Category: World Events


Why is Ethiopia’s the most under-reported conflict in the world?

German chancellor Merkel in Addis Ababa (October 2016)
German Chancellor Merkel in Addis Ababa, October 2016 (Photo credit: Bundesregierung/Steins)

According to Chris Blattman, the situation in Ethiopia is the most under-reported conflict in the world right now. This is rather true. (Although some media outlets reported on the recent political turmoil in Ethiopia, such as some German press in the context of the recent visit by Chancellor Merkel to Addis Ababa.)

In November last year, the first protests against the Ethiopian Government unfolded in the Oromia region when the government wanted to expand the margins of the city of Addis. As this implied the resettlement of the local Oromo population, this was considered by the Oromo – the largest ethnic group in the country – as a further expression of their political and economic marginalization.

The situation calmed down a little over spring this year and erupted again in summer, when the Amhara people in the North started anti-government protests. The military was deployed and further unrest unfolded again in the Oromia region. For the first time, an alliance between the Oromo and the Amhara was built. Since November last year, at least 500 people have been killed by security forces and tens of thousands have been arrested according to Human Rights Watch. What started as protest against the expansion of Addis turned into an expression of general dissatisfaction with authoritarianism and lack of public participation in the past two and a half decades.

On October 9, the Ethiopian Government declared a state of emergency for the first time in 25 years. This was after more than fifty people died at an Oromo religious festival in Bishoftu (close to Addis). A week after, further details on the state of emergency were made public. Now, the government can arrest and detain for six months (the duration of the emergency state) any person contravening the emergency prohibitions, and conduct searches without a court warrant.

There are now severe restrictions to the freedom to assembly and protest, and any communication with foreign governments or foreign NGOs “that is likely to harm sovereignty, security, and constitutional order” as well as any communication with “anti-peace groups” is prohibited. Moreover, the Government can monitor and restrict “messages transmitted” through different sorts of media outlets. This is reflected in cutting off the internet access through the mobile network, which is a major internet access route in Ethiopia, as well as the disabling of social media.

On October 15, shortly after declaring the state of emergency, the Ethiopian Government also announced reforms, including a reform of the electoral system from first-past-the-post to proportional representation. A change of the cabinet has already taken place, and tackling corruption has been declared a priority.

So why are these developments in Ethiopia the most under-reported conflict in the world?

To reiterate: Ethiopia is experiencing political unrest over an extended period, and the  state of emergency has been declared for the first time in 25 years. This could be reason enough to report on the situation, but there is more: Ethiopia has the second largest population in Africa (with nearly 100 million inhabitants), only topped by Nigeria. Secondly, Ethiopia’s GDP grew rapidly over the last years, with a growth of 9.6% in 2015. Thirdly, Ethiopia is considered by many as a bulwark against Islamist movements on the Horn of Africa. Despite recently retreating some forces, Ethiopia has been very active in the fight against al-Shabab in Somalia.

The importance of Ethiopia (for the West) is a good reason to follow the current political events. At the same time, it provides at least a partial explanation for the lack of coverage. Looking at the increasing levels of development assistance (ODA) to Ethiopia, most notably the United States and the United Kingdom, it seems as if the West buys into two arguments by the Ethiopian Government: Political participation and democratic rights are less important than (1) Ethiopia’s economic development and (2) regional stability in the fight against terrorism.

For the U.S. and the United Kingdom, this is also reflected in their national focus on the “war on terror” and their own balancing of national security in relation to human rights. A similar dynamic exists with regard to the World Bank’s and other donors’ prioritizing of poverty reduction over issues of political governance when they decide on Ethiopia’s ODA levels.

Though it has to be mentioned that the U.S., among others, expressed that they were “deeply concerned” over the situation in Ethiopia, actions speak louder than words. It needs to be seen whether or not Western ODA levels continue to grow. In the same manner, we should all observe (and report on!) whether or not the Ethiopian government will really deliver on its reform promises.

Inshah Malik

The stalemate over Kashmir: How to resolve Asia’s oldest conflict?

On July 9, the Indian army killed a 23-year-old popular Kashmiri militant, Burhan Wani. Since then, the region is under strict curfew. Due to the authority’s iron-fisted response to dissent, over seventy people are dead, more than eight thousand civilians are injured and about six hundred are blinded due to the use of pellet-guns. The right-wing Prime Minister Narendra Modi and his Bharatiya Janata Party (BJP) remain unwilling to treat Kashmir as an international political issue and continue to disengage Kashmir’s demand for self-determination.

