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Discourses on Global Economic Security
Finances on a War Path: The “Weaponization” of Financial Markets as Legitimate Tools of Foreign Policy

Gone are the days when the world was viewed through the lens of Pax Americana; a time when the United States predominantly set the tone and rules of the game. Today, we find ourselves in the midst of a profound long-term global political and economic transformation leading to a radically changed world. This age of turbulence is defined by certain dynamic trends. One of these is the use of financial markets as legitimate tools of foreign policy. The early 21st century is witnessing an “arms race” of unconventional financial tools and a dramatic weaponization of finances with far-reaching market and other implications. MORE


January 29, 2016


The Russian-language edition of Lee Kuan Yew’s memoirs “From Third World to First: The Singapore Story, 1965-2000” with Foreword by the Hon. Henry Kissinger and Introduction by Dr. Alexander Mirtchev


The Moscow State Institute of International Relations of the Ministry of Foreign Affairs of the Russian Federation (MGIMO) launched its new publishing series with the book “From Third World to First: The Singapore Story, 1965-2000” – the memoirs of the first Prime Minister of Singapore Lee Kuan Yew, the Foreword to which was contributed by the Hon. Henry Kissinger and for the Russian-language edition by Dr. Alexander Mirtchev. MGIMO received a number of congratulatory letters from international policy heavyweights in relation to the new publishing series, noting the value and significance of the publication, including among others, former Secretary of State Dr. Henry Kissinger, Richard Haas and others. Dr. Henry Kissinger noted: “I share with Dr. Mirtchev his great admiration for Minister Mentor Lee, whom I believe to be one of the greatest political leaders of the post-World War II generation”. MORE
Dr. Alexander Mirtchev’s take on ongoing challenges to the post-Cold War world order exemplified by the Ukraine crisis and ISIS, and the NATO summit in Wales

Bloomberg Alexander Mirtchev

In an interview on Bloomberg, Dr. Alexander Mirtchev, Board Director of the Atlantic Council of the United States provides his take on the rising tide of challenges to the world order that was established after the end of the Cold War. A confluence of crises in different regions and of varied nature heralds an across-the-board push against or outright rejection of this order. One example is the Ukraine crisis, where the premises of international relations conduct and sovereignty operating more or less in the same way since the Peace of Westphalia have been put to the test. Another example is the growth of radicalized extremism as a premise for conduct vis-à-vis others. The actions of the so-called Islamic State, which is just the tip of the iceberg, demonstrates how certain actors are no longer acting within the paradigm of behavior and values that have been espoused by the West.  On that backdrop, the NATO summit in Wales reveals the imperative for a re-engineered NATO capable to deal both with issues of immediate urgency, as well as addressing the future trajectory of the Alliance. MORE

September 4, 2014


Shale gas – the new best US foreign policy tool?

RealClearEnergyIn an article on RealClearEnergy, Dr. Alexander Mirtchev, Senior Scholar at the Woodrow Wilson International Center for Scholars, considers the geo-economic and foreign policy implications and advantages that the United States, its allies, and global economic security overall, could derive from the perceived advent of the so-called “shale gas revolution.” The growing significance attached to non-traditional fossil fuel resources is seen as a factor that can remove previous dependencies on external suppliers, the need to protect transport routes and choke points, as well as the concomitant necessity to maintain the security of far-flung territories and countries that are often a source of instability. The further development of these energy resources could eventually provide the U.S. with new forms of geo-economic power by creating a new bargaining chip – something that can be offered or withheld to induce specific geopolitical postures in others. Offering access to these new resources may allow the U.S. to offset the reliance of its allies, in particular in the EU, on foreign energy suppliers, making them less susceptible to the use of energy as geopolitical leverage by exporting countries. The benefit from taking advantage of the “shale gas revolution” could lie not just in the geopolitical realm, but can open up new horizons for economic development within the U.S. itself. However, the practical use of these energy resources for geopolitical and geo-economic purposes is subject to the establishment of new trade relations, networks, infrastructure and capabilities. The choice of whether or not to pursue the development of these new energy resources to advance U.S. foreign policy, geo-economic and geopolitical interests would depend on the extent to which “rather than being a harbinger of a geopolitical withdrawal by the US, the new opportunities presented by shale gas and oil could presage a possible strategic expansion of America’s geopolitical role.” MORE

November 27, 2013



The post-G8 Outcomes: Overarching Statement with Limited Policy Output Due to Divergent Visions of Post-Crisis Recovery Strategies

Following the G8 Summit in Northern Ireland, Dr. Alexander Mirtchev, Board Director of the Atlantic Council of the United States, shared his reaction to its outcomes on CNBC. The meeting at Enniskillen expressed an overarching policy position by the G8, but was accompanied by a relatively modest immediate policy output. Although this is often the nature of such summits, achieving tangible outcomes was not helped by the diverse issues requiring urgent response – the conflict in Syria, trade, tax avoidance, corporate transparency, as well as other concerns such as tackling poverty, fighting terrorism and maintaining the still fragile economic recovery. Achieving consensus was further undermined by the persistent differences in economic security strategies espoused by various G8 countries. Some actors maintain their support for austerity and a return to fiscal discipline, while others insist on stimulating the economy despite already strained government budgets. Predictably, the outcome was a G8 communiqué sparse on detailed growth measures, evidence that states’ immediate focus is rather on finding new ways to fill depleted government coffers. The measures that held a level of specificity – such as addressing tax avoidance and optimizing global trade terms between the U.S. and the EU through a free trade agreement – are yet to pass the test of conflicting perceptions of vital interest between the traditional rule-setters and the emerging powers, in particular China. This lack of consensus was exacerbated by the immediate pressure to reconcile G8 members’ diverging strategic interests where the conflict in Syria is concerned. The lack of mutually satisfactory solution to the conflict is not surprising, but it sounds the death-knell of the 1916 Sykes-Picot Agreement that essentially determined the shape of the political geography of the Middle East today. The dismantling of this century-long framework will result in disequilibrium of geopolitical relations in the region, leading to further global political volatility and economic instability. MORE 

June 19, 2013 


The pre-G8 Summit Agenda: The Transforming Geo-economic and Security Paradigm under Pressure to Address Issues of Trade, Tax and Transparency

In an interview on CNBC prior to the G8 summit in Lough Erne, Northern Ireland, Dr. Alexander Mirtchev, Board Director of the Atlantic Council of the United States discussed the shaping of the summit’s agenda by the divergent pressures of political urgency and the need to meet long-term geopolitical and geo-economic necessities. Beyond the immediate foreign policy challenges and conflicts, this agenda focused on the “hot” issues of the day – global growth, stability and governance. Paradoxically, the dominance of these issues coincided, rather than conflicted, with the societal concerns that usually confront summits of this type – the conduct of multinationals, global trade transparency and tax avoidance. This confluence underlined the consistent pressure on leading economies to find new ways to replenish their treasuries, while at the same time revitalize a persistently moribund global economy. However, this common sense of urgency is yet to be reconciled with the geo-economic realities of new and emerging power players – in particular the BRIC economies – that seek to capitalize on their competitive advantages, and achieve a new positioning in the global political economy. As these powers increasingly eschew the global economic paradigm defined by the West, the likely response toward rebalancing is going to correspond to societal pressure to address issues of transparency and accountability, in particular in extractive industries. Such transparency initiatives run the risk of being taken by actors such as China and Russia as an attempt by the West to impose a “Do as I say, and not as I do” framework to curtail their expanding geo-economic power. It is relatively easy to imagine how imposition of such initiatives by certain actors could lead to new geo-economic rivalries, protectionist approaches, and even trade disputes, resulting in more losers than winners and negatively impacting the still shaky global economy. Actors are likely to undertake actions in response that could exacerbate existing contentious issues, exacerbating existing and creating new economic security risks. The G8 would need to give due consideration to the impact that the increasing attractiveness of geo-economic statecraft actions can lead to new threats to global economic security. MORE

