money will flow into the US economy, allowing it to weather the financial storm, and will speed up economic recovery. Lastly, the economic crisis might affect emerging competitors to the US, such as China and India (with the exception of Russia), more severely than the US.
The European Union might turn out to be the biggest loser in terms of geopolitics in the wake of this economic crisis. The European Central Bank (ECB) has no real power in determining monetary policy, and the inability of the EU member states to swiftly agree on a unified approach to deal with the crisis reveals the precarious nature of European integration. While some European economies are officially in recession and others heading towards it, bank failures across the continent do not inspire trust among investors who are fleeing from euro-denominated financial assets. However, what is more important is the fact that this crisis demonstrates the inability of the EU to act as a coherent unit even when the issue is the economy, an area where the history of integration goes way back. The EU is always a military dwarf compared to the US or Russia but now, even its economic power is in question. We will have to wait and see what this will mean for the political influence of the EU in the near future, but my guess is that it will be greatly reduced.
To say that economics and politics Â-especially security and defense policies-, are tightly coupled is a bit of a cliché. However, nothing reminds us of this particular cliché as vividly as economic crises. This global economic crisis we are in right now is no different. It was political decisions and indecision that brought us to this point, and it will have serious geopolitical consequences. It will not fundamentally change us like the Great Depression did back in 1929, but it will nevertheless likely affect the future of the international system. Most importantly, this crisis provides an opportunity for Russia to reassert itself as a global player Â-the question here being if Russia will be clever enough to seize this opportunity-, while undoubtedly limiting the influence of newcomers such as China and India. The US will probably stand to gain from the crisis in the long term as the dollar reasserts its dominance in the global economy, while the inability of the EU to act in unison will come to haunt member states pretty soon. Or so it seems.