The Economics of State Aid for the Rescue and Restructuring of Firms in Difficulty: Theoretical Considerations, Empirical Analysis and Proposals for Reform. Bruges European Economic Research (BEER) Papers 27/September 2013

State aid for rescue and restructuring (R&R) of companies in difficulty causes a significant distortion of competition. It prevents the market from eliminating inefficient companies. Because of this, the European Commission has to be specially strict when it assesses rescue or restructuring aid. This paper examines recent cases of corporate restructuring partly funded with public money. It explains the main aspects of the current guidelines which are applicable to R&R State Aid and establishes a theoretical framework for the economic assessment of R&R aid. It then analyses decisions adopted by the European Commission concerning R&R state aid during the period 2000-2013. It finds that there is little economic rationale in the granting of R&R aid. The paper concludes by applying the lessons drawn from the empirical analysis to the anticipated revision of the R&R guidelines in the context of the State Aid Modernisation process.

Dealing with the Fallout: West Germany's Response to the Solange Decision (1974). ACES Working Papers, 2011

The European Union's powerful legal system has proven to be the vanguard moment in the process of European integration. As early as the 1960s, the European Court of Justice established an effective and powerful supranational legal order, beyond the original wording of the Treaties of Rome through the doctrines of direct effect and supremacy. Whereas scholars have analyzed the evolution of EU case law and its implications, only very recent historical scholarship has examined how the Member States received this process in the context of a number of difficult political and economic crises for the integration process. This paper investigates how the national level dealt with these fundamental transformations in the European legal system. Specifically, it examines one of the Union's most important member states, the Federal Republic of Germany. Faced with a huge number of cases dealing with European law, German judges dealt with the supremacy of European law very cautiously, negotiating between increasingly polarized academic, public and ministerial debates on the question throughout the 1960s. By the mid 1970s, the German Constitutional Court famously limited the power of the ECJ in its Solange decision (1974). This was an expression of a broader discourse in Germany from 1968 onwards about the qualitative nature of democracy and participation in public life and was in some aspects a marker, at which the German elites felt comfortable expressing the value of their national constitutional system on the European stage. This paper examines the political, media and academic build up and response to the Constitutional Court's decision in the 1970s, arguing that the national "reception" is central to understanding the dynamics and evolution of European Union legal history.

Europe on the Road to the Third Stage of EMU: Recent Evidence. CES Germany & Europe Working Papers, No. 07.2, 1996

The paper deals with Europe's effort to proceed to the thud stage of EMU and establish a common currency. It is argued that the success of the common currency experiment will greatly depend on the fulfillment of the Optimum Currency Area (OCA) criteria, on the adoption of the proper adjustment policies as well as on the political desirability of the project. The paper is organized as follows: Section 1 deals briefly with the index of criteria that define an OCA. Section 2 examines the extent to which Europe experiences common demand disturbances, while sections 3 and 4 focus on evidence about the mobility of factors of production across Europe, namely labor and capital. Section 5 examines the possibility of an increase in trade volume across the EU under fixed exchange rates or a common currency regime. Section 6 sheds light on the possibility of the EURO (the ex-ECU} to become a vehicle currency in the international financial system, and Section 7 is concerned with the benefits and costs of the establishment of a European Central Bank (ECB), paying special attention to seigniorage revenues. Section 8 deals with the necessity of establishing an EU federal mechanism facilitating adjustment. Section 9 sketches out a proper role for a hegemonic power in a common currency regime. Finally, section 10 examines EMU prospects during the transitional period. The paper closes with some concluding remarks, where the role of politics and coordination of economic policies are particularly emphasized as of cardinal importance on the road to the third stage of EMU.

State Aid to Infrastructure: Do Competitively Selected Operators Obtain an Undue Advantage? Bruges European Economic Research Papers (BEER) 33/2015

Addressing high and volatile natural resource prices, uncertain supply prospects, reindustrialization attempts and environmental damages related to resource use, resource efficiency has evolved into a highly debated proposal among academia, policy makers, firms and international financial institutions (IFIs). In 2011, the European Union (EU) declared resource efficiency as one of its seven flagship initiatives in its Europe 2020 strategy. This paper contributes to the discussions by assessing its key initiative, the Roadmap to a Resource Efficient Europe (EC 2011 571), following two streams of evaluation. In a first step, resource efficiency is linked to two theoretical frameworks regarding sustainability, (i) the sustainability triangle (consisting of economic, social and ecological dimensions) and (ii) balanced sustainability (combining weak and strong sustainability). Subsequently, both sustainability frameworks are used to assess to which degree the Roadmap follows the concept of sustainability. It can be concluded that it partially respects the sustainability triangle as well as balanced sustainability, primarily lacking a social dimension. In a second step, following Steger and Bleischwitz (2009), the impact of resource efficiency on competitiveness as advocated in the Roadmap is empirically evaluated. Using an Arellano–Bond dynamic panel data model reveals no robust impact of resource efficiency on competiveness in the EU between 2004 and 2009 – a puzzling result. Further empirical research and enhanced data availability are needed to better understand the impacts of resource efficiency on competitiveness on the macroeconomic, microeconomic and industry level. In that regard, strengthening the methodologies of resource indicators seem essential. Last but certainly not least, political will is required to achieve the transition of the EU-economy into a resource efficient future.

EU Budgetary Responses to the ‘Refugee Crisis’: Reconfiguring the Funding Landscape. CEPS Paper Liberty and Security in Europe No. 93/May 2016

This paper analyses the EU budgetary responses to the ‘refugee crisis’ in Europe. The European Commission has proposed several changes to the EU budget as well as the establishment of new funding instruments. The paper explores what the announced funding consists of, what role it plays in policy-making and what issues it generates. Throughout these budgetary responses the search for flexibility has been dominant, motivated by the need to respond more swiftly to humanitarian and operational needs. In addition, the paper argues that beyond implementation or management, the role of funding is also symbolic and communicative. In light of limited competences that are difficult to exercise, funding represents a powerful tool enabling the Commission to shape policy-making in times of crisis. At the same time, the dominant search for flexibility also challenges established funding rules and procedures. It has furthermore led to reduced space for democratic scrutiny by the European Parliament. More profoundly, EU funding for cooperation with third countries to prevent the inflow of refugees and asylum seekers has monetised questions over the responsibility for these individuals. As the EU–Turkey agreement shows, this has created a self-imposed dependence on third countries, with the risk of potentially insatiable demands for EU funding. This paper questions the proportionality and rule of law compliance of allocating funding for the implementation of this agreement. Moreover, it proposes that the Commission take steps to practically safeguard the humanitarian aid principles in the management structures of the new funding instruments, and it stresses the need for more scrutiny of the reconfigured funding landscape by the European Parliament and the European Court of Auditors.