June 13, 2013


Alternative Energy and Global Energy Security In Aftermath Of Rio+20

In an article in Forbes, Dr. Alexander Mirtchev, President of Krull Corp. and Vice-President of the Royal United Services Institute for Defence and Security Studies, considers the implications for alternative energy development of the progression of international negotiations on environmental security and climate change, as exemplified by the Climate Summit in Rio de Janeiro in June 2012. He posits that a major driver behind the development of alternative energy, the pursuit of economic growth and security, has constrained the expansiveness of climate change summitry. With the ongoing economic strains in the majority of developed economies worldwide, the search for mechanisms to achieve the envisaged “green economy” is facing a number of practical hurdles. However, the major constraint is lack of consensus, and there is no agreement on “what is meant by ‘green economy’ or ‘green growth.’” The dialog and negotiations between states appear much more focused on the distribution of funds and resources necessary to kick-start this “green economy”, with the transfer of wealth and technologies becoming a bone of contention. Still, Mirtchev considers that despite the lack of firm consensus on climate change, there is a possible opening for alternative energy developments. “Alternative energy can be a universal buffer against energy supply disruptions and price shocks, as well as broader economic volatility and global cyclicality.” Achieving such outcomes would be contingent on the creation of a global alternative energy market that would facilitate public and private collaboration and the eventual integration of the private sector as the motivating force of such a market. It will also entail developing a consensus on the goals of economic security mechanisms that match the needs of the majority of actors, and avoiding the problem that one actor’s economic security mechanism may prove to be another actor’s economic security threat. MORE


August 27, 2012


Will the G-20 Counter the Power of Uncertainty?

With the run-up to the French G-20 summit, Dr. Alexander Mirtchev, President of the Royal United Services Institute for Defense and Security Studies (RUSI) International, noted in RealClearWorld that the rising tide of global economic turmoil and problems ranging from sovereign indebtedness to consumption and saving imbalances have created a ‘perfect storm' that is far from abating.  He considers the challenges that G-20 leaders face in setting forth a concrete, viable roadmap that genuinely addresses the range of outstanding global economic security risks, and in particular countering the uncertainty gripping the global economy. These challenges are underpinned by the political considerations that formulate the continued policy paralysis, which he considers exacerbates uncertainty and undercuts market confidence. Adding to the general sense of economic anxiety is the feeling that policy makers continue to be misdiagnosing the underlying problem.  In the case of the immediate hurdle of the sovereign debt crisis, leaders appear to be primarily addressing a symptom – lack of liquidity, rather than the underlying cause - a lack of solvency. While the apparently inevitable response – debt restructuring – may be unpalatable to creditors, it is, in all likelihood, a reality, but requires a political solution. Despite the political difficulties, developing and implementing a viable roadmap to help governments and markets navigate the turbulent waters will go a long way towards reinvigorating sustainable economic growth and strengthening global economic security. MORE


October 28, 2011


The ongoing wave of quantitative easing – is Japan’s monetary easing a sign of a global anti-austerity tsunami?

In an interview on the BBC, Dr. Alexander Mirtchev, Senior Scholar at the Woodrow Wilson International Center for Scholars and president of Krull Corp. discusses the ongoing global plans to loosen monetary policy. The latest step in worldwide quantitative easing measures was undertaken by Japan, which broke away from years of financial discipline. Japan’s central bank – the Bank of Japan – announced an unprecedented stimulus package of $1.4 trillion over 10 years. This policy provided a short-term fillip to global markets that were starved for some form of good news. Monetary easing is working by providing a new direction of policy activities that affect the perception of the world markets about the willingness of major economies to be part of a global recovery. “The Bank of Japan’s monetary easing should be viewed as a bold political statement, rather than a set of policies that still need to be tested before assessing how they will be implemented in practice and what they will mean,” indicated Mirtchev. This policy can be seen as part of the global wave of anti-austerity sentiments that appear to be coming to the fore after several years of dealing with low growth and inflation and extensive state indebtedness. This policy changes the way in which the markets see the direction that the Japanese economy is taking. It also, according to Dr. Mirtchev, “provides a new bold direction of think in Japan and affects the perception of the world of the shape of the global economy.” MORE

Source: BBC World News

4 Apr 2013

The new EU External Energy Policy – a statement of political and economic intent that impacts global energy security

The EU’s adoption of its new External Energy Policy contributes toward its posture as a unified negotiating bloc in the world energy market, argues Dr. Alexander Mirtchev, President of Krull Corp. and Vice-President of the Royal United Services Institute for Defence and Security Studies in European Energy Review.  Should this posture be accompanied by tangible and practical measures and actions, the EU External Energy Policy ‘could provide more efficient economic outcomes, reduce price volatility and strengthen political stability, with a positive effect on regional and global energy security and geopolitical balances.’ The new Policy may create opportunities for the EU to have a larger say in global energy security matters and help cushion it from external energy shocks. However, this Policy also could ‘expose contradictions between its intended outcomes and the existing positions of individual member states that may have previously enjoyed advantageous arrangements with energy suppliers.’ There is also a risk that the Policy may actually result in alienating some external suppliers.  Still, no matter how the EU External Energy Policy evolves in practice, it is an economic and geopolitical signal that heralds an important unfolding story. Indeed, its very existence could contribute toward a redefinition of the global energy security picture and add to the geopolitical puzzle.  MORE 

December 8, 2011

European Energy Review

Will Financial Regulation Trash Global Economic Security?

In an article in Forbes, Dr. Alexander Mirtchev, President of Krull Corp. and Vice-President of the Royal United Services Institute for Defence and Security Studies, poses the question “Is it not time to cease fighting against the current; or… stop trying to put the genie back in the bottle,” as far as financial regulation is concerned? The fallout from the global financial and economic crisis led to a call for increasingly tight and comprehensive regulation of the financial sector. The most prominent example has been represented by the financial regulatory reform package to ostensibly minimize risk in the financial system and maximize consumer protection, developed under the auspices of the Financial Stability Board. However, according to Mirtchev, the effects of this regulation, in particular on economic growth and global economic security, are yet to be fully articulated and addressed. In particular, the impact and costs of these regulations on the market and especially the customers of financial institutions, could have significant importance for market confidence, productivity and risk assessment. In Mirtchev’s view, “the issue is not whether or not to regulate, but what to regulate and how to reinforce, rather than distort market efficiency, promote productivity and growth.” The path toward optimal regulatory frameworks would need to focus on the financial products themselves, rather than on the process or the activities that lead to them. Appropriate regulation would have to ensure transparency, information and education about the outcomes, in order to address systemic risk issues and be conducive to growth. Ultimately, this could entail unleashing a “global financial mega-market” of mass participation, based on new and upcoming technologies, as well as advancements in the financial services sector. MORE


In response to the question posed by the International Business Times, ‘Does the new line of credit by the IMF to strong Eurozone economies raise the chances of higher inflation and a rise in the price of gold?’, Dr. Alexander Mirtchev, President of RUSI International, considers that the IMF’s provision of a new credit line to even strong and healthy Eurozone economies consolidates its tangible role in the current crisis by extending a further global financial safety net. As far as the price of gold is concerned, he posits that such moves, ‘while not a decisive factor,’ tend to ‘contribute to the rise of the price of gold.’ The inflationary pressure from this credit line, which could ‘act as another form of quantitative easing,’ would contribute to further commodities price rises, including gold. In addition, the inflationary pressure could exacerbate the flight to gold’s perceived safety, thus further pushing prices up. Not forgetting the classic ‘on the other hand,’ this upward movement would be offset by the dearth of liquidity due to the European debt crisis. Debtors – both private and state – would need to liquidate assets in the process of restructuring their liabilities, including via sales of gold reserves. This was also exacerbated by regulatory requirements of commodity exchanges, which entailed traders liquidating stocks, including gold, in order to meet increased margin requirements. Thus, irrespective of blips resulting from the inflationary pressure from measures such as the IMF’s credit line, the gold price is likely to continue to follow the fundamentals. MORE 

International Business Times

November 23, 2011

We are all Europeans Now

“While the EU has modernized and expanded in ways that its founders may not have envisioned, the architecture that underpins the Union has not adapted to the realities of a globalized twenty-first century”, notes Dr. Alexander Mirtchev, President of Krull Corp., Vice-President of the Royal United Services Institute for Defence and Security Studies and Forbes Contributor.  Mirtchev argues that, in effect, “we are all Europeans now, as the euro zone crisis threatens global economic security and threatens to evolve into a renewed global economic crisis.”  Genuinely addressing these threats likely will mean rebuilding Europe from the bottom up and laying the foundation for a new era of European growth. To achieve this, Mirtchev believes that the EU would benefit from an institutional makeover which would include both the lengthy process of amending the EU treaties to bring about a closer fiscal union and at the same time undertaking measures in the short-term that demonstrate to the markets that European countries, particularly Germany, are willing keep the distressed economies of Europe afloat.  Further, the EU could benefit from a hard look at the sustainability of its current socio-economic model.  Indeed, the roots of the “economic problems of the euro zone lie ultimately in the structural imbalances at the heart of the EU.”  Considering a potential path back to growth, Mirtchev suggests that EU leaders implement measures, such as a revamping of its painfully rigid labor market, to ignite entrepreneurship, innovation and productivity. Ultimately, addressing the challenges of the European sovereign debt crisis may appear trivial from an intellectual point of view, but they may prove far from trivial from a historical perspective.  MORE 

January 4, 2012


The Global Inflation Wave: Waiting for Emperor Constantine?

