Politics had much to do with this. President Obama tried hard not to get too far ahead of the U.S. Congress now that the latter is finally taking up climate legislation in a serious way.  Germany holds a national election later in the year and a general election is also coming up in the United Kingdom.  Both countries have been hit hard by the global economic downturn and have opposition parties that strive to out-green the ruling party.  Understandably, their leaders are reluctant to appear soft on the United States when it comes to emissions mitigation, and they are not particularly eager to make new financial commitments to developing nations.  No doubt domestic politics also influenced the leaders of China, India, and other emerging economies.  But the primary reason for the stalemate at the MEF was that neither developed nor developing nations were prepared to be specific enough about compromises they would be willing to make on issues of concern to the other group to allow the other parties to move away from long-held positions.  With U.S. mitigation goals still up in the air and the financing package offered by the developed world still more rhetorical than concrete and real, the elements of the global deal were simply not in place yet.

With the 2009 MEF behind us, the last, best hope for progress in Copenhagen may rest with the United States and Europe.  Unless the United States and Europe find common ground on both emissions mitigation and financing for developing nations, China and other emerging economies are unlikely to make major compromises. By reaching agreement now on the blueprint for transatlantic climate cooperation, Europe and the United States could add new momentum to global climate talks.  The blueprint for a strong transatlantic climate partnership, in short, needs these elements:

•    European pressure on Congress to raise the United States’ ambitions on climate change, coupled with pragmatic, eventual acceptance of the best emissions target America can deliver. •    A united effort to convince emerging economies to join developed nations in accepting verifiable international obligations to implement ambitious climate-friendly growth plans that include measurable, reportable, and verifiable mitigation actions. •    A concrete and generous transatlantic offer of assistance to developing nations to help them pursue low-carbon growth and adapt to climate change, within the context of a decentralized system of bilateral agreements, existing multilateral institutions, and private sector-oriented market mechanisms.

(Note: This is adapted from an upcoming policy paper by GMF Fellow Nigel Purvis.)

SOFIA — Elitist socialists and liberal intellectuals look down upon GERB leader Boyko Borisov with ill contained condescension or even derisive contempt. The Sofia mayor demonstrates a folksy style of unpretentious vanity, which could be compared to a Jesse Ventura populist appeal. While socialist elites graduated from the Moscow diplomatic school and collected several Harvard/Oxford-level scholarship diplomas, Borisov came out of the fire brigade section of the police academy and later on made a career with his private security business, guarding celebrities like the ex-communist leader Todor Zhivkov and the ex-king Simeon Saxe-Coburg-Gotha. He probably watched his clients carefully and learned a lot from them about the informal side of politics.

It was just Borisov’s folksy style and populist charisma that helped him on July 5 to beat soundly the stuck-up offsprings of socialist and ex-communist aristocracy like ex-PM Stanishev. The governments of the last decade were ideologically indifferent and based entirely on elitist consensus of vested interests. People viewed this consensus as highly cynical. They wanted to elect someone like them, and the leader of GERB was the best offer for an ordinary guy. Borisov is a populist not because of an affectionate charisma, but because he seems to represent the ordinary guys against corrupt and sterile elites at the post-communist top of society.

What could we expect from the government of “an ordinary guy” like PM elect Boyko Borisov? Events — more than values and interests — will shape the activities of the new GERB government in its first year in office. The world financial crisis is just rushing upon Bulgaria, having swept the United States and the West of Europe. The most optimistic prediction for economic decline is 3.5 percent for 2009, and the most pessimistic is between 7 and 10 percent. The economic team of GERB is composed of inspired neo-liberals and free marketers willing to reduce public spending and support business with the lowest possible taxes. Some key figures in local business management and prominent international experts (like Simeon Djankov of the World Bank) will be included in the GERB team at high executive positions. The country already has the lowest flat income tax rate of 10 percent, and currency board restrictions have been observed successfully for 12 years after 1997.

Yet neo-liberal orthodoxy will not prove enough to pull the country out from the crisis. On the one hand, Bulgaria is among the countries with lowest living standards in Europe (its GDP in PPS is only 40.1% of the European average), and additional factors like unemployment growth, welfare restrictions and reduction of wages will further endanger fragile balances of society — mass scale emigration of young people may resume, public education and healthcare could worsen even below their poor present status. On the other hand, Bulgaria’s economic system suffers primarily from a general inefficiency of institutions, both public and private, which is the key structural issue of economic and social improvement. The challenge of institutional inefficiency does not come from an alleged complexity of institutional reform, but from the vicious circle of oligarchic control upon the public institutions.

