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Melvyn Krauss



Articles by Melvyn Krauss

The Draghi Power Triangle

February 19, 2021

Italy’s new prime minister, Mario Draghi, is not solely someone whose credibility in financial markets can lower the Italian borrowing costs and boost Italian stock prices. As he showed in his maiden address, he is a student of history, with strong democratic values and strategic capabilities that Europe badly needs.

STANFORD – Mario Draghi’s first speech as Italy’s prime minister made clear that his national unity government will not only be about domestic Italian politics and policy reforms, but about Europe, too. Draghi has signaled nothing less than a dramatic reconfiguration of European policymaking, with major consequences for Europe and the European Union’s relations with Russia and the United States.

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Draghi and the Defense of Democracy

February 4, 2021

US President Joe Biden’s administration has made forging a common approach with its allies to China and Russia a pillar of its foreign policy. The prospect that former European Central Bank president Mario Draghi will join the European Union’s core leadership could go a long way toward achieving that.

STANFORD – Mario Draghi, the European Central Bank’s former president, has been asked to form a government of national unity in Italy at a pivotal moment. Coming so soon after Joe Biden’s arrival in the White House, and with the impending retirement of German Chancellor Angela Merkel, a Draghi premiership means that French President Emmanuel Macron will no longer cut such a forlorn figure in Europe when standing up for

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The Inevitability of German Stimulus

January 19, 2021

The transition to new German leadership after 16 years under Chancellor Angela Merkel will not change the country’s core political priorities vis-à-vis Europe. Preserving the eurozone will remain paramount, even if it means suspending Germany’s traditional opposition to fiscal stimulus and deficits.

STANFORD – Armin Laschet’s victory in the election to lead Germany’s Christian Democratic Union (CDU) puts him in pole position to succeed Chancellor Angela Merkel later this year. But the leadership contest was more about differences in tone and style than substance. From a policy standpoint, it makes no difference.

Merkel Minus Angela

Shan Yuqi/Xinhua via Getty Images

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The Brexit Boon to Europe and the US

January 8, 2021

More than four years after the Brexit referendum, the United Kingdom has finally left the European Union, and the timing could not be better. With Britain gone, Europe has nothing preventing it from adopting a new economic-policy model that is better equipped for contemporary conditions, not least a strengthening euro.

STANFORD – Most Europeans are happy that Joe Biden will be the next president of the United States. Whether they realize that Biden’s economic policies will put the euro and Europe in a bind is another matter. The new US administration will want the euro to remain strong against the dollar in order to keep the US economy humming.

Remove and Ban Trump Now

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The ECB’s New Stealth Mandate

December 15, 2020

Over the course of the pandemic, the European Central Bank has effectively adopted a new mandate, perhaps having concluded that its inflation target is unattainable without more fiscal stimulus. The new top priority appears to be financial solidarity within the eurozone, and it could not have come at a better time.

STANFORD – The European Central Bank’s monetary policy has undergone a peculiar change during the pandemic. Something other than the goal of price stability appears to be guiding the bank’s overall approach, suggesting that it has adopted a new mandate without publicly announcing it.

Who Will Succeed Merkel?

Popow/ullstein bild via Getty Images

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Getting NATO Back on Track

December 8, 2020

France and Germany must heal their current defense rift, and America must maintain its security guarantee for Europe. One possible solution would be for Germany to spend more on European defense, thus providing a measure of the independence that France seeks, while keeping the US troops it wants.

STANFORD – US President-elect Joe Biden’s nomination of Lloyd Austin, a recently retired four-star general, as Secretary of Defense is a further welcome sign that America has come to its senses and will, after January 20 next year, no longer seek to punish its friends and reward its enemies. To demonstrate this shift to the world, Biden should, immediately on taking office, rescind President Donald Trump’s order last July to withdraw

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Europe’s Faustian Bargain

November 23, 2020

Lost behind the news of the European Union’s budget and recovery fund is a long-awaited improvement in the eurozone’s internal balance. The convergence between north and south is such an important development that it is likely to take precedence over guaranteeing member states’ adherence to the rule of law.

NEW YORK – The second wave of COVID-19 infections has struck Europe harder than many expected. The hope of a V-shaped recovery has been replaced by the fear of a double-dip recession, implying that there will be no quick return to normal European Union budget rules. More worryingly, Europe now finds itself forced into a tradeoff between two objectives, both of which are critical to its long-term viability as a

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