European leaders need to implement common European solutions to the refugee crisis. Only joint solutions can credibly and effectively reduce the growing human suffering and social and political turmoil.

The refugee crisis poses a serious challenge, both to the welfare of refugees and to European societies. In 2015, more than 1.5 million migrants crossed into the European Union. From Italy to Poland, and from Greece to Germany, countries face immense challenges in responding to requests for humanitarian aid, asylum, and integration. The associated integration challenges in housing, language, work and welfare are already formidable. Failing to manage them properly poses serious threats to social cohesion and political stability.

European countries have had sufficient time to analyse and assess the long-standing challenges which created the current crisis. Now it is time to act – not individually and at the expense of others, but jointly and in a spirit of European solidarity. This is why Vision Europe – a partnership between seven leading think tanks and foundations in Europe – will in 2016 focus its efforts on providing practical solutions to the current refugee crisis, and its root causes. We, the seven signatories, writing in an individual capacity, see an urgent need for a common European approach, to compliment local and national efforts.

At present, there is no consensus among member states on how to respond to the crisis, neither on the objectives to be achieved or the methods to be used.  But disagreements on substance must be overcome now. Building on current discussions, we propose a comprehensive agenda at the EU level, with five major dimensions.

First, it is important to control the EU’s external borders so that only refugees fleeing war and persecution, who have a legitimate right to seek asylum, can enter and potentially remain in the EU. The porous nature of the EU’s external borders has meant an unacceptable loss of control in the eyes of many EU citizens and has raised false hopes for irregular migrants trying to enter the Union. The control of the borders of the Schengen Area should be a collective effort of the EU and all Member States, coordinated by European Institutions with professional staff and with financial support provided to Member States at the EU’s periphery. Regaining control of the EU’s external borders is essential to preserve open internal borders.

Second, beyond implementing the already agreed upon relocation of 160,000 refugees from Greece and Italy, the EU should develop a system which distributes a much larger number of refugees across the Union, directly from the hotspots in the EU and the neighbouring counties such as Turkey, Jordan or Lebanon. Member States not willing to host refugees themselves could choose to make a primarily financial contribution to the system. A Migration Solidarity Fund should be created to manage this compensatory system. Turkey’s efforts to reduce the crossings in the Aegean Sea should be matched by a willingness among EU Member States to take in refugees in an orderly manner. The Conclusions from the European Council seem to move in the right direction in this regard.

The third measure should be to improve, standardize and speed up the processes to determine asylum applications. The sooner refugees know whether they can stay, the more energy can be invested in their integration into host countries’ societies and in family reunions. The sooner a decision is taken, the fairer and more feasible it is to send back those whose requests are refused in full respect of international law and human rights. And EU members cannot afford to have vastly different standards in granting asylum status.  Under international law, there can be no limit set on the number of those eligible to request asylum.

As a fourth measure, we recommend expanding efforts at the EU level to improve the living conditions of refugees staying in countries close to their countries of origin. Many refugees want to return to their homes as soon as the situation becomes safe again. They should not be driven to start the hazardous journey to the European Union only because of unbearable conditions in the countries where they are currently sheltering.

Last but not least, the EU and its Member States should work vigorously towards ending the violent conflicts that are the principal causes of the crisis. Europe must invest heavily in the Syria peace process, in particular. The EU must also raise the ambition and resources of its Neighbourhood Policy, with a focus on helping to stabilise the region and on improving the living conditions and economic opportunities in the Southern neighbourhood.

But action is also required at the national level, especially in the EU countries where significant numbers of refugees have received or are expected to receive asylum. The distribution of refugees across municipalities and regions should be fair and should come with adequate support and resources from the national level, emphasising education and language training. The recognition of professional competences and support to enter the labour market should be available at a very early stage. Within our societies, we need a dialogue between refugees and the host society. It should be made clear that respect for human rights, democratic values and cultural norms is indispensable for a prolonged stay in the respective European host country.

Coming from seven European countries, with different national policies and approaches to the refugee crisis, the foundations and think tanks of Vision Europe are working together to advance new ideas, to frame an informed debate and to emphasize the benefits of common European solutions to Europe-wide problems. Europe is strong enough to manage the migration challenges, but only if political leaders act now, act responsibly and use the resources at their disposal, including support for civil society working in this area. We must not leave the public space to populists and nationalists offering false promises. Only a European solution will be workable and sustainable.

 

Aart de Geus
Chairman and Chief Executive Officer, Bertelsmann Stiftung, Germany

Artur Santos Silva
President, Fundação Calouste Gulbenkian, Portugal

Guntram Wolff
Director, Bruegel, Belgium

Mikko Kosonen
President, Finnish Innovation Fund Sitra, Finland

Piero Gastaldo
Secretary General, Compagnia di San Paolo, Italy

Robin Niblett
Director, Chatham House, United Kingdom

Yves Bertoncini
Director, Jacques Delors Institute, France

Professor Tim Benton has joined Chatham House’s Energy, Environment and Resources department to help develop the institute’s work on the critical challenges of climate change, resilience and sustainable development. He brings renowned expertise on food security and environmental change, and will focus on establishing new initiatives at the intersection of research and policymaking.

Previously Tim has been UK champion for global food security, acting as an ambassador and spokesperson as well as coordinating work between research councils and government departments in this increasingly important area or research. Tim is also the dean for strategic research initiatives at the University of Leeds and a global agenda steward for the World Economic Forum.

Rob Bailey, director of the Energy, Environment and Resources department, said: 'I am delighted to welcome Tim to Chatham House. He has distinguished himself as a leading thinker on climate change and food security and we are all excited at the prospect of working with him.'

Tim Benton said: 'It is an honour to join Chatham House, with its great international reputation for independent thinking. I am looking forward to making a contribution to meeting the challenges implicit in managing the world’s resources sustainably whilst the global population and economy grows.'

His Royal Highness met with young fellows from the Queen Elizabeth II Academy for Leadership in International Affairs and discussed the important role that the next generation of leaders must play in bringing about positive change in their communities. 

The Academy was formally launched by Her Majesty The Queen at Chatham House in 2014.

Prince Harry also contributed to the first scenario exercise held in the institute’s new simulation centre, which explored how to respond to a humanitarian emergency that required landmine clearance, drawing on the prince’s work in the field of landmine eradication.

The opening of the Stavros Niarchos Foundation Floor marks a significant moment in the modern history of the institute and is a core component of the Chatham House Second Century Initiative, which aims to strengthen the institute’s capacity to innovate and meet the growing demand for its research in the lead-up to its centenary in 2020.

The extension includes a series of new facilities, including the Asfari Centre for Academy Fellows, the simulation centre, new meeting spaces and a media studio, which will ensure that Chatham House can continue to contribute to building a sustainably secure, prosperous and just world over the coming decades.

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The gift will create the Stavros Niarchos Foundation (SNF) Wing, enabling a permanent expansion of the institute’s research and providing a home to its Queen Elizabeth II Academy for Leadership in International Affairs. The wing will also house the ‘Chatham House SNF CoLab’, an initiative to open Chatham House’s policy research to wider public audiences.

The funds from the Stavros Niarchos Foundation (SNF) will be used to integrate a three-storey wing with the institute’s renowned building at 10 St James’s Square. The SNF Wing will support research collaboration and provide a stimulating environment to explore ways to engage people in the institute’s research, using interactive multimedia and other digital tools. Inauguration of the Chatham House SNF CoLab and the SNF Wing is anticipated in fall of 2019.

The gift from SNF is one of the largest in the institute’s history and is a major milestone in the foundation’s long-standing support of Chatham House, which dates back to 2007 and includes grants for research, infrastructure and student outreach totalling over £4.5m in the past 5 years.

Chairman of Chatham House, Lord Jim O’Neill said, 'This exceptional gift from SNF is a vote of confidence in the independence, quality and impact of the institute’s work. It will guarantee that the institute can innovate for the future, especially by engaging younger generations into its research and ideas, which is essential.'

Director of Chatham House Dr Robin Niblett said the gift will encourage informed public debate at a time of unprecedented global uncertainty and deepening political polarisation.

'The SNF Wing and Chatham House SNF CoLab will ensure Chatham House can continue to serve as a trusted hub for dialogue and a source of credible information, analysis and ideas on international affairs. It is an enormous boost to our staff and their work as we begin our second century, and of special value in such turbulent times.'

SNF Co-President Andreas Dracopoulos said, 'Chatham House is one of our key partners, and this grant marks an important new stage in our collaboration. At a time of uncertainty in international affairs, supporting the world-class independent analysis that can help citizens around the world engage in informed decisions about their future is essential. We are proud to help Chatham House maintain its independent voice while deepening its engagement with the public.'

The Stavros Niarchos Foundation’s past support has enabled Chatham House to establish an ‘SNF Floor’ with a broadcast media studio, a purpose-built simulation centre and training facilities, which will now be incorporated into the larger SNF Wing. The floor was officially opened by His Royal Highness the Duke of Sussex in 2017, when he took part in a scenario exercise exploring how to respond to a humanitarian emergency that required landmine clearance, drawing on the Duke’s ongoing work in this field.

For more information please contact:

pressoffice@chathamhouse.org
Phone: +44 (0)207 957 5739

He brings substantial expertise on food systems and environmental change to the role and will focus on establishing new initiatives at the intersection of research and policymaking.

Tim was appointed as a distinguished visiting fellow of Chatham House in the Energy, Environment and Resources Department in 2016. He has since contributed to the institute in a number of ways, not least through leading the GCRF-AFRICAP project which aims to enhance policy making in Sub-Saharan Africa, through building climate-smart food systems.

Tim’s research focuses on food security and building food systems that are resilient and sustainable, working within the broader areas of ecology, natural resources and climate change impacts. He has published over 150 academic papers, most tackling the core themes of agriculture’s environmental impact and more generally how systems respond to environmental change. He is a lead author of the upcoming Intergovernmental Panel on Climate Change (IPCC) special report on climate change and land. He is also coordinating lead author on international risks for the UK’s Climate Change Risk Assessment, which draws on his broader interests in sustainable finance, trade and energy. He has advised other governments as well as global companies on related issues.

Tim joins Chatham House in his new capacity from the University of Leeds where he is dean of strategic research initiatives. Prior to this, from 2011 to 2016, Tim was the champion of the UK’s Global Food Security programme, a large multi-agency partnership of the UK’s public bodies involved in addressing challenges around food. He has also been research dean in the Faculty of Biological Sciences, and head of department, at Leeds.

Dr Robin Niblett, director of Chatham House, said: 'Tim’s wealth of experience will be especially valuable as we build up our interdisciplinary Chatham House research theme of promoting sustainable growth. We look forward to welcoming Tim to his new role in early July.'

Tim Benton said: 'I am honoured to be joining Chatham House as Research Director for Energy, Environment and Resources. Chatham House has a global reputation in these areas, on which we can build. Informed analysis, combined with effective action to transition towards sustainable economies, is needed now, more than ever.'

About the Energy, Environment and Resources Department

The Energy, Environment and Resources department at Chatham House seeks to advance the international debate on energy, environment and development policy and to influence and enable decision-makers – governments, NGOs and business – to take well-informed decisions that contribute to achieving sustainable development. Independent of any actor or ideology, we do this by carrying out innovative research on major policy challenges, bringing together diverse perspectives and constituencies and injecting new ideas into the international arena.