The disputed area of Kashmir (2003), from UT Austin's map collection
The disputed area of Kashmir (2003), from UT Austin’s map collection

The former state of Jammu and Kashmir, ruled by the British-installed Dogra monarchy, is now divided between India, Pakistan, and China. The monarchy, through different periods, had seen several upheavals from its subjects. These Kashmiri uprising(s) paralleled the subcontinent’s anti-colonial struggle against the British rule. The British exit from the region in 1947 led to the partition of the Indian subcontinent, birthing two new countries—India and Pakistan. This left the Dogra king of Kashmir, Hari Singh, with an option to join either of the newly formed modern nations.

Singh, presiding over a Muslim majority, remained undecided. The undecidedness of the Kashmiri monarch is attributed to the complex political nature of Kashmiri society. The uprising in Poonch region in 1947 that sought to join Kashmir with Pakistan proved that the national will of Kashmiris could not be galvanized for a merger with either one of the nations. In the Kashmir valley, the popular leader Sheikh Abdullah propounded politics of Kashmiri nationalism with strong opposition to the idea of partition. To quash the Poonch rebellion and to deter the tribesmen entering from the north in support of the rebels,  fearing that the rebellion would break the country, the monarch sought the Indian military intervention. The military help came with a condition to accede to India.

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Mathis Lohaus

Dahrendorf Symposium: Discussing EU foreign policy

Dahrendorf Symposium

Two weeks ago I had the pleasure of attending (parts of) the 2016 Dahrendorf Symposium hosted by Hertie School of Governance, LSE and Mercator foundation. The event focused on European foreign policy. I was unable to attend any of the workshops, but will try and summarize the debates on the final day. Please also see my previous post on the scenarios for Europe in 2025.

Panel #1: Europe in the World 2025

Panelists:  Ahmed Badawi (Free University Berlin), Frances G. Burwell (Atlantic Council, Washington), Fabrice Leggeri (FRONTEX Executive Director), Daniela Schwarzer (GMFUS Berlin), Sylke Tempel (DGAP).

The panel did not directly address the scenarios, but rather focused on current challenges for the EU that have long-term consequences. Not surprisingly, the three main topics were challenges related to refugees/migration, the rise of European populism, and the consequences of Brexit.

[By the way: This and the other discussions will be available on YouTube soon.]

Panel#2: EU Global Strategy: game changer or wish list?

Panelists: Robert Cooper (British diplomat/adviser), Anne-Marie Le Gloanec (Sciences Po), Sebastian Heilmann (Mercator Institute for China Studies MERICS), Andrey Kortunov (Russian International Affairs Council), Alfredo Conte (Head of the Strategic Planning Division, European External Action Service EEAS)

The second panel of the day addressed the forthcoming EU Global Strategy on Foreign and Security Policy, which will be the successor to the EU’s 2003 strategy (“A Secure Europe in a Better World”). Three European/Russian academics plus two practitioners (the skeptical veteran Cooper and EEAS planning official Conte) turned out to be a good mix.

(Very selective) summary and reflections

I’m not an expert on any of these issues, but I found the following bits the most interesting:

Who is leading EU (foreign) policy-making? Echoing the famous “which phone number do we call?” argument, Frances Burwell adopted the American perspective and asked Germany to step up its leadership, including a bold decision in favor of mutualized debt and increased defense spending. Daniela Schwarzer pointed out that German leaders might think they did the Eurozone a favor over the past few years, but people in Athens see it differently. (Nobody made an attempt to defend German foreign policy choices…)

With an eye to the looming Brexit referendum, panelists suggested the UK might no longer be a reliable partner for European cooperation. Mr. Conte (EEAS) said that Brexit would mean losing one of the few members “with a strategic vision for the whole world, not just some regions” — but also result in one veto player less.

What about the European Union’s credibility and “soft power”? Andrey Kortunov described the EU as long-term “focal point for intellectual aspirations as well as material envy”, but said that the feasibility of the European model is now being doubted in Russia. Still, he urged European diplomats to focus on their comparative advantage: linking development and security (rather than trying their hand at geopolitics).

Anne-Marie Le Gloanec asked: “Do we still have the resources and soft power we thought we had when we wrote the first strategy in 2003?” Her diagnosis, citing the EU-Turkey deal on refugees and the EU’s actions in the MENA region, was rather negative. For the EEAS strategist Conte –not surprisingly– the answer was to develop a strategy revolving around “flexibility” and “credibility”, that is, member state activism and cash.

What role for the EU External Action Service? Not surprisingly (again), the EEAS representatives were confident about their ability to act and speak for the Europeans. Other panelists seemed skeptical regarding the service’s mandate and operational capabilities. Robert Cooper pointed out that “strategy” documents often amount to “bullshit”, and also said that EU members must invest in their foreign services’ day-to-day capabilities.

At a more fundamental level, the aforementioned call for national leadership seems at odds the very idea of the EEAS. Stuck between unwilling member states and external actors that don’t take her seriously, the high representative Mogherini indeed seems to face an “impossible task” (Le Gloanec).

