The fall of the Berlin Wall was bad news for sovietologists. Thousands of spies, military officers, diplomats, professors, journalists and assorted experts made a living studying the Soviet Union. None predicted its collapse.

But if the sudden and peaceful end of the Soviet empire was a surprise, the effects of the collapse for Europe have been almost as surprising. Here are 4 of the unexpected consequences that the end of the Soviet Union had for Europe -- and that the experts also failed to anticipate.

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1. China displaced the Soviet Union (USSR) as the main threat for Europeans.

When the Berlin Wall fell no one imagined that China would more directly affect the lives of Western Europeans than was ever the case for the USSR. Not because of China's military might but as a result of its economic prowess. After World War II, Western Europe had lived under the threat of a deadly confrontation with the Soviets. Fortunately, that threat never materialized and, in practice, the daily lives of Europeans were not that affected. In contrast, the economic rise of China touches the daily lives of all Europeans: from what they pay for a TV set to medicines, and from gasoline to their home mortgages or the possibility of finding a job. Chinese capitalism is transforming Europe far more than Soviet communism ever did.

2. The Euro.

No one predicted that the fall of the Berlin Wall would stimulate the creation of a single European currency. That the Germans would be willing to leave the deutschemark or that the French would accept having a currency controlled from Frankfurt -- the headquarters of the European Central Bank  were unimaginable possibilities. Or that 14 other countries would also shed their old currencies to adopt the Euro. Equally impossible to imagine was a scenario where after a massive global financial crisis with devastating effects on European economies, the reserve currency for those who feared that the U.S. dollar will plummet would be the Euro. The Euro was a utopia and today is a reality that does not surprise anyone. And that's a surprise.

3. Europe's geopolitical weakness.  

The influence of an international alliance should be proportional to the number of nations that join it: the larger the number of nations, the more powerful the alliance. In 1960, the European alliance had six member countries, in 2003 15, and today it has 27. Europe is one of the world's largest economic powers and, its democracies are a model and its social policies are envied by the rest of the world. Its generous development aid is coveted by all developing countries. Yet, despite the numbers, the resources and its success Europe's influence in world politics has been declining.

Take for example the defense of human rights, a core European value and a frequent goal of the European Union's international efforts. According to a study by the European Council on Foreign Relations (ECFR), the influence of the continent at the United Nations regarding human rights has plummeted. In the late 1990s, 70 percent of the countries in the United Nations supported European initiatives on human rights. Today, 117 of the 192 countries regularly vote against Europe at the United Nations. The ECFR also notes that in 2008, Europe sent more troops to Afghanistan than the United States -- 500 of whom lost their life. The EU was also at par to the United States in financial aid there. Yet its weight in the overall strategic approach to Afghanistan is very limited. The same applies to the conflict between Israelis and Palestinians. Europe sends a lot of money but has little effect. The countries of the European Union do not act in a very united and determined fashion and, inevitably, this diminishes Europe's geopolitical importance in the world.

4. Islam in old Europe, and America in new Europe.

At the height of the cold war it would have been hard to imagine that the European public would feel more threatened by the flow of immigrants from Arab countries than from the expansion of communism in their continent -- or by an armed conflict with Russia. At the time, it would have also been surprising to learn that Poland, Hungary, or the Czech Republic would become bastions of pro-Americanism. But these are some of the surprising realities of  the post-Berlin Wall Europe. Anxiety over immigration, especially from Muslim countries, has become a topic of daily discussions from parliaments to dinner tables. The possibility that Europe could turn into "Eurabia" is a corollary of these anxieties. Today, immigrants make up about 10 percent of the population of most Western European countries, and in some large cities they reach 30 percent. Inevitably, surveys show that 57 percent of Europeans consider that in their country "there are too many foreigners." Meanwhile, in some countries of the former Soviet Union economic, political, cultural and even military pro-Americanism is flourishing. That this should happen in a continent where anti-American sentiments are common is another astonishing legacy of the fall of the Berlin Wall.

This column first appeared in El Pais. 

Welcome to the new shadow financial system, a world where regulators are hampered and bankers are bold. The "old" shadow financial system, before the bubbles burst, thrived on ample liquidity and lax regulations. The new one will be less liquid but will flourish thanks to the many new and incomplete regulations that will characterize the post-crisis world.