Tim Benton takes over the role from Rob Bailey who has joined Marsh & McLennan Insights as Director, Climate Resilience.

He brings decades of experience as a health economist working in international development and health and is an internationally recognized expert on universal health coverage (UHC) and progressive health financing, operating at the highest political levels.

For the past five years, Rob has led the Centre’s work on Universal Health Coverage (UHC) as director of its UHC Policy Forum, which works on the political economy of UHC reform processes and advises political leaders and government ministries on how to plan, finance and implement national UHC reforms.

He has also worked closely with The Elders on presenting policy options on universal health reforms to heads of state across the world. Before leading the UHC Policy Forum at Chatham House, Rob was a senior health economist at the World Health Organization from 2011 to 2014, after moving from the UK Department for International Development (DFID), where he was a senior health economist. Prior to that, Rob was the deputy head of the Integrated UN Office in the Democratic Republic of Congo. He also spent five years working for the government of Uganda as a senior health economist, on secondment from DFID during the early 2000s.

'I am delighted to welcome Rob Yates as the head of the Centre on Global Health Security. He will bring a wealth of experience to the role at a time of risk but also great opportunity in the sector,' said Dr Robin Niblett, director of Chatham House. 'Rob will continue to work on his own area of expertise – universal health coverage – while ensuring the Centre continues to address other major global health challenges that manifest themselves as foreign policy and international affairs problems.'

Rob replaces David Heymann, who retires from the role as the Centre marks its 10th anniversary but will remain involved in several of the Centre’s projects.

'I would also like to pay tribute to David Heymann, who launched the Centre on Global Health Security in 2009 to examine key global health challenges in international affairs and world politics,' Niblett added. 'Without David the Centre would not have had the impact that it has and I am truly grateful for his hard work and achievements over the last 10 years.'

Yates takes up his post this week.

'I am honoured to become the new head of the Centre on Global Health Security and build on the successes delivered by David Heymann and the team over the last decade,' he said. 'My priority as the new head will be to ensure that our research and activities have a real impact in accelerating progress towards the Sustainable Development Goals by focusing on improving health security and health coverage in countries across the world. Engaging in issues related to the political economy of health and health care reforms will be critical in achieving this impact.'

For the past few months, users have been sharing their thoughts on our website on the future of democracy and the role of technology in it. Many have shared concerns about the effects of technological change:  

• Social media may be undermining the historic role of politicians to speak on behalf of their constituencies.
• Twitter favours brief writing and hence brief thinking, which may be leading to a deterioriation in democratic debates.
• The risk that the so-called 'echo chamber effect' undermines balanced and reasoned public debate.

But there have also been lots of ideas about how technology can help European democracies become more responsive and dynamic such as:

• The use of technology to better inform citizens and include civil society in decision-making.
• Sybil-proof identity verification for social network accounts operated by local municipalities.
• The development of non-profit personal data cooperatives as a response to the domination of Big Tech.

Now we want users help in shaping the final report. What do you think should be included?

We are opening up the report writing process and inviting you to take part and feed in your views. Work with us on a collaborative draft in Google Docs – comment, edit and get an insight into the black box of think tank research.

We’ll also be incorporating the most interesting submissions from the previous phase. If you'd like to make a submission, you can still do so here.

How To Join

To access the documents, you will need a Gmail account and to be registered as a user on demtech.chathamhouse.org. Each research question has its own working document, accessed via the Research Questions page.

The process is open to everyone. We look forward to working with you!

Join the project now

Creon will join Chatham House from the Cabinet Office where he served as director for international economic affairs in the National Security Secretariat and G7/G20 ‘sous sherpa’, advising on global policy issues such as climate change, natural resource security, global health threats and the future of the international economic architecture.

Creon first joined the Cabinet Office in 2013 as director in the European and Global Issues Secretariat, advising prime minister David Cameron on international economic and financial issues, ranging from country-specific developments in China and Germany to global challenges such as antimicrobial resistance and anticorruption.  He designed and organized the UK’s global Anti-Corruption Summit in May 2016.  Earlier in his career, he served in the Bank of England, HM Treasury and in the Foreign and Commonwealth Office, where he was director for economic policy and chief economic adviser.  He was also deputy high commissioner in New Delhi from 2006 to 2009.

Robin Niblett, director of Chatham House, said: 'We are delighted that Creon Butler will join Chatham House at such an important moment, when geoeconomic competition and technological disruption are changing the structure of the global economy, and as governments and societies across the world must develop more sustainable pathways to economic growth. Creon brings precisely the right combination of knowledge and experience to enable Chatham House to conceive inclusive solutions for the future.'

Creon Butler said: “Chatham House’s high quality, independent and focused policy research has never been more important in helping policy makers to chart the best path given today’s extraordinary economic and political uncertainties. I am very pleased to have the opportunity to lead the institute’s Global Economy and Finance programme at this critical time.'

 

Dr Robin Niblett, director of Chatham House, is chair of the NATO Group of Policy Experts, tasked with providing NATO Secretary-General Anders Fogh Rasmussen and the North Atlantic Council with ideas on how to strengthen the Alliance's transatlantic bond ahead of September's  NATO summit in Wales. 

The group's report Collective Defence and Common Security: Twin Pillars of the Atlantic Alliance was published on 10 June for discussion at a NATO conference in Brussels on the transatlantic bond.

 

Executive Summary 

Key points from the Policy Experts report to NATO Secretary-General Anders Fogh Rasmussen, released at the Conference on Strengthening the Transatlantic Bond in Brussels on 10 June 2014:

• Transatlantic security cannot be taken for granted. Following its withdrawal from Afghanistan, NATO needs to reaffirm its value around the twin objectives of collective defence and common security. 

Upholding peace and stability in Europe 

• The commitment under NATO’s Article V to treat an attack against one as an attack against all must be credible, and NATO members should take concrete steps together to make it so. Tallinn should be as secure as Toronto. 

• There can be no return to a ‘strategic partnership’ between NATO and Russia so long as Russia’s actions threaten European security.

• European governments bear particular responsibility for ensuring their own territorial security. They must invest in the necessary R&D, equipment and deployable capabilities. No amount of ‘smarter’ defence will compensate for a failure to reverse falling defence spending.

• NATO needs to develop effective responses to the ‘non-linear’ forms of aggression seen during the crisis in Ukraine. But the EU should take the lead in helping its members and neighbours embed good governance practices that will lessen their vulnerability to external destabilization.

•  European countries should reduce their dependence on Russian energy. Russia’s main strength should no longer be Europe’s main vulnerability. 

• NATO’s door should remain open to all European democracies that share the values of the Alliance. However, existing members must be ready, willing and able to extend the full benefits of Alliance membership to them, including those in Article V.

 Confronting international insecurity 

• NATO should not turn inwards after 2014. Much of the Middle East, and North Africa face a decade of turmoil which will pose direct threats to NATO members. 

• In Asia, unresolved territorial disputes and historical animosities are driving dramatic rises in defence spending. It must be remembered that the Pacific Ocean is the western flank of NATO. 

• In this context, it should not be left to the United States and a handful of others to deploy hard power beyond NATO’s borders. An over-reliance on US power projection will erode the foundations of the transatlantic bond over time. 

• NATO and the EU must also cooperate closely to deliver their comprehensive range of capabilities to manage international crises, from market access and development assistance to military intervention and post-conflict civilian support. 

• Completion of the Transatlantic Trade and Investment Partnership (TTIP) will strengthen the transatlantic community strategically as well as economically.

• NATO needs to differentiate its approach to working with its international partners. In particular, it should develop long-term cooperative arrangements with the small number of countries in Europe and beyond which have contributed actively alongside NATO to international security in recent years. 

• The NATO–Russia Council should continue to operate at ambassadorial and higher levels. This will help the two sides coordinate responses to international crises and potentially rebuild trust on European security. 

• NATO publics are increasingly sceptical about the value of any form of external intervention. Political leaders need to communicate better the deterioration of the security situation in Europe; the importance of international security to their nations' welfare and prosperity; and the need to protect the core values that underpin the Alliance, especially democratic governance, open economies and the rule of law.  

Chatham House press release: Director of Chatham House to Chair New NATO Group of Policy Experts

 

NATO press release: NATO Secretary General to attend conference on Strengthening the Transatlantic Bond

In September, the UK will host a summit on the future of NATO. The Wales Summit will chart the course of the alliance as it deals with the long-term implications of Russia’s policy towards Ukraine and prepares to complete its longest combat mission in Afghanistan. The secretary-general will outline the decisions that need to be taken to ensure that the alliance remains fit to face the future. He will set out NATO’s readiness action plan, address the debate on declining defence budgets, and explain how NATO intends to turn a new page in Afghanistan. 

The speaker will outline a number of foreign policy challenges facing transatlantic business, such as China’s increasing economic power, turmoil in the Middle East, and Russia’s recent actions in eastern Europe. He will examine how these issues can provide obstacles to cooperation and development, and restrict access to markets, and how they can be addressed. 

The event is part of our series on US and European Perspectives on Common Economic Challenges. Conducted with the support of Bank of America Merrill Lynch, this series examines some of the principal global challenges that we face today and the potentially differing perspectives from the US and across Europe. 

Attendance at this event is by invitation only.

The situation in Ukraine remains in flux and despite Europe and the US toughening sanctions on Russia, President Putin continues to increase the scope of Russia’s involvement in the conflict between the Ukrainian government and the separatists. It remains unclear how far Putin is willing to go, what his broader regional ambitions are, and what he will do if forced further into a corner by Western actions. In this time of uncertainty and instability it is therefore vital to assess how the transatlantic partners should respond to this increasingly precarious situation. 

At this all-day event, the group will discuss how US policy towards Russia is changing, what this means for Europe and, subsequently, how Europe should respond. 

Attencance at this event is by invitation only.

The event is part of the Transatlantic Strategy Group on the Future of US Global Leadership run jointly with the German Marshall Fund of the United States. Over the course of a year, this group will come together to discuss how US policy is changing on key issues and the implications for Europe. This project is supported by the Fritz Thyssen Stiftung.

Drawing on his experience as governor of Wisconsin, Scott Walker will outline the importance of forging strong global partnerships to fuel business growth and build prosperous local economies. Governor Walker will consider how mutually beneficial partnerships can be developed within the global community and the impact of these on local communities.

LIVE STREAM: This event will be live streamed. The live stream will be made available at 18:00 GMT on Wednesday 11 February.

ASK A QUESTION: Send questions for the speaker by email to questions@chathamhouse.org or using #CHEvents on Twitter. A selection will be put to him during the event.

The speaker will outline the importance of economic cooperation in the transatlantic relationship and consider recent developments in the global economy.

The international community is in urgent need of successful, cooperative strategies for both preventing mass atrocities before they begin and stopping those in progress. As recent crises have highlighted, effective international cooperation to save lives and preserve peace and security remains largely aspirational. Participants will discuss current thinking on mass atrocity prevention and intervention, and identify how transatlantic cooperation in this space could be more effective.

