The Crisis Next Time: What We Should Have Learned From 2008

Carmen Reinhart and Vincent Reinhart

Foreign Affairs

At the turn of this century, most economists in the developed world believed that major economic disasters were a thing of the past, or at least relegated to volatile emerging markets. Financial systems in rich countries, the thinking went, were too sophisticated to simply collapse. Markets were capable of regulating themselves. Policymakers had tamed the business cycle. Recessions would remain short, shallow, and rare.

Seven years later, house prices across the United States fell sharply, undercutting the value of complicated financial instruments that used real estate as collateral—and setting off a chain of consequences that brought on the most catastrophic global economic collapse since the Great Depression. Over the course of 2008, banks, mortgage lenders, and insurers failed. Lending dried up. The contagion spread farther and faster than almost anyone expected. By 2009, economies making up three-quarters of global GDP were shrinking. A decade on, most of these economies have recovered, but the process has been slow and painful, and much of the damage has proved lasting. (Read more)

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E.U. parliament votes to punish Hungary for backsliding on democracy

Michael Birnbaum and Griff Witte

The Washington Post

European lawmakers voted Wednesday to initiate sanctions proceedings against the Hungarian government for what they said was backsliding on democracy, an extraordinary censure for a nation that was once a beacon of post-Communist transformation.

The measure, which required a two-thirds supermajority of the European Parliament to pass, declared there was a “clear risk of serious breach” of European values by Hungarian Prime Minister Viktor Orban. It was the first step in a process that could ultimately strip Hungary of its voice in decision-making in the European Union.

The decision creates head winds for Orban’s ambitious quest to remake the continent in his model of “illiberal democracy” — a bloc that would be closer to Russia, less open to migration, and less concerned about independent judiciaries, a free press and minority rights. (Read more)

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International Criminal Court plays important role in global rule of law

Catherine Powell

The Hill

This week, White House national security adviser John Bolton slammed the International Criminal Court in the latest shot across the bow the Trump administration has taken against multilateral institutions. However, Bolton’s attack on the ICC is particularly shortsighted. As I have written before, it is in the United States interest, in our interest in national and international security, to support this court.

Even before joining the Trump administration, Bolton penned a piece in the Wall Street Journal that the United States should welcome the opportunity to “strangle the ICC in its cradle” or at least to tell the ICC Prosecutor that “you are dead to us.” As Bush administration legal adviser John Bellinger confirms, Bolton led the charge during George W. Bush’s first term to oppose the fledgling court, including by “unsigning” the Rome Statute that created the ICC and bullying U.S. allies into signing more than one hundred Article 98 agreements promising not to surrender American officials to the court. However, the Bush administration’s hostility to the court began to evaporate, as officials soon began to recognize that many of the most important U.S. allies were members of the ICC and that the court could serve American policy goals. (Read more)

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The Case Against Doing Nothing on North Korea

Victor D. Cha and Abraham M. Denmark

Bloomberg

Barely three months after they met in Singapore, President Donald Trump says he’s happy to sit down again with North Korean dictator Kim Jong Un. One might justifiably ask why, given how little the North has conceded since their last tete-a-tete. There is room to make tangible progress, however, if the U.S. first rethinks its negotiating strategy.

Talks between the U.S. and North Korea have foundered in part because of a fundamental contradiction in worldviews. It’s impossible for the U.S. to imagine establishing a peaceful, normal relationship with the North until Kim has completely and verifiably dismantled his nuclear program. For North Korea, it’s impossible to imagine denuclearizing until its relationship with the U.S. is peaceful and normal. So long as these issues are linked, and so long as leaders in Washington and Pyongyang continue to cling to their particular understanding of how they’re linked, even another Trump-Kim summit is likely to produce little. (Read more)

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The Oslo Accords Are Dead, but There Is Still a Path to Peace

Daniel Levy

Foreign Policy

Twenty-five years ago, U.S. President Bill Clinton presided over a famous handshake between Israeli Prime Minister Yitzhak Rabin and Palestine Liberation Organization Chairman Yasser Arafat on the South Lawn of the White House as they signed the Oslo Accords. Those accords, initiated at secret Norwegian-hosted talks between Israeli academics and PLO officials, set an agenda and a five-year timetable for a full peace deal that would initially allow limited Palestinian self-governance in parts of the occupied territories and entailed mutual recognition between Israel and the PLO.

These days, that historic moment is mostly forgotten as Israelis and Palestinians hurl familiar accusations at the other side in order to vindicate their current positions. In some quarters, there is an occasional whiff of nostalgia for an opportunity missed. But finger-pointing or rose-tinted memories of that September day miss the significance of the occasion. In today’s grim reality, what matters most is understanding how the Oslo breakthrough became possible in the first place. (Read more)