What and where is our border again? Mr. Leggeri from Frontex, who seems to be a social constructivist, emphasized the need for a “credible external border” that is “emotionally perceived as ‘our’ border”. He added that he was “appalled” by the precarious situation in Lesbos “last year”, but said things were improving on the ground. Frontex, in his view, needs more resources and a mandate to plan for the future and do things other than emergency responses.

Some panelists made related points about what the EU can and should do beyond its external borders, but ultimately with a view to stabilizing them. On MENA, Sylke Tempel urged policymakers to work on good governance issues, as people there had “neither taxation nor representation”.

Should we embrace multi-speed Europe on social issues? Closely related to the idea of borders, some parts of the discussion addressed differentiation within Europe. Francess Burwell urged EU leaders to make a choice on migration: Ultimately, are the Syrian refugees going to be ‘visitors’ or ‘citizens’? (Her advice was crystal clear: Europeans need to work on turning them into the latter!)

The old debate about multi-speed Europe applies to social policy — which, in Europe and beyond, inevitably has consequences across borders. A member of the audience suggested to just accept the fact that Hungary, Austria and other do not wish to support Chancellor Merkel’s humanitarian policies. In response, Daniela Schwarzer instead called for a push-back against illiberal developments.


In sum, the panel discussions at the Dahrendorf Symposium raised many interesting questions (although, as usual at such events, they could have been even more focused). It was great to have practitioners, advocates and academics illuminate different aspects. With the Brexit vote around the corner and half a dozen crises ongoing in the neighborhood, readers of this blog are well advised to keep an eye on the EU …

Mathis Lohaus

Scenarios for European External Relations in 2025

Dahrendorf Symposium

Last week I had the pleasure of attending (parts of) the 2016 Dahrendorf Symposium hosted by Hertie School of Governance, LSE and Mercator foundation. The event focused on European foreign policy. I will summarize the debates on the final day in a separate blog post.

A few months ago, Hertie School hosted a scenario planning workshop as part of the Dahrendorf project. It focused on the EU’s relations to other world regions, trying to draw up scenarios for the year 2025. Meeting in five different working groups, the participants developed scenarios for the future relations between the EU and the U.S., China, Russia and Ukraine, Turkey, and the MENA region. Given my interest in forecasting and curiosity about scenario planning, I gladly signed up and contributed to the EU/U.S. working group.

At the Dahrendorf Symposium last week, Monika Sus and Franziska Pfeifer (who are coordinating the scenario project) briefly described our method and results to the audience. The publication with our 18 (!) brief scenarios is available via the Dahrendorf blog: European Union in the World 2025 – Scenarios for EU relations

The results are interesting and I really encourage you to download the document! Personally, I particularly enjoyed the process. It was a great exercise to think about  basic assumptions we have about transatlantic relations; to identify key drivers relevant for change; and to come up with scenarios that reflect the most relevant combinations of key drivers taking particular directions.

Transatlantic mistrust on tech
Illustrations for the scenario report by Jorge Martin

Let me indulge in a bit of self-promotion and quote the intro to my group’s scenario:

“In the years up to 2025 there will be a situation of balkanised technological regulation in the EU, driven by political debates which emphasise the need to shield national markets and societies against the uncertain effects of technological progress. On the other side of the Atlantic, political leaders will continue to embrace new technologies, with an emphasis on keeping the competitive edge also in terms of offensive capabilities in the cyber and AI realms. Only after a series of trigger events, increasing the pressure on decision-makers, will transatlantic leaders be willing to invest in a new institutional framework to manage the political problems associated with technological progress.” (‘Transatlantic Frankenstein’ scenario)

Then, of course, there was the Dahrendorf Symposium, which included a couple of workshop sessions (that I couldn’t attend) and two round-table panels on the final day. I will put my summary of these discussions into a separate post.

Vincent Dreher

Seven years in crisis: Some questions for the Eurozone

DER SPIEGEL 29 2015Recently, German media entered uncharted territory. While conservative newspapers have always identified the Greek government’s profligacy as root cause of the ongoing crisis, the liberal press had maintained more balanced positions. Yet on July 9, 2015, the weekly DIE ZEIT asked: ‘The Greek trap – the crisis-ridden country has a culture inimical to achievement. How can it be overcome?’ DER SPIEGEL proclaimed (in its July 11 issue) the necessity of ending the German romanticization of its arcadia in Attica. The title read: ‘Our Greeks – rapprochement with a strange people’.

Since when has culture advanced as main explanation for a country’s (economic) misery? How can shortcomings in a state bureaucracy be taken to explain an entire people’s failure of achieving prosperity and societal welfare?