In the wake of the global economic crisis, the world economy is trying to chart a path to a future equilibrium and find a "new normal." According to Dr. Alexander Mirtchev, President of Krull Corp., there is an inherent danger that in the pursuit of recovery and a global economic security equilibrium that allows “business as usual,” inflation has been deemed by some policy makers to be a target that can be “sacrificed.” In the long-run, that is not likely to be the case, however. As early in history as the reign of the Roman Emperor Constantine, governments have had to deal with the unsustainable nature of economies, wracked by the problems that inflation imposes. The modern approaches utilized to address economic weaknesses, however, are more reminiscent of Constantine’s predecessor, Diocletian, who undertook price controls and currency debasing policies in order to redress the Roman Empire’s growing liquidity problems. Now, in the US (and Europe) debasement is taking the form of “quantitative easing,” which in turn is supporting the build up toward a surge in prices in both the developed and developing economies. Governments in either case should be increasingly concerned about the inflationary impact of their economic policy. The nature of the responses to strained growth prospects has already generated market uncertainty and fluctuations, which could presage deeper problems and even social discontent and rising tension. This poses questions about the convergence of weak growth and inflationary pressures, exacerbated by strained state balance sheets across the developed economies. In the main, the responses that have emerged so far appear to fall short of addressing the economic security risk of boosting inflation in a period of stagnating growth. A number of these policies do not integrate the need for structural changes in the developed economies that go beyond just scratching the surface but reach to the heart of the integral sustainability of the global economic model that prevails at present. MORE

This article is part of the series “The Annals of Entropy: The Search for a New Global Equilibrium” with Dr. Alexander Mirtchev and Dr. Norman Bailey.

The Globalist

March 24, 2011

Without Addressing Systemic and Structural Imbalances

In response to the Economist’s debate following Federal Reserve Chairman Bernanke’s speech at the annual meeting of central bankers in Jackson Hole, Wyoming, Dr. Alexander Mirtchev considers that governments worldwide, including the US Fed, should take a long and hard look at the inflationary impact of the foretold policy responses of the day – i.e., QE3 – to flagging economic recovery. Mirtchev, President of the Royal United Services Institute for Defense and Security Studies (RUSI) International, noted in the Economist that the majority of measures currently under consideration seem to be of a stop-gap nature, rather than embodying the necessary set of radical reconsiderations aiming to address the structural weaknesses that are imperiling the global economy. Mainly, the responses that have emerged so far are exactly that – responses. For now, they eschew addressing the economic security risk of creating inflationary pressure in a period of stagnating growth, which in the mid-term could render them rather insufficient in the eyes of the market. A more comprehensive approach appears appropriate. MORE

The Economist

August 31, 2011

Sovereign Debt and Beyond: Toward a New Magna Carta?

Dr. Alexander Mirtchev, President of Royal United Services Institute for Defense and Security Studies (RUSI) International and Board Director of the Atlantic Council, analyzes the extent to which the deteriorating global debt situation is undermining efforts to return to sustainable economic growth worldwide. It appears that the debt problems of the developed countries have gathered an unstoppable momentum, prompting divergent reactions and proposals that are often inadequate to the scale of the problem. On the surface, the policy preferences focus either on austerity measures or further stimulus packages. Both seem to ignore significant aspects of the economic problems that are coming to the surface in particular in the developed economies. In effect, policy decisions often boil down to a choice between the least damaging option, as both stimulus and austerity entail added strain to government budgets. Yet, stimulating growth is unsustainable as it exacerbates the issue of global debt weaknesses, and austerity is deemed counterproductive in a period of recession. Furthermore, hoping that stimulating growth would generate sufficient revenues to bring government budgets back into the black relies more on chance than on fundamentals. The debt burden and stagnating productivity of a number of economies is due largely to the existence of extensive long-term commitments that are at the core of the overall social contract prevalent in the Western world and beyond. That in mind, it is increasingly evident that grand plans and declarations are not deemed sufficient by the markets. Instead, it is imperative to address the underlying cause of the debt crisis – weakening solvency, predicated on unsustainable economic relations and undertakings. That entails a redefinition of what is essentially the social contract among the government, Main Street and Wall Street, with the current circumstances being a vivid reminder of the precursors of the Magna Carta. A redefined social contract would enable addressing the distortions caused by the interactions between governments, populations and markets that impose growing restrictions and market involvement by states endeavoring to combat the effects of the global economic downturn. However, it does not appear that a new “Magna Carta” is on the cards. MORE

This article is part of the series “The Annals of Entropy: The Search for a New Global Equilibrium” with Dr. Alexander Mirtchev and Dr. Norman Bailey.

The Globalist

March 31, 2011

“Deep Thoughts by Alexander Mirtchev” – Oxford SWF Project’s Ashby Monk comments on G20 Magazine publication

See Oxford University SWF Project. MORE


Source: Oxford SWF Project

November 17, 2010

Securing global economic security

In a Letter to the Editor of the Times, Dr. Alexander Mirtchev, President of Krull Corp., assesses inflation as a significant factor of global economic security and has the innate capacity to upend carefully laid plans.

The erosion of earnings by inflation should move higher on the economic agenda. In fact, the issue of inflation is hardly limited to the UK alone: the developed economies are still faced with the threat of stagflation, while the rapidly developing economies, such as China, Brazil and India, are showing signs of overheating.

Inflation is a significant factor of global economic security and has the innate capacity to upend carefully laid plans and further upset the efforts to bring the global economy back into equilibrium. In that regard, the risks to recovery associated with higher interest rates should be carefully considered, as ultimately the choice may be between the lesser of two evils: slower recovery or rampant inflation over the longer term.

In effect, the inflationary pressure is exacerbated by various aspects of government intervention and the aftermath of the bailouts of the too-big-to-fail banks and companies in a number of the developed economies.

With that in mind, the policies put forward by the governments of the UK and other developed economies that revolve around mechanisms such as austerity measures or quantitative easing, continue to focus on liquidity, rather than the core of the economic malaise — solvency. MORE

The Times

May 6, 2011

The Rising Global Significance of Sovereign Wealth Funds – A New Geo-economic and Geopolitical Factor Impacting Global Economic Security

In the G20 Magazine for the Korea Summit in November 2010, Dr. Mirtchev, Vice-President of the Royal United Services Institute for Defense and Security Studies, London, and President of Krull Corp., analyses SWFs’ strategic repositioning in the wake of the worldwide financial and economic crisis. He assesses the rising economic security relevance of SWFs, rooted in their historical underpinnings – the VOC (Dutch East India Company), the British East India Company and others, and manifested in their contemporary role as economic power projection tools. Emerging from the single-country focus of Temasek and the Kuwait Investment Authority, and the broader “trophy assets” sprees of the Abu Dhabi Investment Authority and China’s CIC, among others, SWFs are rechanneling their resources towards production and asset-based investments, becoming a significant source of financing, prepared for broader strategic cooperation among themselves and other market players. The ability of SWFs to take an inherently longer-term outlook and their stabilizing influence should be balanced against their potential to be a disruptive force in international investment flows and the intrinsic concerns about the balance between political and economic objectives of SWFs. They are subject to continuous transformation in their own right as they become a more intrinsic part of the market, and the market will inevitably have its say. At the same time, the growing relevance and projected significance of SWFs has made them a focal point for more intense scrutiny, and has in turn driven them to increase the level of transparency and accountability that surrounds their investment and operational activities. MORE

