The EMS Crisis of the 1990s: Parallels with the present crisis? CEPS Working Document No. 393, 28 March 2014

The EMS crisis of the 1990s illustrated the importance of a lack of confidence in price or exchange rate stability, whereas the present crisis illustrates the importance of a lack of confidence in fiscal sustainability. Theoretically the difference between the two should be minor since, in terms of the real return to an investor, the loss of purchasing power can be the same when inflation is unexpectedly high, or when the nominal value of government debt is cut in a formal default. Experience has shown, however, that expropriation via a formal default is much more disruptive than via inflation. The paper starts by providing a brief review of the EMS crisis, emphasising that the most interesting period might be the ‘post-EMS’ crisis of 1993-95. It then reviews in section 2 the crisis factors, comparing the EMS crisis to today’s euro crisis. Section 3 outlines the main analytical issue, namely the potential instability of high public debt within and outside a monetary union. Section 4 then compares the pressure on public finance coming from the crises for the case of Italy. Section 5 uses data on ‘foreign currency’ debt to disentangle expectations of devaluation/inflation from expectations of default. Section 6 concludes.

Armed conflicts in the post-Soviet region: Present situation, prospects for settlement, consequences. OSW Study 9/2003

Unresolved conflicts continue to smoulder in Transnistria, Chechnya, Abkhazia, Nagorno-Karabakh and South Ossetia. "Para-states" have formed in most conflict-affected areas. These have grown to become permanent players in the region. In Chechnya, guerrilla fights continue in the wake of the Russian army's siege of the republic. The conflict in Tajikistan ended in 1997 and the normalisation process is currently under way. Each of these conflicts has entailed profound political, social, ethnic and economic changes, as well as affecting other spheres of life. Presently, it is impossible to return to the pre-conflict situation. The "para-states" have fortified their independence and are no longer controlled by the external powers on which they depended in the initial phases of the conflicts.