Economic Crisis and Regional Integration

HIGHLIGHTS:

• read the article paying attention to focus words
• summarise the main ideas, identify the author’s message
• comment on the ideas expressed by the author
• compose 3 questions for discussion

FOCUS WORDS

resort to	обращаться за помощью к, прибегать к
extension	расширение, продолжение, удлинение, распространение
vulnerable	уязвимый, ранимый
substantial	существенный, значительный, важный
benevolent	благотворительный, доброжелательный
stymie	загнать в угол, ставить в тупик, безвыходное положение
combat	вести бой, сражаться, бороться
capacity	вместимость, мощность, способность, объем
promote	способствовать, поощрять, продвигать, стимулировать
amplify	увеличивать, расширять; усиливать

PREPOSITIONS

1. resort to
2. in response to
3. demands for 
4. answer to 
5. suffer from 
6. relative to 
7. owing to 
8. benefit from 
9. deal with 
10. restrict to

Mar 4, 2009 Harold James

Harold James

Harold James is Professor of History and International Affairs at Princeton University. A specialist on German economic history and on globalization, he is a co-author of The Euro and The Battle of Ideas, and the author of The Creation and Destruction of Value: The Globalization Cycle, Krupp: A History of the Legendary German Firm, Making the European Monetary Union, and The War of Words.

In the 1930’s, Germany and Japan resorted to forcible regional integration, not economic nationalism, in response to economic crisis. By contrast, in today’s crisis, the largest members of the European Union, the best model and greatest hope for benign regionalism, have turned their backs on integration.

PRINCETON – Everyone now knows that we are in the worst economic crisis since the 1930’s. The protectionist responses are sadly familiar: protests against foreign workers, demands for trade protection, and a financial nationalism that seeks to limit the flow of money across national frontiers. 

In the 1930’s, however, economic nationalism was not the only show in town. Many people started to think of regional integration as the answer to depression. But the sort of integration that occurs in times of economic crisis is often destructive. The most unattractive versions of 1930’s regionalism came from Germany and Japan, and represented nothing less than a practical extension of their power over vulnerable neighbors, which were forced into trade and financial dependence on the basis of Germany’s Grosswirtschaftsraum or its Japanese equivalent, the Greater East Asia Co-Prosperity Sphere. As a consequence of the horrors of the 1930’s, there remains substantial suspicion of concepts like “Greater East Asia.” In the second half of the twentieth century, Europe had the chance to build a much more benevolent form of regionalism. But today, the European Union is stymied by having squandered the chance to build stronger institutions when times were better and tempers less strained. The EU is suffering from a number of problems that have been widely discussed for many years, but never seemed to be that urgent. Suddenly, in the face of the economic crisis, these problems have become major sources of political instability. There is a common monetary policy in the euro-zone countries, and an integrated capital market with financial institutions that are active across national frontiers. But banks are regulated and supervised nationally – as they must be, because any rescue in the event of a large bank failure becomes a fiscal issue, with the cost borne by taxpayers in individual states rather than by the EU as a whole. But this set-up makes little sense in the face of the economic logic of European integration. 

The second obvious problem is the smallness of the EU’s budget relative to those of the member states. The vast part of government activity takes place on a national level. But different governments have different degrees of fiscal room for maneuver. Italian, Greek, or Portuguese public debt is so high that any attempt to use fiscal spending as part of a strategy to combat the economic crisis is doomed to fail. But Ireland, with previously modest deficit and debt levels, also suddenly and unexpectedly faces the same kind of issue, owing to the government’s need to take over private debt from the banking sector. France and Germany, by contrast, have an inherently strong fiscal position. So only the EU’s strongest countries can really do anything against the sharply worsening recession. Moreover, the whole idea of Keynesian demand stimulus was developed, again in the 1930’s, in the context of self-contained national economies. Keynesians filled up the warm water of fiscal stimulus in a national bathtub. When the national bathtub has holes, and other people benefit from the warmth, the exercise loses its attraction. In any case, it only ever worked for the larger states. The smaller states could not do Keynesianism in a hand basin. There are ways to fix both the banking and the fiscal problem. Control of banking is the simplest. The European Central Bank clearly has the technical and analytical capacity to take on general supervision of European banks, using the member central banks as information conduits. The fiscal problem could be dealt with by issuing generally guaranteed European bonds, which might be a temporary measure, restricted to the financial emergency. Both bank regulation and fiscal policy require a great deal more Europeanization. The most obvious way is to use existing mechanisms and institutions, in particular the ECB or the European Commission. The difficulty with such a suggestion is that it would imply a relative weakening of the national states, including the largest, Germany and France. They would most likely resist, and try to stay in their own bathtubs. Indeed, the crisis has turned France and Germany once more into the key players of the European process. But the more the crisis affects them, the more they think largely in national terms. From the perspective of Berlin or Paris, there should be no systematic Europeanization. Instead, the large states are now promoting informal groupings to look for worldwide solutions.Overtones of the 1930’s are amplified, clearly exposing the Union’s predicament, because of an odd coincidence: the Czech Republic now holds the EU’s rotating presidency. The Czechs, probably the people with the most vivid historical memory of the bad regionalism of the 1930’s, succeeded France, the European country that today is the least constrained in asserting its national interest. The clash of two visions of Europe is eroding the political stability of an area that once represented the best model and greatest hope for benign regionalism. 