Source: G20 Magazine – Seoul Summit 2010

November 12, 2010

The European Debt Crisis – Dominant State Intervention Need Not Preclude Market-oriented Exit Strategies, But One Should Not Hold One’s Breath

Dr. Alexander Mirtchev, President of Krull Corp., in an interview with CNBC, emphasized that measures considered and applied in dealing with the European debt crisis are exacerbating market uncertainties and impacting global economic security, in particular due to addressing the crisis as liquidity rather than a solvency problem.  Mirtchev indicated that the measures put forward in response to the concerns over Greece, Ireland, Portugal, Spain, Belgium, Hungary, etc. aim more to “put off” the sovereign debt issues arising in the wake of the global economic crisis, rather than resolve them. The recovery measures put in place by the leading EU economies have had a particularly pronounced impact on state balance sheets. Moreover, Mirtchev stressed that there are no fundamental reasons which prevent a practical and viable market-oriented exit strategy from the government intervention in the markets that could further alleviate outstanding sovereign debt burdens. Such a strategy would entail debt restructuring, enacting policies which genuinely support economic growth, innovation and competitiveness and, in general, reshaping the currently unsustainable broader economic arrangements. Inevitably, such a set of measures will prove painful and unpopular, and will therefore depend on the leadership and political resilience of the major EU member-states, in particular Germany. However, other approaches would only deepen and extend the global impact of the European debt crisis, putting sustainable recovery further and further into the future. MORE

Source: CNBC

May 15, 2010

Sovereign Wealth Funds to Multiply

Economic (and Political) Power Projection Aspirations Coupled with the Strong State Balance Sheets which Support SWFs are Meeting the Financing Demands of a Cash-Starved Economic System and the Need for a Global Economic “Insurer of Last Resort”

Dr. Alexander Mirtchev, President of Krull Corp., maintains that SWFs are increasingly seen as bound to play a more critical role in global economic security, driven by the imperatives for a growing number of states to establish new mechanisms to exert geo-economic, as well as possibly geopolitical, pressure. These funds are strongly positioned to act as a first choice source of financing in the current cash-starved economic environment in Europe and other regions.  Indeed, SWFs have taken on a new role that goes beyond being a source of cash and fall-back option for alleviating sovereign deficit issues. They are becoming part of states’ considerations in establishing a more advantageous position in the global economic and geopolitical landscape in the wake of the global economic crisis. The diverse advantages they are seen to convey to governments have actually spurred intentions of establishing new SWFs. Within the framework of depressed valuations among European economies that appear to have fully embraced austerity, SWFs can not only buffer their own sovereigns from the boom and bust cycles of the global economy, but may actually become an “insurer of last resort”. At the very least, SWFs can serve as a “bridge” that could ease the transition from state intervention to market-oriented strategies. In this manner, they are gaining prominence as legitimate elements of the fundamental mechanisms that could be deployed to strengthen global economic security. MORE

Source: The National

June 26, 2010

The Euro is First and Foremost a Political Project – Intrinsic Political Considerations will not Allow the Collapse of the Euro Zone, For Now

Dr. Alexander Mirtchev, President of Krull Corp., in discussion with Dr. Yannis Papantoniou, former Finance Minister of Greece, assessed the survival of the single European currency, determined more by the political nature of the European project and the vested political interests in its survival than by the economic fallout caused by some of the Eurozone’s unstable and debt ridden economies. The impact of the unfolding European sovereign debt guarantee plans and financing mechanisms deployed to address European countries’ balance sheet problems would inevitably affect the broader future of the single European currency. Despite the unsustainable economic arrangements that underpin the Eurozone’s developments, it is unlikely that this project would be allowed to fall apart; indeed there is no Euro ‘exit strategy’.  It is hard to imagine, after a decade of the Euro, member countries rushing to embrace their old currencies. The Euro will survive, but, in the long-term it must be supported by sound economic leadership and policies, not the emotional rhetoric from which it was born. Due consideration should be given to navigating the upcoming risks associated with this survival, however, in particular that of a two-speed Europe emerging, which could bring its own long-term destabilization factors. MORE

May 11, 2010

Prioritizing Investment Portfolios Beyond the Global Downturn – Multinationals and SWFs Surpass the “Withdraw And Regroup” Phase and Consider the Post-crisis Geo-economic Horizon

Dr. Alexander Mirtchev, President of Krull Corp and former Chairman of a sovereign wealth fund, discussed the rationale and potential consequences for the global economy from the increasing investment activity by sovereign wealth funds.  He emphasized the fact that the economic crisis has driven SWFs to prioritize their portfolios and to move beyond the “withdraw and regroup” stage. Investments focused on production capacities and productive industrial sectors, in turn, could boost the pace of recovery in the respective markets where they are made. Inevitably, states see the opportunity for enhancing their geo-economic presence and geopolitical power via the mechanisms SWFs provide. In this process, SWFs are seeking to offset limitations or inefficiencies they may have with investments in specific projects or specific markets, and are focusing on synergies and trying to stay ahead of the curve by making targeted growth investments in strategic sectors. The added positive effects of SWF cooperation could bring about improved sovereign investment efficiency and intensified activity could ultimately lead to stabilization of economic growth and boost market confidence in various emerging and rapidly developing economies, as well as some developed ones. This, in turn, could strengthen the pillars of the global economic architecture. MORE


Source: ABC Channel 25

August 27, 2009

After the Worldwide Bailouts – The Long Shadow of Overwhelming Sovereign Indebtedness Has Not Created an Imperative to Redefine the “Social Contract” between Main Street, Wall Street and the Government

SmartMoney logodow jones logoDr. Alexander Mirtchev noted that the actions taken toward economic recovery, in particular, the state intervention in the market, generate complexities and imbalances that can have a medium- to long-term impact on sovereign debt, and, ultimately, global economic security. He emphasized that to be successful, state intervention should not only be balanced, but also consider its ongoing effect on strained sovereign balance sheets, and requires a clear exit strategy. This exit strategy should indicate to the markets the policy goals as well as the respective developments that the markets can factor in their calculations. Such a strategy would alleviate fear and uncertainty about the future, boost market confidence, and ultimately bring a new level of productivity, competitiveness and entrepreneurship, thus ameliorating global economic security. It is notable that the sovereign debt pressures resulting from the bailouts might have been avoidable, but, as has been pointed out before, government intervention in the markets was the “cure of choice” for the global economic crisis. At the end of the day, a viable and transparent exit strategy from the bailouts would require a redefinition of the “social contract” between Main Street, Wall Street and the government. It’s imperative that policymakers recognize that this “contract’s” current form, made up of often unsustainable commitments, does not provide a “silver bullet” to deal with the “elephant in the room” – the specter of economic depression, looming debt and incipient inflation。 MORE

Source: Smart Money

August 21, 2009

The Global Economic Security Equation – Likely Prospects Defined by Worldwide State Intervention in the Markets and Resulting Accumulated Debt

Dr. Alexander Mirtchev cautions that the potential recovery determined by global economic initiatives, such as those envisaged by the G20, will be contingent on taking into account their unanticipated consequences. He emphasized that the signs of recovery should be considered in context and that the global economy is not “out of the woods” yet.  However, Mirtchev indicated that some, in particular the rapidly developing economies, have reached the nadir of the downturn, and should be on the upward slope.  A consistent and sustained recovery will not only be contingent on the absence of new external “shocks” and systemic upheavals, but, most importantly, on the impact of the government intervention in the markets that was prompted by the crisis. This impact’s drawbacks will become most apparent in the precarious debt positions of certain countries. In this context, the reaffirmation by the G20 of the intent to maintain the unprecedented levels of government intervention worldwide will generate additional complexities and distortions that could impact global economic security. Ultimately, the return to global economic security equilibrium will clearly depend on the formulation of an efficient, timely and straightforward exit strategy.  MORE

Source: MSNBC

May 11, 2009

The Elusive Quest for Growth – Resurgence of Corporate Mergers in Anticipation of Global Recovery