The old shadow financial system included a dizzying array of institutions -- investment banks, broker-dealers, money-market funds, hedge funds, special investment vehicles, and many more highly specialized companies. These companies were not tightly regulated and had the ability to mobilize vast quantities of money even if they did not have the capital to adequately back up their oversize credit and trading operations. Most of it wasn't illegal, and certainly not all the system's products were toxic or fraudulent. Many did spread risks, lower costs, and open opportunities for consumers everywhere. But, as we now know, the shadow financial system was also a Wild West where peddlers of incomprehensible financial products, reckless speculators, and even Ponzi-schemers roamed, looking for opportunities to make fortunes betting with other people's money.

The crisis wiped out many players in the shadow financial system, the criminal Bernie Madoff being the most spectacular example. But others, like hedge fund manager John Paulson, who hauled in $3.7 billion in 2007 and whose fund earned an incredible 37.6 percent return in 2008, profited handsomely from the downturn and are just waiting on the sidelines now. They still have access to large pools of capital and to the people, technologies, institutions, and investment vehicles worldwide that will allow them to continue exploiting the opportunities created by market imperfections and deficiencies in government regulations.

But the new shadow financial system will be different, for two main reasons. First, under the ancien régime, money was abundant and projects of all kinds -- including many bad ones -- were easy to fund. This ample liquidity fueled excesses everywhere, but especially in the shadow financial system, which had outgrown the $10 trillion regulated banking sector to become a massive $10.5 trillion market itself. Surely in coming years liquidity will be tighter, but not tight enough to strangle the new shadow financial system out of existence.

Even in the post-crash world, the golden rule of finance has not changed: Products and schemes that offer a return commensurate with their risk will find the capital they need. And the new shadow system will be rife with attractive investment opportunities. In fact, many will emerge as a result of the second difference between the old and the new systems: more government regulation.

Finance today may be global, but politics are still local. Financial regulations do not result from a technocratic exercise, but are primarily the outcome of a political process. And because these politicized outcomes will vary across countries and continents, the new global regulatory system is bound to be full of inconsistencies, contradictions, and gaps. These are the nooks and crannies where the players in the new shadow financial system will be getting rich.

So it has been for the last two decades. The pattern is familiar: The booming economy of a country or region crashes. Experts, investors, and governments alike are caught by surprise. Major reforms are promised. But then, as happened in the Mexican crisis of 1995 and in the South Korean crash of 1997, economies recover faster than expected. The appetite for change diminishes and the reform process is truncated. Inevitably, the resulting regulatory system falls short.

We are witnessing a repetition of this cycle as the global economy recovers faster than nearly anyone expected. The best brains in the world, the same ones who missed the crash in the first place, were also caught off guard by the economic upturn. Pessimists still worry that the recovery will be short-lived and that another dip is inevitable. Yet, while they worry, the world's largest economies are growing faster and sooner than anyone had expected. Stock markets have also rebounded more quickly than anyone had predicted.

We've seen this show before. Leaders of the world's most important countries urgently agreed that "strengthening the architecture of the global financial system" was absolutely necessary, while announcing their commitment "to reduce the risks of crises recurring in [the] future and to improve our techniques for responding to crises when they do occur."

That was in 1998, when world leaders met to discuss the Asian financial crisis and its aftershocks. Shortly after the summit, Asian economies surprised everyone by staging an unexpectedly strong recovery that eviscerated the political will to undertake the painful changes that everyone had claimed were urgent and indispensable. Ten years and an even more massive crisis later, world leaders are still promising to overhaul the rules of global finance.

In his recent speech on financial reform, U.S. President Barack Obama vowed to "make certain that markets foster responsibility, not recklessness ... [and] reward those who compete honestly and vigorously within the system, instead of those who try to game the system." These are fine moral sentiments. But if past is prologue, there will still be plenty of opportunities for the gamers.

This does not mean that no major changes will be implemented. Surely, the financial system that emerges from the current crisis will be more regulated, and more cautious, than it was. But the post-crisis world will still include a large, diverse, and underregulated shadow financial system where vast wealth will be made. Until the next crash.

Oil is a curse. Natural gas, copper, and diamonds are also bad for a country's health. Hence, an insight that is as powerful as it is counterintuitive: Poor but resource-rich countries tend to be underdeveloped not despite their hydrocarbon and mineral riches but because of their resource wealth. One way or another, oil -- or gold or zinc -- makes you poor. This fact is hard to believe, and exceptions such as Norway and the United States are often used to argue that oil and prosperity can indeed go together.

The rarity of such exceptions, however, not only confirms the rule, but also serves to clarify what it takes to avoid the misery-inducing consequences of wealth based on natural resources: democracy, transparency, and effective public institutions that are responsive to citizens. These are important preconditions for the more technical aspects of the recipe, including the need to maintain macroeconomic stability, prudently manage public finances, invest part of the windfall abroad, set up "rainy-day funds," diversify the economy, and ensure the local currency does not reach too high a price.