DISCUSSION AND APPLICATION QUESTIONS

1. What are the main impediments to building a much more benevolent form of regionalism? Why are the key players of the European process like Germany and France against systematic Europeanization? What are the benefits and drawbacks of regional integration for small, open economies?
2. What principle was Keynesian demand stimulus underpinned by? What are the ways to fix the current banking and fiscal problems? How feasible is the scenario of the EU member states giving all bank regulations to EU institutions? 
3. How can countries overcome political and economic challenges to establish and maintain regional alliances and partnerships?

---

LANGUAGE REVIEW

FLASHCARDS

SYNONYMS

MATCH THE WORD WITH ITS TRANSLATION

resort to	вести бой, сражаться, бороться
extension	увеличивать, расширять; усиливать
vulnerable	способствовать, поощрять, продвигать, стимулировать
substantial	вместимость, мощность, способность, объем
benevolent	расширение, продолжение, удлинение, распространение
stymie	обращаться за помощью к, прибегать к
combat	загнать в угол, ставить в тупик, безвыходное положение
capacity	существенный, значительный, важный
promote	благотворительный, доброжелательный
amplify	уязвимый, ранимый

MATCH THE WORD WITH ITS DEFINITION

resort to	of a considerable size or value, having wealth or importance, sufficient and nourishing
extension	to block or prevent from proceeding or going forward
vulnerable	to make larger, greater, or stronger
substantial	to have recourse for use, help, or accomplishing something, often as a final available option or resource
benevolent	the maximum amount or number that can be contained;volume; the power or ability of the mind; mental ability, ability to perform, yield, or withstand
stymie	encourage; to advance in rank or position; to aid in organizing
combat	capable of being wounded or hurt physically or emotionally; open to or defenseless against criticism or moral attack; open to assault; difficult to defend
capacity	to fight or contend against; oppose vigorously
promote	an act or instance of extending, lengthening, stretching out, or enlarging the scope of something
amplify	characterized by or expressing goodwill or kindly feelings; intended for benefits rather than profit

MATCH THE WORD WITH ITS SYNONYMS

resort to	impede, obstruct, hamper, block
extension	considerable, ample, abundant, plentiful, sizable, large-scale, consequential, important
vulnerable	ability, capacity, skill, aptitude, facility, competence, faculty, capability, potential, inclination
substantial	enlarge, extend, increase, intensify, raise, expand , magnify, inflate, enlarge, augment
benevolent	lengthening, enlargement, prolonging, augmentation, expansion, increase, protraction
stymie	material, physical, substantial, touchable, concrete, visible, observable
combat	oppose, resist, contend with, do battle with, counter
capacity	recourse, recur
promote	generous, altruistic, kindly, charitable, beneficent, compassionate, sympathetic
amplify	unprotected, defenseless, exposed, susceptible, sensitive, liable

MATCH THE WORD WITH ITS COLLOCATIONS

resort to	patients/ groups/  to disasters/ position/ areas
extension	protests/ access/ the career
vulnerable	smile/ alumni/ attitude/ institution
substantial	from assistant/ to CEO/ wellbeing/ the development/ economic development/ awareness/ understanding
benevolent	mortgage/ apply for/ a project/ of the deadline/ of six weeks
stymie	limited/ restricted/ mental/ emotional/ to learn/ improve
combat	creativity/ energy/ positive attitudes/ enrollment
capacity	crime/ problem/ pollution/ inflation/ terrorism/ unimployment
promote	to measures/ to violence/ to dirty tricks
amplify	amount/  quantity/ decrease/ profits/ impact/ losses