Dr. Alexander Mirtchev, President of Krull Corp., considers the extent to which the signs of revitalization in the international mergers and acquisitions market point to a resurgence of market confidence and a new stage of global economic recovery.  While the revival in international M&A activities has often been interpreted as one of the “green shoots of recovery,” Mirtchev believes that the rationale for the recent resurgence reflects not only the expectation of prolonged recovery in the eventual post-crisis period, but also indicates the intrinsic process of repositioning that multinationals seem to be undergoing. From his perspective, the increasing number of major corporate alliances and acquisitions correspond to a drive to develop synergies between corporations that will, on one hand, position them well in the long term and reinforce more balanced global economic growth, as well as provide them with a new level of influence propagated across state borders, on the other. In this manner, non-state actors are generating new resources and tapping alternative and non-traditional income streams, which in turn points to new avenues for a solid post-recovery growth, but outside the previous boom-bust cyclical framework. MORE

Source: Global Finance Magazine

October 1, 2009

Post-crisis Political Realities Changing SWF Dynamics – Synergetic Investments by SWFs Expand Under the Banner of Corporate Governance and Transparency

The “Oxford Sovereign Wealth Funds Project,” Oxford University, analyzed SWF post-crisis investment strategies and discussed views concerning the new political reality that positions SWFs in a new role in the global economy, exemplified, among others, by the growing trend of cooperation between them. According to comments by Dr. Alexander Mirtchev, the increased strategic cooperation between SWFs in emerging markets reflects the potential advantages that SWFs and their sovereigns achieve, by realizing opportunities for a new geopolitical and geo-economic positioning. Just like multinationals, in certain industry sectors SWFs are able to achieve more, as they may not be bound by anti-trust and other restrictive regulatory policies. In addition, joint project development allows better structuring of the investment activities of SWFs, making them a more desired and systemically important investor, in particular in the context of post-crisis global economic security. Mirtchev considers that SWF cooperation will help diminish concerns regarding the political motives of individual SWFs and, at the same time, contribute to market legitimacy and transparency of both the funds’ operations and the regional economies they work in, thus better equipping them for market expansion in regions to which they have not had exposure before, which would likely benefit regional and even global economic security. MORE

August 18, 2009

The Geopolitics of the Global Economic Recovery – Rapidly Developing Economies Could Return to Growth First, Generating a Profound Global Economic Impact and Certain Geopolitical Implications


Dr. Alexander Mirtchev, President of Krull Corp., member of the Board of Trustees of the Kissinger Institute on China and the United States at the Woodrow Wilson International Center for Scholars, and a Board Director of the Atlantic Council of the United States, analyzes the recovery strategy pursued by rapidly developing and some emerging markets through and beyond the economic crisis. Dr. Mirtchev suggests that there are new geopolitical balances imposed by the multiple dimensions of power projection by an increasing number of power centers that characterizes the twenty-first century. These multidimensional balances are aptly illustrated by the consideration that the recovery of certain economies, including China, India and Brazil, although still patchy and uneven, would in general be quicker than some of the developed economies. He delineates the commonalities and distinctions in the recovery approaches noting that certain rapidly developing economies are incorporating the effect of regional and global systemic imbalances as well as their own domestic strategic priorities, in their anti-crisis agendas and ambitions. This would prompt, in Mirtchev’s view, a reassessment of recovery-oriented global economic security cooperation, with the quicker-recovering economies pursuing opportunities for a better positioning within global institutions and platforms, such as the IMF and G20. The success of rebalancing will be signaled by and inextricably linked to the formulation of respective government exit strategies, combined with appropriate structural reforms and creating the preconditions for “engineered” economic growth in specific industries like mining, power generation and agribusiness. The choice of this type of strategic directions would indicate a reinvigorated international focus by certain emerging markets, which seek to secure, at advantageous terms, the requisite resources for growth. However, a rebalancing of this magnitude is likely to entail global economic security implications. For example, there are doubts that some countries will contain their expansionist strategies within the existing rules-based system largely governed by WTO, which could result in globalization falling victim to the “thousands cuts” of small protectionist measures. The concomitant symptoms of the fragmentation of the global market and the tendency toward the formation of various regional and international “economic blocs” can affect the stability of the current single-dimension network of international trade relations, as well as geopolitical balances and global economic security. MORE

Source: Diplomatic Courier

Fall 2009, Issue IV, Vol III

Potential Global Rebalancing Factors – SWFs to Expand Footprint in the Emerging Markets via Strategic Cooperation

Dr. Alexander Mirtchev, President of Krull Corp., discussed the post-crisis trend of active cooperation between sovereign wealth funds in investment projects, reflecting the shifting balance of geo-economic power throughout a wider spectrum of actors. He notes that such SWF alliances point to their growing market confidence and greater ideological acceptance both in the emerging markets and the developed economies. According to Mirtchev, sovereign investment partnerships are not merely another risk mitigation phenomenon stemming from increased risk aversion among investors but rather a healthy search for synergistic opportunities benefiting economic development in regions where such alliances jumpstart operations. Furthermore, it is an offshoot of the rebalancing of economic priorities of emerging markets in particular, which seek new patterns of investment that would combine returns with enhanced risk mitigation. Ultimately, the rising investment appetite by SWFs could represent a useful catalyst for economic recovery in regions and markets that may otherwise have been slow to rebound.  Moreover, the increased willingness of investors to share the benefits from merger and acquisition activities in order to introduce elements of comparatively independent supplementary financing mechanisms in their transactions is another sign of their growing maturity. Put in perspective, this trend may set the stage for the development of evolved forms of financing of investment transactions that could integrate as an additional layer of the global financial system. MORE

Source: Reuters Hedgeworld

August 18, 2009

In the Midst of the Crisis “Bottom Fishing” has Already Begun – Multinationals Navigating the Emerging Multi-centric Global Economy

Forbes logoDr. Alexander Mirtchev, President of Krull Corp., asserts that, despite the persistence of the global economic downturn, there are signs of revival in investment activity, in particular towards assets that appear undervalued. To a large extent, this resurgence reflects the growing assimilation of the realities of the multiplying power centers and the increasing significance of non-state actors, such as multinationals. Even though indications that growth in certain sectors may be on the rebound are far from reliable precursors of the end of the economic crisis, the continued uncertainty has not deterred select market participants, including private equity and sovereign wealth funds, from becoming more active in seeking investment targets among distressed assets that are perceived to have upside potential, in particular in areas aligned with their new agendas. This search for undervalued assets, or “bottom fishing”, can be interpreted as a trend of multinationals repositioning themselves for the new multi-centric global economy, where the vectors of productivity, growth, profit and economic power intersect across a number of dimensions. The targets for such “bottom fishing” are also determined by the belief that market recovery will be quite uneven, with some industrial sectors pulling ahead, while others remaining on a downward slope for longer periods, making post-crisis positioning as, or even more important that the trajectory of recovery, dependent on the depth and length of the slump in each specific industry. MORE

Source: Forbes

April 7, 2009

Rectifying the Discordant Role of the International Financial System in the Global Security Architecture – Time to Unleash a Global “Financial Mega-Market”?