It all sounds sensible, and a recent book edited by Jeffrey Sachs, Joseph Stiglitz, and Macartan Humphreys, Escaping the Resource Curse, synthesizes the consensus about what countries beset by the combination of rich subsoil and poor institutions should do. As Brazil, Ghana, and others are soon likely to become major oil players for the first time, they will provide rare real-life test cases of these recommendations.

Unfortunately, for most underdeveloped countries, the suggested defenses are as utopian as the larger goal they are supposed to help achieve. Countries that already have all these institutional strengths need not worry. For the rest, like an autoimmune disease, the curse undermines the ability of a country to build defenses against it. Indeed, we've learned in recent years that concentrated power, corruption, and the ability of governments to ignore the needs of their populations make it hard to do what it takes to resist the resource curse.

Juan Pablo Pérez Alfonzo, Venezuela's oil minister in the early 1960s and one of the founders of OPEC, was the first to call attention to the oil curse. Oil, he said, was not black gold; it was the devil's excrement. Since then, Pérez Alfonzo's insight has been rigorously tested -- and confirmed -- by a slew of economists and political scientists. They have documented, for example, that since 1975 the economies of resource-rich countries grew at a slower rate than countries that could not rely on the export of minerals and raw materials. And even when resource-fueled growth takes place, it rarely yields growth's usual full social benefits.

A common trait of resource-based economies is that they tend to have exchange rates that stimulate imports and inhibit the export of almost everything except their main commodity. It's not that their leaders fail to realize they need to diversify their economies. In fact, all oil countries have invested massively in the development of other sectors. Unfortunately, few of these investments succeed, largely because the exchange rate stunts the growth of agriculture, manufacturing, or tourism.

Then there is the intense volatility of the commodities that these countries export. In the last 24 months, for example, oil shot up from less than $80 per barrel to $147.27, then fell to $32.40, and again moved up, to $59.87 by mid-2009. These boom-and-bust cycles have devastating effects. The booms lead to overinvestment, reckless risk taking, and too much debt. The busts lead to banking crises and draconian budget cuts that hurt the poor who depend on government programs. To make matters worse, governments faced with a windfall of revenues feel pressure to launch plans that are larger and more complex than their bureaucracies can handle. Inevitably, the overambitious projects end up generating enormous waste and are often abandoned once revenues drop.

What's more, the oil industry is highly concentrated and capital intensive. This means that oil-fueled growth does not create jobs in volumes commensurate with oil's large share of the economy. In many of these countries, oil and natural gas account for more than 80 percent of government revenues, while these sectors typically employ less than 10 percent of the country's workforce. Inevitably, this leads to high income inequality.

Perhaps even more significantly, the oil curse also nurtures bad politics, and herein lies its autoimmune nature. Because governments of such countries do not need to tax the population to amass giant fiscal revenues, their leaders can afford to be unresponsive and unaccountable to taxpayers, who in turn have tenuous and often parasitic links with the state. With their ability to allocate immense financial resources pretty much at will, such governments inevitably grow corrupt.

This explains why the many sovereign wealth funds, oil-stabilization funds, and other solutions tried by resource-rich countries to avoid the effects of volatility, fiscal excess, indebtedness, export-inhibiting exchange rates, and other problems have rarely worked. Such funds either get raided before the rainy days or squandered in poor investments. Almost no resource-exporting country has been able to prevent its exchange rate from undermining the international competitiveness of its other sectors.

Once in power, oil-rich governments are deadly hard to dislodge. They stick around by spending their vast public resources to buy out or repress their political opponents. Statistically, it is far less probable that an authoritarian oil country will transition to democracy than that a resource-poor autocracy will. Oil-rich governments spend two to 10 times more on their militaries than countries without oil and are more prone to go to war. Most oil-exporting countries that do not have strong democratic institutions before they start exporting crude inevitably create an inhospitable environment for democracy.

One promising new idea is to force multinational corporations to be more transparent about their contracts, investments, tax payments, and revenues in poor countries. The premise is that more transparent information will curtail the ability of unaccountable politicians to use national resources as if they were their own. Not all multinationals are accountable and willing to play by these rules, however, and it takes more than the threat of posting a report on the Internet to stop a deeply entrenched kleptocracy from stealing.