Attendance at this event is by invitation only.

With the Middle East in chaos and the future of many states increasingly uncertain, there is a large amount of attention as to how policy-makers in Europe and the US should respond. In particular, many in Europe are unsure of long-term US policy in light of competing American priorities, budgetary constraints and a public adverse to committing further resources abroad. In this context, it is important that European and American policy-makers understand each other’s positions.

At this all-day event, a group of experts will discuss how US policy towards the Middle East is changing, what this means for Europe and, subsequently, how Europe should respond. 

Attendance at this event is by invitation only.

The workshop is held as part of the Transatlantic Strategy Group on the Future of US Global Leadership run jointly with the German Marshall Fund of the United States. Over the course of a year, this group will discuss how US policy is changing on key issues and the implications for Europe. This project is supported by the Fritz Thyssen Foundation, with support for this event provided by the Delegation of Strategic Affairs of the French Ministry of Defence and the British Embassy in Paris.

The NATO Summit, held in September 2014 in Newport, Wales, was a waypoint in the larger strategic vision for NATO over the coming decade. As the alliance continues to confront challenges on its eastern and southern frontiers, it must find ways to adapt its strategy for more effective responses, while also staying ahead of emerging threats and risks. 

The event will bring together senior representatives from a number of the NATO member states, NATO partners and external experts from industry, the media and the think-tank and academic communities, to examine what NATO member states have done thus far to move the deliverables forward, and how to most effectively work together in continuing to do so. 

Attendance at this event is by invitation only.

This is the second of two workshops held in collaboration with SWP-Berlin; the first took place at Chatham House in October 2014.

Europe and the United States have dominated global institutions for over 70 years. However, as the emerging markets take up a greater share of the global economy it is becoming increasingly difficult for the transatlantic powers to maintain the current system. This event will examine the changes needed in order to avoid a collapse of the current system.

The workshop is held as part of the Transatlantic Strategy Group on the Future of US Global Leadership run jointly with the German Marshall Fund of the United States. Over the course of a year, this group will discuss how US policy is changing on key issues and the implications for Europe. This project is supported by the Fritz Thyssen Foundation, with support for this event provided by the Bertelsmann Foundation. 

In the wake of the Paris attacks and the destruction of a Russian plane by a bomb in Sinai, Russia had been once more calling for a new level of engagement with Western partners over operations in Syria. Even an ‘anti-terrorism coalition’ appeared to gain traction after the terrorist attacks in Paris. But Russian attacks on Western-backed opposition groups in Syria and continuing violation of Turkish airspace narrowed the window of opportunity for engagement between NATO member states and Russia in Syria, and Tuesday’s incident – where Turkey shot down a Russian bomber − fundamentally challenged this option. NATO allies and Secretary General Jens Stoltenberg were quick to call for ‘calm and de-escalation’ of the situation. But they face a problem: in the absence of a strategy, NATO lacks a mechanism—a form of transparent process for crisis resolution—between member states and partner nations when and if a dispute or disagreement arises.

NATO has three essential core tasks—collective defence (Article 5), crisis management and cooperative security; it does not prioritize one task over the other. Whereas collective defence applies to member states like Turkey, cooperative security involves engagement with partner nations, such as Russia, to assure Euro-Atlantic security. NATO’s role, in this sense, goes beyond protecting a member’s state’s sovereignty. This aspiration to provide enduring cooperation and cooperative security beyond members lies behind the now-obsolete NATO-Russia Founding Act on Mutual Relations, Cooperation and Security, signed in 1997.

NATO’s balance between these tasks and its role vis-à-vis partner states is ill-defined, and among the core issues the Alliance must consider at or before its next summit in Warsaw in July 2016. These discussions must include prioritizing and grouping partner nations—Russia and Sweden, for instance, are clearly not partners in equal terms – and clarifying the role of the NATO-Russia Council (NRC). The NRC is a venue for political dialogue that includes consultation, cooperation and joint action, but does not have a crisis resolution mechanism. From 2014 onwards, the NRC has not functioned, yet it is the only venue where NATO and Russia could have discussions regarding the future of Syria, focusing on ISIS as a major threat both to the Alliance and to the partner nations. Neither Russia nor the Alliance will benefit from escalation; thus, both sides should bear in mind that a troubling partnership is better than an adversarial relationship.

This is even more important because NATO member states do not have a cohesive strategy regarding Syria’s future. For some countries, like Germany, the efforts lie on refugee relief policies, while for others, such as France, the focus is the military fight against ISIS. Russia is clearly testing NATO’s response mechanisms through hybrid warfare techniques. Yet, NATO also does not have a coherent policy regarding Russia’s assertiveness in Ukraine, involvement in Syria and its annexation of Crimea.  NATO officials are in general agreement that there can be ‘no grand bargain with Russia’ as long as it continues to violate international treaties and norms. Russian aggression and assertiveness is a long-term problem for the Alliance to tackle. So far, though, NATO benefits from ‘avoid[ing] that situations, incidents and accidents spiral out of control’, as the NATO secretary general noted in his speech after the extraordinary North Atlantic Council meeting. Solidarity among allies and protecting Turkish territorial integrity is a clear role for NATO, but the Alliance’s response mechanism in crisis situations should not be exhausted and undermined with small-scale, bilateral disagreements and disputes.

NATO could move to incorporate a crisis resolution mechanism, in specified non-escalatory terms and processes, between member states and partner states, where NATO member states and Russia meet together as equals in case of a crisis. This could re-establish a communication channel between NATO and Russia in particular, especially when the NRC is not functioning. If such a mechanism were in existence today, Turkey could have taken the issue to NATO’s crisis management system and pointed out its concerns over airspace violations, rather than shooting down the Russian bomber. This could have enabled the Alliance and Russia to participate in a dialogue that has been silent for more than a year. Instead, this incident demonstrates the delicate strategy of balancing deterrence policies with engagement between a member state and a rather troubling partner nation.

When Syria’s future is discussed, as it will be, at the Warsaw summit, Russia will be an unavoidable part of the discussion. But until there is a way to de-escalate these small-scale incidents, it will be increasingly difficult for Russia and NATO to determine whether they do in fact have any scope for cooperation, or at the least collaboration, on shared challenges and threats.

To comment on this article, please contact Chatham House Feedback

The US−UK ‘Special Relationship’ is in decline, and a British decision to leave the EU would hasten its demise. As Great Britain increasingly becomes just one of America’s many strategic relationships, Brexit would speed the transfer of US attention and energy from the UK to the continent. This, however, does not need to be inevitable. The necessary ingredient to reverse this decline is stronger British leadership internationally.

The US government has made it abundantly clear that its preference is to see the UK remain in the European Union. In January 2013, when David Cameron had not yet committed to a referendum, Phil Gordon, the US assistant secretary of state for European affairs bluntly stated that it is in the American interest for the US ‘to see a strong British voice in that European Union.’ The fact that a senior US official would go so far – to be seen to intervene so early in a divisive domestic political issue – spoke volumes about how important this is to America. This week, President Obama will visit the UK to send an equally firm, if polite, message to the British public.

Why does the US want the UK to remain in Europe?

From the US perspective, there are three principal elements that the UK brings to the table in the bilateral relationship. The first stems from Britain’s capabilities, particularly in the military and intelligence arenas. US−UK intelligence sharing, the closest for both countries, has a long history dating back to the Second World War. For good or ill the UK has been among America’s leading allies in every major conflict the US has been involved in for the last quarter of a century – in the Gulf War, Bosnia and Kosovo, Afghanistan, the war in Iraq, the interventions in Libya as well as current operations against ISIS in Iraq and, belatedly, Syria.

The second relates to the political value of having a reliable partner in international engagements – and thereby avoiding the perception of acting unilaterally. Shared history and values, and thus often perspectives (as well as capabilities) have ensured that the UK has long been the first port of call for the US when seeking to solve international problems or build coalitions. At the same time, Britain’s historical global reach and diplomatic experience around the world (not least in areas of current concern such as Afghanistan, Pakistan, Israel and Palestine, and Iraq) have provided American policy-makers with valuable input on foreign policy issues that has contributed to their own internal decision making.

The third area of added value for the US is Britain’s place in the EU. While British and US policy preferences may at times diverge, as they have recently on the Israel−Palestine issue, for example, their common outlooks and interests mean that Britain is the closest thing that the United States has to having a voice in the EU. At the same time, the US also sees the UK as the country most likely to support an open trade and investment agenda and a more proactive approach to dealing with the challenges in Europe’s neighbourhood, policies that leaders in both countries agree are necessary to make the EU a more effective actor and better partner to the US on the international scene.

The transition from US−UK ties to US−European ties

In recent years, however, the US has begun to diversify its relationships within Europe, in part as the UK has become unable or unwilling to step up and fulfil these three elements of paramount importance to the US.

Defence and intelligence

With regards to defence capabilities, it is no longer the UK that the United States inevitably looks to first. In Libya, the operation that started with the defence of Benghazi from Gaddafi’s forces in March 2012 (that eventually came to remove Gaddafi himself) was jointly led by the French and the British, although then-French president Nicolas Sarkozy appeared to be the driving force. More recently, it was the French with whom the US partnered in responding to the terrorist activities in Mali and who were first to support the US in action in Syria (following a UK parliamentary vote to stay out in August 2013 and a belated vote to act in December 2015). But in recent years others have worked more closely with the United States militarily as well, including in particular Poland and Denmark (although with the new government in Poland, the relationship might wither again).

This trend towards more diversified military engagement with other European states looks set to continue in the near term. Despite taking a tough position in the 2014 NATO Summit to reinforce the NATO commitment of two per cent of GDP spending on defence, the Cameron government came very close to falling below this line in 2015 (after five years of real defence cuts). The eventual decision to commit to meet this target, along with the newly released Strategic Defence and Security Review (SDSR), have somewhat reassured American policy-makers of the UK’s continued ambition and capabilities. But there remains a lack of US confidence that this is only a temporary uptick in UK attention on defence. Meanwhile, America will continue to expand its horizons.

The story on intelligence sharing is slightly different, but here too obstacles have arisen in the close US-UK exchange of information. Since the end of the Second World War, the US and UK have been part of the ‘Five Eyes’ alliance – with Australia, New Zealand and Canada – that allows the close sharing of intelligence. And arguably, within the Five Eyes, the links between the US and UK are the closest of all. However, more recently, tensions have emerged. Over the past five or so years, the British judicial system in particular has pushed back on US confidentiality rules in ways that make the US intelligence services nervous of continuing to share information; given the current close relationship, this could be more of an obstacle than it is for other countries sharing intel with the US.

At the same time, with the ISIS-inspired resurgence in the terrorist threat in both Europe and the US, it is becoming increasingly clear that the close intelligence sharing between the US and UK must take place much more widely. The current systems – through NATO or INTERPOL – have proven too slow and ineffective, as the recent attacks in Paris and Brussels have made clear. Sharing among the US and UK, or even among the Five Eyes, is insufficient – increasingly the relationships will have to be broadened.

Partnership

The US is also looking elsewhere for partnership in its international engagements, including on some of the issues that are at the top of the inbox for the American president.