The President of Krull Corp. Dr. Alexander Mirtchev believes that the initiatives espoused to reform the global financial markets and reshape regulations ultimately represent an attempt to “put the genie back in the bottle”. To an extent, the regulatory drive is reminiscent of an effort to bring the global financial system back to its pre-crisis status, rather than reform it. Strengthened market regulation and a newly empowered IMF could address certain immediate economic security threats and concerns, as well as pre-empt some upcoming financial market upheavals. On the other hand, the strategies reflected in more stringent regulatory regimes could also have wider repercussions on broader economic security, including impede financial innovation, create opportunities for “regulatory arbitrage” and stifle the eventual emergence of a new global financial system. The reform process also has to contend with the residue of decades of misdirected policies, over-leveraging and major economic imbalances. It could prove more beneficial for the global economy to consider supporting the emergence and the “unleashing” of a “global financial mega-market”.  This innovative development would utilize the technologies and infrastructure that are already in place; empower and educate both sophisticated market players and individual consumers; and incentivize rather than restrict business activity, all the while establishing clear, consistent and transparent rules of the game. MORE

Source: Al Jazeera

June 2, 2009

Emerging Markets’ Uneven Recovery Creating New Strategic Openings – Multinationals in the Midst of the Downturn

business week logo

The President of Krull Corp. analyzes how the financial crisis and massive across-the-board government intervention could affect the short to medium-term strategies of multinationals. Dr. Alexander Mirtchev argues that the multinationals feeling pressure from the economic downturn should not shy away from increased expansion in rapidly developing economies and emerging markets. At first glance, developing economies have a wider scope of unutilized profit margins and untapped resources. A more in-depth look provides the opportunity to glimpse more long-term benefits for those non-state actors that wish to secure a new position for themselves in the global economy. These markets can provide a positive factor that could offset some of the negative results that are anticipated in multinationals’ core markets. Many of these economies are expected to emerge from the crisis sooner than the developed economies which are likely to continue to struggle with the consequences of heavy government intervention in the markets and subsequent sovereign indebtedness. International conglomerates should be bold in embracing new opportunities that the emerging markets provide because it may put them ahead of the curve and allow them to take full advantage of the subsequent economic recovery.  MORE

Source: Businessweek
February 26, 2009

The Omnipresent Specter of Sovereign Debt - Defining the Nature of the Post-Recovery Period and Beyond

Dr. Alexander Mirtchev, President of Washington, D.C.-based Krull Corp., assesses the short- and long-term implications of policies, in particular in the U.S., undertaken to counter the recession, exemplified by the intensive government intervention in the private sector and financial markets. This intervention has brought to the surface a range of issues likely to impact the restoration of the “social contract” between Main Street, Wall Street and the government. He considers that, as the U.S. government has only a limited set of tools at its disposal to deal with the current crisis in all its complexities, the duration of recovery will be closely correlated with the levels of sovereign debt and the impending concerns over burgeoning deficits. The presence of the “elephant in the room” – the specter of stagflation – economic depression and incipient inflation – is also a factor that can exacerbate the wider economic impact of worsening sovereign debt. Mirtchev stresses that in the context of sovereign and corporate balance sheet fragility, the use of government intervention in the markets as a “cure-all” and a “substitute” for bankruptcy and other corrective market mechanisms, could have unintended consequences.  It is also imperative that government intervention be balanced and accompanied by a clear exit strategy. How the U.S. and other developed economies approach and coordinate their exit strategies could also have a fundamental impact on the restoration of market confidence and global economic security. MORE

Source: Al Jazeera

May 24, 2009

Globalization and Fragmentation as Two Sides of the Same Coin – Emerging and Rapidly Developing Economies, including their Banks, are Not “Decoupled” from the Rest of the World in the Global Economic Crisis

The President of Krull Corp., Dr. Alexander Mirtchev, assessed the strategies of emerging markets and banks in those markets which are being used to deal with the credit crisis and the global economic slump.  He indicated that while the banks will accept government assistance, they are not in a position to fully utilize the resources received before needing to find a market solution to their difficulties. This situation underlines the diverging pressures of globalization and fragmentation that are currently at work in the global economy, reinforcing the importance of markets such as Russia, China, India and other rapidly developing economies, which are far from “decoupled” from the global economy. In effect, the divergent pressures of integration and fragmentation are intrinsically linked, finding a common expression in the altered economic power balances outside the traditional scope of developing and developed economies. While rapidly developing economies cannot be the “sole engines for growth” that could keep the global economy on an upward path, their “domestic” recovery measures could have a positive effect on regional economic security and the pace of global economic recovery. VIEW


Source: Bloomberg Television

February 12, 2009

Liquidity vs. Solvency – A Choice with Profound Implications for Dealing with the Crisis and the Recovery Period, and, Most Importantly, for Post-Crisis Global Economic Security

Dr. Alexander Mirtchev believes the financial crisis and the economic downturn should be approached as two separate issues that have coincided and have mutually reinforcing effects on the global economy. The intensifying government intervention measures undertaken by the developed economies are focused predominantly on addressing liquidity problems, when the essence of the crisis lies in solvency issues. Mirtchev argues that government intervention ignores solvency in favor of liquidity at its own peril, and that such a choice would define the manner in which the crisis would be dealt with. When analyzing the impact of government intervention in specific industry sectors, Mirtchev highlights the danger of “prolonging the agony” when supporting selected companies’ liquidity, rather than addressing their solvency issues.  In the final analysis, government intervention will be judged appropriate and successful if it provided a boost to market confidence within a relatively short time span, and, crucially, encouraged new levels of productivity, competitiveness and entrepreneurship, whilst dealing with the social fallout of the crisis. Looking ahead, how leading economies handle these choices will impact not only the rules of the game, but the philosophy underpinning the global economic architecture. MORE

Source: MSNBC

February 19, 2009

Global Economic Adjustment Seems Inevitable – Multinationals Should Gear-up for a Serious Economic Downturn and Use This Time to Reposition Themselves with a Focus on Emerging and Rapidly Developing Economies

The President of Krull Corp., Dr. Alexander Mirtchev, analyzes the potential growth strategies of multinationals faced with the vagaries of the global financial and economic crisis, as a feature of the upcoming global economic adjustment. Following the impact of across-the-board government intervention, emerging markets represent an area of growing interest, due to the relative abundance of undervalued assets that have remained undeveloped due to the crisis.  Mirtchev’s view is that these markets not only provide greater upside potential for multinationals, but also could significantly enhance their global positioning. The path to recovery will be patchy and uneven, but corporations that are seen to be active in the “tough times” will have created a springboard for future expansion leading to immediate and long-term benefits. MORE

Source: Voice of America

January 22, 2009

The Lasting Impact of the Post-Cold War Paradigm Shift on Energy Security – Without a Political Solution, the Russia-Ukraine Gas Dispute Exemplifies Energy Disruptions Impacting European and Global Energy Security

Krull Corp.'s President Dr. Alexander Mirtchev, in an interview with Energy and Environment Television, analyzes the tilt in international energy security balances in the context of the transformational geopolitical and geo-economic changes after the end of the Cold War. A point of note that underscores the significance of these changes that in confluence could be considered as representing a post-Cold War paradigm shift is the Russia-Ukraine gas dispute. Mirtchev believes that it is not realistic to expect that energy suppliers like Russia would readily give up the geopolitical competitive advantage endowed by controlling energy resources. The effect of utilizing this advantage is further exacerbated by the lack of a coordinated strategy and approach by the consumer countries. As evidenced by the Russia-Ukraine natural gas supply dispute, the weak position of a divided Europe has not changed, despite the realization by the EU consumer countries that they will continue to face recurring energy disruptions. Mirtchev argues that the impetus to utilize “natural resource” power to secure an enhanced geopolitical position by exporters impacts the foreign policy decisions of European nations and the U.S. Administration, in particular. MORE

Source: E&ETV

January 15, 2009

Burgeoning Sovereign Debt Could Sink Global Economic Stability – The Consequences of Massive State Intervention are Bound to Impede the Recovery and Further Redefine the Geo-economic Equilibrium

mergermarketDr. Alexander Mirtchev assesses the implications for government intervention in the banking system in an interview with Mergermarket, a Financial Times company. He notes that the crisis which has led governments to accept the transfer of private sector debt onto state balance sheets exposes both developed and developing economies to sovereign debt and deficit imbalances. Such transfers are likely to have far-reaching repercussions, deepening some economies’ exposure to the impact of the financial crisis and possibly prolonging the advent of recovery, ultimately threatening some of the pillars of global economic security. He discusses the need to look beyond the immediate short-term pressures, and devise a broader policy response that would address the long-term needs of greater productivity, competitiveness and growth. Strategies should take into account the interdependency, engendered by the truly global nature of today's financial system, as well as the unintended consequences of large-scale government intervention in the markets. MORE

Source: Mergermarket

January 11, 2009

Energy Security Redux – For Russia to be a Responsible Energy Market Player it Needs to be a “Bona Fide Stakeholder” in the Global Energy Security Equation

