Various reports from CFR, posted at the discretion of CFR's president and director of studies.
This Working Paper, the third in the Squam Lake Working Group series distributed by the Center for Geoeconomic Studies, recommends support for a new regulatory hybrid security that will expedite the recapitalization of distressed financial companies. The new instrument resembles long-term debt in normal times, but converts to equity when the financial system and the issuing bank are both under financial stress. The regulatory hybrid security the authors envision would be transparent, less costly to taxpayers, and more effective than the ad hoc measures taken in the current crisis.
See more in Financial Crises
This Working Paper, the second in a series from the Squam Lake Working Group distributed by the Center for Geoeconomic Studies, argues that regulators consider systemic effects when setting bank capital requirements. Everything else the same, capital requirements should be proportionately higher for larger banks, banks that hold more illiquid assets, and banks that finance more of their operations with short-term debt. But capital requirements are not free. When designing capital requirements that address systemic concerns, regulators must weigh the costs such requirements impose on banks during good times against the benefit of having more capital in the financial system when a crisis strikes.
See more in Global; Financial Markets; Financial Regulation
Information about prices and quantities of assets lies at the heart of well-functioning capital markets. In the current financial crisis, it has become clear that many important actors—both firms and regulatory agencies—have not had sufficient information. Distributed by the Center for Geoeconomic Studies, this Working Paper proposes a new regulatory regime for gathering and disseminating financial market information. The authors argue that government regulators need a new infrastructure to collect and analyze adequate information from large (systemically important) financial institutions. This new information framework would bolster the government's ability to foresee, contain, and, ideally, prevent disruptions to the overall financial services industry.
See more in United States; Financial Markets; Digital Infrastructure
Seven years after 9/11, there is still no durable framework for effectively securing the United States against terrorism while also upholding its values. This Working Paper by Daniel B. Prieto calls on President Obama and Congress to engage these issues in a bipartisan fashion and craft comprehensive long-term counterterrorism policies that reaffirm the U.S. commitment to core values; only then will the United States be able to develop the kind of foreign policy necessary to meet the modern terrorist threat.
See more in United States; Terrorism and the Law
Though the United States of America faces its toughest budgetary and economic challenges since the Great Depression, it cannot afford to eliminate, or even reduce, its foreign assistance spending. For clear reasons of political influence, national security, global stability, and humanitarian concern the United States must, at a minimum, stay the course in its commitments to global health and development, as well as basic humanitarian relief. In this report, Laurie A. Garrett makes recommendations for the future of foreign aid under a new presidential administration and Congress.
See more in Global; Foreign Aid; Financial Crises
For several years, high oil prices enabled the Gulf Cooperation Council countries to add large sums to their state coffers. Falling oil prices imply that some Gulf countries may need to draw on their depleted funds to cover their import bills. In this Center for Geoeconomic Studies Working Paper, Brad W. Setser and Rachel Ziemba examine the impact of the fall in global equities on the Gulf’s large funds and explore how various oil price scenarios could shape those funds’ future growth.
See more in Regional Security; Middle East and North Africa; Sovereign Wealth Funds
In this Center for Universal Education Working Paper, Gene B. Sperling argues that there are important design elements of the existing global education architecture—the Education for All Fast Track Initiative—that reflect a promising model for a coordinated, global effort on education that should be built upon. Yet he also finds that a new Global Education Fund must employ serious reforms and have a major rebranding and relaunching moment by heads of state that mobilizes a greater global commitment to more resources and sound program implementation to make significant steps toward achieving quality universal education for the world’s poorest children.
See more in Education; Global
This Center for Preventive Action Working Paper surveys existing approaches to assessing state fragility and failure within the context of development, conflict, and governance. It examines the risk factors that have been identified through systematic inquiry and research with the goal of improving the prospects for successful conflict prevention and management, and argues that the goal of "early warning" relating to state fragility and failure should be more to inform and temper our expectations for policy response than to trigger costly and risky interventions.
See more in Conflict Prevention
Read the chapter contributed by former CFR visiting senior fellow for geoeconomics Jessica LeCroy: "Can Canada Be as Innovative, Competitive, and Entrepreneurial as the United States?"
CFR fellows host a series of discussions on pressing international issues.
The news that the Doha Round of the World Trade Organization has broken down in Geneva has made many Americans pessimistic about the future of multilateral trade agreements. In this Center for Geoeconomic Studies Working Paper, Douglas A. Irwin makes the case for optimism and argues that the key to advancing the free-trade cause is political leadership of the sort demonstrated by a heroic but near-forgotten figure, the late secretary of state Cordell Hull of Tennessee. Irwin traces Hull’s path through the decades and shows how his legacy lights the way for leaders of both political parties.