On responding to Russian actions in Ukraine, it is clear that German Chancellor Angela Merkel is in the lead, both in corralling Europeans to maintain the sanctions but also in negotiating with Russian President Vladimir Putin. This was highlighted in the creation of the Normandy format in the summer of 2014, a group encompassing Germany, France, Russia and Ukraine (but not the UK or the US), to resolve the situation in the east of Ukraine. On another issue of significant import to the United States, European economic prosperity and stability, Merkel is again the leading actor in Europe.

In the case of targeted bombing in Syria, it was not the British that were first to join the United States in the offensive against ISIS, but instead the French. President Francois Hollande also proved far more proactive after Syrian President Assad crossed the chemical weapons ‘redline’ in 2013, although in the end France was left hanging when President Obama decided to step back from military action after the failure of the British parliamentary vote to authorize UK involvement.

Finally, on at least one issue of great import to the US – China – the UK appears to be diverging meaningfully. The most recent case – the UK decision to join the Asian Infrastructure Investment Bank in March 2015 – is perhaps the starkest example of such differing policy positions that have caused significant frustration in the US.

Influence in the European Union

With regards to Europe, even before the referendum was formally announced, it was increasingly clear that the UK was less inclined to engage proactively in the EU. A number of factors have ensured that, particularly since 2010, the UK has become less influential there.

British influence has been diminished through actions by the Cameron government that have, perhaps unnecessarily, antagonized many across the Channel. Many European conservatives became frustrated early in Cameron’s tenure when he decided to take the Conservative Party out of the principal conservative group in the European parliament, the European People’s Party. This sentiment only worsened in recent years as, albeit for perhaps understandable domestic political reasons, Cameron conducted an adversarial negotiation with his European partners in an effort to secure reforms to the EU and changes in Britain’s terms of membership.

The UK also no longer sends its best and brightest to EU institutions. Many of the leading British officials who once occupied high offices there have left and been replaced by other continental Europeans. This deprives Britain of an important source of influence within the EU.

It is clear that if the US wants influence in the EU, it needs more partners there than just the UK. Britain is still important, and would be a strong driver to make the institution more efficient, but as its influence declines it is no longer sufficient. A Leave vote would immediately dispose of that influence entirely.

The UK is ‘one among many’ for the US

What is clear is that increasingly the UK is not ‘first among equals’ in Europe but ‘one among many’ for the United States. America is diversifying its relationships. More and more the US can find other allies and friends to fulfil the needs in which the UK no longer has interest.

If the UK leaves the European Union, the pace of this trend will only quicken. In addition to needing to find alternative partners to address these policy gaps, the UK will likely no longer have the time to devote to the United States that it does today. If Brexit takes place, Whitehall will find itself inundated with issues which had previously been managed by the EU, from trade deals with third parties to negotiating constant market access adjustments with the EU. Thus, very quickly, British resources are likely to be pulled from the US portfolio, and issues of common concern will get drowned out by other agendas. At least for a while, the US will likely get short shrift.

America’s response then can only be to hasten its search for other partners both in Europe and beyond. And there lies an inevitable negative spiral for the Special Relationship.

Can anything be done to save the Special Relationship?

There is no question that the US and UK will continue to have a strong and positive relationship, but it is clear that, without action, either in or out of Europe, its ‘specialness’ will decline. As the arguments above lay out, the only question is how fast this demise takes place. But there is something that could not only halt, but also reverse this trend.

As President Obama made starkly clear in his interviews with Jeffrey Goldberg in the Atlantic, what he wants most from partners and allies is for them to step up – to show more leadership (a sentiment that the Republican candidates for president would push even further). With the perceived failure of interventions over the last 15 years – from Afghanistan to Iraq to Libya –many politicians and publics have become wary of foreign military intervention. This is true in Europe and the US; but Americans have often felt that they have been left holding both the bag and the blame.  

It should be noted that more leadership does not necessarily mean more military engagement. Or even, necessarily, more spending on foreign policy tools (whether diplomatic, military or development). But it does mean a willingness to step up and take responsibility for trying to guide international events and for promoting common interests.

In the UK’s SDSR released towards the end of 2015, the government stated its intention to remain fully engaged globally; however, its actions belie this. Where Asia is concerned – an issue that is front and centre for the US – the UK joins other European powers in arguing that its lack of resources in the region makes it unable to contribute meaningfully to maintaining stability. Even closer to home, in the Middle East, the UK has been wary of leading.

It is understandable why the UK is hesitant to take such a leadership role, even as part of a coalition, in some of the larger strategic challenges the world faces. There are few benefits. Merely finding the human capital to coordinate an international response is difficult. The complexity of these problems ensures they rarely work out as hoped, and more often lead to international contempt rather than approbation. Thus it is no great surprise that the UK, along with much of the rest of the world, resists the temptation to be out in front. But there are opportunities – two issues that the US would likely welcome greater British leadership on would be building support in Europe for the Transatlantic Trade and Investment Partnership and taking a more active role in maintaining stability in Asia. Further, having a stronger European partner on issues in the Middle East (from Yemen to Syria) – Europe’s near abroad – is something that many American policy-makers have suggested. 

But the UK would not have to stand alone. With a little leadership from the UK, the US would provide support, as would many others currently loath to take the lead but with very strong interests in the outcomes. But someone has to start; as Obama made clear, there needs to be less ‘free riding’.

If the UK wants to reverse the decline of the Special Relationship, it will need to show more leadership internationally. This should not be as hard as it might seem. Not only does it conform to the government’s own strategy (as laid out in the SDSR) but public concern over further interventions is weaker than one might imagine. Such a leadership role would once again show to the United States the value of the Special Relationship.

This article has also been published by Real Clear World.

To comment on this article, please contact Chatham House Feedback

The NATO Summit, to be held this July in Warsaw, will provide an opportunity for NATO to review its progress towards meeting both the new and more traditional challenges it faces. It will also make clear the political will, resources, priorities and direction of the alliance in the coming years. In light of resurgent geopolitical concerns, new and evolving challenges and long-standing structural anxieties, the summit is an important moment to review progress and define a new path forward.

Building on workshops held over the previous six months, the US and the Americas Programme at Chatham House, jointly with the Polish Institute for International Affairs (PISM) and the Center for War Studies at the University of Southern Denmark are convening an expert roundtable to provide insight and analysis towards answering these questions.

Attendance at this event is by invitation only.

 

Summary

• The United States’ transatlantic allies need to appreciate how its global leadership is changing and what this means for their interests, and respond accordingly. Notions of US decline have been overstated, but the country is not going to play the same international role in the future that it has previously.
• As the United States’ international engagement changes, Canada and Europe should increase coordination with it to prevent power vacuums from emerging. The transatlantic allies should work together to build greater links at all stages of the policy process, from perceptions of threat, prioritization, analysis, threat definition and policy formation to implementation and action.  
• As the United States’ capabilities adapt to its changed circumstances and role, so too must those of its allies. This adjustment must go far beyond military aspects to enhancing diplomatic, energy, economic, intelligence and other resources.
• In addition to the challenges around differing interests, priorities and capabilities inherent in any alliance, Europe appears to have lost its confidence. In part this is due to its growing disengagement and introspection. But Europe retains huge potential for influence if it uses its resources effectively. There is much that European states can do, individually and together, to take more control over advancing their strategic interests. Equally, by working together they can do much to nudge the United States in helpful directions to support the mutual interests of all parties.
• The conversation on reforming global institutions such as the IMF must move beyond the need for change per se towards articulating the actual shape of such changes. Europe and Canada will likely need to push the United States into accepting reform of these institutions to better reflect today’s reality and tomorrow’s challenges. Global institutions need more diversified leaderships if they are to ensure their long-term legitimacy and influence. This will be difficult to push through politically in the United States, but by working with new regional and global powers to propose reforms, Europe and Canada can help find an acceptable solution.
• The use of ad hoc coalitions does not necessarily damage the efficacy of broader consensus institutions such as NATO. In fact, flexible coalitions may often be desirable when solutions to new challenges need to be developed and agreed quickly.
• Canada and Europe should consider partnering with other actors besides the United States where necessary. This may be expedient for meeting individual objectives, and would have the secondary benefit of demonstrating to emerging powers that the West does not exclude cooperation with others out of an arbitrary loyalty to the United States.
• Europe needs to appreciate the potentially dire consequences of failing to adapt to changing US leadership and an increasingly complex world. There is a real chance that the European project could unravel in the next few years due to external and internal pressures. While many European policy-makers display an understanding of these challenges in private, in public there is little appetite for taking the decisions necessary to bring long-term stability to the continent. 

A British exit from the EU would add to growing strains on the United States’ relations with Britain and the rest of Europe, but by itself would not lead to a breakdown in transatlantic relations due to the scale of shared ideas and interests, institutional links, international pressures and commitments by individual leaders. It would, however, add to pressures on the US that could change the direction of the transatlantic relationship. From the perspective of Washington, Britain risks becoming an awkward inbetweener, beholden more than ever before to a wider transatlantic relationship where the US and EU are navigating the challenges of an emerging multipolar world. The article outlines developments in the UK, EU, Europe and the US in order to explain what Brexit could mean for the United States’ approaches to transatlantic relations. By doing so the article moves beyond a narrow view of Brexit and transatlantic relations that focuses on the future of UK–US relations. In the conclusion we map out several ways in which US views of the transatlantic relationship could be changed.

With Britain’s decision to leave the EU, the clouds of uncertainty hanging over the proposed US-EU free trade deal (known as the Transatlantic Trade and Investment Partnership or TTIP) have become darker. The negotiations were formally launched three years ago and have stalled because of transatlantic differences (for instance over issues of investor protections and public procurement) as well as growing public opposition. For now, both the US and the EU negotiators are determined to weather the storm and continue talks when they meet in Brussels from 11-15 July.

The result of the UK’s EU referendum will blow a strong wind into the face of TTIP negotiators on three fronts. First, the Brexit vote will delay the TTIP talks as EU officials will focus their attention and political capital on the future UK-EU relationship. Once the UK government triggers Article 50 of the Lisbon Treaty, both sides have two years to sort out the separation proceedings. Only after it has become clear what Britain’s relationship with the EU will look like will the European side stop navel-gazing. The TTIP negotiations will likely continue in the meantime, but will be put on the back-burner.

Second, any progress on TTIP will require clarity on what both sides are bringing to the negotiating table. But until the final nature of the UK-EU relationship is known, it will be difficult for the American side to assess exactly how valuable the access to the remaining EU market is. This raises the question of whether American negotiators will put forth their best offers if they don’t know what benefits they will obtain for making concessions.

Third, with Britain’s vote to leave the EU, TTIP has just lost one of its greatest cheerleaders. French and German officials are increasingly expressing concerns about TTIP. Within three days of the Brexit vote, French Prime Minister Manuel Valls dismissed the possibility of a US-EU trade deal, stating TTIP was against ‘EU interests’. In addition, 59 per cent of Germans oppose TTIP – up from 51 per cent – according to the most recent Eurobarometer survey. Britain’s voice for further trade liberalization will be sorely missed by American negotiators eager to strike a deal.

