Robert Kahn is the Steven A. Tananbaum senior fellow for international economics at the Council on Foreign Relations (CFR) in Washington, DC. Kahn has held positions in the public and private sectors, with expertise in macroeconomic policy, finance, and crisis resolution.
Prior to joining CFR, Kahn was a senior strategist with Moore Capital Management, where his portfolio spanned Group of Seven (G7) monetary and fiscal policy, regulatory reform, debt policy and debt workouts, and the crisis in Europe. Prior to that, he was a senior advisor in the financial policy department at the World Bank, where he focused on financial sector assessments for developing economies and was the Bank's liaison to the secretariat of the Financial Stability Forum.
Kahn also held staff positions at the International Monetary Fund (IMF), where he worked on public policy and the resolution of debt crises in emerging markets. He was a member of the IMF team that worked closely with Korean authorities in 1997–1998 to develop a system for comprehensive monitoring and reporting of external debt and reserves, and subsequently was involved in development of the Fund's policy for private sector involvement in crisis resolution.
Kahn has held various senior-level positions at Citigroup and was the managing director and head of the sovereign advisory group. He served as the head of the Office of Industrial Nations at the U.S. Treasury from 1995 to 1996. He was also a senior economist at the Council of Economic Advisers from 1990 to 1991, as well as the Federal Reserve Board from 1984 to 1990 and from 1991 to 1992.
Kahn received his BA from the University of Chicago and his PhD from the Massachusetts Institute of Technology.
Sanctions in the Twenty-First Century
The imposition of financial sanctions in response to Russia's annexation of Crimea represents a new application of sanctions to address foreign policy disputes. After September 11, the United States began targeting financial systems, effectively cutting off adversaries' access to financing. Over the next decade, sanctions were used successfully against al-Qaeda, Iran, and North Korea. The use of sanctions against Russia in 2014 is different, though, not only because of Russia's size and global importance, but also because the scale and complexity of Russia's ties to global economic markets may make it particularly vulnerable to sanctions that restrict access to trade and investment. My research assesses the short and longer-term cost of these sanctions, as well as the implications for their use elsewhere. Will we see a greater reliance on sanctions in the future? If so, will the risk of their misuse also grow? I will also consider what policymakers will need to keep in mind when considering their use. U.S. policymakers need to balance the benefits of financial sanctions against the costs of weakening the deep global financial markets for countries that adhere to international norms. These results will be presented in a CFR Council Special Report.
Strengthening the Framework for Sovereign Debt Restructuring
The difficulties associated with the Greek debt crisis and Argentina's ongoing legal standoff with holdout creditors has renewed calls to rethink policy for sovereign debt crises. Reformists have called for new statutory bodies that could resolve sovereign bankruptcies and rules to change the terms and conditions of IMF lending. But reformists have the case wrong. Sovereign debt markets largely work well, and the current official strategy—which emphasizes debtors negotiating market-based restructurings with IMF support—has proven effective at allowing most countries to exit crisis when facing distress. More could be done to improve the contracts on existing debt. But my larger concern is that creditor governments and the IMF are too slow to act, unwilling to address a persistent debt overhang in the eurozone, and adopting unrealistic assumptions about debt sustainability in Ukraine. I examine this issue on my blog (for example here and here) and in my July 2013 monthly report "Lessons Learned from Greece". I am also writing several articles and a book on the history of sovereign debt crises and prospects for meaningful reform.
The Growing Geopolitical Threat to Financial Markets
Financial markets are forward looking. Investors make decisions in light of all available knowledge about risk. Why then, in the midst of political upheavals in Europe and the Middle East, have markets been until recently so quiescent? I have already explored the dynamics underlying this tension and argued that the sea of global liquidity created by extraordinary monetary policy in the industrial world, as well as the seeming remoteness of potential risks, has allowed market participants to continue to price a benign view of future global economic growth. But such a scenario is unlikely to last for long, particularly as the political upheavals we currently face are not easily solved. The weakness of the eurozone economy is one place where political crisis could spill into financial trouble. In a series of monthly reports, op-eds and articles, I identify where else and how political risk might translate into financial distress, and how if at all the possibility of sharp market corrections should influence the policy debate.
Robert Kahn argues that the West should be ready to impose more robust economic sanctions against Russia, in order to deter it from further infiltrating or destabilizing Ukraine. Russia's economic complexity means sanctions would meaningfully reduce Russian wealth and growth, since Russian oligarchs and business leaders have significant financial stakes in the West.
Europe can no longer afford to put off its debt problem. Robert Kahn recommends that policymakers draw lessons from the Paris Club to provide a rules-based approach to debt relief that can get Europe back on the path to growth.
As Russian officials on Thursday announced new military operations in several regions near the Ukrainian border, it becomes clear that the country isn't just dealing with a political crisis. Its economy is also in jeopardy.
Steven A. Tananbaum Senior Fellow for International Economics Robert Kahn writes that Greece and its creditors are again locked in a showdown over reforms, cash, and debt relief. Another cliff-hanger ahead of heavy July debt payments looks likely. Extend-and-pretend is a dead end for Greece and an increasingly populist Europe, and a more ambitious agreement seems ruled out by bailout fatigue in creditor countries. Markets are once again underestimating the risks of “Grexit.”
Steven A. Tananbaum Senior Fellow for International Economics Robert Kahn writes that markets showed impressive resilience in the face of a range of geopolitical shocks in 2016, but recent market moves suggest this year could be different. A greater range of possible, if unlikely, political challenges, as well as U.S. monetary policy normalization, could bring a crisis back to the fore.
