Europe's social problem and its implications for economic growth. Bruegel Policy Brief 2014/03, 1 April 2014

The European Union faces major social problems. More than six million jobs were lost from 2008-13 and poverty has increased. Fiscal consolidation has generally attempted to spare social protection from spending cuts, but the distribution of adjustment costs between the young and old has been uneven; a growing generational divide is evident, disadvantaging the young. The efficiency of the social security systems of EU countries varies widely. Countries with greater inequality tended to have higher household borrowing prior to the crisis resulting in more subdued consumption growth during the crisis. The resulting high private debt, high unemployment, poverty and more limited access to education undermine long-term growth and social and political stability. Policymakers face three main challenges. First, addressing unemployment and poverty should remain a high priority not only for its own sake, but because these problems undermine public debt sustainability and growth. Second, bold policies in various areas are required. Most labour, social and fiscal policies are the responsibility of member states, requiring national reforms. But better coordination of demand management at European level is also necessary in order to create jobs. Third, tax/benefit systems should be reviewed for improved efficiency, inter- generational equity and fair burden sharing between the wealthy and poor.

Coltan from Central Africa, International Trade and Implications for Any Certification. Bruges European Economic Policy (BEEP) 23/2012

The exploitation of coltan in Central Africa can be considered a case of conflict minerals due to its nature. Many international organizations and bodies, national governments and private sector organizations seek to address this conflict, in particular via transparency, certification and accountability along the material supply chain. This paper analyses the international trade dimension of coltan and gives evidence on the dimension of illicit trade of coltan. The authors start from the hypothesis that illicit trade of coltan sooner or later will enter the market and will be reflected in the statistics. The paper is structured in the following manner: first, a short section gives a profile of coltan production and markets; second, an overview of the mining situation in the Democratic Republic of Congo (DRC) and related actors. The third section addresses mechanisms, actors and measurement issues involved in the international trade of coltan. The final part draws lessons for certification and conflict analysis and offers some guidance for future research. The paper identifies two main possible gateways to trace illegal trade in coltan: the neighbouring countries, especially Rwanda, and the importing countries for downstream production, in particular China. Our estimation is that the value of such illicit trade comes close to $ 27 million annually (2009), roughly one fifth of the world market volume for tantalum production. With regard to any certification the paper concludes that this will become challenging for business and policy: (a) Central Africa currently is the largest supplier of coltan on the world market, many actors profit from the current situation and possess abilities to hide responsibility; (b) China will need to accept more responsibility, a first step would be the acceptance of the OECD guidelines on due diligence; (c) better regional governance in Central Africa comprises of resource taxation, a resource fund and fiscal coordination. An international task force may provide more robust data, however more research will also be needed.

The Economics of Subsidies for R&D: The Intrinsic Difficulty of Determining Optimum Subsidies and Implications for Reform of EU State Aid Rules on R&D. Bruges European Economic Research (BEER) Papers 26/February 2013

The European Commission is reforming state aid rules. An important element of the reform is to prevent the granting of excessive subsidies. This paper shows that the determination of the optimum subsidy for research is difficult. What appears to be the socially optimum level of research effort depends on the benchmark of comparison and whether this benchmark is the situation before subsidies or the situation after subsidies. In the presence of asymmetric information, policy makers should induce firms to reveal their true costs and should grant subsidies to the relatively more efficient firms by allocating subsidies not on a first-come-first- serve basis but through a competitive process. However, competitive selection of subsidy recipients is not a panacea as it may not be possible to be effectively used in all cases and for all research programmes. This is because in principle public subsidies should support those programmes with the largest value for society, rather than with the lowest costs. Although this paper focuses on R&D, its findings are relevant to any subsidy whose aim is to remedy market failure caused by positive externalities.

The implications for the EU and national budgets of the use of EU instruments for macro-financial stability. CEPS Special Report, 4 September 2012

The euro crisis has forced member states and the EU institutions to create a series of new instruments to safeguard macro-financial stability of the Union. This study describes the status of existing instruments, the role of the European Parliament and how the use of the instruments impinges on the EU budget also through their effects on national budgets. In addition, it presents a survey of other possible instruments that have been proposed in recent years (e.g. E-bonds and eurobonds), in order to provide an assessment of how EU macro-financial stability assistance could evolve in the future and what could be its impact on EU public finances.

The fiscal implications of a banking union. Bruegel Policy Brief 2012/02 [3?], September 2012

Systemic banking crises are a threat to all countries whatever their development level. They can entail major fiscal costs that can undermine the sustainability of public finances. More than anywhere else, however, a number of euro-area countries have been affected by a lethal negative feedback loop between banking and sovereign risk, followed by disintegration of the financial system, real economic fragmentation and the exposure of the European Central Bank. Recognising the systemic dimension of the problem, the Euro-Area Summit of June 2012 called for the creation of a banking union with common supervision and the possibility for the European Stability Mechanism to recapitalise banks directly.