Despite the dark Brexit clouds on the TTIP horizon, there might be a silver lining. Britain’s decision to leave the EU could bring some benefits to the US-EU trade talks in two ways. First, financial services regulation might no longer be a sticking point in the TTIP negotiations. Given London’s role as a financial centre, the UK had insisted on including a financial services chapter in the trade deal. The US, however, has resisted this. The removal of this friction could help move the TTIP negotiations along.

Second, European trade negotiators will no longer have to address British fears that TTIP could put the National Health Service (NHS) at risk. Much of the TTIP-debate in Great Britain has focused on how this deal might impact the NHS. Opponents of TTIP have argued that including healthcare in the agreement could lead to privatization and ultimately the death of the NHS. EU Trade Commissioner Cecilia Malmström spent resources and energy in correcting these misconceptions. UK withdrawal from the EU means that she can now focus on fighting other myths surrounding TTIP, which could potentially help advance the trade deal.

For now and the immediate future, Britain will remain a member of the EU and the European Commission will continue to negotiate trade deals on behalf of all 28 member states. Both the US and EU negotiators are committed to advancing the trade deal despite Brexit. The British decision to leave the EU has not weakened the case for TTIP. Speaking on the outcome of the EU referendum, United States Trade Representative Michael Froman said ‘the economic and strategic rationale for TTIP remains strong’. And his counterpart Cecilia Malmström went even further, saying that the British decision to leave the EU creates more of an impetus for TTIP to be finished this year.

Though this timeline is unlikely to be met, TTIP is likely to survive the British decision to leave the EU. However, Brexit is a serious blow that will probably push back the conclusion of TTIP by at least two years. Any deal will need to take into account the future nature of the UK-EU trade deal, which may not be known before 2018. Meanwhile, elections in Germany and France (two countries with strong public opposition to TTIP) will take place in 2017. On the other side of the Atlantic, the US presidential election adds yet another layer of uncertainty as the trade policy of the next administration remains unknown. When US and EU trade negotiators meet again this week, they should not be too worried about the Brexit storm but rather the changing climate for TTIP in France, Germany and the US.

To comment on this article, please contact Chatham House Feedback

Summary

• Chatham House brought together 22 participants over a two-day period in May 2016 to discuss US and European responses to a potential conflict between Turkey and Russia. This was the third of four scenario roundtables (the first two involved a conflict between China and Japan and a potential breakdown in the Iran nuclear deal, respectively).
• The scenario was designed and the roundtable took place before a number of crucial subsequent developments, including the partial restoration of Turkish/Russian relations, the British vote to leave the European Union (EU), and the attempted coup against Turkish President Recep Tayyip Erdoğan. This paper should be read and understood in that context.
• In our simulation, the United States and Europe worked closely together, with cooperation particularly in evidence between the US and Germany. While the US was slightly more willing than Europe to threaten sanctions against Russia, transatlantic unity was not seriously threatened by a Turkey/Russia conflict.
• Western states were wary of bringing NATO into the picture for fear that this would be perceived as militarizing an already tense situation. The EU was also sidelined in favour of more ad hoc negotiating strategies.
• Russia was effective in using international law to defend its position, even as it took steadily more aggressive action in Syria. Neither the West nor Turkey deployed an effective countermeasure to this tactic.

Economic populism is on the rise on both sides of the Atlantic. In the US, both Donald Trump and Bernie Sanders have made protectionist arguments and appealed to voters who feel left behind by globalization. In Europe, left-wing groups like Syriza in Greece and Podemos in Spain as well as far-right groups like France’s Front National, Germany’s Alternative für Deutschland (AfD) and the UK Independence Party are capitalizing on the anti-globalization mood.

Manifestations of the current anti-trade and anti-globalization movements include opposition to trade initiatives like the Transatlantic Trade and Investment Partnership (TTIP) and the Trans-Pacific Partnership (TPP) as well as populist calls for an end to the austerity measures and economic reforms that were introduced in the wake of the euro crisis. There have been questions regarding whether capitalism can respond to the rise in inequality seen in many Western states. Many populists also share a distrust of those they perceive as elite policy-makers and a desire to reclaim national sovereignty from international institutions. Thus, the rise of populism could have far-reaching consequences for trade and economic policy-making and the existing trade and broader economic architectures.

The US and the Americas Programme at Chatham House and the German Marshall Fund of the United States in cooperation with the Konrad Adenauer Stiftung will convene an expert roundtable to provide insight and analysis geared towards examining key drivers behind the rise of economic populism, its implications for the international economic system, and possible ways to mitigate the effects of populism in the economic arena.

Attendance at this event is by invitation only. 

The Chatham House Rule

To enable as open a debate as possible, this event will be held under the Chatham House Rule.

The transatlantic partnership has provided the backbone to the liberal international order ever since the end of the Second World War. The tumultuous political events of 2016 denote a brutal rupture from the dominant global position of the transatlantic partnership and threaten to undermine the partnership itself. Only by understanding that the current problems facing the transatlantic relationship have deep structural roots will it be possible to find ways to prevent further erosion, sustain the benefits of the existing partnership and build opportunities for transatlantic cooperation in the future. 

Ahead of the publication of his new paper, Robin Niblett, will join us to share his thoughts on the challenges, opportunities and potential strategies towards securing the future of the transatlantic relationship. 

Attendance at this event is by invitation only. 

Summary

• As the US government and European governments once again grapple with the challenges of reinforcing and expanding the transatlantic economic relationship, traditional negotiations over trade or tax policy may soon be upstaged by a far thornier and more important issue: how to regulate the storage, protection and analysis of data.
• Growth in the traditional global trade in goods and services has levelled off, but cross-border data flows continue to expand rapidly and the challenges of developing policies that protect privacy, security and innovation are already tremendous. For example, data analytics are driving dramatic productivity gains in industry, particularly for large and complex installations whose safety and efficiency will increasingly depend on flows of data across jurisdictions. Meanwhile, ‘fintech’ (financial technology) start-ups and large banks alike are testing new modes of accumulating, analysing and deploying customer data to provide less expensive services and manage the risk profile of their businesses.
• While the US debate on the use of data has often been framed around the trade-off between national security and personal privacy, Europeans often face an even more complex set of concerns that include worries that their digital and technology firms lag behind dominant US competitors. The political and regulatory uncertainty helps neither side, and leaves transatlantic companies struggling to comply with uncertain and conflicting rules in different jurisdictions.
• A global consensus on data regulation is currently well out of reach, but given the expanding importance of data in so many areas, basic agreement on regulatory principles is crucial between the US and the EU. This paper proposes a ‘Transatlantic Charter for Data Security and Mobility’, which could help shape a common understanding. While it would hardly resolve all concerns – or indeed contradictions – around the prevailing traditions on both sides of the Atlantic, it could provide the basis for better cooperation and establish a framework to protect the promise of the digital age amid an unpredictable and emotional debate.

Diane Coyle will join us for a discussion on the impact that new technologies will have on transatlantic economic transformations in the future.

Economic growth rates in the US and Europe have been decelerating over the last decades, and the growth that has materialised has not been equally shared by all.

While technological advancements have contributed to widening inequality of income and wealth, at the same time, technological change is a driving force in improving living standards.

Looking ahead, what role will new technologies play in economic transformations and disruptions?

How can leaders in government and business on both sides of the Atlantic best harvest the potential and respond to the challenges of technological change and its impact on the economy?

This event is part of the US and Americas Programme ongoing series on Transatlantic Perspectives on Common Economic Challenges.

This series examines some of the principal global challenges that we face today and potentially differing perspectives from across Europe and the US.

Attendance at this event is by invitation only.

Summary

• The United States and the European Union are deeply integrated economically in terms of movement of goods, services and capital across the Atlantic, but this is not matched by the mobility of labour. Freer movement of high-skilled workers across the Atlantic has a potentially critical role to play in maintaining and strengthening the bilateral economic relationship.
• Both the US and EU seek to attract high-skilled labour through the use of temporary visa programmes. Various routes are available for highly skilled workers from the EU to temporarily work in the US (for instance, through the H-1B visa for foreign nationals in ‘specialty occupations’, as well as other visa categories for treaty traders and investors, intra-company transferees, and international students seeking work authorization in the US before or after graduation). The main ways for highly skilled workers from the US to temporarily work in EU member states are through EU-wide schemes that apply in 25 out of the 28 member states (for holders of EU Blue Cards or intra-company transferees); or via member states’ parallel national schemes.
• The experiences of US and EU employers and workers under the US H-1B programme and the EU’s Blue Card scheme differ greatly. The EU Blue Card scheme avoids many of the drawbacks of the H-1B visa. It does not have an annual cap on the number of visas issued. It also grants greater autonomy to the worker by not requiring the employer to sponsor long-term residence, by providing greater flexibility to switch employment, and by having a longer grace period for visa-holders to find new employment after dismissal.
• The US visa system hampers America’s economic growth. Restrictive policies such as an annual limit on the number of H-1B visas issued, and the associated uncertainty for employees and employers, hinder the ability of US companies to expand and innovate. The complex and costly visa application process is a particular burden for small and medium-sized enterprises. Problems around the timely availability of visas frustrate investors both from the US and from abroad (including from the EU). European firms face difficulties in acquiring visas for intra-company transferees, and not all EU member states have access to the treaty trader and treaty investor visa categories. At times, this impedes foreign direct investment and restricts US job creation. In addition, current policies hinder the economy’s retention of EU and other graduates of US universities. This is of particular concern given that skilled graduates have a critical role to play in addressing the US’s growing shortage of workers in the science, technology, engineering and mathematics (STEM) fields.
• Given the comparability of US and EU wages and labour markets, US concerns about foreign workers ‘stealing’ their jobs or depressing wages generally do not apply to EU citizens. On the contrary, a more open immigration policy for high-skilled workers – in particular for EU citizens – would benefit the US economy.
• Efforts to reform visa systems for high-skilled labour are under way in both the US and EU. In order to facilitate the movement of highly skilled workers across the Atlantic, this research paper recommends (1) creating a special visa for highly skilled EU citizens to work temporarily in the US; (2) extending the availability of treaty trader and investor visas to all EU member states; and (3) increasing efforts to eliminate fraud and abuse in the H-1B system. These measures could potentially help to create more investment, jobs and economic growth in the US.

Megan Greene will join us for a discussion on the prospect of future economic and political uncertainty on both sides of the Atlantic.

The first year of Donald Trump’s presidency and the ongoing saga of Brexit negotiations underscore the amount of uncertainty about the economic future on both sides of the Atlantic.

Despite that, business and consumer confidence in the US and continental Europe have soared. Are we still stuck in secular stagnation, or are we breaking out of the low growth, low inflation, low rate environment we’ve been in for years?

What opportunities and risks are posed by this year’s elections in France and Germany, the upcoming elections in Italy, and the mid-term elections in the US?

This event is part of the US and Americas Programme ongoing series on Transatlantic Perspectives on Common Economic Challenges. This series examines some of the principal global challenges that we face today and potentially differing perspectives from across Europe and the US.

Attendance at this event is by invitation only.

Events over the past 18 months, in particular with the UK’s decision to leave the European Union and the election of Donald Trump, have elevated concerns among many Europeans and Americans over the health of the transatlantic relationship. With the EU looking inward and President Trump’s rejection of a number of historically common US-European interests, such as NATO, the JCPOA on Iran, and the Paris Agreement, the continuation of close transatlantic collaboration is in question.

