Social Investment and State Capacity. CEPS Working Document No. 419/February 2016

This paper looks at the difference between the levels and nature of social policy expenditure in northern and northwest European countries and the countries of southern, central, and eastern Europe, and examines the relationship between social investment and state capacity in these country groupings. The authors show that southern and eastern countries have a much greater preference for ‘compensating’ rather than ‘capacitating’ social policy spending. Furthermore, the state capacity in these countries is lower, which generates less state revenue. Based on these observations they conclude that low state capacity and low state revenue go hand in hand with the preference for capacitating social policies, as these policies involve less delegation and discretion than social investment policies. This paper shows that high state capacity is probably a necessary precondition for effective social investment policies, although some limited alternative paths do exist.

The dynamics of leniency application and the knock-on effect of cartel enforcement. Bruegel Working Paper 2016/02, February 2016

The authors study the timing of leniency applications using a novel application of multi-spell discrete-time survival analysis for a sample of cartels prosecuted by the European Commission between 1996 and 2014. The start of a Commission investigation does not affect the rate by which conspirators apply for leniency in the market investigated, but increases the rate of application in separate markets in which a conspirator in the investigated market also engaged in collusion. The revision of the Commission’s leniency programme in 2002 increased the rate of pre-investigation applications. Our results shed light on enforcement efforts against cartels and other forms of

Green Diplomacy Network – What is in a name? EPC Commentary, 29 February 2016

The external representation of the European Union (EU), with 28 member states plus the Brussels institutions, has a complex architecture. While the inauguration of the European External Action Service (EEAS) and the transformation of European Commission offices worldwide into EU delegations in December 2009 were meant to streamline external representation patterns, such hopes have only been partially attained. Despite a continuing series of national embassy closures abroad by EU member states, mostly spurred by shrinking budgets, many countries in the world host embassies from nearly the full complement of EU member states along with an EU delegation.

Revue GRASPE/GRASPE Review. Réflexions sur l'avenir de la Service Publique Européenne/Reflections on the future of the European civil service. Cahier n° 26 Février 2016

No abstract.

The United States dominates global investment banking: does it matter for Europe? Bruegel Policy Contribution 2016/06, March 2016

In the aftermath of the global financial crisis, the market share of US investment banks is increasing, while that of their European counterparts is declining. We present evidence that US investment banks are on the verge of taking over pole position in European investment banking. Meanwhile, since 2015, Chinese investment banks have overtaken American and European investment banks in the Asia-Pacific market. Credit rating agencies and investment banks are the gatekeepers of the capital markets. The European supervisory institutions can effectively supervise the European operations of these US-managed players. On the political side, we suggest that the European Commission should continue to view its, albeit declining, banking industry as a strategic sector. The Commission, the European Central Bank and the Bank of England should jointly develop a strategic agenda for the EU-US Regulatory Dialogue. Finally, corporates rely on investment banks to issue new securities. We recommend that the big European corporates should cherish the (few) remaining European investment banks, by giving them at least one place in otherwise US- dominated banking syndicates. That could help to avoid complete dependence on US investment banks.

Paradoxes of stabilisation. Bosnia and Herzegovina from the perspective of Central Europe. OSW Report, March 2016

On 15 February 2016 Bosnia and Herzegovina applied for membership of the European Union. This was the result of the new policy strategy which the EU introduced in 2014, aimed at unblocking BiH’s integration process and encouraging local elites to accelerate the reform process. Despite a formal application to the EU, the main internal problems of BiH remain the same - local politicians focus more on the power struggle and enhancing ethnic division than on reform and this is hampering the economic development of one of the poorest countries in Europe. For these reasons this report is devoted to analysing the internal challenges to the stability, coherence and unity of the country. Special attention was also placed on examining the interest and strategies of the various international actors since they can hinder or support the reform process.

My enemy’s enemy–Turkey’s stance on Islamic State. OSW COMMENTARY NUMBER 198/24.02.2016

In the context of the civil war in Syria, Turkey has been accused of intense co-operation with Islamic State. The accusations have been coming for some time from the West, and also from the Turkish opposition and the Kurds. The Russian government has also joined in the accusations over the past few months.

Why Moldova’s European integration is failing. CEPS Commentary, 3 March 2016

As anti-government demonstrations continued in Chisinau, EU foreign ministers reaffirmed their support for Moldova’s political association and economic integration with the EU in the Council conclusions of 15 February 2016. The ministers also confirmed that all 28 EU member states have ratified the Association Agreement between Moldova and the EU. Despite this progress, Moldova’s European integration project is in tatters. According to an authoritative survey commissioned by the National Democratic Institute in November 2015, only 40% Moldovans support European integration; 44% are in favour of Eurasian integration, however. [1] As Russia steps up the pressure on Moldova, these trends are worrying for the EU.

