Daily Archives: December 17, 2014

Florida, United States

What would Jeb Bush’s foreign policy look like?

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jebbush

Is he more like his brother or his father?floridaUSflag

One of the most vexing questions in US politics is whether the foreign policy of former Florida governor John Ellis ‘Jeb’ Bush will look more like his father’s or his brother’s. Bush announced he would ‘actively explore the possibility’ of a presidential campaign on Tuesday.

The common perception is that Bush’s father, George H.W. Bush, the 41st president of the United States, was a moderate and a foreign policy realist. He largely navigated the United States to the post-Cold War world with deftness, and he wisely held back US force against Saddam Hussein’s Iraq during the 1990-91  liberation of Kuwait. Bush père surrounded himself with hard-nosed realists like Brent Scowcroft, his national security adviser, and James A. Baker III, his secretary of state.

Conversely, the foreign policy of Jeb’s brother, George W. Bush, the 43rd president of the United States, weighs heavily his response to the September 2001 terrorist attacks, the onset of the global ‘war on terror,’ and the invasion and subsequent occupation of Iraq that ousted Saddam and presided over a sectarian civil war between competing Sunni and Shiite forces. Bush frère deployed muscular language in stark tones about democracy, freedom and embraced a neoconservatism that set itself as realism’s counterpart, with support from officials like Donald Rumsfeld, his defense secretary, John Bolton, his ambassador to the United Nations, and Dick Cheney, his powerful vice president.

On the basis of idle speculation and one speech earlier this month in Miami, commentators are already declaring that Jeb Bush, who might run to become the 45th president of the United States, is closer to his brother’s foreign policy than his father’s.

Those false dichotomies will only calcify before they become more nuanced. Continue reading What would Jeb Bush’s foreign policy look like? →

Norway

Could Norway benefit from the oil price decline?

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solbergkrone

When she was elected in September 2013 as Norway’s new conservative prime minister, one of Erna Solberg’s top priorities was to bring down the value of the Norwegian currency, the krone.norway

Boosted by its spectacular oil wealth, Norway is today one of the world’s wealthiest countries, so strong that it’s shunned not only eurozone membership but accession to the European Union altogether. Like many other oil-producing countries, however, the sudden drop of oil prices since July from over $100 per barrel to nearly $60 today has adversely affected Norway’s economy. If prices drop even lower, or the $60 level sustains itself through 2015 or beyond, it could endanger Solberg politically, who leads a minority government consisting of her own center-right Høyre (the ‘Right,’ or the Conservative Party) and the more controversial Framskrittspartiet (Progress Party), a more populist, anti-immigrant party that has its roots in the anti-tax movement. The Progress Party’s leader, Siv Jensen, now holds the unenviable task of serving as Norway’s finance minister as oil prices tumble. Solberg ousted the popular two-term prime minister Jens Stoltenberg, who is now NATO secretary-general.

But for a country that was facing inflationary pressure when the rest of Europe continues to battle deflation, the fall in oil prices may bring additional benefits to a country long topping the list of the world’s most expensive places. As of July 2014, Norway still led The Economist‘s ‘Big Mac Index‘ — the price of the iconic McDonald’s sandwich was a whopping 61% higher in Norway than in the United States.

There’s no doubt that a sustained fall in oil prices will harm Norway’s bottom line. It will reduce the revenues available for public spending (already estimated to fall by over $9 billion because of the price drop), and it could easily cause Norwegian GDP growth to fall in 2015 from estimates of 2% or so (still robust compared to the eurozone), thereby causing the country’s relatively low 3.4% jobless rate to climb.

But it’s also caused the krone to fall to a 13-year low, declining to  parity with neighboring Sweden’s currency, the krona, for the first time since 2000. As recently as May, one US dollar was worth 5.8 Norwegian kroner. Today, that’s skyrocketed to 7.5 kroner and, as Russia and other oil-exporting countries see their own currencies tanking, investors could push the krone even lower.

NOKUSDPhoto credit to Bloomberg.

Aside from reducing concerns about inflation, the krone‘s fall could provide all kinds of benefits to Norway. For now, Solberg remains incredibly popular with Norwegians. Also for now, Jensen and the government doesn’t seem panicked, though the central bank cut interest rates from 1.5% to 1.25% last week. The current 2015 budget cuts taxes, while holding social welfare spending steady and increasingly spending on the country’s infrastructure.  Continue reading Could Norway benefit from the oil price decline? →