The use of innovative financial instruments for financing EU policies and objectives: Implications for EU and national budgets. CEPS Special Report, October 2012

This CEPS Special Report analyses the proposed expansion of innovative financial instruments in the EU Multiannual Financial Framework for the 2014–20 period. It presents the economic rationale, governance principles and criteria that these instruments should follow and compares these with proposals from the European Commission. Based on this assessment, it makes recommendations for the proposed instruments.

Student's cross-perception of the economic crises in the European Union and in Southeast Asia. EU Centre in Singapore Working Paper No. 11, December 2012

The financial crisis of 1997-1998 in Southeast Asia and the European Union’s financial crisis of 2008 followed by the sovereign debt crisis represented major policy events in the regions and beyond. The crises triggered policy adjustments with implications on economic and other policies. This paper aims at evaluating the perception of university students in the European Union (EU) and Southeast Asia on the management of these crises. It strives to confirm several ex ante assumptions about the relationship between students’ background, their policy orientation and their knowledge of the European Union and ASEAN policies. It also provides an analysis of the students’ evaluation of the geopolitical importance of the global regions and the EU and ASEAN policies. The paper is based on opinion surveys conducted during the first part of 2012 at four universities, two in the EU and two in ASEAN countries. In the eyes of EU and ASEAN students, the EU crisis is not being managed appropriately. The citizens of the EU surveyed were even significantly more critical of the EU’s anti-crisis measures than any other surveyed group. Their ASEAN counterparts were generally more positive in their evaluations.

Obama 2: future implications for EU-US relations. Jean Monnet/Robert Schuman Paper Series Vol. 12, No. 8, November 2012

Introduction. The week following his reelection, President Obama traveled to Asia – Thailand, Myanmar, and Cambodia –, while facing at home a fiscal cliff, the need to select the next Secretaries of State, Defense, and Treasury, and the resignation of one of America’s most senior and respected generals and Director of the CIA, David Petraeus; all this at the moment wherein the Middle East is burning in flames due to another round of violence between Israel and Hamas. On the other side of the pond, the EU is currently trying to solve or at least contain several crises: the Eurozone, agreeing on the Multiannual Financial Framework 2014-2020, or MFF 2014-2020,2 and saving France.3 For both giants, the American and European priorities are domestic; they both need to do some ‘nation-building at home.’4 The threat of the fiscal cliff in the US and the one of the Eurocrisis in Europe are too important to be ignored and so visceral that they will affect the way both actors behave internationally and interact with one another. The big question since Obama’s reelection has been what will the EU-US relations look like under his second mandate? And will there be any differences from the first one?5 This paper argues that the US-EU relations will remain quite similar as it was under the first Obama presidency. Nevertheless, with the current shift to Asia, the ‘pivot,’ the EU will be required to increase its contributions to global politics and international security. This paper is structured in three parts. First, the economic and political climax of the EU and the US will be presented. In a second a part, the EU and US strategies and foreign policies will be laid out. Last but not least, several core issues facing the Euro-Atlantic community, such as the Asia pivot, Iran, climate change, and the economy will be addressed. Other issues such as Syria, Afghanistan, and the Middle East and North Africa will not be addressed in this paper.6

Rulemaking in Super-RTAs: Implications for China and India. Bruegel Working Paper 2014/03, March 2014

The faltering Doha round has led to a renewed focus on large regional trade agreements. There are two super-RTAs in the making in the Asia-Pacific and one in the Atlantic, all with rather ambitious negotiation targets, and presented as alternate means to reset global trade rules and take the multilateral trade liberalisation agenda forward. So what does this development mean for large emerging markets such as China and India that are on the fringes of these regional trade negotiations? Can these agreements become alternate means of pressuring these Asian economies to follow new trade rules set by industrialised countries, especially given the progressive erosion of the policy dominance of industrialised countries and the strong dissenting voice of developing countries in the Doha Round? This paper examines how super-RTAs may emerge as game changers in the multilateral trading system as promulgated by the WTO, and the implications for China and India. The paper analyses the new economic governance system that is likely to emerge given the renewed interest in regionalism, and argues that while the super-RTAs will not be entirely benign in their impact on China and India, rather than forcing these economies to accept the higher new regulatory standards enshrined in the super-RTAs, a distinct possibility in the medium-term is the emergence and entrenchment of a dual regulatory regime in these economies.

Shifting Between Hegemony and Dominance? A Neo-Gramscian Analysis of the EU as a Structural Foreign Policy Actor: The Singular Case of the Cariforum-EU Economic Partnership Agreement. Bruges Regional Integration & Global Governance Paper 01/2014