Xenia Wickett will discuss the future of the transatlantic relationship. Is there a clear structural divergence between the US and the UK or is the partnership merely going through a temporary hiccup? She will explore the importance of recent events as well as structural, long-term factors that affect the US and Europe similarly. And what actions, if any, can be taken to mitigate differences and best manage the current situation of uncertainty?

Please note, this event is online only. Members will be able to watch the webinar from a computer or other internet-ready device and do not need to come to Chatham House to attend.

The Review on Antimicrobial Resistance, chaired by Jim O’Neill, was commissioned by former UK prime minister, David Cameron, in July 2014. Supported by the UK government and the Wellcome Trust, the final report of the review was published in May 2016 and has had a global impact in terms of motivating political leaders and decision-makers to take more seriously the threat posed by antimicrobial resistance.

Yet there is now a perception that the political momentum to address the issue is waning and needs to be reinvigorated.

In a further report produced by Chatham House, the progress of the recommendations of the review is assessed and the key ways to move forward are identified.

Panellists at this event, where highlights of the report are presented, provide their assessment of the progress so far and discuss priorities for future action.

The report was funded by Wellcome.

Linking health and security has become a mainstream approach to health policy issues over the past two decades. So much so that the discourse of global health security has become close to synonymous with global health, their meanings being considered almost interchangeable. While the debates surrounding the health–security nexus vary in levels of analysis from the global to the national to the individual, this article argues that the consideration of health as a security issue, and the ensuing path dependencies, have shifted in three ways. First, the concept has been broadened to the extent that a multitude of health issues (and others) are constructed as threats to health security. Second, securitizing health has moved beyond a rhetorical device to include the direct involvement of the security sector. Third, the performance of health security has become a security threat in itself. These considerations, the article argues, alter the remit of the global health security narrative; the global health community needs to recognize this shift and adapt its use of security-focused policies accordingly.

Even though most African states have signed and ratified the Framework Convention on Tobacco Control (FCTC), a global treaty to limit tobacco use, African states have been slow to pass and implement tobacco control policies like regulations on sales, smoke-free environments and taxes. This article examines how the ineffectiveness of local tobacco-control advocacy contributes to this suboptimal outcome. It asserts that the disconnect between the global tobacco-control advocacy network and local advocates shapes this ineffectiveness. With funding and direction predominately from the Bloomberg Initiative, local advocates emulate the funders' goal of achieving quick, measurable policy results. Their reliance on the network drives African advocates to strive to pass legislation, even in difficult political climates, and to remake their agendas when funders change their priorities. They also emulate the network's focus on evidence-based arguments that stress epidemiological data and biomedical interventions, even when this issue frame does not resonate with policy-makers. Financial dependence can draw local advocates into expectations about patronage politics, undermine their ability to make principled arguments, and lead them to downplay the ways that their home country's socioeconomic and cultural contexts affect tobacco use and control. Based on key informant interviews with African advocates, media analysis and the case-studies of Ghana and Tanzania, the article broadens the study of philanthropy in global health, it adds an African perspective to the literature on global health advocacy, and it deepens knowledge on power dynamics between external funders and local actors in the realms of health and development.

Air pollution has been classified as a cancer-causing agent with evidence showing an increased risk of lung cancer associated with increasing levels of exposure to outdoor air pollution and particulate matter.

Air pollution is also known to increase risks for other diseases, especially respiratory and heart diseases, and studies show that levels of exposure to air pollution have increased significantly in some parts of the world - mostly in rapidly industrializing countries with large populations.

In coordination with London Global Cancer Week partner organizations, this event outlines the evidence linking air pollution and cancer rates in London and other major cities.

Panellists provide a 360° picture of the impact of the rising incidence of cancer across the world, the challenges the cancer pandemic poses to the implementation of universal health coverage and the existing UK contribution to strengthening capacity in cancer management and research in developing countries.

A ground-breaking research project from Chatham House, supported by The Power of Nutrition, is exploring the business case for tackling undernutrition, micronutrient deficiencies and overnutrition. Companies across all sectors hold huge, transformative power to save countless lives and transform their own financial prospects. To act, they need more compelling evidence of the potential for targeted investments and strategies to promote better nutrition and create healthier, more productive workforces and consumers.

At this workshop, Chatham House will engage business decision-makers in a scenario exercise that explores different nutrition futures and their commercial prospects in each before examining what different strategies business can pursue to maximize future profitability through investments in nutrition.

Attendance at this event is by invitation only.

At the United Nations general assembly in September, all countries, including South Africa, reaffirmed their commitment to achieving universal health coverage by 2030. This is achieved when everybody accesses the health services they need without suffering financial hardship.

As governments outlined their universal health coverage plans, it was noticeable that some had made much faster progress than others, with some middle-income countries outperforming wealthier nations. For example, whereas Thailand, Ecuador and Georgia (with national incomes similar to South Africa) are covering their entire populations, in the United States, 30 million people still lack health insurance and expensive health bills are the biggest cause of personal bankruptcy.

The key factor in financing universal health coverage is, therefore, not so much the level of financing but rather how the health sector is financed. You cannot cover everyone through private financing (including insurance) because the poor will be left behind. Instead, the state must step in to force wealthy and healthy members of society to subsidise services for the sick and the poor.

Switching to a predominantly publicly financed health system is, therefore, a prerequisite for achieving universal health coverage.

The National Health Insurance (NHI) Bill, recently presented to parliament, is President Cyril Ramaphosa’s strategy to make this essential transition. In essence, it proposes creating a health-financing system in which people pay contributions (mostly through taxes) according to their ability to pay and then receive health services according to their health needs.

Surprisingly, these reforms have been dubbed 'controversial' by some commentators in the South African media, even though this is the standard route to universal health coverage as exhibited by countries across Europe, Asia, Australasia, Canada and much of Latin America.

In criticising the NHI other stakeholders (often with a vested interest in preserving the status quo) have said that the government’s universal health coverage strategy is unaffordable because it will require higher levels of public financing for health.

Evidence from across the world shows that this is patently false. South Africa already spends more than 8% of its national income on its health sector, which is very high for its income level. Turkey, for example (a good health performer and slightly richer than South Africa), spends 4.3% of its GDP and Thailand (a global universal health coverage leader) spends only 3.7%. Thailand shows what can be accomplished, because it launched its celebrated universal health coverage reforms in 2002 when its GDP per capita was only $1 900 — less than a third of South Africa’s today.

In fact, Thailand’s prime minister famously ignored advice from the World Bank that it could not afford publicly financed, universal health coverage in the aftermath of the Asian financial crisis when it extended universal, tax-financed healthcare to the entire population. When these reforms proved a great success, a subsequent president of the World Bank, Dr Jim Kim, congratulated the Thai government for ignoring its previous advice.

Similarly the United Kingdom, Japan and Norway all launched successful universal health coverage reforms at times of great economic difficulty at the end of World War II. These should be salutary lessons for those saying that South Africa can’t afford the NHI. If anything, because universal health reforms generate economic growth (with returns 10 times the public investment), now is exactly the time to launch the NHI.

So there is enough overall funding in the South African health sector to take a giant step towards universal health coverage. The problem is that the current system is grossly inefficient and inequitable because more than half of these funds are spent through private insurance schemes that cover only 16% of the population — and often don’t cover even this population effectively.

Were the bulk of these resources to be channelled through an efficient public financing system, evidence from around the world shows that the health sector would achieve better health outcomes, at lower cost. Health and income inequalities would fall, too.

It’s true that in the long term, the government will have to increase public financing through reducing unfair subsidies to private health insurance and increasing taxes. But what the defenders of the current system don’t acknowledge is that, at the same time, private voluntary financing will fall, rapidly. Most families will no longer feel the need to purchase expensive private insurance when they benefit from the public system. It’s this fact that is generating so much opposition to the NHI from the private insurance lobby.

This is the situation with the National Health Service in the UK and health systems across Europe, where only a small minority choose to purchase additional private insurance. Among major economies, only the United States continues to exhibit high levels of private, voluntary financing.

As a consequence, it now spends an eye-watering 18% of its GDP on health and has some of the worst health indicators in the Organisation for Economic Co-operation and Development, including rising levels of maternal mortality. If South Africa doesn’t socialise health financing this is where its health system will end up — a long way from universal health coverage.

What countries celebrating their universal health coverage successes at the UN have shown is that it is cheaper to publicly finance health than leave it to the free market. This is because governments are more efficient and fairer purchasers of health services than individuals and employers. As Dr Gro Harlem Brundtland, the former director general of the World Health Organization, said in New York: 'If there is one lesson the world has learnt, it is that you can only reach UHC [universal health coverage] through public financing.'

This is a step South Africa must take — it can’t afford not to.

This article was originally published by the Mail & Guardian.

At the United Nations General Assembly in September 2019, all governments re-committed their countries to achieving universal health coverage (UHC) whereby ‘all people obtain the health services they need without suffering financial hardship when paying for them’. To achieve UHC, governments will need to oversee health systems that are predominantly publicly financed although countries may use both private and public health providers of health services.

Robert Yates will provide a review of recent transitions towards Universal Health Coverage, highlighting the importance of genuine political commitment by heads of state, and the potential benefits to corporate stakeholders in helping reach this sustainable development goal. What are the political, economic and health benefits of UHC? Why can only public financing mechanisms, rather than a free market in health services, deliver an equitable health system? And what is the role of the private sector within the political economy of UHC?

This event is only open to Major Corporate Member and Partner organizations of Chatham House. If you would like to register your interest, please RSVP to Linda Bedford. We will contact you to confirm your attendance.

To enable as open a debate as possible, this event will be held under the Chatham House Rule.

When it comes to emerging infectious diseases – those newly recognized in humans or in new locations – it is not only what we know that matters but also what we do not know.

An outbreak of a new coronavirus first reported in Wuhan, China, which has so far led to more than 500 confirmed cases and multiple deaths across five countries (and two continents) has prompted the question from several corners of the world: Should we be worried?

Although expert teams coordinated by the World Health Organization (WHO) are working on key questions to get answers as soon as possible, the level of uncertainty is still high.

We do not yet know exactly how deadly the disease is, how best to treat those who get sick, precisely how it is spreading, nor how stable the virus is. It is thought that the virus spread from an animal source, but the exact source is yet to be confirmed and the disease is now in human populations and appears to be spreading from human to human.

It is such uncertainty, inherent in emerging infectious disease outbreaks, that warrants concern. Until they are resolved, it is appropriate for the world to be concerned. It is useful to remember that most established scourges of humanity such as HIV, influenza and tuberculosis likely started as emerging infectious diseases that jumped the species barrier from animals to humans.

Shortly after the Chinese authorities reported the first cases of ‘mystery pneumonia’ in Wuhan, China, to WHO, the virus causing the disease was isolated and identified as being part of the coronavirus family. It belongs to the same virus family as SARS, a highly contagious and life-threatening coronavirus that caused a nine-month epidemic in 2003 that affected 26 countries and resulted in more than 8,000 infections and nearly 800 deaths.