Dr. Alexander Mirtchev assesses the new paradigm of global energy security, symbolized by the Russia-Ukraine gas dispute and its implications for EU foreign and energy policies. The issues of energy independence, interdependence and resilience that underpin energy security have not changed dramatically, but have achieved a more prominent imprint on global security due to the changing geopolitical and geo-economic balances in the twenty first century. Mirtchev argues that, to a large extent, these policies need to integrate the views of suppliers such as Russia in order to achieve more sustainable energy equilibrium. Taking into account the fact that Russia is unlikely to give up energy as a competitive advantage and it is not afraid to demonstrate this advantage to achieve its desired outcomes, consistent engagement is not only necessary but imperative. Ameliorating the situation would also require making Russia a stakeholder in energy security discussions, as well as curtailing the role of “vested interests” and increasing the transparency and accountability of the process. MORE

Source: MSNBC

January 17, 2009

Local Showdown with the Global Downturn – Two Patterns of Dealing with “Toxic Assets” Emerge: Developed Economies Assimilate while Emerging Markets Use Targeted Mitigation Policies

Dr. Mirtchev considers that some of the rapidly developing and emerging market economies are better-positioned than even some of the major economies to deal with the pressures of the global credit crunch and economic downturn.  Emerging markets are not “decoupled” from the rest of the world; they face the same pressures, and, provided they introduce some specific policies in response to the crisis, could very well be better positioned to address the continued “toxicity” of certain assets. Although not without losses, “toxic” balance sheets in certain emerging markets can be revitalized relatively painlessly. However, Mirtchev warns that those economies that succumb to the pressure and try to transfer bad or “toxic” assets onto state balances face the potential of further debt constraints and the accompanying deterioration of financing terms for both the public and private sector.  This, in turn, could impair their increasing global competitiveness and geopolitical influence. MORE

Source: Wall Street Journal Digital Network

January 11, 2009

The New G20 “G”-ometry – From Euclidian Multi-Polarity to Newtonian Multi-Centricity Toward a Multidimensional Multifaceted Brave New World

In an interview with Voice of America television, Dr. Alexander Mirtchev, President of Krull Corp., analyzed the implications of government intervention in the markets in response to the challenges of the financial crisis and the economic downturn. The measures that have been announced via international platforms, such as the G8 and G20, reflect the changing G-ometry of the world. Just like the understanding of physics and mathematics transitioned from Euclidian to a Newtonian model, so has the world system gone beyond the perceived limited poles of geopolitical and geo-economic power, which has brought about a new set of dimensions and facets to geopolitical interactions. These measures were overwhelmingly embraced by the governments of both developed and developing countries and attempt to reconcile divergent ways of creating a consumption-based recovery. He warns that the state’s role in such a consumer-led recovery could result in further economic imbalances and does not account for the specifics of the newly evolved international financial system. Managing the recovery overall will require an innovative global approach and a new level of international coordination in order to address the systemic weaknesses that lie at the heart of the financial crisis. An example of the divergence of international positions on this issue can be found in the comparison of the rescue options and current measures available to the governments in the U.S. and other G-7 economies, and governments of rapidly developing economies such as Russia, Brazil, China and India. MORE

Source: Voice of America

December 20, 2008

Faced with the Crisis, Multinationals Consider a Two-Pronged Strategy – Expanding Their Global Footprint and Focusing Beyond their Core Businesses

Dr. Alexander Mirtchev assesses the strategies for growth of multinationals in the wake of the global economic slowdown and financial crisis. Contrary to prevailing views, certain non-state actors, such as multinationals, can find opportunities and a form of empowerment in emerging markets. These opportunities are considered much more attractive than those in the developed economies in the current economic climate. In order to take advantage of these opportunities, multinationals should revise their strategy; they should continue to focus on their core business while at the same time expanding their global footprint. He asserts that emerging markets will have a significant impact on the global recovery process and the future course of related developments.  Greater expansion by multinationals during the crisis will ultimately affect the global economic security equilibrium. MORE

Source: International Business Times
December 8, 2008

Anticipated Post-Crisis Momentum Could Reposition Emerging Markets – States Retooling to Utilize New Geo-Economic Instruments such as SWFs

Dr. Alexander Mirtchev discussed the strategy of a number of emerging markets during the course of the global crisis and the process of recovery and the retooling that their economic arsenals are undergoing, in particular sovereign wealth funds. Mirtchev believes that the crisis is going to lead governments toward re-tasking SWFs to abandon previous vectors of investments and move towards more tangible profit-driven and productivity-oriented strategies, becoming more and more focused on and sensitive to their governments’ need to react to the economic downturn. In addition, these funds will be positioning themselves more and more as leading market players and potentially market-makers in certain regions and economies, establishing firmly their role as legitimate partners in the implementation of recovery strategies by different countries.  Indeed, how the SWFs respond to the crisis and the emerging new global economic framework will impact the geopolitical perception of these funds and open new investment opportunities in a wider range of sectors and countries. MORE

Source: USA Today

December 5, 2008

The Foretold Fate of the Push Toward Economic Stability – The Varied Approaches to Tackle the Crisis Converging Around Government Intervention will Create Different Paths to a Patchy and Uneven Recovery

Dr. Alexander Mirtchev reviews and compares the crisis-management measures adopted by economies worldwide, as well as the different strategies and specific actions undertaken by a number of developed countries – the US, the UK and other EU economies, as well as certain emerging markets. He asserts that the developed countries’ “recovery strategy of choice” is focused on addressing the banking sector’s liquidity problems rather than the more pertinent solvency problems faced by both the private and public sectors of those economies. On the other hand, emerging markets have, in some cases, been bolder with plans to stabilize both the financial sector and to address systemic imbalances in their economies. MORE

Source: EuroWeek

November 28, 2008

The “Glamour” Investments Party is Over – SWFs to Reconsider Core and Non-core Assets and Restructure Portfolios, at Least for Now logoDr. Alexander Mirtchev, President of Krull Corp and a sovereign wealth fund independent director, believes that most of the sovereign wealth funds that gained prominence in the last 5 years will probably need to retool in order to face the challenges that arise out of the global economic and financial crisis. He expects them to shift their focus to productive assets that are related to their base economies, such as natural resources or technologies, and promptly restructure, including dealing with, and where necessary, disposing of non-core assets they have acquired during the boom times. He asserts that this change of focus could have wider implications beyond the sovereign wealth funds themselves. The paths to recovery undertaken by both developed and emerging economies, although diverging in their minutiae, are unlikely to result in stable economic balances. In that regard, it is notable that increasing confidence in SWFs as legitimate partners will have an impact on the regional and global economic security equilibrium. MORE

Source: Gulf News

November 21, 2008

Foreign Exchange Volatility a Concern but "Old-Fashioned Currency Control" Not the Answer - A Sign of Upcoming Currency Wars?

The global economic and financial crisis has struck currency markets, yet Dr. Alexander Mirtchev, President of Krull Corp., believes that central banks in emerging markets should resist the temptation to restrict currency fluctuations via ad-hoc “quick-fix” measures. Despite the volatility in the foreign exchange markets and the negative impact on emerging market currencies, Mirtchev believes that foreign exchange restrictions will inevitably affect the investment inflows and outflows and hinder prospects for a sustainable balanced recovery. Tightening regulations and increasing restrictions could also have a long-term affect on already weak state balance sheets and negatively impact already low confidence levels in global financial markets thereby further undermining global financial security. MORE

Source: The New York Times

October 31, 2008

Supply-side Recovery Strategies – National Approaches and Mechanisms Shifting Focus onto Productivity

forbes logoDr. Alexander Mirtchev, President of Krull Corp., contends that different economies are adopting strategies for recovery that differ much more widely than their global interrelation suggests. Developed economies, in particular, have relied heavily on direct government intervention in the markets. A number of emerging economies, however, have put key elements of their stabilization and recovery policies within the framework of their sovereign wealth funds. This has led to a shift in focus for these funds towards industrial projects that, in effect, represent custom-tailored supply-side approaches to recovery. Notably, the priorities have shifted onto productivity and industrial development, rather than the service sector, reflecting the rebalancing between the “post-industrial” developed economies and emerging markets. Dr. Mirtchev considers that, in the global economic recovery process, sovereign wealth funds have faced increasing regulatory requirements worldwide, which has altered regional and emerging market-oriented acquisition approaches. He concludes that a SWF-based recovery strategy appears to be the common denominator for a range of emerging markets. MORE