In logical consequence of this narrative, the subsequent Eurozone-Greece agreement of July 13, 2015 figured as ‘the most intrusive economic supervision program ever mounted in the EU’ (FT). The drastic measures alongside the required ‘ownership’ of reforms revealed the deep mistrust in Greek institutions. The source of most, if not of all, failures was located in the Greek government’s incapacity, or reluctance, to accept conditionalities and implement reforms.

Unit labor costs and competitiveness in the Eurozone

This is yet another instance of misinterpreting the symptoms of a disease rooted in the fundamental misalignments within the Eurozone. There have been idiosyncratic issues in Greece (reporting failures, unsustainable debt since 2010), just as there have been home-grown issues in other crisis-hit member states contributing to the current escalation. However, these problems represent only the tip of the iceberg. It is not the misbehavior of individual governments, let alone cultures, which underlie the seven-year-old crisis. It is persistent failures in the economic governance of the Eurozone. Recent data from other Southern members are hailed as heralding the end of misery (EC, Reuters, FT, WSJ). The following discussion will demonstrate to the contrary: as long as the shortcomings in the institutional set-up of the Euro and the failures of member state coordination of fiscal policies persist, the crisis will continue. Greece today, who tomorrow?

Unit labor costs, the ratio of total labor costs to productivity, are interpreted as the best approximation of an economy’s competitiveness. Judged by these standards, today’s Germany is competitive. This is not merely due to its superior productivity though. German multinationals as well as the famed Mittelstand are very capable. But the great divergence of unit labor costs compared to Southern European economies was due to wage restraints and welfare cuts, beginning with Schröder’s Agenda 2010 in the early 2000s (Mickey Levy, Flassbeck, Spiecker, The Economist). Addressing ‘the sick man of the Euro’, the reforms (and other factors) put the German economy ahead. This was achieved, however, at the cost of society’s lower strata and its Euro partners, as evidenced by subsequent divergences in balance of payments across the Eurozone (Gavin Davies). Bound by the Euro, others could no longer devalue their national currencies to improve competitiveness. During the decade of the European boom, no one seemed to worry. Southern economies expanded strongly, while Northern capital was flowing in and financed investments and consumption. Consumption of Northern, of German goods for that matter. Apparently unnoticed, Eurozone’s North and South diverged.

Since the onset of adjustment programs across Europe, however, unit labor cost convergence has moved center stage. Yet this is not a joint effort – i.e. via wage restraint, reforms and export-orientation in the South combined with wage increases, fiscal expansion and domestic consumption in the North. Instead, the benchmark has been set by Germany and Northern Europe, and the others are asked to adjust. During the past years, Southern economies have undertaken enormous efforts. Greece, above all, is the star pupil (OECD, Economonitor). But to little avail. And even if the recent recovery across Europe (except Greece) proved sustainable – when every Eurozone member strives to become  ‘competitive’, who will act as counterpart? The German ‘Sparpolitik’ in the 2000s was offset by Southern expansion. Who is buying now, when everyone is saving?

The structure of the Eurozone and the European Central Bank

Divergences of unit labor costs, clouded by the boom, were further reinforced by the ECB’s single nominal interest rate. Paul de Grauwe and Notre Europe argue that increasing inflation in booming Southern economies lowered real interest rates, thereby rewarding further economic expansion. The reverse was true for the North, which still profited of huge export-gains. Additionally, due to increasing real exchange rate spreads the prices of comparable products across member states diverged, making Northern manufacturing more and more attractive (Vistesen, Dadush, Wyne). Hence economic dynamics pushed states further into imbalances, not merely the often denounced human fallacies. Where is the public discussion about these curious, and obviously significant, dynamics?

A second issue identified by de Grauwe is the lack of a lender of last resort. Since the late 19th century, any central bank’s mandate has included the provision of unlimited liquidity in times of financial panic; not so in the Eurozone. When the financial crisis hit Europe, each member had to clean its own doorstep. Capital fled to presumably safer Northern countries and Southerners dried up. The lack of affordable refinancing forced spending cuts, thereby inducing immediate austerity programs. The cuts diminished GDP, which made servicing debt even harder. And only then the European austerity programs were devised and implemented. The question arises: were state budgets ultimately unsustainable and Southerners righteously punished for profligacy? Or did they simply look weaker relative to Northern neighbors, which were favored by investors in times of uncertainty? Evidence points to the latter. Nevertheless, these are the discussions we Europeans should hold.

The Eurozone is not ready for the challenges ahead

Despite improvements in financial governance, such as the banking union or the ECB’s perennial setting of precedents, the economic structure of the Eurozone has seen little of the desperately needed changes (e.g. Hans Tietmeyer, Euractiv). As long as there is not some kind of fiscal union, as long as there are not some kind of common Eurozone debt instruments, the inherent fragilities persist. Furthermore, the majority of European policymakers remain bound to their national constituencies – why should they care for the whole of Europe, when their electoral mandate stems from a fraction of the people?

