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The Good German

The last G8 Summit revealed latent disagreement between the economic policies wished by Washington and those wished by Berlin. Two aspects of this rivalry are noteworthy. First, there seems to be a clear misunderstanding of the policy embraced by Germany’s chancellor, Angela Merkel. Second, it seems that opponents of expansionary policies have a clearer understanding of economics than White House economists.

Clash of the Deficit Hogs

The resignation of White House budget director Peter Orszag is a telling sign of the fiscal tensions that grip Washington today. As much of Europe pursues budget-tightening agendas, the US has thus far resisted taking substantive steps to reduce its massive deficit--thanks, in large part, to the relative security of its currency and securities. Yet, while Europe recovers and as China gradually liberalizes, Washington's reluctance to rein in its debt may have serious, long-term consequences.

China, IPOs and a Transforming Economy

Behind the astronomic figures and shattered records, the Agricultural Bank of China’s celebrated initial public offering reveals the growing financial ties between the Middle Kingdom and the Middle East, reflects a maturing China broadening its domestic growth strategy, and demonstrates the importance of Asia to global recovery.

Not So Quiet on the Eastern Front

The signing of an economic cooperation agreement between China and Taiwan on 29 June 2010 heralds a new phase in cross-Straits relations and Asian economic integration. This agreement, however, is not without political uncertainties, not least for Taiwan. Indeed, although the agreement has some clear (and greater) economic advantages for Taiwan, the question of independence still hovers over the island’s future.

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Agreeing to Remain Poorer

The GCC and the EU have been debating economic cooperation for over 20 years. As negotiations collapsed again on 27 May 2010, many were amazed at the stubbornness of politicians to keep shooting themselves in the foot. By succeeding in fostering disagreement for 20 years, both regions seem obstinate in refusing the greater economic growth and dynamism that deeper bilateral cooperation would bring.

The Crumbling of Global Solidarity

If there was a clear signal sent by world leaders at the first G20 meeting in April 2009, it was that the global economic crisis could only be solved through a coordinated response from the major world capitals. This “going it together”, however, was quickly to unravel and was replaced by the usual “going it alone” epitomized by increasingly uncoordinated moves in fiscal policymaking and financial regulatory proposals. The failure of this common front is even more troublesome when one realizes that the very global imbalances that triggered the crisis were left broadly unaddressed. While these attitudes remain politically understandable, they are nonetheless disquieting for the future of the world economy.

The Quest for Talent

One of the main challenges for the Gulf region in the near future will be how to continue to attract skilled workers. The emergence of the BRICs economies has not only restricted the supply of skilled labour (as many potential migrants decide to stay home), but it has also increased the international competition for skilled labour. A clear solution to this conundrum lies in the restructuring of payment packages offered to expatriate workers in the region.

Stay the Course

As the Western world debates the merits of financial globalization, Saudi Arabia is questioning where its ongoing financial reforms should lead. The Kingdom should stay the course, as these reforms are likely to bring significant improvements to its economy. The fact that these economic policies seem to go against the current tide of Western regulatory reform should not be a reason for Saudi leaders to simply follow in their stead.