Source: Forbes

November 19, 2008

While No Place for Inordinate Energy Security Concerns – Volatile Energy Markets are Here to Stay

Krull Corp. President Dr. Alexander Mirtchev assesses the effect of the dramatic fluctuations in oil and other commodity prices in the context of the financial crisis, indicating that global energy balances would be affected in the long-run. The parameters of the global energy security equation have not altered significantly in their essence. Energy and commodities market volatility will eventually subside, particularly once the recovery from the global crisis is under way. However, he asserts that, in the particular case of oil, price volatility will continue for the foreseeable future, due to the fact that the emerging markets and rapidly developing economies that represent a large proportion of the oil producers (and increasingly, oil consumers) are better able to take advantage of their resources. In this context, it is pertinent to consider a comprehensive and coordinated strategy for engaging the key supplier and consumer emerging markets and making them feel they have a stake in resolving global energy issues. Such a strategy, coupled with diversification of supply channels and production capacities, would need to be put in place and take effect in the near future, in order to effectively address global energy security imbalances. MORE

Source: Focus Washington

October 13, 2008

A “Pass-Key” Opening the Door Out of the Crisis? – While Worldwide “Bailout Packages” are Perceived as a “Necessary Evil” there is a Hefty Price to be Paid

Dow Jones logoDr. Alexander Mirtchev, President of Krull Corp., expressed doubt about the proclaimed benefits of the massive bailout packages established by European Union members and the United States in an effort to boost confidence in crisis-hit markets. He noted that these bailout packages do not have the intrinsic capability to affect the economic strategy of the major economies, including those with the highest economic growth in the world at present – rapidly developing and emerging market economies. On the other hand, and in particular from the perspective of the increasingly post-industrial developed economies, these strategies carry the risk of mounting sovereign debt and other market repercussions. As far as the emerging markets are concerned, they are unlikely to remain satisfied by continuing to be considered “second string” in international trade relations and to accept the economic security framework imposed by the developed economies. Starting from the premise that emerging markets are far from “decoupled” from the rest of the world, it is to be anticipated that government intervention by the leading economies may cause certain disruptions in the international trade framework established over the course of the last 20 years, possibly resulting in domestic retrenchment and protectionist policies. MORE

Source: Dow Jones Newswires

October 13, 2008

Beyond the Burgeoning Crisis – The Financial Crisis will be Followed by a Patchy, Uneven and Anemic Recovery, with a Better Outlook for the Rapidly Developing Economies and Some Emerging Markets

BusinessWeek logoDr. Alexander Mirtchev anticipates that the economic effects of the global financial crisis, in particular on some of the rapidly developing economies, could bring about differing policy reactions by governments that may have negative mid- and long-term repercussions for the global economy. Some emerging markets are likely to enjoy better results if they undertake their own initiatives with regards to specific industries, such as the financial sector.  However, Mirtchev cautions that certain initiatives could actually affect other segments of the economy in ways that have not been anticipated. Due, in part, to the divergent levels of involvement by the private sector in government stimulus plans, Mirtchev expects that recovery from the crisis will be patchy and uneven, with some countries faring better than others. MORE

Source: Business Exchange/BusinessWeek

October 11, 2008

Global Economic Security Imbalances – Still Inherent in Recovery Strategies of the Leading Economies

washingtonpost logoDr. Alexander Mirtchev assesses the effects of the “bailouts” in the U.S. and other developed economies on the policy choices that rapidly developing economies could undertake to tackle the economic problems caused by the global financial crisis. He emphasizes that these developing economies have been responsible for the highest proportion of global economic growth in the last few years and therefore, how they respond to the state intervention approaches by major economic powers may cause unanticipated repercussions. It should be understood that the steps taken by specific countries to alleviate the crisis are likely to have a global impact and result in market distortions that could offset the positive effect of government intervention. Realistically, all countries are faced with the same problems; however, some, if well led, are positioned to better cope with the crisis.  Those that have implemented free market reforms and have taken the necessary steps to positively engage in the global economy will likely manage the crisis more effectively and be positioned to make the most of their competitive advantages and secure future economic growth. MORE

Source: Washington Post

October 10, 2008

Liquidity vs. Solvency – Prioritizing Liquidity Over Solvency will Determine Anti-Crisis Policies and Define the End-Game

Dr. Alexander Mirtchev analyzes the varied responses to the current financial crisis on Bloomberg Television. Mirtchev considers the crisis to be more of a solvency and asset quality crisis rather than a liquidity crisis, and that government intervention in the markets by several countries ignores this issue at the peril of a number of unanticipated results in the ultimate end game post-crisis. On the other hand, continuing market reforms in some emerging markets could help alleviate the effect of the financial crisis and provide new leverage towards achieving global economic security equilibrium, as these markets are well positioned to effect remedies, if their leadership stays the course of economic reforms and modernization. MORE

Source: Bloomberg

October 4, 2008

Global Economic Security Rebalancing – Commodities Price Volatility as a Symptom of Upcoming Asymmetric Economic Cycles

Dr. Alexander Mirtchev says that commodity price fluctuations are a fact of life and should be taken into account by both developed and rapidly developing economies when making plans to tackle the credit crunch and the concomitant global economic security challenges. He indicated that those that relied on commodities and natural resources to act as a buffer to the vagaries of the credit crunch are now painfully aware that this is not the case. The commodities markets, just like any other, would be intrinsically linked to market sentiments that are in turn guided by how policies and regulatory frameworks are factored in market players’ calculations. Likewise, commodity price fluctuations are gradually becoming less and less correlated with economic growth. The long-term stability prospects of energy-heavy economies such as Russia, Brazil, Bolivia and Mexico are unlikely to change, however. The strategies for recovery leading to an extensive rise in government debt by the U.S. and other developed economies will affect the value of the dollar and further encourage investments in productive assets, including oil. MORE

Source: iStockAnalyst

September 24, 2008

Tomorrow’s Exit Strategy Should be in Place Today – The Already Inevitable Bailout Packages Should be Accompanied by a Viable Market-oriented Exit Strategy

The unprecedented U.S. government and other developed economies’ bailout plans, prompted Dr. Alexander Mirtchev, President of Krull Corp., to comment that such massive state intervention will require a declared market-oriented exit strategy for its ultimate success. He believes that, faced with the exigencies of the credit crunch, combined with public pressure and the needs of the political calendar, governments had little choice but to take visible steps. However, the bailouts do not provide a way out of the crisis, but rather represent a stop-gap measure. His view is that the “Law of Unintended Consequences” should not be ignored.  In particular, governments that have committed themselves to such a market intrusion should consider the implications of how targeting one industry affects other sectors.  Mirtchev also argues that the fallout from the developed economies’ intervention could affect the rest of the world including the future power equilibrium of the global economy and the patterns of interrelations that have governed it in the last three to four decades. He emphasized that, in contrast with the developed economies, the diversity of emerging markets could prompt differing reactions to the financial crisis, contingent on the clamor for more government intervention not drowning out the voice of the free market. MORE

Source: AllBusiness

September 20, 2008

The Worldwide Bailout Plans – A “Universal Cure Of Choice”?

Dr. Alexander Mirtchev, President of Krull Corp., believes that the U.S. bailout plan already represents the embodiment of an inevitable universal “cure of choice” across the globe. His perspective on the current economic situation, both in the U.S. and in both the developed and emerging markets, is that the reaction of the developed economies’ governments to the credit crunch represents a “bad choice from a plethora of bad choices.” Due to the combination of diminishing growth, reducing market confidence and exposure of the imprudent solvency practices of major market players, states have been left with few mechanisms in their toolkit that could reverse the downward trend beyond putting the economy on life-support. He expresses concern that this may result in misunderstood “nostalgic” pressure to attempt to bring the new global financial system back to the “one country banking sector” model of the 1990’s.  Policymakers must understand that this model is no longer adequate to handle the evolved and intrinsically interconnected world financial markets and the very nature of the bailouts precludes any opportunity to go back to the “good old days.” Mirtchev also expressed doubt about the focus on liquidity in government measures, because he considers that a major factor contributing to the global financial crisis was a lack of solvency in both the financial system and in the global economy. MORE

Source: Focus Washington

September 10, 2008