Steven A. Tananbaum Senior Fellow for International Economics Robert Kahn writes that financial markets rallied following the U.S. election, on hopes that President-Elect Donald J. Trump’s fiscal stimulus and deregulation initiatives would spur corporate profits and growth. Perhaps so, but a strong case could be made for the opposite: that Trump’s economic agenda will prove disruptive to trade and growth, face growing headwinds in Congress, and exert a contractionary impact on the U.S. economy.
Steven A. Tananbaum Senior Fellow for International Economics Robert Kahn argues that the Group of Twenty (G20) policymakers agree on the importance of stronger and more inclusive growth to address growing populism, but disagree on who—central banks, treasuries, or legislatures—should take the lead. This standoff all but guarantees that the global recovery will continue to disappoint.
Steven A. Tananbaum Senior Fellow for International Economics Robert Kahn argues that at the Group of Twenty (G20) Summit in Hangzhou, China, leaders called for governments to do more to support growth, but offered little in the way of new measures. Quietly, and away from the G20 spotlight, fiscal policy is becoming more expansionary, but current policies are unlikely to provide a meaningful boost to growth or soothe rising populist pressures.
Steven A. Tananbaum Senior Fellow for International Economics Robert Kahn argues that markets have absorbed the initial economic shock from Brexit, but navigating the new landscape will remain a challenge. Two months after the vote, the politics of Brexit is producing a lengthy and uncertain renegotiation of Britain’s place in Europe and the world. Such extended uncertainty is likely to produce a long-lasting drag on both UK and European economies, which could ultimately threaten the viability of the European Union (EU).
Steven A. Tananbaum Senior Fellow for International Economics Robert Kahn argues that summer has seemingly brought a new optimism about the Russian economy. Russia’s economic downturn is coming to an end, and markets have outperformed amidst global turbulence. But the coming recovery is likely to be tepid, constrained by deficits and poor structural policies, and sanctions will continue to bite. Brexit-related concerns are also likely to weigh on oil prices and demand. All this suggests that Russia’s economy will have a limited capacity to respond to future shocks.
Steven A. Tananbaum Senior Fellow for International Economics Robert Kahn argues that the crisis in Venezuela continues to escalate, with no recovery or relief in sight. A messy and chaotic default looms, and the rescue will likely involve a tough adjustment program, large-scale financing from international policymakers, and deep sacrifices from Venezuela’s creditors and, most of all, the Venezuelan people. China’s role, as Venezuela’s largest creditor, will be critical and precedential for other emerging market commodity exporters with too much debt.
Steven A. Tananbaum Senior Fellow for International Economics Robert Kahn argues that the case for strong and effective Group of Twenty (G20) leadership is as compelling as ever. But if the G20 is to be as effective in noncrisis times as it was in 2008–2009, it needs stronger Chinese leadership, working informally yet closely with the United States—a Group of Two (G2) within the G20. Debt policy is one area where China and the United States should cooperate this year.
Steven A. Tananbaum Senior Fellow for International Economics Robert Kahn argues that the International Monetary Fund (IMF) deserves credit for effectively responding to the global and European financial crises. However, the institution will face different and potentially more difficult challenges in the next five years as it struggles to come to terms with a changing international power order and lending rules that are not well suited to address future crises.
Steven A. Tananbaum Senior Fellow for International Economics Robert Kahn argues that the idea of capital control is less radical than it seems; although comprehensive liberalization is theoretically the ideal option, capital controls may be China’s best chance to end the panic roiling global markets.
Steven A. Tananbaum Senior Fellow for International Economics Robert Kahn argues that 2016 looks set to be a volatile year in which geopolitics and hard-to-quantify policy dilemmas create significant uncertainty in markets. Policymakers will be asked to make tough decisions about where and when to intervene in markets at a time when their capacity to deal with crisis is increasing challenged, suggesting the road ahead could continue to be bumpy.
Steven A. Tananbaum Senior Fellow for International Economics Robert Kahn argues that the European Union (EU) faces rising populist pressure, reflecting long-term challenges to economic policymaking that can only partly be addressed by a cyclical recovery and debt relief. By strengthening the credibility of economic policy and the region’s resilience to shocks, better policy coordination and a faster path to economic union would go far toward securing a better economic future for Europe and addressing some underlying causes of populism.
Steven A. Tananbaum Senior Fellow for International Economics Robert Kahn argues that the concerns driven by China's economic problems are modest compared to the 1997 Asian financial crisis or the Great Recession. However, there are reasons for concern: large financial imbalances, weak global growth, inadequate official resources, and political pressures. While a severe global financial crisis remains a tail risk, policymakers need to be prepared to respond.
Steven A. Tananbaum Senior Fellow for International Economics Robert Kahn argues that China's growth prospect lies somewhere between hard-landing and muddle-through scenarios. However, uncertainty remains and is already being felt strongly and likely to put increasing pressure on emerging markets through trade contraction and financial contagion. For the United States, fragility in emerging markets is the critical risk and will dominate economic decision-making for months if not years to come.
Steven A. Tananbaum Senior Fellow for International Economics Robert Kahn argues that China’s request to include its currency, the renminbi (RMB), in an International Monetary Fund (IMF) currency basket, known as special drawing right (SDR), is political as much as economic in intent and effect. The inclusion would signal a milestone in China’s transition to a less-regulated economy.
Steven A. Tananbaum Senior Fellow for International Economics Robert Kahn argues that if Greece exits the eurozone, introducing a new currency could occur quickly; getting broader economic policies right is the more difficult challenge facing the country.
Director: Robert Kahn, Steven A. Tananbaum Senior Fellow for International Economics March 2013—Present
The Roundtable Series on International Economics and Finance aimes to engender dialogue on implications of global economic events, with an emphasis on issues on which policymaker and market-participant views differ. The series is based in New York, New York.