Trading off sovereignty. The outcome of Belarus's integration with Russia in the security and defence field. OSW Commentary No. 107, 2013-04-25

Although the Republic of Belarus is constitutionally designated as a neutral country1, it is in fact closely connected with Russia’s own security and defence architecture. Within the Union State of Belarus and Russia, the armed forces are integrated to an extent unequalled in the world. A legacy of the Soviet division of labour, the Belarusian defence industry complex remains structurally dependent on Russia, which is its main raw material provider, outlet for exports and intermediary on world markets. Bilateral military cooperation also builds on the perception of common threats and partly shared security interests. Hence it unfolds regardless of the disputes that sporadically sour relations between Minsk and Moscow, standing out as the main achievement of the Union State – if not the only one.

No other choice but co-operation. The background of Lithuania's and Latvia's relations with Belarus. OSW Commentary No. 99, 2013-01-04

For years now Belarus has been a key economic partner for Lithuania and Latvia. These two Baltic states have well-developed port infrastructure and thus provide what are the geographically closest and also the cheapest exit to international outlets for Belarusia’s petrochemical and chemical industries, both of which are export-oriented. As a result, the transit of Belarusian goods is one of the major sources of income for the state budgets of the two countries. This economic interdependence has affected the stance Riga and Vilnius take on Minsk at the EU forum. When in February and March 2012 the Council of the European Union was resolving the issue of imposing economic sanction on selected Belarusian companies which backed Alyaksandr Lukashenka’s regime, this triggered a discussion on what the point of such measures is and on possible economic losses in Lithuania and Latvia. As a result of firm resistance from Latvia (which was backed by Slovenia), the Council removed those companies which were most strongly engaged in co-operation with Latvian partners from the list of those to be covered with economic sanctions. Lithuania, which is more critical of the political situation in Belarus, did not express its official opposition to the sanctions. Despite some differences in the policies adopted by Riga and Vilnius, it turned out that Minsk could count on strong support from local business groups in both of these countries, as these groups fear impediments in this highly profitable co-operation and also retaliation from the Belarusian government. The existing economic bonds mean that neither Vilnius nor Riga have any other choice but to co-operate with Belarus. They must therefore adopt a carefully balanced policy towards Minsk. At the same time, being EU member states, they do not officially deny that a problem exists with the violation of human rights by Alyaksandr Lukashenka’s regime. It is for this reason that the governments of Latvia and Lithuania will be interested in maintaining the status quo in relations with Minsk. On the other hand, Belarus in a way also has no other choice but to use the ports in Lithuania and Latvia, and this will prevent it from excessively escalating tension in relations with these two countries.

Conflicting Role Conceptions: In Search of the European Union's Added Value for its Southern Neighbors. Bruges Regional Integration & Global Governance Paper 04/2014

Many scholars have analyzed the role of the European Union (EU) in its southern neighborhood by looking at the EU’s policy documents and strategies. As such, it is often argued that the EU is at best a useful partner in democratic reform and at worst an unsuccessful ‘normative power’. However, very few studies have analyzed the EU’s role from the recipients’ point of view: the southern neighboring countries themselves. This paper adopts an ‘outside-in approach’ and explores what the southern neighborhood countries believe the EU should be or do. On the basis of a set of 15 interviews with diplomats from the region and an analysis of 50 newspaper articles from the region on the EU’s relations with its southern neighborhood, this paper seeks to reveal the EU’s real ’added value’ for its southern Mediterranean partners. To what extent does the EU’s own perceived role in its southern neighborhood match the role conception of those countries? Based on the three case studies of Algeria, Jordan and Egypt, the paper finds that there is a clear divergence in role conceptions between the EU and its southern partners. While the EU sees itself as a ‘force for good’ and promoter of norms and democracy in the southern Mediterranean region, the three countries primarily believe that the EU perceives itself foremost as a provider of security and stability in the region, while they primarily expect it to act as a reliable partner for economic cooperation.

State of the Union and key challenges for Europe's future. CHALLENGE EUROPE Issue 22 - Challenges and new beginnings: Priorities for the EU's new leadership, September 2014.

In the last five years deep cracks have appeared in the European project. The 'euro-area crisis' triggered by a severe global financial and economic crisis has put European integration to a major test, more profound than ever before. The experience of recent years has revealed and exacerbated significant deficiencies in the European Union's (EU) economic and political construction. At time it has cast doubt on fundamentals of the European project and raised questions about whether Europe will be able to deal effectively not only with the immediate crisis, but also with the many other serious socio-economic, politico-institutional, societal and global challenges that Europe is and will be confronted with. At the start of a new institutional-political cycle (2014-2019) and while the crisis situation has for a number of reasons improved significantly since the summer of 2012, at least in systemic terms, the Union's new leadership and Member States will now have to take strategic decisions about the future of European integration.