Like most post-communist countries, Bulgaria performed tough simultaneous political and economic transformation, in which major economic assets were appropriated by the networks of ex-communist regime officials. After integration in NATO and the EU, a specific social contract was signed between Eastern European nations and their ex-communist and new capitalist elites. Citizens will not ask about the shadow origin of the new wealth possessed by the old guard apparatchiks. The new business elites, based on old regime power resources will observe law and order, the rules of democratic Europe.  This is a social contract that the majority of Bulgarian new and old elites refused to sign.

Strong networks of vested interests — semi-legitimate by origin and semi-criminal by their activities — have established full-scale control upon the public institutions, and their business is focused entirely upon illegal draining of public resources in private hands. This is a system that has no reference to market or to competition. This is a system of criminal corporate control over state and society. This is a system of structural corruption at all levels, a system of power and wealth, which has to be disintegrated, in order to achieve decent environment within public institutions.

Will the GERB leader — and the GERB government — have enough determination, political will, and resources to clash with the corrupt system of corporate oligarchy, which jeopardizes Bulgaria’s chances of decent membership in the community of democratic nations? We don’t know yet. We could presume two basic options of governmental strategy in dealing with the issue of institutional reform. The first option means nothing less than a war against organized crime, which springs out of the institutions of the state. It requires punctual investigations, merciless transparency, and an efficient justice system against criminal vested interests behind the public scene. This war we cannot avoid if we opt for decent and high standards of institutional performance, which are obligatory within the EU membership. If we need to restore the trust of our partners, to open the gates for EU funding, to achieve acceptable levels of affluence and security – we have to open and win this war.

Yet it is a risky endeavor for anyone’s political career to embark upon such a tough ticket — to oppose the real seat of wealth and power in post-communist Bulgaria. This is why the GERB government might go for a second option — to a campaign of imitated justice restoration, in which some key political figures or shadow dealers might be really prosecuted with great publicity while the real infrastructure of illegitimate oligarchic power is left untouched. This is a risk, which also involves the authoritarian temptation to substitute real institutional reform with a public manifestation of a “strong hand,” which ordinary people can endorse in their search for security and justice.

The span and the depth of institutional transformation will be the key indicator for the GERB government success in office. The other basic tasks of this incoming government might be enlisted as follows. First, concentrated effort in developing national infrastructure could not be postponed any longer. Bulgaria has probably the worst road system in Europe, and the funds — both national and European — for road construction were either misappropriated by previous governments, or simply not utilized on purpose. B. Borisov has already declared highway construction as a basic priority for his government, yet the list of infrastructure emergencies goes well beyond highways only. Urban traffic, urban plumbing, water systems, and resources — those are only the first points in the list.

Another urgent concern is Bulgaria’s energy strategy. The previous government — heavily assisted by Bulgaria’s president Georgi Parvanov — has adopted a number of energy projects, putting the energy system of the country entirely in the hands of Russia’s Gazprom. A nuclear power plant in Belene should be constructed by Russian Atom-Export-Story, employing Russian nuclear technology, Russian fuel, and Russian investment. The single big oil refinery of Bulgaria, Neftochim Bourgas, is owned by Russia’s Lukoil company. Bulgaria signed two major contracts with Gazprom — one for the South Stream project and another one — for a 35-year period of gas supplies and gas transiting through Bulgarian soil. Bulgaria joined as minority shareholder to the oil pipeline project Bourgas-Alexandroupolis, designed to transfer Russian oil to the Aegean coast. Taken together, all those projects put the country into almost 100 percent energy dependency from this single source — Russia. It’s a position of vulnerability for a country like Bulgaria — to be member of NATO and the Euroatlantic security community, to be part of the EU as an economic, political, and values-based community, and to sustain this full dependence upon energy from Russia. A government, respectful to Bulgarian national interest should opt urgently for diversification of the national energy portfolio. Bulgaria has to maintain a strong partnership with Russia while insisting on its independence and membership into the community of Western nations.

The new government has to go for an active and pragmatic foreign policy. The legacy, which GERB receives from the Triple Coalition, is unenviable. Bulgaria is a relatively small country, which could hardly make a difference in a global scope, or even within the larger European context. The Balkans and the Black Sea region are both dimensions of Bulgarian foreign policy activities, a position that could really place the country as a valuable partner in international community. Both the Balkan and the Black Sea dimensions were in effect deserted by the outgoing government — partly for an absent strategic capacity, partly for ill-considered concerns about potential discords between Sofia and the major regional powers — Moscow and Ankara. As a Balkan and Black Sea country, Bulgaria has to initiate strategic proposals for both regions for the EU strategy-making process.