COMPLETE THE SENTENCES BY FILLING IN  FOCUS WORDS

stymie promote vulnerable amplify substantial benevolent resorted extension capacity combat

1. American businessmen and expats flocked to Cuba to benefit from the ………… business climate and the favour of the Cuban government. 2. When politicians talk about their post-Brexit ………… to control immigration, the public simply does not believe that is actually what they are managing to do. 3. Republicans often oppose efforts to lower the voting age, saying it is a naked attempt by liberals to ………… their power among young Americans. 4. As the Fed has raised rates to ………… inflation, the value of bonds that banks hold as assets has fallen. 5. America’s central bank is given ………… freedom to set policy without political interference. 6. Corporate companies have had policies that ………… diversity, equity and inclusion in some form for decades, largely to avoid discrimination on the basis of race, sex or religion. 7. Early in the pandemic, U.S. companies ………… to mass layoffs, causing the unemployment rate to surge to double-digits for the first two months of the pandemic. 8. Republicans want a one-year ………… on the debt limit and at least 10 years of budget caps. 9. The most ………… economies, the report warned, are facing greater risk of financial crises as a result of rising rates. 10. Opposition groups have accused the prime minister of using the law to ………… political critics.

MATCH THE COLLOCATIONS FROM THE TEXT

1. national	a) supervision
2. squander	b) emergency
3. political	c) frontiers
4. a fiscal	d) measure
5. banking	e) predicament
6. general	f) instability
7. temporary	g) issue
8. financial	h) the chance
9. exposing	i) national interest
10. assert	j) sector

COMPOSE MEANINGFUL SENTENCES BASED ON FOCUS WORDS AND COLLOCATIONS FROM THE TEXT

E.g. _____________ resorting to sanctions _____________

→ Certain countries willfully interfered in other countries’ internal matters and regional affairs, frequently resorting to unilateral sanctions and armed coercion.

1. _________ resort to military policy _________
2. _________ a short-term extension _________
3. _________ remain vulnerable to _________
4. _________ take a substantial period to _________
5. _________ become more benevolent _________
6. _________ will stymie economic growth _________
7. _________ to combat a sharp increase in _________
8. _________ strengthen the analytical capacities of _________
9. _________ the organization’s mission was to promote _________
10. _________ amplify disinformation _________

PREPOSITIONS

1. resort ___
2. ___ response ___
3. demands ___ 
4. answer ___ 
5. suffer ___ 
6. relative ___ 
7. owing ___ 
8. benefit ___ 
9. deal ___
10. restrict ___

GRAMMAR MIX

1. Saudi Arabia ……………….. Islamist terrorism since the oil-price boom of the 1970s dramatically boosted the country’s wealth.

1. is bankrolling
2. was bankrolling
3. bankroll
4. has been bankrolling

2. Officials and analysts in the three countries had been hopeful that Congress ………….. the agreement.

1. would approve
2. will approve
3. approves
4. has approved

3. The working-age population in the bloc ………….. by 11,000 people daily and ………… to grow at this rate for the next 15 years.

1. increased; continues
2. is increasing; will continue
3. is increasing; will be continued
4. increase; will continue

4. In 2005, that deal ………….. to the Greater Arab Free Trade Agreement (GAFTA), which eliminated customs duties among its 17 member countries.

1. upgraded
2. had been upgraded
3. was upgraded
4. was being upgrade

5. Unless ASEAN ……… united as a bloc, it ………… its ability to convene regional actors, mediate disputes, and shape principles of international behavior and interaction.

1. remains; lose
2. remains; will lose
3. will remain; loses
4. remains; loses

6. Technical experts and policymakers ……… stay focused on analyzing excluded and sensitive products’ implications for intraregional trade and value chains, so that governments and industries ……… adapt accordingly.

1. must to; can
2. can; must
3. must; can
4. must; will

7. …………… the EU, it …………… to develop relationships with other countries that have less in common with it than its immediate European neighbors do.

1. Leaving; is struggling
2. Having left; is struggling
3. Having been left; is struggling
4. Having left; was struggling

8. A unique conjuncture of economic and political developments has created an opportunity for Eurasia to emerge from its historical slumbers, with Russia and China …………. the way.