A second novel coronavirus that emerged in 2012 and persists today – MERS, or Middle East Respiratory Syndrome – is less contagious (spread by close contact rather than coughing and sneezing).

The differences between the SARS coronavirus and the MERS coronavirus highlight that, despite belonging to the same virus family, pathogens do not necessarily behave in the same way. It is as yet unknown whether the new virus is, or will turn out to be, more like SARS or MERS, or neither. 

Chinese authorities have confirmed that there is human-to-human transmission. However, it is not yet established whether it is sustained, which would make the outbreak more difficult to control. As of 23 January, the number of cases range from 500 confirmed cases up to an estimated 1,700 cases, according to a disease outbreak model by Imperial College London.

Likewise, we do not know to what extent the virus is able to mutate and if so, how rapidly. Generally, coronaviruses are known to be able to mutate, with the risk that a less contagious form of the virus becomes highly contagious. This could have an impact not only on the transmission pattern and rate but also the death rate. The virus could change in either direction, to become either more or less of a threat.

It is important to take a precautionary approach while uncertainty persists. It is also important not to overreact and for measures to be scientifically sound. Concern over this outbreak is due, but panic is not.

Three virtual networks of experts supporting the response – one of virologists, one of epidemiologists and one of clinicians – are working on the key pieces of the jigsaw puzzle: watching the virus, watching the transmission patterns, and watching the people who have been infected. It is crucial to maintain the ongoing investigation of the disease, stay focused on the science and to keep sharing the necessary information.

Read all our analysis on the Coronavirus Response

The coronavirus outbreak comes at a difficult time for China’s ruling party. A tumultuous 2019 saw the country fighting an economic slowdown coupled with an increasingly hostile international environment. As authorities take assertive steps to contain the virus, the emergency has - at least temporarily - disrupted global trade and supply chains, depressed asset prices and forced multinational businesses to make consequential decisions with limited information. 

Against this backdrop, panellists reflect on the country’s nascent economic transition from 2020 onward. What has been China’s progress towards a sustainable innovation-led economy so far? To what extent is the ruling party addressing growing concerns over job losses, wealth inequality and a lack of social mobility? And how are foreign investors responding to these developments in China?

The coronavirus outbreak in China poses a tremendous test for Beijing. Beyond the immediate public health crisis, the Chinese Communist Party faces a stuttering economy, growing public anger and distrust, and a potentially heavy blow to its global reputation.

The hesitant early response to the outbreak sheds light on the way the Chinese bureaucracy approaches crises at a time when the party leadership is tightening control at almost all levels of society. At first, officials in Wuhan attempted to censor online discussions of the virus. This changed only after President Xi Jinping’s call for a much more robust approach was followed by a sudden increase in the state media coverage of the outbreak. There is no doubt that Xi’s intervention will greatly speed up the response to the crisis, which should be welcomed.

Despite China’s experience with the SARS epidemic between 2002 and 2004, the sluggish reaction by officials in Wuhan should not have come as a surprise. The tendency among bureaucrats to play down crises is deeply entrenched. And, ironically, the party leadership’s recent push for greater bureaucratic accountability and its promise of stiffer punishment for those who take a 'do little' approach have also contributed to the habit of covering up disasters.

Xi has launched an ambitious programme to reform the governance of the Communist Party and re-centralize political control. This has reinforced the tendency of officials to avoid making important decisions and instead to wait for instructions from the party leadership.

For decades, local governments have made things happen in China. But with tighter regulation of lower-level bureaucrats, civil servants across the system now seem less ready, and able, to provide their input, making ineffective and even mistaken policy more likely.

Moreover, the coronavirus outbreak could not have happened at a worse time. Last year was tumultuous and saw China fighting an economic slowdown while also dealing with an increasingly hostile international environment. Now, as the authorities take steps to contain the disease, economic activity has come to a near standstill, with public transport curbed and restaurants and entertainment venues shuttered.

This contrasts with SARS, when double-digit growth in gross domestic product enabled Beijing to raise government expenditure to tackle the outbreak. Today, the Chinese economy is running into some of the most difficult challenges it has faced since the global financial crisis.

In response to the slowdown in growth, Beijing has adopted loose fiscal policy, with an emphasis on public investment. It also continues to push big banks to cut interest rates for individual borrowers and small businesses which were already suffering from the effects of the trade war with the US before the coronavirus struck.

The outbreak should give new impetus to governments, not least those that have close economic ties with China. Being a great power with ambitions for global leadership, as well as domestic reform, is not easy. Even without multi-party elections, it involves increasing, and often uncomfortable, scrutiny. As President Xi himself has put it: the road is long and the task is weighty.

This article was originally published in the Financial Times.

Professor Heymann, who previously led the World Health Organization’s response to SARS and has been advising the organization on its response to the coronavirus, outlines the key facts relating to this outbreak and reflect on the challenges it poses. 

An outbreak of a new coronavirus first reported in Wuhan, China has so far spread to dozens of countries, led to tens of thousands of confirmed cases and almost 2,000 deaths. The World Health Organization has declared the situation a global health emergency thereby prompting questions from around the world about how worried the public should be and how can governments, media, civil society and the global health community best tackle new infectious disease outbreaks?

What do we know – and what do we not know – about this coronavirus at the moment? What lessons learned from previous outbreaks have been applied – and not applied – to this outbreak? How can governments and the media balance public awareness and the risk of panic? And what measures can be taken to reduce the risk of stigma and discrimination of populations during this and other outbreaks?

Epidemics, of the size of Covid-19, have huge economic impacts – not just from the costs of managing the health of people, but stopping them, and keeping the economy working. The 10% fall in global stock markets since it became clear that Covid-19 would not be limited to China has boldly highlighted this.

Suppressing the epidemic, but allowing the economy to still function, requires key decisions, in which central banks and finance ministries play a part.

The role of fiscal and monetary authorities in managing an epidemic economy

The scope to use monetary policy to manage the economic impact of Covid-19 is limited. The fact that the underlying cause of the shock is an infectious disease outbreak (rather than a banking crisis, as in 2008-09) and nominal interest rates are currently close to zero in most major advanced economies reduces the effectiveness of monetary policy.

Since 2010, reductions in fiscal deficits mean there is more scope for supportive fiscal action. But even here, high public debt levels and the desire not to underwrite ‘zombie’ companies that may have been sustained by a decade of ultra-low interest rates remain constraints. 

However, outside broad based fiscal and monetary policies there are six ways in which finance ministries and central banks will play a critical role in responding to the crisis.

A first crucial role for finance ministries and central banks is in helping provide the best possible economic evaluation of strict containment measures (trying to isolate each potential case) versus managing the epidemic (delaying the spread of the virus, protecting the most vulnerable and treating the sick, while enabling the majority of people to get on with daily life). Given the economic consequences, they must play a full part, alongside health experts, in advising political leaders on this key decision.

Second, if large numbers of staff are required to work from home to manage the epidemic, they have the lead role in doing whatever is necessary to ensure that financial markets – and thus the wider economy – will continue to function smoothly.

Third, they need to ensure adequate funding for the public health response. Steps that can make an enormous difference to the success of containment strategies, such as strengthening surveillance, and guaranteeing the availability of testing kits and protective equipment for front line health workers, must not fail because of a lack of funding. 

Fourth, they have a lead role in designing targeted economic interventions for the wider economy. Some of these are needed immediately to re-enforce and incentivize strict containment strategies, such as ensuring that employees without full or adequate sick leave cover have the financial support to enable them to report and self-isolate when they get sick. 

Other interventions may help improve the resilience of the economy in accommodating moderate ‘social distancing’ measures; for example, by providing assistance to small firms to help them gear up for home working.

Yet others are needed, as a contingency, to safeguard the most vulnerable sectors (such as tourism, retail and transport) in circumstances where there is a prolonged downturn. The latter may include schemes to allow deferral of tax payments by SMEs, or steps to encourage loan extensions and other forms of liquidity support from the banking system, or by moves to underwrite continued provision of business insurance.

Fifth, national economic authorities will need to play their part in combatting ‘fake news’ through providing transparent and high-quality analysis. This includes providing forecasts on the likely economic impact of the virus under different scenarios, but also detailed information on the support and contingency measures they are considering, so they can be improved and refined through feedback. 

Sixth, they will need to ensure that there is generous international support for poor countries, by ensuring the available multilateral support facilities from the international financial institutions and multilateral development banks are adequately funded and fit for purpose. The World Bank has already announced an initial $12 billion financing package, but much more is likely to be needed.

They also need to support coordinated bilateral aid where this is more effective, as well as special measures to support particularly vulnerable groups, for example, in refugee camps and prisons. Given the importance of distributing sophisticated medical equipment and expertise quickly, it is also important that every effort is made to avoid delays due to customs and migration checks.

Managing the future

The response to the immediate crisis will rightly take priority now, but economic authorities must also play their part in ensuring the world finally takes decisive steps to prevent a repeat of Covid-19 in future.

The experience with SARS, H1N1 and Ebola shows that, while some progress is made after each outbreak, this is often not sustained. This epidemic shows that managing diseases is absolutely critical to the long-term health of global economy, and doubly so in circumstances where traditional central bank and finance ministry tools for dealing with major global economic shocks are limited.

Finance ministries and central banks therefore need to push hard within government to ensure sustained long-term funding of research on prevention and strengthening of public health systems. They also need to ensure that the right lessons are drawn by the private sector on making international supply chains more robust.

Critical to the overall success of the economic effort will be effective international coordination. The G20 was established as the premier economic forum for international economic cooperation in 2010, and global health issues have been a substantive part of the G20 agenda since the 2017 Hamburg Summit. At the same time, G7 finance ministers and deputies remain one of the most effective bodies for managing economic crises on a day-to-day basis and should continue this within the framework provided by the G20.

However, to be effective, the US, as current president of the G7, will need to put aside its reservations on multilateral economic cooperation and working with China to provide strong leadership.

As coronavirus spreads across the globe, states grapple to find the ideal strategy for coping with the global pandemic. And, in China, Singapore, South Korea, the US, the UK, and Europe, divergent policies are a product of state capacity and legal authority, but they also reveal competing views about the optimal role of centralized state authority, federalism, and the private sector.

Although it is too soon to know the longer-term effects, the apparent capacity of centralized state authority in China, South Korea and Singapore to respond effectively and rapidly is making headlines. In the United States, the opposite has been true. 

America’s response is being shaped by its federal structure, a dynamic private sector, and a culture of civic engagement. In the three weeks since the first US case of coronavirus was confirmed, state leaders, public health institutions, corporations, universities and churches have been at the vanguard of the nation’s effort to mitigate its spread.

Images of safety workers in hazmat suits disinfecting offices of multinational corporations and university campuses populate American Facebook pages. The contrast to the White House effort to manage the message, downplay, then rapidly escalate its estimation of the crisis is stark.

Bewildering response

For European onlookers, the absence of a clear and focused response from the White House is bewildering. By the time President Donald Trump declared a national emergency, several state emergencies had already been called, universities had shifted to online learning, and churches had begun to close.

By contrast, in Italy, France, Spain and Germany, the state has led national efforts to shutter borders and schools. In the UK, schools are largely remaining open as Prime Minister Boris Johnson has declared a strategy defined by herd immunity, which hinges on exposing resilient populations to the virus.