Finally, the preference of partner(s) by GERB in governing the country may make a significant difference. GERB has 116 MPs, which is close to, but short of, a parliamentary majority. The format of the incoming government is an open issue. The first option could be a minority government of GERB, supported by smaller center-right fractions like the Blue Coalition and Order, Law, and Justice (OLJ) Party, and by the radicals of  “Ataka” Party. The minority government would provide a coherent start, but it takes serious risks in the longer run. If the smaller parties are not involved in power-sharing from the very beginning, their situational interest may easily depart from the GERB government activities, in particular in periods of real hardships and tough challenges.

A second option for government is the coalition in the European People’s Party format — GERB plus the Blue Coalition. This option involves minimal power-sharing, but it is subject to an uneasy personal relationship between both leaders — GERB leader Borisov and the ex-PM Ivan Kostov, heading the Blue Coalition. Bringing a third party — the OLJ populist leader Yane Yanev — into the formula could widen political support, yet add to unpredictability of political balance within the coalition.

Borisov has a very strong personal control over the decision-making process of GERB, which adds stability to the expected government performance, but also brings the risks of identification of personal failures with the complete failure of the party in government. Both GERB and its leader are quite inexperienced in political process at national level, which opens the door for unexpected opportunities and for dangerous risks. Partnerships with the parties, sharing closer identities, might help in bringing better stability to the government process.

SOFIA — An unexpectedly high turnout of more than 60 percent has swept away the governing “Triple Coalition” of ex-communist socialists and liberals at the general elections in Bulgaria of July 5. The victory of the center-right populist GERB Party was expected, yet not in such a landslide, which actually brought the GERB leader — charismatic Sofia mayor Boyko Borisov — to the threshold of absolute parliamentary majority.

GERB, which in effect is a personal political project of the former police general, fire brigade psychologist, and national karate coach Borisov, scored almost 40 percent of the total vote. The party gets 116 out of 240 seats at the National Assembly, leaving the second-in-line Socialists far behind with less than 18 percent of the vote and with 40 seats. The second partner of the governing socialists — the Movement for Rights and Freedoms (MRF), supported mostly by ethnic Turks and Muslims, received 14.5 percent of the votes, which amounts to an unprecedented high of 610,000 voters. The Movement of ex-king Simeon — the third member of the governing coalition — has practically left the political scene with just 3.2 percent of the vote, which left the party below the 4 percent threshold for representation required by Bulgarian electoral system.

Two small fractions of the once glorious democratic movement — the UDF of the 1990s — this time united efforts in the center-right Blue Coalition and got close to 7 percent of the vote — enough to survive as a parliamentary force and probably to assist GERB in achieving absolute majority in parliament. Both GERB and the Blue Coalition hold membership in the European People’s Party — the Christian Democratic family of Europe, which makes them natural allies despite their mutual partisan suspicions on a personal basis. Another fraction of hard-line conservative populists — the Law, Order and Justice Party — also made it to the Parliament with just 4.13 per cent of the vote, thus opening an additional partnership choice for the GERB leadership. Last but not least, hard nationalist and populist Ataka (”Attack”) Party took almost 9.5 percent of the vote on a ticket of radical anti-Turkish and anti-corruption populist campaigning.

We could hardly assess this “cocktail” of electoral results without departing from the basic division lines of Bulgarian politics of the last four years. The governing coalition of socialists, ethnic Turks, and ex-king loyalists, which emerged from the general elections of 2005 defined itself as an instrument of compromise among parties of diverse platforms in favor of Bulgaria’s successful joining of the EU on January 1, 2007. The country was facing significant difficulties in convincing Brussels of its preparedness to join European institutional standards after the controversial record of the 2001-2005 government headed by the ex-king Simeon and the MRF leader Ahmet Dogan. High levels of institutional corruption (both political and administrative), a poor-performing justice system, and administrative inefficiency were among the key concerns among European decision-makers in assessing Bulgaria’s membership application. The Triple Coalition, headed by the socialist leader Sergey Stanishev as prime minister, was designed to pass the country through the narrow doors of the EU in reforming the ailing Bulgarian institutional system.

It was sooner the wish of Brussels to consider Bulgaria reformed enough, rather than the performance in institutional reform of the Triple Coalition, which navigated the country successfully to the EU membership in 2007. Once the membership was a fact, the legitimacy basis for the Triple Coalition government expired — particularly provided its modest success record. Yet coalition members decided to complete their four-year term. This decision was wrong. The government had neither integrity nor real institutional potential to make hard decisions in favor of national interest. The Triple Coalition was constructed as a corporate entity with three parties – shareholders in common business. Political positions and institutional benefits were shared in the proportion of 8:5:3 in favor of socialists, ex-king loyalists, and ethnic Turks. Each party guarded its feuds, sucking out the maximum benefits of control over ministries and other national institutions. Common government priorities were left largely in the hands of the prime minister, whose power was seriously impeded by the informal design of power-sharing both within his own Socialist Party and among the three party leaders in the coalition.

