Geoeconomics

Geoeconomics

Under this moniker we have grouped the issues associated with the at times uneasy interplay between national economic interests and wider geopolitical considerations. The EU’s unhealthy dependence on Russian energy is a case in point, as well as the highly controversial Nord Stream 2 pipeline, which took a war to get cancelled. By examining economic tools and resources, such as trade, investment, sanctions, and technological developments, Geoeconomics sheds light on how states leverage their economic strength to shape global dynamics and achieve geopolitical objectives—and how this can clash with the common EU interests.

Related articles

Cover of EconPol Forum 3/2023

How Sanctions Work - And Which Goals They Fail to Achieve

POLICY DEBATE OF THE HOUR

Jerg Gutmann, Matthias Neuenkirch and Florian Neumeier, Constantinos Syropoulos and Yoto V. Yotov, Eckhard Janeba, Stefan Goldbach and Volker Nitsch, Kai A. Konrad and Marcel Thum, Dario Laudati, Mohammad Reza Farzanegan

In the light of geopolitical conflicts and instability, sanctions play an important role in the international economic policy debate - especially against countries such as Russia, Iran and China. Economic sanctions are often intended to achieve foreign and security policy goals: fighting terrorism, protecting democracy and human rights, or resolving conflicts. In this issue of EconPol Forum, our authors examine, using the evidence-based studies, the extent to which various sanctions have achieved their goals. How do they affect economic growth, trade, and prosperity? In addition, we want to understand their impact on sectoral development of agriculture, energy and mining, as well as on human rights, military spending or life expectancy. In this context, international trade, financial transactions, technology transfer and other economic activities, among others, are systematically studied. And researchers look at different types of sanctions, such as unilateral, multilateral, and extraterritorial.

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Cover of EconPol Policy Brief 50

NATO Defense Spending in 2023: Implications One Year After Russia’s Invasion of Ukraine

Florian Dorn, Niklas Potrafke, Marcel Schlepper

War is raging close to NATO's Eastern border. Russia has attacked Ukraine and threatens those states that in the past had been part of Moscow's sphere of influence. Many of them are now member states of NATO. As a collective defense alliance, this poses a threat to all NATO members. Since the ability to defend against an aggressor does not come for free, defense spending will be on the agenda at the NATO Summit in Vilnius in July 2023. NATO Secretary General Jens Stoltenberg has already expressed his expectation that all member states no longer see the 2% target as a mere ambition, but as the floor for their future defense spending. This paper presents first results for the expected defense spending of the 30 NATO members and the candidate country Sweden in 2023.

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German Economic Model

The German Economic Model – Decline or Second Economic Miracle?

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Expert Opinion
What is the future of Germany’s economic model? The Russian attack on Ukraine has triggered a debate about the further development of prosperity in Germany. There are growing concerns about economic decline. Rising energy prices, the high costs of climate protection, an increase in geopolitical conflicts, and a shrinking workforce could put an end to the successes of the German economic model. Current decisions by energy-intensive companies to relocate investments to the United States and China seem to confirm this. Optimists counter that the growing global interest in clean technologies ought to benefit the capabilities of German companies. German Chancellor Olaf Scholz even talks about Germany facing a period of high growth rates, similar to the years of the German economic miracle in the 1950s, because of investments in decarbonization.
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Banks Skyscrapers

The Current Banking Quake: Where Does It Come from and What Should Policy Makers Do?

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Expert Opinion
The crises at Silicon Valley Bank and Credit Suisse have shaken the world of finance. While policymakers and central banks are being placatory, the markets are not calming down. Banks that very recently seemed healthy are running into liquidity problems. Interest rate hikes by central banks are a major driver of the crisis. They cause the market value of bonds and other long-term assets such as real estate and stocks, previously inflated by expansionary monetary policy, to fall. At the same time, short-term interest rates are rising faster than long-term rates. As a result, banks must either grant account holders higher deposit rates or expect at least the more astute investors to withdraw their funds and invest them elsewhere on better terms.
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Cover of EconPol Forum 2/2023

How to Reconstruct Ukraine? Challenges, Plans and the Role of the EU

POLICY DEBATE OF THE HOUR

Anna Bjerde, Romina Bandura, Anders Åslund, Marek Dabrowski, Christopher A. Hartwell and Dmytro Boyarchuk, Barry Eichengreen, Stephan von Cramon-Taubadel and Oleg Nivievskyi, Joop Adema, Yvonne Giesing, Tetyana Panchenko and Panu Poutvaara

The war in Ukraine is not over yet. Nevertheless, a possible roadmap and proposals for post-war reconstruction strategies are currently being discussed. They should be accompanied by economic and political reforms in the country. To finance this project, Ukraine will need to tap a variety of sources and institutions. This is because it will require investments in the hundreds of billions ‒ perhaps even trillions ‒ of US dollars. The EU, the US and other Western countries have signaled their willingness to provide further financial support for postwar reconstruction. Also potentially involved could be bilateral donors, multilateral banks, private investors, and the Russian state with reparations.

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