We need a European debate. A debate about the flawed narrative that the Greek government’s profligacy is said to have caused the economic and political crises; a debate concerning the interpretation of the crisis as a mere lack of competitiveness (what about the European welfare state by the way?); and a debate with regard to the absurd claims about “cultural” limits to economic growth.

Vincent Dreher is a PhD student at the Berlin Graduate School for Transnational Studies. He works on the Political Economy of International Money and Finance, with a focus on international institutions.

Kai Striebinger

Neither ‘good’ nor ‘bad’ – Re-Focusing the debate on Coup Outcomes

Dadis Camara, who led the Coup in Guinea 2008 and briefly was the country’s president (Image credit: Public Domain via Wikimedia)

Recent blog posts by Sebastian Elischer and Alexander Noyes have revived the debate whether Coups d’Etat – the accession of the military to the presidency of a country – are ‘good’ or ‘bad.’ I argue that this discussion is not very fruitful. While those who argue that Coups can be ‘good’ sometimes refer to the consequences of Coups for the overall political regime, most of those who say that they are ‘bad’ make a principled argument saying that perpetrating a Coup is, in itself, bad – regardless of the consequences.

Only the first understanding allows probing into the effects of Coups. In order to evaluate their effects on the (violated) core feature of democratic regime (the selection of a head of state or government), it is useful to understand how and why military governments stay in or withdraw from power. This opens the research agenda to include military internal, domestic, and international factors.

Principle versus consequences

The confusion in evaluating whether Coups are ‘good’ or ‘bad’ stems from two different points of measurement. In one perspective, the act is evaluated; in the other, its consequences are measured. If the core of democracy is defined as accession to the presidency via free and fair elections, then the act of a Coup itself cannot be democratic. It is a violation of a democratic principle and therefore – by definition – ‘bad for democracy’. But if the purpose of a Coup is considered, then a Coup might make a regime more ‘democratic’ after some time at least.

This latter point warrants expansion: most countries where top executive leaders are determined through elections have a constitutional provision to use violence to prevent the abuse of power. Article 20(4) of the German Basic Law, for example, reads: “All Germans shall have the right to resist any person seeking to abolish this constitutional order, if no other remedy is available.” This is an attempt to prevent the rise of another autocratic regime. Such clauses recognize that formally democratic systems (selection of head of state via elections) may erode into political systems where the rights and institutions that the democracy is supposed to protect are systematically violated. In such a situation, a Coup d’Etat can theoretically lead to a system where fewer violations take place. While the act itself violates democratic principles, the purpose aims to protect them, and therefore can be justified. If this second understanding is adopted, then it is an empirical questions what effects Coups d’Etat can have on the nature of political systems.

While it is relevant to inquire about the overall effects of military government on the liberty of the press, the respect for human rights, or economic performance, for example, the main question in order to determine whether there is a chance for establishing a democratic form of government via free and fair elections is whether the military stays in or withdraws from power. The question is thus no longer about an overall effect on ‘democracy’ (which is determined by many other factors as well such as the independence of judicial institutions or a free press), but rather centered on the military itself.

When does the military stay in power after a Coup d’Etat, and when does it withdraw?

When re-centering the attention on this question, three explanatory factors come to the fore. The first concerns the role the other soldiers play. Whether a military is united and features values of civilian supremacy is likely to impact on whether it will reduce its involvement in government after a Coup d’Etat. In the thirteen Coups d’Etat in West Africa from 1990-2014 (without the Coups in Guinea-Bissau), this explanation does, however, only have limited leverage. In about half the cases, the setup of the military does not explain its continued rule. A clientelist military in Guinea in 2008 withdrew from power, while a similarly constituted military in Togo in 2005 held on to power and the Coup President is still ruling today, for example.

Other domestic actors, especially the extent to which they can exert pressure on the military in government shapes the governments’ decision to withdraw from or stay in power. The examples of Guinea and Togo show, however, that extended pressure by civil society actors is necessary but not sufficient to enable a military withdrawal. This is only possible in conjunction with the involvement of external actors who are jointly voicing their preference for military withdrawal.

External actors do play an important role. They can, for example, use coercive power in order to remove the military leadership from government – as has been done after Coups in Sierra Leone in 1997 and Guinea in 2008. But they can also adopt a variety of negative material incentives (such as an arms embargo or travel and financial restrictions) but also positive material incentives (such as an increase in Official Development Assistance or unconditional loans) as well as positive and negative immaterial incentives. They also engage the military leadership in processes of persuasion appealing to their considerations of appropriate behavior.