After achieving EU membership, the reformist potential of the Triple Coalition declined decisively. The second half of the mandate was marked with growing corruption at the highest political level, expansion of organized crime, helplessness of the judiciary, and impotence of the public administrative system, sinking into self-sufficient helplessness. Growing claims on behalf of Brussels against basic inadequacy of Bulgaria’s public institutional system to EU standards mounted to blockades of EU credit lines — both pre-accession and membership (structural and cohesion) funds — for Bulgaria. The public was discovering that the Triple Coalition was in effect jeopardizing Bulgaria’s EU status.

Institutional inadequacy came hand in hand with growing arrogance in the public performance of party leaders and major executive figures of the government. This arrogance extended to unprecedented violation of institutional rules and democratic procedures in preparing for the upcoming general elections in 2009. Bulgarian electoral standards have worsened throughout the decade after 2000. Instead of keeping and strengthening the country’s positive legacy of free and fair elections throughout the 1990s, both political factors and vested interests insistently eroded the legitimacy of the electoral process in the last 7-8 years. Systems of mass scale buying of votes expanded to cover marginal groups and rural parts of the country. Practices of organized pressure on behalf of corporate business, political parties, and local criminal groups developed to levels of seriously endangering the representation process.

Civil society groups initiated a public campaign against the practices of buying votes and exercising pressure upon voters, offering an “Integrity Pact” to the political parties for joining their efforts in favor of restoring a free and fair electoral process. Most parties signed the Pact, yet the parties of government considered their signatures largely nominal. The governmental majority in Parliament passed highly controversial amendments into the electoral law at the last moment possible in order to deprive both opposition and public opinion the right to debate and oppose the changes. Those changes were considered potentially favorable for the government parties’ performance at the ballot box, which did not prove the case at the end. The security services of the state (in particular the State Agency for National Security – DANS) were misused by the government in order to support puppet political fractions, considered potent to drain support from the government political opponents. The court system was misused — together with the government-dominated Central Electoral Commission — in rejecting legitimate registration of particular political parties (UDF for example) for the elections.

The elections for European Parliament on June 7 were considered a rehearsal to the general elections a month later. GERB won a moderate majority of 6 percent ahead of the Socialists after an expected relatively low turnout of 38 percent. GERB is a young party with small inner nucleus of hard core supporters and a large periphery of potential voters. On the other hand, the Socialists enjoy relatively wide hard-core support and almost no potential in the periphery. Low turnout grants privileges to the Socialists’ electoral record. The results of the European elections were considered promising for the Triple Coalition’s chances to remain in office in a redesigned formula of power sharing: GERB would be a moderate winner at the general elections again and would need the support of at least 2 or 3 more parties in order to govern. Why not GERB with the Socialist Party and, maybe, the ethnic Turks’ Party?

All those calculations, made in public, produced widespread despair among a growing number of citizens, heavily disappointed by the Triple Coalition’s government record. Expected electoral cheating and fraud, widely organized buying of votes, and pressure on voters, together with governing parties’ arrogance in re-claiming another mandate, enraged significant sections of Bulgarian society, in particular the urban middle class, which suffered most from widespread corruption and institutional inefficiency. There was only one option to counter the Socialists’ strategy to crawl back to power - a high turnout. Quite powerful awareness-raising campaigns by NGOs and oppositional parties made voting desirable and necessary for a growing number of citizens who felt disenfranchised with political disgust and despair after a number of disappointing electoral choices in the past. A wave of 2/3 of actual voters (the electoral lists are wider than the real number of voters in the country) swept away the triple formula of cheating the voters in favor of a small corporate structure — political minority at the top, organized around the status quo ex-Communist elites, both socialist and liberal.

This is why the impressive electoral score of GERB on July 5 is composed of two parts: first, supporters of GERB Party and its leader Borisov, and, second, newly enfranchised pessimists who voted for the most obvious alternative against the Triple Coalition status quo. This composition of electoral support for GERB unfolds both opportunities and strength, as well as potential weaknesses of this party in government. GERB holds a clear mandate for change and reform in the country. Yet the winners around Boyko Borisov will have to face severe challenges and limitations. First, the world financial crisis, which is just rushing on Bulgaria after having swept Europe’s west and north. Second, the government of GERB will have to face an urgent priority of reforming Bulgaria’s institutional system before regaining the benefits of the EU funds for the country. Third, B. Borisov and his team will have to deal with their relative inexperience of government in a time when urgent and punctual decisions will need to be made.

The Continent’s slow and uncoordinated response to the global financial meltdown has not done much to bolster the region’s image. Neither has the fact that Europe has emerged as the laggard of the global economy. Based on the latest estimates from the Organisation for Economic Co-operation and Development (OECD), the Eurozone economy is expected to contract by nearly 5% this year, a much deeper decline than in the United States (-2.8%) and light years behind China, where 2009 growth forecasts have been revised up to +7.7%.