The groundbreaking scope of the Economic Partnership Agreement (EPA) between the European Union (EU) and Cariforum (CF) irrefutably marks a substantive shift in trade relations between the regions and also has far-reaching implications across several sectors and levels. Supplementing the framework of analysis of Structural Foreign Policy (SFP) with neo-Gramscian theory allows for a thorough investigation into the details of structural embeddedness based on the EU's historic directionality towards the Caribbean region; notably, encouraging integration into the global capitalist economy by adapting to and adopting the ideals of neoliberal economics. Whilst the Caribbean – as the first and only signatory of a ‘full’ EPA – may be considered the case par excellence of the success of the EPAs, this paper demonstrates that there is no cause-effect relationship between the singular case of the ‘full’ CF-EU EPA and the success of the EPA policy towards the ACP in general. The research detailed throughout this paper responds to two SFP-based questions: (1) To what extent is the EPA a SFP tool aimed at influencing and shaping the structures in the Caribbean? (2) To what extent is the internalisation of this process reflective of the EU as a hegemonic SFP actor vis-à-vis the Caribbean? This paper affirms both the role of the EU as a hegemonic SFP actor and the EPA as a hegemonic SFP tool. Research into the negotiation, agreement and controversy that surrounds every stage of the EPA confirmed that through modern diplomacy and an evolution in relations, consensus is at the fore of contemporary EU-Caribbean relations. Whilst at once dealing with the singular case of the Caribbean, the author offers a nuanced approach beyond 'EU navel-gazing' by incorporating an ‘outside-in’ perspective, which thereafter could be applied to EU-ACP relations and the North-South dialogue in general.

Climate Change: Balancing economic and environmental concerns. CEPS Commentary, 3 October 2014

In surveying the portfolio for climate change assigned to Commissioner-designate Arias Cañete, Andrei Marcu finds in this CEPS Commentary that the approach proposed in the European Commission’s January 2014 package offers a sound basis on which to proceed overall, but he specifies that it needs to be put in a context where the causes and symptoms are correctly identified. He singles out timing and governance as other important elements and discusses their practical implications.

Immigration and free movement in an unusual electoral race: what implications for the next political cycle? EPC Policy Brief, 20 May 2014

Immigration and freedom of movement of EU citizens are among the main issues debated throughout the European Parliament election campaign and have some potential in determining who tomorrow’s EU leaders will be. This Policy Brief looks at how the two policies are debated at national level – in France, Germany and the UK – and at EU level between the ‘top candidates’ for European Commission Presidency – Jean-Claude Juncker (EPP), Ska Keller (Greens), Martin Schulz (PES) and Guy Verhofstadt (ALDE) – who have participated in several public debates. Two different campaigns have been unfolding in front of EU citizens’ eyes. The tense debate that can be identified at national level on these issues, is not transferred to the EU level, where immigration and free movement are less controversial topics. Furthermore, although participating in European elections, national parties present agendas responding exclusively to the economic and social challenges of their Member State, while the candidates for the Commission Presidency bring forward ‘more European’ programmes. Hence, several aspects need to be reflected upon: What will the consequences of this discontinuity be? How will this impact the future European agenda in terms of immigration and free movement? What institutional consequences will there be? Answering these questions is not a simple task, however, this paper aims to identify the parameters that need to be taken into account and the political landscape which will determine the future EU agenda in terms of immigration and free movement.

The natural resources deficit: the implications for German politics. OSW Commentary No. 46, 2011-02-08

Falling amounts of natural resources and the ‘peak oil’ question, i.e. the point in time when the maximum rate of extraction of easily-accessible oil reserves is reached, have been among the key issues in public debate in Germany on all levels: expert, business and – most crucially – the government level. The alarming assessments of German analysts anticipate a rapid shrinkage of oil reserves and a sharp rise in oil prices, which in the longer term will affect the economic and political systems of importer countries. Concerns about the consequences of the projected resource deficit, especially among representatives of German industry, are also fuelled by the stance of those countries which export raw materials. China, which meets 97% of global demand for minerals crucial for the production of new technologies, cut its exports by 40% in summer 2010 (compared to 2009), arguing that it had to protect its reserves from overexploitation. In 2009 the value of natural resources Germany imported reached €84 billion, of which €62 billion were spent on energy carriers, and €22 billion on metals. For Germany, the shrinkage of resources is a political problem of the utmost importance, since the country is poor in mineral resources and has to acquire petroleum and other necessary raw materials abroad1. In autumn 2010, the German minister of economy initiated the establishment of a Resources Agency designed to support companies in their search for natural resources, and the government prepared and adopted a national Raw Material Strategy. In the next decade the policy of the German government, including foreign policy, will be affected by the consequences of the decreasing availability of natural resources. It can be expected that the mission of the Bundeswehr will be redefined, and the importance of African states and current exporter countries such as Russia and China for German policies will increase. At the same time, Germany will seek to strengthen cooperation among importer countries, which should make pressure on resource-exporting states more effective. In this context, it can be expected that the efforts taken to develop an EU resource strategy or even a ‘comprehensive resource policy’ will be intensified; or at least, the EU’s energy policy will permanently include the issue of sourcing raw materials.

The 'Yukos affair', its motives and implications. OSW Study 25/2006

When interpreting the "Yukos affair", it is hard to focus on any single particular motive or explanation that would easily rationalise the government's actions against the company. The "Yukos affair" is a multi-layered process with a number of different reasons for its cause. When one scrutinises the events around the company, the impression may be obtained that the Kremlin seemed at first not to have had any ultimate strategy; the authorities' position evolved as time went by. At first, the conflict was mainly of a political nature; economic factors did not arise until later, when the oil sector was undergoing changes in ownership.