So, is all hope lost for poor countries with rich natural resources? Not quite. Chile and Botswana stand out as success stories on continents where the resource curse has otherwise wreaked havoc. Their experiences confirm what we know is needed to inoculate a country from the oil curse. But why they were able to do so is still a mystery. Answers such as "good leadership," "strong governance," and "reliable institutions" only serve to mask our ignorance. Unlocking the secret of what enabled these two poor countries to successfully lift the resource curse can spare millions from the devil's excrement. But nobody has done it yet.

Never say never. Because of the global economic crisis, habits that seemed unalterable are suddenly being altered. Americans are now saving more and consuming less. Financial institutions are no longer betting the house on risky investments they do not understand. Wealthy oil-exporting countries are tightening their belts. At least some emerging markets long prone to financial accidents are behaving with uncharacteristic prudence. Everywhere, change is in the air.

Everywhere, that is, except in the way humanity responds to its most menacing threats. You know the list: climate change, nuclear proliferation, terrorism, pandemics, trade protectionism, and more. Not one can be solved, or even effectively contained, without more successful international collaboration. And that is not happening.

When was the last time you heard that a large number of countries agreed to a major international accord on a pressing issue? Not in more than a decade. The last successful multilateral trade agreement dates back to 1994, when 123 countries gathered to negotiate the creation of the World Trade Organization and agreed on a new set of rules for international trade. Since then, all other attempts to reach a global trade deal have crashed. The same is true with multilateral efforts to curb nuclear proliferation; the last significant international nonproliferation agreement was in 1995, when 185 countries agreed to extend an existing nonproliferation treaty. In the decade and a half since, multilateral initiatives have not only failed, but India, Pakistan, and North Korea have demonstrated their certain status as nuclear powers. On the environment, the Kyoto Protocol, a global deal aimed at reducing greenhouse gas emissions, has been ratified by 184 countries since it was adopted in 1997, but the United States, the world's second-largest air polluter after China, has not done so, and many of the signatories have missed their targets.

The most recent multilateral initiative successfully endorsed by a large number of countries was in 2000, when 192 nations signed the United Nations Millennium Declaration, an ambitious set of eight goals ranging from halving the world's extreme poverty to halting the spread of HIV/AIDS and providing universal primary education—all by 2015. Although some progress toward achieving these goals has been made—mostly thanks to Asia's spectacular economic performance—the failure of rich countries to fully fund these efforts, execution problems in poor countries, and the global economic downturn make the achievement of the goals by 2015 unlikely.

The pattern is clear: Since the early 1990s, the need for effective multicountry collaboration has soared, but at the same time multilateral talks have inevitably failed; deadlines have been missed; financial commitments and promises have not been honored; execution has stalled; and international collective action has fallen far short of what was offered and, more importantly, needed. These failures represent not only the perpetual lack of international consensus, but also a flawed obsession with multilateralism as the panacea for all the world's ills.

So what is to be done? To start, let's forget about trying to get the planet's nearly 200 countries to agree. We need to abandon that fool's errand in favor of a new idea: minilateralism.

By minilateralism, I mean a smarter, more targeted approach: We should bring to the table the smallest possible number of countries needed to have the largest possible impact on solving a particular problem. Think of this as minilateralism's magic number.

The magic number, of course, will vary greatly depending on the problem. Take trade, for example. The Group of Twenty (G-20), which includes both rich and poor countries from six continents, accounts for 85 percent of the world's economy. The members of the G-20 could reach a major trade deal among themselves and make it of even greater significance by allowing any other country to join if it wishes to do so. Presumably, many would. Same with climate change. There, too, the magic number is about 20: The world's 20 top polluters account for 75 percent of the planet's greenhouse gas emissions. The number for nuclear proliferation is 21—enough to include both recognized and de facto nuclear countries, and several other powers who care about them. African poverty? About a dozen, including all the major donor countries and the sub-Saharan countries most in need. As for HIV/AIDS, 19 countries account for nearly two thirds of the world's AIDS-related deaths.

Of course, countries not invited to the table will denounce this approach as undemocratic and exclusionary. But the magic number will break the world's untenable gridlock, and agreements reached by the small number of countries whose actions are needed to generate real solutions can provide the foundation on which more-inclusive deals can be subsequently built. Minilateral deals can and should be open to any other country willing to play by the rules agreed upon by the original group.

The defects of minilateralism pale in comparison with the stalemate that characterizes 21st-century multilateralism. It has become far too dangerous to continue to rely on large-scale multilateral negotiations that stopped yielding results almost two decades ago. The minilateralism of magic numbers is not a magic solution. But it's a far better bet at this point than the multilateralism of wishful thinking.

See also: FP bloggers respond to Moisés Naím's "Minilateralism."