Miguel Otero-Iglesias

Reframing the euro vs. dollar debate through the perceptions of financial elites in key dollar-holding countries

ABSTRACT This paper proposes a theoretically-informed and empirically-grounded cognitive approach to analyse how financial elites from China, the Gulf Cooperation Council states and Brazil interpret the euro vs. dollar debate. At the theoretical level, we argue that the debate should be reframed in order to capture not only the material, but also the ideational footprint of the euro, as well as to better conceptualise change in the International Monetary System (IMS). Our empirical work shows that the euro is perceived by financial elites as a useful diversification tool to avoid over-exposure to dollar weaknesses. However, despite its appeal as a valuable investment alternative, the European currency has a series of structural flaws that prevent it from substituting the dollar as the main international currency. Therefore, in purely material terms, the euro-sceptical literature is correct. However, we also find that the hitherto material inroads of the euro, while limited, have been sufficient to ideationally convince these elites that a multicurrency IMS is possible and might be more stable (and therefore preferable) to current dollar unipolarity. Therefore, the euro-optimist literature is far from wrong when it argues that the creation of the euro represents a challenge to the greenback, for it could be a stepping stone towards the formation of a multipolar IMS.

Is the Dollar Becoming a Negotiated Currency? Evidence from the Emerging Markets

This article proposes a cognitive and empirical approach, based on in-depth semi-structured elite interviews, to analyse the extent to which the dollar is becoming a negotiated international currency in the perception of financial elites in China, Brazil and the countries of the Gulf Cooperation Council. It shows that while the greenback is still the top currency in the system due to a lack of alternatives, its long term dominance is questioned because its economic pre-eminence and its political leadership are perceived to be fading. This in turn is stimulating financial elites in emerging markets to promote alternative regional monetary frameworks and the internationalisation of their own currencies. The article explores how financial elites in key dollar holding countries react to the US ‘exorbitant privilege’ of not facing disciplinary constraints in its economic policies. It then examines how the US has been able to misuse its central position in the system by delaying and deflecting adjustment costs upon others, and illustrates the disapproving response that this has provoked in emerging markets and Europe. Finally, it concentrates on Chinese proposals to renegotiate the status of the dollar in the system and why these have been hitherto rejected by the US.

EU‐China Collaboration in the Reform of the International Monetary System: Much Ado About Nothing?

The global financial crisis has shown that the current international monetary system (IMS) suffers from an inherent flaw: it depends on US current account deficits for the provision of global liquidity. Under this arrangement, peripheral countries have to accept periodically the debasement of the US dollar. Thus, there are some mutual incentives for the EU and China to reform the current IMS through cooperation. Both are in favour of stable exchange rates, and both are keen to constrain US macroeconomic profligacy. There have been some efforts towards these objectives in the past, especially during the French presidency of the G20 in 2011. However, there has been no significant progress. On the European side, there is not a united and independent Europe which could act as the primary agent of reform. On the Chinese side, Beijing does not see Europe as a reliable partner because the latter is deemed to have a major vested interest in the current regime. As a result, the French government failed to focus the worlds attention on the reform of the IMS during G20 Cannes Summit, and the Chinese government has chosen a more unilateral way to internationalise its own currency.

Stateless by any other name: refused asylum-seekers in the United Kingdom

This article maintains that there are certain aspects of the UK asylum system which may lead to statelessness-like situations. In order to understand how this can happen, we reconsider Hannah Arendts concept of statelessness, which entails three losses of home (exile), state protection (basic rights) and having a place in the world (political rights). Through interviews with refused and long-term asylum-seekers in Oxford and London, and one focus group, we examine the impact of negative asylum-application decisions on applicants’ access to rights. The main finding of this research is that, when denied state protection, refused asylum-seekers endure an existence not unlike stateless people. This study calls into question the application of key principles of human rights as they relate to refused asylum-seekers, especially the tenets of dignity and non-discrimination, and the right to family life.

Still waiting for Paris: Germany’s reluctant hegemony in pursuing political union in the Euro Area

Abstract After decades proposing the creation of a political union to make the euro sustainable, Germany has not utilised the ‘window’ offered by the Eurozone crisis to pursue this goal. Using the conceptual devices of the ‘Chartalist theory of money’ (which states that a monetary union cannot work without a political union) and ‘hegemony’, three possible explanations are explored in this paper. (1) Germany is slowly becoming a ‘normal’ power; (2) The German public has lost its enthusiasm for European integration; (3) Germany remains a reluctant hegemon and once it has seen that France is still not ready for political union it has refrained from actively promoting this ideal. The conclusion of the paper is that the first two explanations have merits, but the third remains more convincing. Berlin is still determined to build a more federal Europe. The question is rather whether Paris is ready to participate in this endeavour.