In 2010, Eurozone economic growth is projected to be flat, while the OECD expects the U.S. economy to expand by 1% and China to grow by more than 9%. Against this backdrop, no one really expects much from Europe, so when the region disappoints, it’s hardly an earth-shattering event for the financial markets.

That said, Europe does matter. We are talking about one of the most important economic entities in the world, a key source of demand for the United States and numerous emerging markets. Bringing the Doha trading round back to life, forging an agreement on global climate change and fostering peace in the Middle East and other troubled spots — these challenges mandate Europe’s participation and leadership.

More immediately, as the global economy struggles to right itself in the months ahead, Europe’s role and contribution (or lack thereof) will be crucial. For more perspective on this topic, consider the following metrics:

The largest economy in the world — A full-fledged global economic rebound requires Europe’s presence. The European Union is the largest economy in the world, accounting for roughly 30% of world GDP in 2008 (based in U.S. dollars). On a purchasing power parity (PPP) basis, the EU’s global share is around 22%, but no matter how you slice it, the EU represents a sizable share of the global economy. The strength and durability of a global economic recovery will hinge, to a significant degree, on the EU’s ability to kick-start its own economy.

A huge source of global demand — Europe’s economy is not only large, it’s wealthy. Income levels vary across the region, but an average per capita GDP of $33,400 (PPP) makes this region one of the wealthiest in the world. The personal consumption expenditures of its close to 500 million people reached nearly $11 trillion in 2008; that represents roughly 30% of the global total. Thanks to this underlining wealth, the EU is the world’s largest importer, accounting for roughly 37% of global imports in 2008. The United States accounted for less than 15% of global imports last year, the BRICs, less than 12%. A key takeaway — a revival in global trade requires a revival in European demand, a prospect that does not look likely until 2010.

A key source of foreign direct investment — Europe remains a principal recipient and provider of foreign direct investment (FDI). According to the United Nations, European nations accounted for roughly two-thirds of global FDI outflows and nearly 50% of global FDI inflows between 2000 and 2007. U.S. firms have been significant beneficiaries of this dynamic.

Despite all the chatter of U.S. investment decamping for cheaper locales in Asia and elsewhere, the EU remains the primary destination of U.S. foreign investment, and by a wide margin. On a historic cost basis, America’s investment stake in Europe topped $1.5 trillion in 2007 (the last year of available data). That figure represented 54% of total U.S. investment overseas, which underscores the massive stakes Corporate America has in Europe. U.S. FDI in the BRICs in 2007 — $70 billion cumulative — equaled less than 5% of total U.S. investment in the EU. Meanwhile, Corporate Europe’s stakes in the United States are massive, with the EU accounting for more than 70% of total FDI in the United States. No other region of the world has invested as much in the United States as Europe.

An important source of U.S. global earnings — Europe matters most when it comes to U.S. global earnings. The EU that generates more foreign earnings for Corporate America than any other region; Europe has accounted for more than half of total U.S. foreign affiliate income, a proxy of global earnings, this decade. Not unexpectedly, U.S. global earnings have plunged along during the past year’s steep decline in EU economic activity. Against this backdrop, Europe is critical to a rebound in U.S. global earnings.

The bottom line

There are enough metrics that underscore the importance of Europe to fill a dozen columns, but the conclusion remains the same: Yes, it’s easy to dismiss Europe as a fossil. Europe’s earned the right to be called the world’s economic laggard, but that doesn’t mean United States should ignore or write off the region.

The views of this artcile reflect the author’s, not the German Marshall Fund

In their April meeting in London, G20 leaders pledged to “not repeat the historic mistakes of protectionism of previous eras.” But with many economies witnessing the sharpest falls in their exports in decades, and with unemployment rising to levels not seen since the early 1980s, fears are growing that governments may be tempted to renege on this pledge.

Although the world has not seen a return to the across-the-board tariff increases of the early 1930s, governments have resorted to massive stimulus packages, bailouts, and subsidies, many of which include nationalistic provisions that cost jobs and harm exporters and investors. The recent WTO General Council meeting confirmed that tensions between nations are growing, fuelled in part by the murky nature of current protectionism and precious little objective information upon which to formulate policy.

With this as background, a coalition of partners is launching a new service, Global Trade Alert (www.globaltradealert.org), to fill this information gap. This independent initiative will investigate suspicious state measures taken during the crisis and make public the findings. Exporters, the media, analysts, and governments will then have a firmer basis upon which to judge crisis-induced measures. No longer will the discussion of commerce-threatening measures take place behind closed doors in Geneva.

