Day two at the Brussels Forum

Posted By Daniel W. Drezner Saturday, March 21, 2009 - 9:51 PM Share

Day two of the Brussels Forum had more off-the-record events, but here are the juicy tidbits:

Note to the Obama administration: Indians across the political spectrum are thoroughly underwhelmed with your approach to South Asia to date. Also, they'd like you to cut out the complaints about offshore outsourcing. If not, Boeing is going to feel a world of hurt.
Iain Johnston has characterized China as a temporary status quo power. Speaking to the Chinese attendees, there's a lot of "after the crisis" talk - i.e., after the crisis, China is not going to be a status quo power. The big question, of course, is whether what China does during the crisis constrains its options afterwards.
Russian Foreign Minister Sergei Lavrov spoke, and let's just say that the Russians do not do soft power terribly well in Europe. Lavrov insisted that Russia needed new security structures based on hard law and not "political commitments." Strangely enough, he failed to reconcile this preference with his explanation for what happened in Georgia in 2008. He was pretty contemptuous of his co-panelist Javier Solana, as well as any questioner who challenged him (this included Anne Applebaum and John Kornblum). As a result, a subsequent panel on the 20^th anniversary of the fall of the Wall mutate into a let's-bash-Russia bitch session.
It's kind of difficult to listen to either the Japanese or Russian participants without thinking "demography is destiny, demography is destiny...."
Gallows humor from a Financial Times employee: he described his niche as, "being in one industry that's f***ed writing about another industry that's f***ed."
World Bank President Bob Zoellick articulated the whispered fears of a great many attendees - if the current set of stimulus packages fails to return the global economy to positive growth by the summer, there is a genuine fear of the next policy steps will be. There's been a lot of protectionism in the past six months, but much of it has been of the ticky-tack variety. Without positive job growth, the fear is that the protectionism will become much more real. The Brazilian Minister for External Relations observed that, "protectionism is a contagious disease." One could envision a 21^st century version of beggar-thy-neighbor policies in the form of competitive "quantitative easings."

That's all.

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KXB

3:50 AM ET

March 22, 2009

Obama's India policy - MIA

Most Indians probably understood that the momentum in Indo-US relations under the Bush administration, would not be immediately sustained in the first few months of the Obama administration. They may not mind his ignoring of Indo-Pakistani relations, since that leaves New Delhi in the driver's seat in bilateral negotiations. But with new H1-B restrictions about to come in effect, Obama's economic policies are likely to rub India the wrong way. But, instead of Indian diplomats raising a fuss, I'd expect the corporate honchos of IBM, Accenture, and GE to object - seeing as how each of them has more employees in India than the U.S.

BLUE13326

8:21 AM ET

March 22, 2009

It's an interesting question:

It's an interesting question: If the debtor countries do engage in a version of beggar-thy-neighbor policies through quant easing, as the UK & US are doing, and the other major countries intervene directly to push down their currencies, like the Swiss/China/Russia are doing, what happens to exchange rates, assuming everyone's economy remains weak? Does this race to the bottom just end up being a wash? Other than gold hitting $2000/ounce, I wonder what the consequences would be of this version of 21st century mercantilism?

BRETT

11:34 PM ET

March 23, 2009

what happens to exchange

what happens to exchange rates, assuming everyone's economy remains weak?

Optimistic scenario #1: They realize this is going to be inflationary beyond a point, and we see a bunch of central banks and the Federal Reserve co-ordinate a bunch of interest rate raises to prevent inflation.

Optimistic scenario #2: We get Bretton Woods 1.5, with lots of currency pegging.

JON S.

1:40 AM ET

March 24, 2009

I thought the alternative to

I thought the alternative to what these countries are doing right now is deflation, because of the sudden drop off in the purchasing rate, no? Do you think we're beggaring the Chinese already?

BLUE13326

6:02 AM ET

March 24, 2009

I think the Europeans are

I think the Europeans are finding that out now.

It's hard to say about China; first, in terms of currency, because China manipulates its currency, so you could argue that any push down on the dollar might just be getting the exchange rate closer to where it would be would be if it floated freely. Although, in a sense, by destroying the value of the dollar through excessive borrowing, we're beggaring them because they have so many dollars. As far as trade, obviously China isn't a free market. I'm somewhat surprised Obama hasn't been tougher on them, considering his protectionist tendencies. I figured he'd be talking about something like Buffett's Import Certificate plan; maybe he will if this gets worse.

ZATHRAS

2:52 AM ET

March 23, 2009

China

I wonder if Dan could direct us to an elaboration of the thought about China ascribed to Iain Johnston in this post.

BRETT

11:31 PM ET

March 23, 2009

As a result, a subsequent

As a result, a subsequent panel on the 20th anniversary of the fall of the Wall mutate into a let's-bash-Russia bitch session.

Details please! Can you give us any hint of what was said?

It's kind of difficult to listen to either the Japanese or Russian participants without thinking "demography is destiny, demography is destiny...."

Did either Russia or Japan mention the counter-migratory policies they've done, like the "return to Russia" program Russia is trying to do worldwide with ethnic Russians or people of Russian descent, or the Japanese program that allowed a bunch of Brazilians of Japanese origin back into Japan (upon which they were shocked to discover Brazilians, not Japanese)?

I can imagine a sense of pessimism among both on this issue. Of course, the Japanese will have robots - what do the Russians have going for them in this area?

Speaking to the Chinese attendees, there's a lot of "after the crisis" talk - i.e., after the crisis, China is not going to be a status quo power.

So they don't think China will be a status quo power after all the crap goes down? Those unemployment and projected growth figures must be worse than I thought.

DOUG MERRILL

8:11 AM ET

March 24, 2009

Wrong John?

Maybe that was John Kornblum, former US Ambassador to Germany, who challenged Lavrov?

DANIEL W. DREZNER

12:49 PM ET

March 24, 2009

Doug -- yes, it was Kornblum.

Doug -- yes, it was Kornblum. Fixed now!