See more in United States; Trade
The sharp run-up in food prices has triggered riots in several countries and threatened to push millions of people below the poverty line. In this Center for Geoeconomic Studies Working Paper, Karen H. Johnson explains the causes and likely future course of food-price inflation and analyzes the implications for central banks, trade negotiators, and agricultural policy.
See more in Food Security; Agricultural Policy; Global
See more in Foreign Aid; Food Security; Global
In February, Martin Indyk and Richard Haass engaged leading Gulf policymakers in detailed conversations about what they are looking for from a new American president. While all those with whom they spoke were fascinated by the American presidential primary elections and seem to be following the results closely, few have yet focused on the possibility that a significant change in U.S. foreign policy might result from a new administration in Washington. There was also a significant disconnect between leaders and publics: The leaders are focused on how the next administration will deal with complex regional security challenge posed by Iran, whereas the publics are hoping that a new president will resolve the Palestinian issue and press authoritarian governments to be more open, transparent and accountable.
See more in Presidents and Chiefs of State; Middle East and North Africa
Bruce Riedel traveled to India in February to meet with business leaders, government officials, and members of the media. Riedel notes that much of the conversations revolved around Iran's pursuit of nuclear capabilities and the Iran-India relationship. Some in the United States have strongly criticized India for maintaining strong economic relations with Iran and for having exchanges of low-level military delegations. Riedel notes that although India opposes a nuclear Iran, its ties with Iran will lead it to oppose use of a military option against Iran.
See more in Middle East and North Africa; Arms Control, Disarmament, and Nonproliferation; Elections; Presidents and Chiefs of State
Daniel Byman traveled to Israel and Jordan in March -- a time of crisis in the Middle East. During Byman's trip, Palestinian militants in the Gaza Strip fired rockets against the Israeli cities of Sderot and Ashkelon, an attack occurred in the Mercaz Harav Yeshiva in Jerusalem, and Israel took retaliatory measures in the Gaza Strip. In both Israel and Jordan, Byman found that the predominant mood was one of frustration and gloom. Israelis felt trapped between their sense that inaction would encourage more violence and their recognition that the military and political options looked unpromising. Jordanians fretted that the Israeli reaction to the violence would strengthen the radicals politically.
See more in Middle East and North Africa; Counterterrorism; Presidents and Chiefs of State
In February, Tamara Cofman Wittes and Isobel Coleman met with business leaders, academics, journalists, and civic activists in Riyadh and Jeddah, Saudi Arabia. Among Wittes and Coleman's key findings are that many Saudis welcomed the emergence of a more open atmosphere, pointing to King Abdullah's ascension to the throne, dynamism in neighboring Gulf states, and a new "post-post-9/11" environment as key catalysts for the change. Yet, there was frustration at the unpredictability and arbitrariness of the newly expanded social and political space. The next U.S. administration may have a new, but narrow, window of opportunity to reintroduce itself to Saudi Arabia. Many Saudis argued for the creation of a deeper, multi-dimensional relationship between both countries that engages civil society, not just the government and business sectors.
See more in Saudi Arabia; Women
Intuition tells us that oil-rich countries are not friendly to the United States, and that entreprenurial—or “smart”—countries are not endowed with oil. In this Center for Geoeconomic Studies Working Paper, the authors find a triangular relationship between oil wealth, entrepreneurial spirit, and friendliness to the United States. They confirm the idea that “oily” countries are not U.S.-friendly, in contrast to smart countries, which are friendly to the United States and do not have oil. The authors conclude that it is in the U.S. interest to support education and economic diversification in petro-states so those states can become more entrepreneurial and friendly.
See more in Oil; Entrepreneurship; Global
How should the United States respond to Kenya’s political crisis in the wake of the power-sharing deal announced on February 28, 2008? In this POP, Adjunct Fellow Michelle D. Gavin suggests steps the Bush administration could take to promote political and ethnic reconciliation and to restore the viability of Kenya’s governing institutions.
See more in Elections; Kenya
In this paper, the first of a new publication type from the Council called the Policy Options Paper, Senior Fellow Daniel Markey poses a set of recommendations for the United States to consider in response to Pakistan’s ongoing political crisis—in particular, what position the Bush administration should take with regard to the country’s upcoming national elections.
See more in Pakistan; Elections