Global Trade Alert complements and goes beyond the WTO and World Bank’s monitoring initiatives by identifying those trading partners likely to be harmed by state measures. The website monitors not just tariff barriers - which are heavily constrained by WTO rules – but also non-tariff barriers and national crisis measures adopted by countries in response to the downturn. Global Trade Alert investigates a wide range of state initiatives precisely because governments have responded in such different ways to the crisis. So far 18 state measures have been investigated and the findings posted. Around 80 trading partners’ commercial interests were probably harmed by these posted measures. Harm to US commercial interests could not be ruled out in a clear majority of the reported measures. 

The Centre for Economic Policy Research (CEPR) will implement Global Trade Alert, working closely with expertise from independent research institutes and experts in every region of the world economy. CEPR is one of Europe’s most established networks of research economists.  The initiative stands apart from any government or international organization and will last twelve months.  A group of eminent persons will provide advice on the implementation of Global Trade Alert and includes Gary Horlick and Ernesto Zedillo.

The easy-to-use website allows policymakers, government officials, exporters, the media, and analysts to search the posted government measures by implementing country, by trading partners harmed, and by sector. Third parties will be able to report suspicious state measures and governments will be given the right to reply to any of their measures listed on the Global Trade Alert website.

We hope that a combination of peer pressure plus up-to-date information and informed commentary, the latter two being supplied by Global Trade Alert, will help maintain confidence in the world trading system, deter beggar-thy-neighbor acts, and preserve the contribution that exports could play in the future recovery of the world economy.  

NOTE: Jim Kolbe, Former Member of Congress and Senior Transatlantic Fellow at the German Marshall Fund Simon Evenett, Professor of International Trade and Economic Development, University of St. Gallen, Switzerland and Co-Director, International Trade programme, CEPR

Addressing her new State Department staff for the first time in early January, Secretary Clinton used an oft-cited simile for American foreign policy: the three-legged stool. By this she meant that a sturdy U.S. foreign policy framework, like a sturdy stool, needs three legs. These legs consist, alliteratively, of defense, diplomacy and development, or foreign aid. In this logic, our nation requires, first, a strong deterrent military force; second, an active bilateral and multilateral diplomacy; and, third, a substantial American commitment to improving poor people’s lives, to address the underlying causes of conflict and terrorism, reflected in our foreign aid program.

That’s all well and good. This basic simile comports with the strategic thinking of many foreign policy analysts, and reflects the commitments President Obama made while still on the campaign trail.

But, after that reasonable beginning, she veered off into “dead wrong” territory by stating that the State Department should be responsible for “two of the three legs:” diplomacy and development. That reflects exactly the thinking of the departed Bush Administration, which weakened the nation’s foreign aid capacity during its time in Washington. And, regrettably, Mrs. Clinton’s comments followed the flawed logic that led to the absorption of the U.S. Information Agency into the State Department two administrations ago, with catastrophic consequences for America’s image abroad.

The correct policy is to have a vibrant American foreign policy system consisting three core, complementary elements: A strong Department of Defense tasked with fighting and winning the nation’s wars; a strong State Department, strengthened and active in diplomacy; and, a much strengthened and reinvigorated United States Agency for International Development (USAID), to serve as the nation’s leading development tool, and address poverty and inequality before they lead to violence. It is this “three-legged stool” that will ensure that President Obama has the set of tools he needs to conduct a vigorous foreign policy. And, with Mr. Obama still not having named a leader for the U.S. Agency for International Development four months into his presidency, it is this stool that is wobbly, indeed.

Mrs. Clinton, I fear, has listened too closely to the faint-hearted at the State Department who, buffeted during the Bush Administration by over-reliance on military rather than diplomatic tools, feel the need to buttress their bureaucratic position by absorbing USAID. Our nation has fine, highly skilled and dedicated diplomats, and we need many more of them. But these skilled and courageous officers know little about rebuilding war-torn societies; delivering food aid; building health clinics and schools that will last; opening economic opportunities for poor women; responding to tsunamis; increasing agricultural yields; and the thousand and one other skill sets that USAID has been providing for America for six decades, when USAID’s work was critical to winning the Cold War.

Naturally, diplomacy and development, as well as defense, must be coordinated, and I have every expectation that Secretary Clinton and her team can devise appropriate bureaucratic coordination mechanisms. But, it would be the height of irony if, after the Bush Administration diminished the role of USAID over the past eight years, the Obama Administration would follow that path to its reductio ad absurdum, further diminish USAID, and create a wobbly two-legged foreign policy structure.