Energy Union: Can Europe learn from Japan’s joint gas purchasing? CEPS Commentary, 11 December 2014

Japan’s two major electricity producing companies reached a preliminary agreement recently to establish a joint venture for the procurement of fossil fuel resources, primarily liquefied natural gas (LNG). The authors of this commentary ask whether this commercial initiative could serve as an example to Europe of how to increase the negotiating power of individual EU member states. They conclude that a private joint gas procurement company may indeed offer a solution for EU member states in Central and Eastern Europe, instead of yet another source of confrontation. Given the political volatility in the region, it could well be the key to balancing out the need for security of supply with an offer to guarantee security of demand, thereby creating the climate for stable commercial relations.

Croatia: accession negotiations with the EU overshadowed by parliamentary elections. OSW Commentary No. 48, 2011-02-29

In 2011 Croatia entered the final stage of its accession negotiations with the EU. The completion of these negotiations will probably coincide with the parliamentary elections which should be held in November or December this year. The elections are likely to bring about a change of government, as public support for Jadranka Kosor's cabinet and her party, the Croatian Democratic Union (HDZ) has been declining; the left-wing opposition is likely to take power. Therefore, the government’s main goal is to complete the accession negotiations in the first half of the year, in order to sign the accession treaty and hold the EU membership referendum before the parliamentary elections. The HDZ believes that only the successful completion of the accession negotiations could increase its chances of a good result in the upcoming elections. At the same time, fearing a further fall in support, the government will avoid any decisions and reforms that would be controversial for the public, especially in the sphere of the economy; such decisions could also increase Euroscepticism among the Croatian public, and result in the rejection of EU accession in the referendum. The government in Zagreb hopes that the currently implemented anti-corruption strategy and reform of the judiciary, as well as the advanced process of adaptation to EU conditions, will be enough to complete the negotiations. This strategy has a serious chance of success, considering that there is considerable support for Croatia's membership among the EU countries and institutions. Another reason is that further prolongation of the negotiations could aggravate hostility towards the EU among the Croatian public, and would be a bad sign for other Balkan states with membership aspirations. However, subordinating Croatian policies to the completion of negotiations in the first half of the year could prove to be adverse for Croatia itself in the longer term, as it would put off the necessary structural reforms.

Struggling with an Opportunity: The first 10 years with the EU for Central Europe and the Baltics - A few lessons. CEPS Essay No. 12, 2 May 2014

In 2004, ten new members joined the European Union, radically reshaping its geography and governance characteristics. Earlier expectations predicted a more gradual process of accession – like a more gradual earlier evolution had been expected for the new European currency that had been adopted in 1999 by no less than 11 members. But these were the times of euro-enthusiasm. In their new CEPS Essay, Kálmán Mizsei and Ádám Kullmann offer some interesting and instructive insights from the experience in the newest member states following their accession 10 years ago for improving the effectiveness with which the EU structural and cohesion funds are spent.

Efficient taxation of multi-national enterprises in the European Union. Bruges European Economic Policy (BEEP) Briefing 5/2003

Current arrangements for multi-national company taxation in EU are plagued by severe conceptual and administrative problems, leading to high compliance costs, considerable uncertainty and ample room for abuse. Integration is amplifying these difficulties. There are two possible approaches in designing an efficient trans-border corporate tax system for the European Union. The first is to consolidate the EU-wide operations of MNEs, using an agreed common base as the reference variable, and then to apportion this total tax base using some presumptive indicators of activity in each tax jurisdiction – hence, implicitly, of the likely benefits stemming from each location. The apportionment formula should respect requisites of neutrality between productive factors and forms of corporate financing. A radically different approach is also available that offers considerable advantages in terms of efficiency, simplicity and decentralisation, including full administrative autonomy of national tax authorities. It entails abandoning corporate income as the relevant tax base and taxing at a moderate rate some agreed measure of business activity such as company value added, sales or employment. These are the variables usually considered in formula apportionment, but they would apply directly without having first to go through the complications of EU-wide consolidation based on a common-base definition. Reference to a broad base, with no exemptions or deductions, would allow to set low statutory rates.

Is Withdrawal from the European Union a Manageable Option? A Review of Economic and Legal Complexities. Bruges European Economic Policy (BEEP) Briefing 28/2013

Withdrawal from the EU is no more a taboo subject. However, the process by which it can happen is unclear and potentially complex. The purpose of this paper is to show that a withdrawing Member State will not only rid itself from the constraints and obligations of EU rules, but it will also have to re-invent many policies and institutions to fill the gap left by the non-application of EU rules. The paper examines closely the case of the UK and Scotland and concludes that outright exit is not the best option for a withdrawing Member State. The best, but possibly the least feasible, option is an intermediate arrangement falling between full membership and complete separation from the EU. The exact position between the two extremes can only be determined by the exit negotiations and will be influenced by the political climate that will prevail at that time. While the final destination of an acceding country is well known [full adoption of the obligations of EU membership], the exiting country will be embarking on a trip with unknown destination and full of surprises.