Domestic and external actors need to be united in their responses

The effect of such instruments depends, however, on the unity among external actors. When China provides a 100 million dollar grant to the military government in Guinea, then the suspension of official development aid by the US, the EU, and EU member states to the fraction of this amount is unlikely to have any (material) effect on the leadership. But it is true that China does not always support military governments (in Mali, for example, it contributed troops to the UN peacekeeping mission). Neither is it the case that ‘Western’ powers and organizations always support military withdrawal (France’s involvement in Niger 1996 is a case in point).

Next to individual countries, international organizations have to be considered as well. African organizations like the African Union or the Economic Community of West African States have far-reaching mandates to react to Coups d’Etat and have used these extensively to contribute to a decrease in the degree of military involvement. They act on par with the traditional external actors on the continent.

Whether Coups ‘are good or bad’ is thus not the most interesting question. It is more fruitful to ask under what conditions and how the military leadership withdraws or stays in power after a Coup d’Etat. Especially the unity of a domestic opposition and external actors are shaping this decision – almost regardless of military internal factors. Under what situations military withdrawal contributes to free and fair elections or broader results such as economic development, good governance, or more equality would need to be subject of another research agenda.

Kai Striebinger wrote his PhD dissertation on the question how and under which conditions international actors contribute to the decision by military governments to either withdraw from or stay in power after Coups d’Etat in West Africa (1990-2014). He is currently a researcher at the German Development Institute.

Mathis Lohaus

Why the German Intelligence Community Infuriates Me

One and a half years ago, I wrote the following about the German (BND) and the U.S. (CIA, NSA…) intelligence services in comparison:

(…) I think there is a marked difference in self-perception between the two nations. I don’t think anyone in Germany even wishes to have an equally powerful and expensive intelligence apparatus. Maybe I’m extremely naive, but I doubt wiretapping foreign heads of state is high on the BND’s agenda. (…)

Of course this was written in the context of the revelations about NSA and CIA operations that infringe on civil rights around the world. I still believe that (i) German agencies probably are less intrusive than their “Five Eyes” counterparts, and (ii) that public opinion in Germany is more critical of surveillance than in the United States.

Sign at the BND construction site (2008), CC-BY-SA by Schmidt/Richter on Wikimedia Commons

Recent news, however, have led me to re-evaluate my standpoint. While I still wish for “my” intelligence agencies to respect civil rights and the rule of law, most importantly I would really appreciate more professionalism on their side. I mean, you really can’t make this stuff up:

  • The construction site for the new BND headquarters in the center of Berlin was vandalized: after thieves removed a couple of faucets (!!!) from the upper floor, water kept leaking for hours
  • …leading to millions of euros in property damage (FYI: the new HQ is expected to cost >1.3 billion)
  • Nobody noticed anything. And this is not the first incident: In 2011, the top-secret construction plans were stolen or “went missing”…

Ironically, there is a German figure of speech that refers to particularly tight security as “wasserdicht” (waterproof). Of course people on Twitter are having a lot of fun with this and other bad puns. Check out the #watergate and #BNDleaks hashtags. Another particularly fitting yet hard to translate one is #läuftbeimBND.

On a more serious note, I am deeply worried about what goes on in the German intelligence community.

  • Domestically, the investigation of the NSU terrorism against immigrants suggests that the “Verfassungsschutz” (homeland security) was paying informants who not only failed to prevent or investigate any of these terrible crimes, but were present at the scenes of murders and then lied about it at court.
  • Internationally, it seems clear now that there is no concerted effort to curtain U.S. activities on European soil, despite all the symbolic outrage. The “no-spy treaty” was hot air, which is not surprising. New revelations about the British GCHQ or the U.S. services violating the rights of European citizens have not led to any serious response as far as I can tell.
  • (My working hypothesis is that several past German governments owe a lot to U.S. support in Afghanistan, which makes it very difficult to criticize these agencies.)
  • The parliamentary investigative committee on NSA/CIA surveillance is under multiple lines of attack:
    • witnesses and experts are extremely tight-lipped, and the BND routinely “forgets” and “loses” documents
    • three members of the committee have stepped down for unclear reasons
    • everything is obscured by lawyers and engineers claiming ignorance of each others’ field, which leads to almost farcical Q&A sessions
    • the security of the committee’s internal lines of communications is questionable: someone intercepted the package carrying the encrypted phone used by the committee chairman on its way to be serviced.
    • ( offers very extensive coverage of these events [in German], often supported by leaked documents.)

I am no conspiracy theorist, I am not against intelligence services per se, and I also know that politics are complicated. But this combination of blatant negligence when it comes to civil rights (in the country that spawned both the Third Reich and the Stasi!) with strategic and operational incompetence is infuriating.

Mathis Lohaus

Predicting the Effects of TTIP, or: Whose Crystal Ball Can We Trust?