1. lead
2. are leading
3. have been leading
4. leading 

9. Listed as members of the alliance are also all of the jihadist citadels other than Afghanistan, including war-torn Libya and Yemen, both of ……….. are not currently governed by a single authority.

1. what
2. that
3. those
4. which

10. …………. the CSTO, a kind of “Warsaw Pact-lite,” was founded in the 1990s, the Kremlin has never used it to justify a foreign intervention until now, in the case of Kazakhstan.

1. Although
2. However
3. While
4. Yet

---

VOCABULARY NOTES

resort to прибегать, обращаться	definition to have recourse for use, help, or accomplishing something, often as a final available option or resource synonyms recourse, recur collocations to resort to warresort to [drastic, emergency] measures resort to [violence, killing] (without) resorting to dirty [tricks, play]
extension расширение, продолжение, удлинение, распространение	definition an act or instance of extending, lengthening, stretching out, or enlarging the scope of something synonyms lengthening, enlargement, prolonging, augmentation, expansion, increase, protraction collocations a [loan, credit, payment, mortgage] extension [asked, applied] for a [loan] extension [an assignment, an essay, a project, a homework] extension an extension of the deadline an extension of six [weeks, months, days] the [bank, government] has [granted, approved] an extension
vulnerable уязвимый, ранимый	definition capable of being wounded or hurt physically or emotionally; open to or defenseless against criticism or moral attack; open to assault; difficult to defend synonyms unprotected, defenseless, exposed, susceptible, sensitive, liable, subject  collocations vulnerable [patients, residents, families, children] vulnerable [groups, sections, areas, property] are vulnerable to [floods, disasters, attacks] have been left vulnerable by the [decision, storm] found themselves in a vulnerable [position, situation] have become [increasingly] vulnerable amongst the most vulnerable areas the most vulnerable in [society, the area]
substantial  существенный, значительный, важный	definition of a considerable size or value, having wealth or importance, sufficient and nourishing synonyms considerable, ample, abundant, plentiful, sizable, large-scale, consequential, important collocations a substantial [number, amount, quantity] (of) has a substantial amount of [food, money, ammunition] a substantial [decrease, fall, growth, rise] (in) a substantial [decrease] in [interest, profits, price, value] the [army, enemy, forces] suffered substantial losses the [market, company, organization] reported substantial [profits, losses] is substantial in terms of [size, number, impact] is substantial [against, compared to]
benevolent благотворительный, доброжелательный	definition characterized by or expressing goodwill or kindly feelings; intended for benefits rather than profit synonyms generous, altruistic, kindly, charitable, beneficent, compassionate, sympathetic collocations a benevolent smile gifts from benevolent alumnia benevolent attitude a benevolent institution
stymie загнать в угол, ставить в тупик, безвыходное положение	definition to block or prevent from proceeding or going forward synonyms impede, obstruct, hamper, block collocations stymie growing protests stymie access stymie the career
combat вести бой, сражаться, бороться	definition to fight or contend against;oppose vigorously synonyms oppose, resist, contend with, do battle with, counter collocations combat crime, problem, drug, pollution, inflation, terrorism, threat, unimployment, abuse, desease, effects, racism
capacity вместимость, мощность, способность, объем	definition the maximum amount or number that can be contained;volume; the power or ability of the mind; mental ability, ability to perform, yield, or withstand synonyms ability, capacity, skill, aptitude, facility, competence, faculty, capability, potential, inclination collocations a maximum capacity of [40,000] [people, guests] the capacity is [limited, restricted] to [40,000] the capacity has been [extended, boosted, increased] to is full to capacity is at full capacity has the capacity to [provide, meet, produce, make] [mental, emotional, cognitive] capacities the [child’s, student’s] capacity to [learn, improve]
promote способствовать, поощрять, продвигать, стимулировать	definition encourage; to advance in rank or position; to aid in organizing  synonyms material, physical, substantial, touchable, concrete, visible, observable collocations promoted from [assistant, manager] promoted to [manager, CEO] promote (good) health (and wellbeing) promote a [positive, healthy, better] promote the [development, interests, growth, health] of promote economic [growth, development] (in)promote [awareness, understanding, acceptance, openness] promote [the event, a concert, his movie]
amplify увеличивать, расширять; усиливать	definition to make larger, greater, or stronger synonyms enlarge, extend, increase, intensify, raise, expand , magnify, inflate, enlarge, augment collocations amplify creativity, energy, positive attitudes, enrollment