Income Distributional Effects of Decoupled Payments Single Payment Scheme in the European Union. Factor Markets Working Paper No. 29, July 2012

This paper analyses the effects of the Single Payment Scheme (SPS) with and without farm structural change, and focuses on how income distributional effects and farm restructuring are impacted by the SPS under: alternative entitlement tradability, cross-compliance and CAP 'greening' requirements, different SPS implementation models, the entitlement stock, market imperfections and institutional regulations. The authors find that the SPS implication details are highly significant, since farmers’ benefits can range from 100% of the SPS value to a negative policy incidence, and farm structural change may also be hindered by the SPS.

Riding or Reaping the Whirlwind? An Account of the EU’s Engagement with Insecurity in Northern Nigeria. EU Diplomacy Paper No. 9, November 2014

The relations of the European Union (EU) with Africa are increasingly spreading beyond the domain of humanitarian and development cooperation. The continent’s growing potential is producing vast webs of interlinkages in the realms of energy and commerce, among others. At the same time, such interdependencies bring with them increased vulnerabilities to insecurity on the continent. Nigeria exemplifies such a dilemma. The country has just taken the top spot as Africa’s largest economy. Of late, however, violent Islamic extremism ravages the north of the country, threatening the stability of one of Europe’s foremost energy suppliers and a growing trade partner. Thus, this paper sets out to uncover the EU’s response to such a crisis, as well as examining the factors lying behind this response. While the study argues that the issue is potentially ‘Europeaniz-able’ from a member state perspective, deep engagement is seen to be held back by the absence of an effective entry point for securitization with this important ally, as well as the intractability of the EU’s purported multi-functional approach to the idiosyncrasies of the conflict in question, in which not only transnational terrorist groups, but also the central government are centrally implicated in deepening insecurity.

Making the most of Energy Union. CEPS Commentary, 16 December 2014

By elevating “Energy Union” to the status of a Commission mission statement, Commission President Jean-Claude Juncker succeeded in forging a new EU consensus on energy and climate change at the October European Council meeting. In a move that was made possible by linking the internal energy market and climate change agendas to security of supply, solidarity and infrastructure, the initiative notably meets the interests of Central and Eastern Europe as well as the peripheral member states. This commentary by a team of energy specialists at CEPS applauds this new development, but cautions that the European Commission will soon need to give it real meaning and substance before Energy Union can become reality. With this objective in mind, the authors outline six priorities to which Commission Vice President Maroš Šefčovič should give immediate attention.

One money with several cycles? Evaluation of European business cycles using cluster analysis. ACES Cases No. 2009.3

Optimal currency area theory suggests that business cycle comovement is a sufficient condition for monetary union, particularly if there are low levels of labour mobility between potential members of the monetary union. Previous studies of co-movement of business cycle variables (mainly authored by Artis and Zhang in the late 1990s) found that there was a core of member states in the EU that could be grouped together as having similar business cycle comovements, but these studies always used Germany as the country against which to compare. In this study, the analysis of Artis and Zhang is extended and updated but correlating against both German and euro area macroeconomic aggregates and using more recent techniques in cluster analysis, namely model-based clustering techniques.

Ideas and Policy: The European Union considers social policy futures. ACES Cases No. 2010.2

The European Union’s social policy perspectives have changed quite dramatically over the last several decades. Now EU’s social policy discourse often promises to “invest in people,” sometimes “to invest in children,” and always to pay particular attention to youth. This paper argues that the tools of historical institutionalism can lead to understanding the ideational roots of this social investment perspective so distant from the “European social model.” Coming out of social movements, and with collective identities shaped both by those movement roots and national experiences, activists have effectively focused their practices on altering the social representations of European social solidarity through their interest group interventions, their participation in policy forums, and their mobilization within civil society at the European and sub-European levels. They have been able to make common cause with several epistemic communities that themselves revamped their ideas in the face of new institutional constraints, in order to advance their interests in promoting particular directions for social policy. The paper documents that “ideas” are not a variable and discourse “sometimes important” but that the ideas carried by movements and in epistemic communities are integral to the very definition of their interests that they promote within and with institutions.

Hegemony Without Stability: The fiscal and political vulnerabilities of monetary union. ACES Cases No. 2011.2

The crisis has forced the Euro area to establish an emergency fund that supports member states experiencing a sovereign debt crisis. The difficulties of coming up with such a fund for Greece and other Euro area members stands in marked contrast to the balance of payments support that non-Euro members like Hungary received, swiftly and quietly. In order to solve this puzzle, we first establish the difference between EU interventions and IMF programs and, second, trace the evolution of crisis management with France and Germany in the lead. The lens of hegemonic stability theory suggests that the Franco-German leadership is too weak to provide stability and the extensive use of conditionality is one symptom of this weakness. Providing incentives for cooperation "after hegemony" (Keohane) is the unresolved issues troubling the monetary union. Its dominant powers must acknowledge that markets perceive monetary union to be already politically more integrated than its lack of fiscal integration suggests.