Secretary Clinton is a strong leader. She should be strong enough to review her “I’m in charge of two legs of the stool” comment, and recommend the following to President Obama: “Mr. President, we need world-class defense, diplomacy, and development implements to conduct America’s foreign policy, and I promise you unparalleled diplomatic leadership. I am recommending you dramatically increase the capacity of USAID, name a prominent person to the leadership of USAID, and invite that person, the Secretary of Defense, and me to your cabinet meetings. That way, Mr. President, you will be receiving diverse, but informed, military, diplomatic, and development perspectives whenever there is a foreign policy problem. And, Mr. President, America will be stronger for it.”

In 2004, the U.S. Congress authorized the creation of the Coordinator for Reconstruction and Stabilization (CRS) within the Department of State, to serve as a focal point for  U.S. Government (USG) civilian response to conflict and post-conflict crises abroad.  The creation of the “CRS” office, and the naming of a Coordinator (currently Ambassador John Herbst), was the culmination of a long debate about how the U.S. could increase its capacity to help rebuild nations in crisis, and how to create a civilian capacity that would match its ability to deploy military forces quickly.  Given that the formulation of the CRS concept occurred during a national debate on the effectiveness of the Afghanistan and Iraq reconstruction efforts ensured that the debate was vigorous, and sometimes contentious.  The CRS mission and organization are described at www.state.gov/s/crs.

Since 2004, some analysts have expressed doubts about whether the Office of the Coordinator for Reconstruction and Stabilization would ever reach “take-off velocity,” and establish a viable new capability, given limited funding, spotty support from senior-most policymakers, and entrenched resistance from established USG institutions.  But, over the past several weeks, the long nascent CRS initiative has started to become a reality.   Several dozen trainees – from the State Department, USAID, the Justice Department, the Centers for Disease Control, and other federal agencies – began the process of transformation into the first unit of CRS’s “Civilian Response Corps.”

The Civilian Response Corps is intended to serve as the USG’s “first responders” if a country, especially a country in conflict, were to require substantial reconstruction assistance beyond that provided in normal USG assistance programs.  Modeled on the concept of Disaster Assistance Response Teams (DARTs) pioneered by the U.S. Agency for International Development, the Civilian Response Corps is designed to provide a “whole of government” USG capability during crisis response.  Rather than serve as a unilateral capability, Corps members are receiving instruction in how to integrate their response with the priorities of the government in crisis, the UN system, and the work of multilateral and bilateral donors, NGOs and other international organizations.  In theory, when the Civilian Response Corps is fully trained and provided with logistical support, advance elements will be able to deploy, if requested, within 48 hours.

As will be obvious to readers, this new USG initiative provokes a range of important questions and is likely to spur significant debate.  When and under what circumstances will this capacity be used?   Will a standby team dispatched from the United States arrive with sufficient cultural awareness and understanding of local circumstances to be effective?  Will this new team in some sense counterbalance strong reliance on military tools?  Is there a risk that a large team from the U.S. will overshadow local government leadership?  What will be the precise nature of its cooperation with other multilateral and bilateral efforts?  Will the team have the technical capacity and resources to accomplish its stated mission?  What will be the trigger for withdrawing the Civilian Response Corps and returning to “steady state” diplomatic and development relationships?

Each of these questions deserves careful attention.  But at least one question has been answered:  there is no longer any debate about whether the U.S. government will create a new crisis response capacity.  The teams are in training.  The initiative has been launched.

Angela Merkel’s Conservative CDU and its Bavarian sister party CSU polled together at 37,8 percent, down from 44,5% in 2004 (42 seats, down from 49) – yet another manifestation of the Chancellor’s difficulties in translating her personal popularity into votes for her party. The fact that Merkel appears to have decided that the best way to campaign is not to campaign at all has not helped (and is driving her strategists to distraction).

Meanwhile, the Conservatives’ partner in the current grand coalition, the Social Democrats, came in at 20,8%: a record low, and the party’s worst poll outcome in any German election since 1945 (23 seats, as in 2004). The defeat was all the more devastating because the Social Democrats had fought Merkel’s economics minister Karl-Theodor zu Guttenberg tooth and claw over the rescue of German car manufacturer Opel, and won – but their efforts were not honored by the voters. The SPD’s catastrophe may also put paid to the Social Democrat Martin Schulz’s ambition to follow Günter Verheugen as EU Commissioner. Hopes that the Social Democrats will put up a real fight in the federal election campaign and catch up in a last-minute race (as they did in 2005) were dampened by a Sunday night talk show in which Frank Walter Steinmeier, the SPD’s candidate for Chancellor and presently foreign minister of Germany, gave a performance that was lackluster even by his standards.

The other loser of this election is the renegade leftwing party Die Linke, which has not been able to capitalize on the economic crisis; at 7,5%, it gained a mere 0,6 % over its result in the last European election in 2004 (8 as opposed to 7 seats in 2004).