In a paper called “TTIP: European Disintegration, Unemployment and Instability”, economist Jeronim Capaldo argues that there are flaws in four prominent studies on the effects of the proposed TTIP agreement between the U.S. and the European Union. The problem is two-fold. First, all studies use similar models and data, which means that they all share the same set of assumptions and should thus not be treated as independently reaching similar conclusions:

Methodologically, the similarities among the four studies are striking. While all use World Bank-style Computable General Equilibrium (CGE) models, the first two studies also use exactly the same CGE. The specific CGE they use is called the Global Trade Analysis Project (GTAP), developed by researchers at Purdue University. All but Bertelsmann use a version of the same database (again from GTAP).

A detailed discussion of the shared heritage of the different CGE models can be found in a paper by Werner Raza and colleagues (pp. 37-49), which Capaldo cites.

He then goes one step further and alleges that the underlying econometric models are simply false, or at least inappropriate. According to him, CGE models rely on several flawed assumptions:

  • High labor mobility is supposed to allow workers in less competitive industries to switch to those that benefit from trade liberalization, which are assumed to grow enough to absorb the new workforce.
  • Overall, the gains for workers with the right skills are supposed to outweigh the losses for others.
  • The model assumes that new trade between countries/regions is created (rather than diverted from elsewhere, which would be a zero-sum result).

While I have no training in economics and don’t know the econometrics literature, I realize that all large-scale models of social science need to rely on simplified assumptions. Nevertheless, it seems to me that Capaldo has a point. If his account is correct, then European policymakers should look for more diverse academic input. More generally, if the most widely used models really are blind to potential downsides for labor, then that goes against the interest of European citizens. (As they ought to be very loss averse when it comes to employment as well as skeptical about the distribution of pay-offs from economic gains.)

So how do we come up with an estimate that pays more attention to potential negative effects? Capaldo uses the UN Global Policy Model (GPM), which models economic activity as demand-driven, explicitly models different regions, and includes an estimate of employment. (Again, I lack the knowledge to assess how this works and how much sense it makes.) In this model, unemployment and household income are projected to deteriorate in the long term (2025) for several European countries, as aggregate demand is lowered due to trade diversion (see pp. 10-19 for this and other findings).

Jeronim Capaldo, “The Trans-Atlantic Trade and Investment Partnership: European Disintegration, Unemployment and Instability”, Global Development and Environment Institute Working Paper No. 14-03, October 2014, p. 14.

Capaldo is pretty transparent about the limitations of this approach:

  • the non-TTIP baseline scenario (which serves as a comparison) might be wrong
  • the chosen model might be as ill-specified as the ones he is criticizing
  • policy responses down the road are not included (and that’s hardly possible)
  • …and the paper completely ignores the investment dimension of TTIP (which is a weakness shared by the CGE models, according to Raza et al., p. 49)

So the headline “TTIP will lead to a loss of 600,000 jobs” does not really do the paper justice, although the author himself uses pretty strong language in the conclusion.

No matter which forecast turns out to be better in the end, this discussion shows that policy decisions should not rely on a single strand of academic analysis. There is a lot of uncertainty involved in these negotiations, and I don’t see how there can be a confident forecast of net effects.

One final note for the political debate in general: TTIP opponents should not forget that the status quo will not necessarily be maintained or improved just by inaction. The people likely to lose from TTIP are probably heading for difficult times anyway, leading to questions about how to compensate them. Whether European leaders will decide in favor or against TTIP, they are making high-stakes bets on how globalization will play out over the next decades.

Thanks to Zoe for pointing me to the study. And if anyone can add insight regarding the comparison between the different models, please let me know!

Zoe Williams

Investor-State Dispute Settlement in Europe

In the last few months, criticism of  TTIP’s proposed investor-state dispute settlement  (ISDS) provision has become  so mainstream that even The Economist is questioning whether it’s such a good idea. More to the point, some of the biggest players this side of the Atlantic have also come out against it, largely it would seem, mirroring public sentiment.   French officials now claim that TTIP is a no-go if ISDS is kept in, while Germany has spoken out against its inclusion in TTIP, and has gone so far as to backtrack on agreements already made, saying that they want ISDS scrapped from CETA, the EU-Canada free trade agreement (which, until recently, nobody outside of Canada seemed to care about).

The perception of the  threat that ISDS poses is connected to the different health, food and environmental standards in Europe and the US. ISDS allows investors to sue host state governments for unfair or discriminatory treatment, and critics argue that investors will use arbitration (or even the threat of it) to force Europe to lower its regulatory standards based on treaty provisions. As proof of the potential for investors to employ ISDS to attack regulatory standards, critics frequently cite the cases of Philip Morris v. Australia, in which the tobacco company is suing over the country’s decision to require plain packaging of cigarettes, and Swedish energy company Vattenfall suing Germany over Merkel’s nuclear phase-out.

