Cover Story

It’s the Economy, Stupid – Only This Time, Everywhere
Can Mega-Challenge Spark Mega-Cooperation?

Obama Must Lead at Financial Summit; or G-20 Could Become “G-19 + 1”
Douglas Rediker, Director of the Global Strategic Finance Initiative, New America Foundation

Seeking a global response to the crisis, the U.S. assigns priority to coordinated stimulus. Germany, France and some other European nations emphasize better global financial regulation – perhaps partly to punish Wall Street but also to prevent a recurrence of abuses. Leadership now by Obama is needed on both issues because the world’s confidence and trust in U.S.-style capitalism has been shaken.

VERBATIM: Alan Greenspan Explains “Mistake” behind Global Meltdown
What Went Wrong on his Watch as Fed Chairman?

The American economic guru explains how he missed the signs that the economy was going off a cliff during the decade he was chairing “the Fed,” the body that functions as the U.S. central bank. A strong believer that markets can self-regulate thanks to the enlightened self-interest of the players, he failed to recognize the danger signals of the U.S. financial collapse that also engulfed Europe.

The Economic Quicksands of Globalization
The World Is Curved: Hidden Dangers to the Global Economy
by David M. Smick
Reviewed by Martin Walker

David Smick’s book, The World Is Curved, explains that financial engineering has outpaced the understanding of regulators and governments – and even of many of the people involved in the business. His book, reviewed by journalist and consultant, Martin Walker, predicts that worse is still to come for the U.S. and also for highly-leveraged banks in Europe holding “toxic” assets.

NATO at 60 – Not Yet Retirement Age
Bruno Tertrais, Senior Research Fellow, Fondation pour la recherche stratégique, Paris

France’s newfound enthusiam for rejoining NATO’s military command, announced by President Sarkozy at this author’s Paris think tank, underlines an upbeat perspective. A chorus of voices are warning that NATO may fracture over Afghanistan, but history shows the alliance’s unexpected resiliance since the end of the cold war – and its continuing capacity to adapt.

Asymmetric Warfare Creates the Need for “New Soldier”
Rumu Sarkar, Adjunct Law Professor and Visiting Researcher, Georgetown University Law Center

A new theme among strategists stresses the need for redefining future military missions to include more emphasis on winning the hearts and minds of civilians. If this task is seen as essential for redrafting operational doctrines for Western militaries, planners also should consider some radical practical changes in defining the desirable profile for soldiers and training.

Non-Military Organizations Should Lead on “Nation Building”
Integrating Instruments of Power and Influence: Lessons Learned and Best Practices
Co-chairs: Robert E. Hunter, Edward Gnehm and George Joulwan, RAND Corporation
Reviewed by Courtney N. Meyers

Timed for the Obama administration’s Pentagon, this RAND study says government leaders should take more account of the lessons learned from people “on the ground” in recent successful (and unsuccessful) ventures in state-rebuilding. Best practice means strong local command (involving the military under civilian leadership) which is heeded in national capitals.

Russian Gas Problem Could Be Opportunity for Europe
Pekka Sutela, Head of the Bank of Finland Institute for Economies in Transition (BOFIT)

Generalities are not very useful in discussing the energy problems of “Europe” because so many issues are country-specific. But there are some key overall aspects – notably the risk that Russia may not be able to export much more gas any time soon, even if it wants to. So European companies should work at helping Russia improve its energy efficiency to prolong supply.

Nuclear Energy: A New Future in Europe Nuclear energy is regaining favor as an environment-friendly technology.

Europe Should Tackle Gazprom Monopoly
C. Boyden Gray, former U.S. Representative to the European Union, U.S. Special Envoy for European Union Affairs and Special Envoy for Eurasian Energy, U.S. Department of State

Europe’s worst energy vulnerability – natural gas – has environmental implications. Without more supplies, power for growth is likely to be fueled by coal and accelerate global warming. Russia could export more gas (and flare less) if the Kremlin broke up the domestic pipeline monopoly enjoyed by Gazprom. Europe could use its “competition authority” to challenge it.

Gazprom: the Octopus in Europe’s Energy Market
Stuart Weaver, Editorial Assistant, European Affairs

Gazprom, the Russian monopoly, has been on a shopping spree to acquire commercial interests (and political leverage) in “downstream” gas and energy companies and distributors in Europe. Here is a partial list of those European holdings gleaned from the chapter entitled “Buying Europe: Purchase as Politics” in a new book on this monopolistic strategy by Janusz Bugajski.

Talking Business Facts about Europe’s Gas Problems
J. Robinson West, Chairman of the Board, Founder and CEO of PFC Energy

A practitioner in the oil and gas business warns that Europe’s worst weakness regarding natural gas supplies comes from the absence of a free internal market in natural gas among the EU nations. Freeing up the flows in Europe would drastically reduce the rigidities that Gazprom exploits. A good investment would be gas storage facilities, but such infrastructure is costly.

Baltic, Arctic and Atlantic Surveillance:

Nordic Maritime Cooperation Comes In Out of the Cold
Valentina Pop, Journalist, EUobserver, news website

Responding to the emergence of a “new” sea as ice recedes in the Arctic, the Nordic Council has started planning for broader and more integrated systems that can monitor traffic and provide early-warning of accidents. Politically, this will be a precedent in bringing together NATO nations, EU countries and neutrals – with the potential for wider links that might include Russia.

Greece: Piloting OSCE through Doldrums

Bakoyannis argues that the OSCE needs to recover its international stature: it is the only security body involving the U.S. and Russia, plus Europe. The pressing challenge is Georgia: Can the OSCE mission in Georgia be redefined so it can continue its technical work without getting caught in the political impasse over the breakaway enclaves between Russia and Georgia?

Michael Chertoff, recent Secretary of the Department of Homeland Security, speaks with European Affairs

Following his acceptance of The European Institute’s Transatlantic Leadership Award at a December 2008 ceremony in Washington, DC, Chertoff sat down with European Affairs to reflect on his relations with European governments – which proved much more productive than many observers initially feared. He also shared his views on future challenges from Guantanamo to failed states, including the need for a new consensus on dealing with states that tolerate international terrorists on their soil.

Ethical Leadership in an Unethical World
Savage Century: Back to Barbarism By Thérèse Delpech, Translated By George Holoch
Reviewed by William J. Peterson Jr.

Who? – or What Tectonic Shift? – Created the Special Relationship
The King and the Cowboy by David Fromkin
Reviewed by Michael D. Mosettig

Prowling the Former Soviet Empire for Insights about Russia’s Future
Adventures in a Broken World by Ralph Peters
Reviewed by William J. Peterson Jr.

An Ambassador’s Diary in Post-Communist Hungary
Vera and the Ambassador: Escape and Return by Vera and Donald Blinken
Reviewed by Thea Backlar

Global highlights and local sidelights culled from the media (January – March 2009)