But America has never shared Europe’s conviction that the state must lead. The Center for Disease Control and Prevention, the leading national public health institute and a US federal agency, has attempted to set a benchmark for assessing the crisis and advising the nation. But in this instance, its response has been slowed due to faults in the initial tests it attempted to rollout. The Federal Reserve has moved early to cut interest rates and cut them again even further this week.

But states were the real first movers in America’s response and have been using their authority to declare a state of emergency independent of the declaration of a national emergency. This has allowed states to mobilize critical resources, and to pressure cities into action. After several days delay and intense public pressure, New York Governor Andrew Cuomo forced New York City Mayor Bill de Blasio to close the city’s schools.

Declarations of state emergencies by individual states have given corporations, universities and churches the freedom and legitimacy to move rapidly, and ahead of the federal government, to halt the spread in their communities.

Washington state was the first to declare a state of emergency. Amazon, one of the state’s leading employers, quickly announced a halt to all international travel and, alongside Microsoft, donated $1million to a rapid-response Seattle-based emergency funds. States have nudged their corporations to be first movers in the sector’s coronavirus response. But corporations have willingly taken up the challenge, often getting ahead of state as well as federal action.

Google moved rapidly to announce a move allowing employees to work from home after California declared a state of emergency. Facebook soon followed with an even more stringent policy, insisting employees work from home. Both companies have also met with World Health Organization (WHO) officials to talk about responses, and provided early funding for WHO’s Solidarity Response Fund set up in partnership with the UN Foundation and the Swiss Philanthropy Foundation.

America’s leading research universities, uniquely positioned with in-house public health and legal expertise, have also been driving preventive efforts. Just days after Washington declared a state of emergency, the University of Washington became the first to announce an end to classroom teaching and move courses online. A similar pattern followed at Stanford, Harvard, Princeton and Columbia - each also following the declaration of a state of emergency.

In addition, the decision by the Church of the Latter Day Saints to cancel its services worldwide followed Utah’s declaration of a state of emergency.

The gaping hole in the US response has been the national government. President Trump’s declaration of a national emergency came late, and his decision to ban travel from Europe but - at least initially - exclude the UK, created uncertainty and concern that the White House response is as much driven by politics as evidence.

This may soon change, as the House of Representatives has passed a COVID-19 response bill that the Senate will consider. These moves are vital to supporting state and private efforts to mobilize an effective response to a national and global crisis.

Need for public oversight

In the absence of greater coordination and leadership from the centre, the US response will pale in comparison to China’s dramatic moves to halt the spread. The chaos across America’s airports shows the need for public oversight. As New York State Governor Cuomo pleaded for federal government support to build new hospitals, he said: ‘I can’t do it. You can’t leave it to the states.'

When it comes to global pandemics, we may be discovering that authoritarian states can have a short-term advantage, but already Iran’s response demonstrates that this is not universally the case. Over time, the record across authoritarian states as they tackle the coronavirus will become more apparent, and it is likely to be mixed.

Open societies remain essential. Prevention requires innovation, creativity, open sharing of information, and the ability to inspire and mobilize international cooperation. The state is certainly necessary, but it is not sufficient alone.

Linked to the call for a global response to the Covid-19 pandemic that I, Robin Niblett and Creon Butler have outlined, the case for a specific dramatic economic policy gesture from many policymakers in large economies is prescient.

It may not be warranted from all G20 nations, although given the uncertainties, and the desire to show collective initiative, I think it should be G20 driven and inclusive.

We need some sort of income support for all our citizens, whether employees or employers. Perhaps one might call it a truly People’s QE (quantitative easing).

Against the background of the previous economic crisis from 2008, and the apparent difficulties that more traditional forms of economic stimulus have faced in trying to help their economies and their people - especially against a background of low wage growth, and both actual, and perception of rising inequality - other ideas have emerged.

Central banks printing money

Both modern monetary theory (MMT) and universal basic income (UBI) essentially owe their roots to the judgement that conventional economic policies have not been helping.

At the core of these views is the notion of giving money to people, especially lower income people, directly paid for by our central banks printing money. Until recently, I found myself having very little sympathy with these views but, as a result of COVID-19, I have changed my mind.

This crisis is extraordinary in so far as it is both a colossal demand shock and an even bigger colossal supply shock. The crisis epicentre has shifted from China - and perhaps the rest of Asia - to Europe and the United States. We cannot expect policies, however unconventional by modern times, such as the dramatic monetary steps announced by the Federal Reserve Board and others like it, to put a floor under this crisis.

We are consciously asking our people to stop going out, stop travelling, not go to their offices - in essence, curtailing all forms of normal economic life. The only ones not impacted are those who entirely work through cyberspace. But even they have to buy some forms of consumer goods such as food and, even if they order online, someone has to deliver it.

As a result, markets are, correctly, worrying about a collapse of economic activity and, with it, a collapse of companies, not just their earnings. Expansion of central bank balance sheets is not going to do anything to help that, unless it is just banks we are again worried about saving.

What is needed in current circumstances, are steps to make each of us believe with high confidence that, if we take the advice from our medical experts, especially if we self-isolate and deliberately restrict our personal incomes, then we will have this made good by our governments. In essence, we need smart, persuasive People’s QE.

Having discussed the idea with a couple of economic experts, there are considerable difficulties with moving beyond the simple concept. In the US for example, I believe the Federal Reserve is legally constrained from pursuing a direct transfer of cash to individuals or companies, and this may be true elsewhere.

But this is easily surmounted by fiscal authorities issuing a special bond, the proceeds of which could be transferred to individuals and business owners. And central banks could easily finance such bonds.

It is also the case that such a step would encroach on the perception and actuality of central bank independence, but I would be among those that argue central banks can only operate this independence if done wisely. Others will argue that, in the spirit of the equality debate, any income support should be targeted towards those on very low incomes, while higher earners or large businesses, shouldn’t be given any, or very little.

I can sympathise with such spirit, but this also ignores the centrality of this particular economic shock. All of our cafes and restaurants, and many of our airlines, and such are at genuine risk of not being able to survive, and these organisations are considerable employers of people on income.

It is also the case that time is of the essence, and we need our policymakers to act as soon as possible, otherwise the transmission mechanisms, including those about the permanent operation of our post World War 2 form of life may be challenged.

We need some kind of smart People’s QE now.

The measures taken to limit the spread of the coronavirus - in particular social distancing -  come with significant economic costs, as the drop both in demand for goods and services and in supply due to workers being at home sick will create a short-term economic shock not seen in modern times.

Sectors that are usually less affected by regular economic swings such as transport and tourism are being confronted with an almost total collapse in demand. In the airline sector, companies are warning they might only be able to hold out for a few months more.

Building on the calls to provide income support to all citizens and shore up businesses, European leaders should now be giving explicit permission to the European Central Bank (ECB) to provide whatever financial support is needed.

Although political leaders have responded to the economic threat, the measures announced across the continent have mainly been to support businesses. The crisis is broader and deeper than the current response.

Support for weaker governments

The ECB already reacted to COVID-19 by announcing measures to support the banking system, which is important to guarantee the continuity of the European financial system and to ensure financially weaker European governments do not have to confront a failing banking system as well.

Although government-subsidised reduced working hours and sick pay are a solution for many businesses and workers, crucially they are not for those working on temporary contracts or the self-employed. They need direct income support.

This might come down to instituting something that looks like a universal basic income (UBI), and ensuring money keeps flowing through the economy as much as possible to help avoid a cascade of defaults and significant long-term damage.

But while this is likely to be the most effective remedy to limit the medium-term impact on the economy, it is particularly costly. Just as an indication, total compensation of employees was on average around €470bn per month in the eurozone last year.

Attempting to target payments using existing welfare payment channels would reduce costs, but is difficult to implement and runs the risk of many households and businesses in need missing out.

The increase in spending and lost revenue associated with these support measures dwarf the fiscal response to the 2008-09 financial crisis. The eurozone economy could contract by close to 10% this year and budget deficits are likely be in double digits throughout the bloc.

The European Commission has already stated member states are free to spend whatever is necessary to combat the crisis, which is not surprising given the Stability and Growth Pact - which includes the fiscal rules - allows for such eventualities.

Several eurozone countries do probably have the fiscal space to deal with this. Countries such as Germany and the Netherlands have run several years of balanced budgets recently and significantly decreased their debt levels. For countries such as Italy, and even France, it is a different story and the combination of much higher spending and a collapse in tax revenue is more likely to lead to questions in the market over the sustainability of their debt levels. In order to avoid this, the Covid-19 response must be financed collectively.

The Eurogroup could decide to use the European Stability Mechanism (ESM) to provide states with the funds, while suitably ditching the political conditionality that came with previous bailout. But the ESM currently has €410bn in remaining lending capacity, which is unlikely to be enough and difficult to rapidly increase.

So this leaves the ECB to pick up the tab of national governments’ increase in spending, as the only institution with effectively unlimited monetary firepower. But a collective EU response is complicated by the common currency, and particularly by the role of the ECB.

The ECB can’t just do whatever it likes and is limited more than other major central banks in its room for manoeuvre. It does have a programme to buy government bonds but this relies on countries agreeing to a rescue programme within the context of the ESM, with all the resulting political difficulties.

There are two main ways that the ECB could finance the response to the crisis. First, it could buy up more or all bonds issued by the member states. A first step in this direction would be to scrap the limits on the bonds it can buy. Through self-imposed rules, the ECB can only buy up to a third of every country’s outstanding public debt. There are good reasons for this in normal times, but these are not normal times. With the political blessing of the European Council, the Eurosystem of central banks could then start buying bonds issued by governments to finance whatever expenditure they deem necessary to combat the crisis.

Secondly, essentially give governments an overdraft with the ECB or the national central banks. Although a central bank lending directly to governments is outlawed by the European treaties, the COVID-19 crisis means these rules should be temporarily suspended by the European Council.

Back in 2012, the then president of the ECB, Mario Draghi, proclaimed the ECB would do whatever it takes, within its mandate, to save the euro, which was widely seen as a crucial step towards solving the eurozone crisis. The time is now right for eurozone political leaders to explicitly tell the ECB that together they can do whatever it takes to save the eurozone economy through direct support for businesses and households.

In the past few weeks, European Union member states have implemented measures such as social distancing, school and border closures and the cancellation of major cultural and sporting events in an effort to curb the spread of COVID-19. Such measures are expected to have significant economic and political consequences, threatening near or total collapse of certain sectors. Moreover, the management of the health and economic crises within the EU architecture has exposed tensions and impasses in the extent to which the EU is willing to collaborate to mitigate pressures on fellow member states.

The panellists will examine the European Union's response to a series of cascading crises and the likely impact of the pandemic on individual member states. Can the EU prevent an economic hit from developing into a financial crisis? Are the steps taken by the European Central Bank to protect the euro enough? And are member states expected to manage the crisis as best they can or will there be a united effort to mitigate some of the damage caused?  

This event is part of a fortnightly series of 'Business in Focus' webinars reflecting on the impact of COVID-19 on areas of particular professional interest for our corporate members.

Not a corporate member? Find out more.