In times of crisis, Germans like to vote conservative. But the capital-C Conservatives, it seems, moved to the left by Merkel in an attempt to squeeze out the Social Democrats, are not conservative enough.

Indeed, the real winners of this vote were what might be called the mainstream opposition. The Greens got 12.1 % of the vote (up from 11,9 in 2004; 14 seats, from 13). The Liberals, who want to govern the country together with the CDU, nearly doubled their vote from 6 to 11 % (from 7 to 12 seats). Finally, there is the CSU, the CDU’s regional sister and the party that proves that it is by no means better to have your camel in the tent. After losing their decade-long absolute majority in Bavaria in the fall, the CSU leadership had been terrified of falling short of the 5% electoral threshold - which would have meant the end for its aggressively maverick chairman Horst Seehofer, Bavaria’s answer to Nicolas Sarkozy, and more effective at undermining the Chancellor than the entirety of the SPD. But the CSU sailed into the European Parliament at 7,2%.

In the coming months, Chancellor Angela Merkel may well find herself squeezed for a change – between the Liberals and her Bavarian sister party. The chance that she will be running the country after the elections are quite high. But it now seems possible that she would do so – in terms of votes, at least – as the weakest Chancellor Germany has ever had.

Coordinators of the project, which is being headed up by former Pennsylvania State Senator Allen Kukovich, will focus on creating tools and forums to collect input from and build a consensus among the region’s residents, rather than the more traditional approach of drafting and implementing a long-term regional plan from the top down. Like a number of other older industrial cities, including many members of the Transatlantic Cities Network, Pittsburgh will use the regional visioning process as a way to begin approaching its post-industrial future with a sense of purpose and focus, shared broadly between citizens, stakeholders, and institutions.

The first major public event of the process was a town hall meeting on May 20, put together by cityLIVE!, an event series jointly supported by local foundations and media. The town hall featured former Mayor of Turin Valentino Castellani, whose participation was sponsored by GMF. During his term as mayor in the 1990s, Castellani spearheaded the creation of Turin’s region-based, internationally-focused Strategic Plan, which was drafted collaboratively by over 100 stakeholders representing a broad cross-section of civil society, government, and business. (While in Pittsburgh, Castellani also met more privately with the project’s leaders and filmed a segment with Allen Kukovich on local TV station KDKA.)

Pittsburgh’s regional visioning project is supported by approximately $2 million in grants from local and regional foundations, one of which is headed by Transatlantic Cities Network Representative (and Marshall Memorial Fellowship alum) Gregg Behr. In 2003 and 2004, Behr helped Ellen Pope, GMF’s Director of Comparative Domestic Policy, gather a group of Pittsburgh stakeholders to join a group of leaders from Cleveland, Ohio, for a pair of study tours to Turin, Italy and Lyon, France (both also TCN cities).

Behr credits the trips to Turin with connecting the right people in Pittsburgh with the idea that a participatory regional visioning process can be a crucial first step for a post-industrial city trying to renew and transform both its image and its economic base. Pittsburgh’s project also took direction from conversations between Behr and fellow MMF alum Tracy Russ, who worked on Crossroads Charlotte, a similar process now underway in Charlotte, North Carolina (another TCN city), which focuses specifically on building social capital. One of the key lessons from both the Turin and Charlotte experiences is the importance of creating a coherent image for the region that embraces its strengths and history as a base from which to move forward.

In June, the CDP program will continue to facilitate transatlantic learning on best practices in regional visioning with another study tour to Turin and Essen, Germany. Essen, another member of the Transatlantic Cities Network, lies at the heart of the Ruhr Valley, which is perhaps the best-known example of a region that has turned its industrial heritage and architecture into an asset. The region’s former mines, factories, and brownfield sites (most famously the Zollverein, a UNESCO World Heritage site) are now schools, parks, and arts and performance spaces, and the region’s economy is growing around a set of clearly defined cluster industries.

This June’s study tour will include leaders of the Pittsburgh visioning process who met with Castellani during his visit, as well as groups of leaders from Detroit and Cleveland. This fall, GMF will reconvene study tour participants for a pair of workshops in Detroit and Cleveland featuring a select group of experts from Turin and Essen, with the goal of drafting concrete action items to jumpstart regional visioning in (and between) Detroit and Cleveland. For Pope and the rest of the CDP program’s staff, it’s exciting to see the program’s ongoing investment in transatlantic learning bring concrete returns.

Background reading: Local news reports on the Pittsburgh project can be found here and here. A good history of Turin’s Strategic Plan can be found on the website of Torino Internazionale, a key organizer of the process. More information about the Crossroads Charlotte project can be found on the project’s website; a TCN case study on Crossroads Charlotte offers useful background for practitioners and additional resources.