Britain’s Future in Europe: The known Plan A to remain or the unknown Plan B to leave. CEPS Paperback 2nd Ed., March 2016

Following the agreement made by Prime Minister David Cameron with the EU on 18-19 February 2016, the day for the referendum for the UK to remain in or leave the EU is set for 23 June 2016. This will be the most important decision taken by the British people in half a century, and whose consequences will live on for another half century. The first edition of this book, published in March 2015, laid the foundations for any objective assessment of the workings of the EU and the UK’s place in it. It was widely acclaimed and rated as “a myth-breaking exercise of the best kind”. This second edition adds a substantial new chapter following Cameron’s agreement with the EU and announcement of the referendum. It reviews both the ‘Plan A’, namely the status quo for the UK in the EU as amended by the new agreement, and three variants of a ‘Plan B’ for secession. The key point is that the ‘leave’ camp have not done their homework or ‘due diligence’ to specify the post-secession scenario, or how the British government would face up to the challenges that this would bring. The authors therefore do the ‘leave’ camp’s homework for them, setting out three Plan Bs more concretely and in more depth than the ‘leave’ camp have been able or wanted to do, or any other source has done. The book is therefore unique and essential reading for anyone concerned with the fateful choice that lies soon ahead.

The EU ETS: Caught between an ideal and reality. CEPS Commentary, 8 march 2016

The EU ETS (emissions trading system) has passed its first decade of operation and has proven to be an inspiration for those who promote carbon pricing through carbon markets as a means to tackle climate change. During this period, Europe has learned important lessons from operating its own ETS and from observing the experiences of other jurisdictions with carbon markets.

TTIP and Public Procurement: Going beyond the tip of the iceberg. CEPS Policy Brief No. 339, March 2016

Trade negotiations involving international public procurement rules are on the rise, stimulating a growing interest in having a clear picture of the economic stakes involved, including the current level of international openness. A recent paper published by the European Centre for International Political Economy (Messerlin, 2016) made an attempt to provide a range of estimates for the EU and the US and found relatively low rates of import penetration. This analytical approach, however, looked only at the ‘tip of the procurement iceberg’, as the data used covered primarily only one modality of international procurement (direct cross-border), which is not the main avenue for international government procurement. Other modalities, such as procurement from foreign subsidiaries established in Europe, account for much more. Such an approach therefore ignores the main modalities through which foreign firms win EU contracts. Once these other main procurement modalities are taken into account, EU openness in procurement is much higher. Comparable data across all modalities do not yet exist for the US, but we do have clear evidence that the US has introduced the largest number of protectionist procurement measures since 2008 affecting all modalities for international procurement. Against this background, this Policy Brief makes four basic points: i. Public procurement is a key area of trade negotiations, and TTIP is no exception to this rule. ii. The existing levels of openness in procurement markets need to be assessed across all three main procurement modalities and not based only on direct cross-border procurement, which is not the main procurement avenue. According to this comprehensive metric, the EU market already has a high foreign participation rate, including by US companies. iii. Unfortunately, similar data do not exist for the US market. But there is growing evidence of discriminatory measures introduced in recent years, which impede the ability of EU firms to compete on a level-playing field in US procurement markets. iv. The importance of procurement as a key negotiating area requires better data and a greater analytical engagement.

EU-Turkey plan for handling refugees is fraught with legal and procedural challenges. CEPS Commentary, 10 March 2016

EU-Turkey relations in the scope of the ongoing refugee crisis were at the heart of the European Council meeting of 7 March 2016. Among the set of initiatives proposed, the following two have attracted the most attention: First, for every Syrian readmitted by Turkey from the Greek islands, another Syrian from Turkey would be resettled in an EU member state. This has come to be known as the ‘one for one’ resettlement approach. Second, all new irregular migrants and asylum-seekers crossing from Turkey to the Greek islands would be returned to Turkey without offering any guarantee of protection.

The end of globalisation? CEPS Commentary, 10 March 2016

China has just announced that its exports declined on an annual basis last year, for the first time since the country began opening up its economy to the world at the end of the 1970s. And that is not all; in value terms, global trade declined in 2015. The obvious question is why?

The Social Pillar already exists… but more effort is needed to strengthen it. CEPS Commentary, 9 March 2016 Wednesday, 9 March 2016

There is an unmet demand for a more social Europe in the EU. Asked what would strengthen the feeling of being a European citizen, 32% of the respondents replied: “a European social welfare system harmonised between the Member States”. This answer ranked higher than any other possible response, such as being able to use your mobile phone in all EU countries at the same price (23%), a European emergency response service to fight international natural disasters (22%) and having a European ID card in addition to national ID cards (20%) (Eurobarometer, 2014).