The crisis in Iraq and the twists and turns of Turkish Middle East policy. OSW Commentary No. 142, 29.07.2014

The spectacular offensive by Islamic radicals in Iraq this June has led the country to the verge of collapse, and is another scene of the deep crisis in the Middle East, in which Turkey is entangled. The immediate consequence of this is a severe crisis of prestige after the kidnapping by terrorists of Turkish diplomats and Ankara’s inability to resolve the situation; in the long term consequences include escalation of the Kurdish problem, and a further increase in threats to the security of Turkey itself as well as the fundamental principles of its foreign policy. Both Ankara’s options and its political will to actively respond to the crisis are extremely limited. Yet again in recent years, the current crisis, the broader situation in the Middle East, and finally the position of Turkey in the region elude unambiguous assessments and forecasts – these are prevented by the scale and growth of the reappraisals and tensions in the region. The only undoubted fact is that Turkey is strategically and irreversibly entangled in the Middle East’s problems, which are an important factor affecting the transformation of the state which the ruling AKP is implementing; and in the near future, this state of affairs will only deepen.

Central Banks in Times of Crisis: The FED vs. the ECB. CEPS Policy Brief No. 276, 11 July 2012,

Different economic and financial structures require different crisis responses. Different crises also require different tools and resources. The first ‘stage’ of the financial crisis (2007-09) was similar on both sides of the Atlantic, and the response was also quite similar. The second stage of the crisis is unique to the euro area. Increasing financial disintegration within the region has forced the ECB to become the central counterparty for the entire cross-border banking market and to intervene in the sovereign bond market of some stressed countries. The actions undertaken by the European Central Bank (ECB), however, have not always represented the best response, in terms of effectiveness, consistency and transparency. This is especially true for the Securities Markets Programme (SMP): by de facto imposing its absolute seniority during the Greek PSI (private sector involvement), the ECB has probably killed its future effectiveness.

spotlight europe 20120/05, August 2012: Confronting the crisis

The euro crisis has not gone away on holiday. In fact, it continues to generate a never-ending string of horrific headlines. Where is it all going to end? In this article we describe the proposed remedies that are currently being discussed, and what blue and red eurobonds, euro bills, FIRE and the debt redemption fund can actually achieve.

spotlight europe #2012/05, August 2012: Der Krise die Stirn bieten = Confronting the crisis

No abstract.

The euro crisis: ten roots, but fewer solutions. Bruegel Policy Contribution 2012/17, October 2012

Many factors have contributed to the euro crisis. Some have been addressed by policymakers, even if belatedly, and European Union member states have been willing to improve the functioning of the euro area by agreeing to relinquish national sovereignty in some important areas. However, the most pressing issue threatening the integrity, even the existence, of the euro, has not been addressed: the deepening economic contraction in southern euro-area member states. The common interest lies in preserving the integrity of the euro area and in offering these countries improved prospects. Domestic structural reform and appropriate fiscal consolidation, wage increases and slower fiscal consolidation in economically stronger euro-area countries, a weaker euro exchange rate, debt restructuring and an investment programme should be part of the arsenal. In the medium term, more institutional change will be necessary to complement the planned overhaul of the euro area institutional framework. This will include the deployment of a euro-area economic stabilising tool, managing the overall fiscal stance of the euro area, some form of Eurobonds and measures to make euro-area level decision making bodies more effective and democratically legitimate.

What distinguishes the euro crisis from a ‘normal’ financial crisis? CEPS Commentary, 6 November 2012

This Commentary attempts to discern the distinguishing features between the present euro crisis and the financial crisis brought on in the US by the subprime lending disaster and the ensuing collapse of banks and other financial institutions in 2007-08. It finds that whereas the US was able to bring its crisis to an end by socialising the dubious debt and stabilising its valuation so that it could migrate to other investors capable of bearing the risk, this pattern can be only partly repeated in the eurozone, where both debt socialisation and a return to normal risk assessment are more problematic.. It concludes, nevertheless, that the crisis should now abate somewhat given that most risk-averse institutions have by now sold their holdings of peripheral countries’ sovereign debt and especially in light of the ECB’s assurances that it will not allow the euro to disintegrate.