The (in)tangible Euro challenge to the dollar: insights from the financial elites in Brazil and China

The main purpose of this article is to shift the dollar vs Euro debate away from US–EU centrism to perspectives from emerging markets. Drawing on 40 semistructured financial elite interviews in Brazil and China, the key research question studied here is whether the US dollar is malfunctioning as the leading international currency in these parts of the world, and, if so, whether the Euro can be an alternative to the greenback. The results show that the status of the dollar as the main anchor in the monetary system is seriously questioned among financial elites in China and Brazil. As yet, though, the Euro does not represent an alternative to the dollar because of its fiscal and political fragmentations. However, despite these institutional shortcomings, the European currency is seen as an ideational role model for super-sovereign monetary integration out of dollar unipolarity based on consensual negotiations not only on a regional, but also on a global scale.

The Euro in the 21st Century

context together shape the prospects for EU membership. However, the authors agree that ‘we must be cautious not to overestimate the EU’s success’ (p. 255). The book’s contribution lies in the variety of issues it examines. By looking at various policies, the authors analyse the EU’s external performance and invite new contributions, which might be guidelines for future policy-making that is expected to improve the EU’s wellbeing, but not at the cost of non-Europeans.

From Harbinger to Role Model: The Influence of the Euro in Regional Monetary Cooperation

Several authors (Cohen, International Affairs 84(3):455–470, 2008a; Marsh, The Euro: The politics of the new global currency. New Haven, Yale University Press, 2009; Rogoff, The global fallout of a eurozone collapse. Financial Times, 2011) have acknowledged that if (and this is still a big if) the euro survives and becomes a consolidated project it will act as template for monetary unions in other parts of the world. However, theirs are only speculative assumptions. They do not base their claims on empirical evidence. I provide the empirical material to support their hypothesis. On the basis of near 80 semi-structured financial elite interviews in China, Brazil and the GCC (concretely in Saudi Arabia, and the United Arab Emirates), my empirically grounded research shows that indeed the euro is seen in China as a harbinger, in Brazil as a source of inspiration and in the GCC as a role model for regional monetary cooperation. Furthermore, the consolidation of the euro does also show that a multipolar monetary system might be more stable than the current system dominated by the dollar. In all these cases, the euro project is seen as a laboratory for future monetary developments, thus the ideational influence and power of Europe in monetary affairs is considerable.

The Influence of the Euro in Reshaping Global Monetary Governance: Perceptions from Financial Elites in Brazil and China

This article examines the ways in which key emerging market financial elites assess Europes monetary power in the reconfiguration of the U.S. dollar‐dominated monetary system. Interviews with public and private financial actors in China and Brazil record that while Europes debt markets are limited by their size, and hence the material impact of the euro is restricted, the ideational effects are considerable. The findings show that even if the euro does not appear to be replacing the dollar as the main international currency, the European Monetary Union (EMU) is an example for regional and even world monetary integration. Chinese and Brazilian elites applaud European efforts to create a more multilateral and regulated financial system. In this sense, EMU has significant influence, and hence potential for global reach. However, this study also notes that this projection requires greater political coordination of exchange rate policy in order to fully realise its material impact in global monetary governance.This article examines the ways in which key emerging market financial elites assess Europes monetary power in the reconfiguration of the U.S. dollar�?dominated monetary system. Interviews with public and private financial actors in China and Brazil record that while Europes debt markets are limited by their size, and hence the material impact of the euro is restricted, the ideational effects are considerable. The findings show that even if the euro does not appear to be replacing the dollar as the main international currency, the European Monetary Union (EMU) is an example for regional and even world monetary integration. Chinese and Brazilian elites applaud European efforts to create a more multilateral and regulated financial system. In this sense, EMU has significant influence, and hence potential for global reach. However, this study also notes that this projection requires greater political coordination of exchange rate policy in order to fully realise its material impact in global monetary governance.

The political economy of the European Union

more recent ideological ones that have underlain the construction of the so-called Second Republic. That is, the ideological assertion of particular issues (starting with a winner-take-all view of politics) and the ‘expulsion’ of positions or interests perceived to belong to ‘the past’ have been the overriding considerations in the effort of making Italy a ‘normal country’, affecting the approach to age-old problems. The role of such dynamics is apparent in several contributions, especially in the essay on ‘federalism, Italian style’, illustrating the paradox of an elite-driven reform process, which has been presented as the response to a popular demand, as the panacea for the country’s ills, and which apparently enjoys the support of all political parties, but which has still vague contents and implications, has divided public opinion, and is in fact considered ‘the least important topic’ in the priorities indicated by respondents (p. 67). Or, even more, in the three essays under the heading ‘Institutional(ized) Exclusion?’, in which it is shown how the acceptance of civic and social exclusion – particularly of Roma and migrants – as inevitable, if not desirable, so as to prevent greater ills, is becoming a salient feature in Italian political life. In these days, the Italian government is shaken by scandal and popular discontent. A book like Italy Today is a useful reminder that a changing of the guard will not in itself be enough to reverse this apparently terminal decline without a thorough examination of the structural and ideological factors that have paralysed the country.