A threat does exist, as investors, and more importantly, arbitration lawyers are expanding the use of investment arbitration. As this article/advertisement  written by arbitration lawyers suggest, there is money to be made by actively looking for “innovative” uses for ISDS.

However, others argue that Europe’s sudden distrust of ISDS is hypocritical. European states, or at least European investors, have been a driving force behind ISDS in the past. The first Bilateral Investment Treaty was signed by Germany (with Pakistan) in 1959, and since then,  EU member states have signed at least 1400 BITs. Between 2008-2014 alone, EU investors made up 53% of all claimants in investor-state disputes.

Of course, more interesting to critics is likely the track record of EU states as respondents in these lawsuits. So here’s a breakdown of the cases Europe has faced so far, based on my own research.



Here we see the EU member states which have been respondents in arbitration cases. The majority are transition economies, although Spain, Germany, Belgium and the UK have also been faced lawsuits. The concentration of disputes in formerly Communist countries is not surprising, given the logic that has (up until TTIP and CETA) governed BITs. That is, these agreements have usually been signed by pairs of countries between which the investment generally flows only in one direction – most often from developed to developing countries (or at least countries perceived to have unreliable domestic courts).  In other words, when the US and the Czech Republic signed a BIT in 1991, the implicit goal was to protect US investments in the Czech Republic. On the other hand, Western European states and the US have not found it necessary to sign BITs between themselves, as both sides have been confident in the domestic courts and investment climate of the other. At least, until now.


The above shows the industries most often implicated in investor-state disputes involving EU members. How does this compare to investment disputes worldwide? At the global level, electricity and other energy, as well as oil, gas and mining, are the industries that see the greatest number of disputes. Not surprising, given that these industries are often politically interesting already. Extractive industries seem to attract  a range of governance problems, while public utilities are often are privatized to the detriment of low-income consumers.   What appears to be Europe-specific here is the concentration of cases in media and health insurance (although both relate to a number connected cases in Czech Republic and Slovakia).


And here we have a breakdown of the state “measures” which are triggering disputes in Europe. The top two categories are the very specific measure of canceling an agreement, permit, or license of an investor, while the second category – regulatory change – encompasses a range of measures  which effect an entire industry or even the general public.

Finally, how litigious are US companies? Of the 561 known arbitration cases listed on UNCTAD’s IIA database, 124 cases, or 22%, involve US investors.  It’s impossible to know how often US investors will use ISDS under TTIP, if the agreement ultimately includes the provision. All we can say for certain at this point is that if it is left in, a great deal more of global FDI flows will suddenly be covered by ISDS.

Note: Edited to add French dispute to graph which had previously been left off.

Mathis Lohaus

Marginal Costs in Intl. Affairs

Zero Marginal Costs SocietyLast week, Jeremy Rifkin presented his current book here in Berlin. In The Zero Marginal Costs Society, he argues that the marginal costs of production in many sectors are moving (close) to zero, leading to economic shifts on the scale of the industrial revolution. Three forces make this possible according to Rifkin:

  • a truly integrated global internet (communication + logistics + sensors)
  • abundant renewable energy
  • 3D printing as extremely cost-efficient mode of producing physical goods

No matter how you think about the details of Rifkin’s predictions, he makes persuasive points on what very low marginal costs can entail. This is obviously true for the areas he addresses (the economics of production, welfare, labor, automation, consumption).

But in addition,  marginal costs are worth  attention when we think about international relations and and transnational political affairs more generally:

  • If we buy Rifkin’s arguments, IPE scholars and others who care about economic power and growth prospects will put less emphasis on traditional metrics of factor endowments. If the Netherlands are just much better at making use of renewables than Russia, size is a bad predictor of success. How do you model something like the political will to embrace the future?
  • The marginal cost of reaching one more pair of eyes applies to political mobilization. No matter how high your PR budget, you can reach millions of potential recruits if you’re willing to be excessively cruel and upload an execution video. And how does having a single “viral” idea (involving buckets of ice) measure up against having a more traditional structure of supporters?
  • I’ve covered intelligence activities here on the blog, in particular the  large-scale surveillance conducted by the NSA and other agencies. Consider the logic of technology-driven surveillance: The marginal cost of targeting one more person is virtually zero. Keeping that person’s data for one more unit of time is free. And there is no physical or technological limit in sight.
  • Similarly, I suspect that “cyber war” skills probably scale at close to zero marginal costs. Once you managed to infiltrate a crucial bit of IT infrastructure (and still have plausible deniability to mitigate political repercussions), deciding about the amount of damage you want to inflict will not be a matter of costs.

I’m sure there are many more examples. And if you’re willing to bear the cost of adding one more book to your reading list, consider Rifkin’s.