The G20 financial reform agenda. Bruegel Policy Contribution Issue 2014/11, September 2014

Five years ago, the declarations of the G20 in landmark leaders’ summits in London and Pittsburgh listed specific commitments on financial regulatory reform. When measured against these declarations, as opposed to the surrounding rhetorical hype, most (though not all) commitments have been met to a substantial degree. However, the effectiveness of these reforms in making global finance more stable is not so far proven. This uncertainty on impact mirrors the absence of an analytical consensus on the 2007-08 financial crisis itself. In addition, unintended consequences of the reforms are appearing gradually, even as their initial implementation is still unfinished. At a broader level, the G20 has established neither an adequate institutional infrastructure nor a consistent policy vision for a globally integrated financial system. This shortcoming justifies increasing concerns about economically harmful market fragmentation. One key aim should be to make international regulatory bodies more representative of the rapidly-changing geography of global finance, not only in terms of their membership but also of their leadership and location.

Making the institutions work better and more effectively together: Priorities for the New Commission. CEPS Commentary, 1 October 2014

Philippe de Schoutheete takes as his point of departure in this Commentary the assumption that institutional treaty change cannot be a priority, although he does not exclude that it may become possible and desirable at a later period of economic growth and greater self-confidence in public opinion. In a best-case scenario, he foresees that such a window of opportunity might open towards the end of the present legislature. But in the meantime, he advises concentrating attention on adapting the institutions to make them work better and work more effectively together.

Russia’s Punitive Trade Policy Measures towards Ukraine, Moldova and Georgia. CEPS Working Document No. 400, September 2014

While EU and US sanctions against Russia over its aggression in Ukraine, and Russia’s counter-sanctions, are much discussed due to their evident political significance, less attention has been given to Russia’s punitive sanctions against the three Eastern European states – Ukraine, Moldova and Georgia – that have signed with the EU Association Agreements (AA), which include Deep and Comprehensive Free Trade Area (DCFTA) provisions. This paper therefore documents these trade policy restrictions and embargoes imposed by Russia, and provides some first indications of their impact. The immediate impact on trade flows, especially for agri-food products, has been substantial, albeit with some leakage through Belarus. The main instrument for the Russian measures has been allegations of non-conformity with Russian technical standards, although the correlation of these allegations with movements in Russia’s geopolitical postures makes it obvious that the Russian technical agencies are following political guidelines dressed up as scientific evidence. These measures also push the three states into diversifying their trade marketing efforts in favour of the EU and other world markets, with Georgia already having taken significant steps in this direction, since in its case the Russian sanctions date back to 2006. In the case of Ukraine, Russia’s threat to cancel CIS free trade preferences infiltrated trilateral talks between the EU, Ukraine and Russia, leading on 12 September to their proposed postponement until the end of 2015 of the ‘provisional’ implementation of a large part of the AA/DCFTA. This was immediately followed on 16 September by ratification of the AA/DCFTA by both the Rada in Kyiv and the European Parliament, which will lead to its full and definitive entry into force when the 28 EU member states have also ratified it. However Putin followed the day after with a letter to Poroshenko making an abusive interpretation of the 12 September understanding.

Ending the cat-and-mouse embargos game. Making use of EU funds to steer West the Moldovan agriculture exports. EPC Commentary, 30 October 2014

Agriculture in the Republic of Moldova is an important economic sector, accounting for 41% of Moldovan exports and employing 1.3 million people, a large share of the working population. The EU has surpassed Russia as Moldova’s main commercial partner (54% of its exports go to the EU). It is a paradox that the Soviet inheritance still dictates economic trends: the heavy industrialised Transnistria exports, as a percentage, more into the EU than the rest of Moldova does. The right-bank Moldova was designed by Soviet planners as an agricultural basket while Transnistria, on the left bank of the Dniester River, concentrated the heavy industry. As such, from time to time, Russia strikes Moldova where it hurts, with embargos on food and agricultural products

The twenty-first century needs a better G20 and a new G7+. Bruegel Policy Contribution 2014/13, 14 November 2014

During the 2008 financial crisis, the G20 was hastily elevated to ‘global economic steering committee’. In the early stages of the crisis, the G20 was an effective forum for crisis containment. As the crisis has eased, however, the G20 has lost both direction and momentum. Governments and policymakers have felt less need to act in unison and have rather refocused on their national agendas, as is their duty and primary function. However, effective global governance is needed permanently, not just in crisis times. It is desirable to have more representative and effective global governance that, among other things, is equipped to prevent crises rather than just react to them. In an environment of rapid change in global patterns of trade and wealth creation, a new revamped (but highly representative) grouping should be created within the G20, to provide leadership on key economic policy matters. Euro-area members should give up their individual seats in this G7+, allowing room for China and other large emerging economies. Without euro-area countries taking such a step, it would be impossible to reconcile effectiveness and representation in this new G7+, which would take charge of decision making on global economic imbalances, financial and monetary issues. All existing G20 countries, including individual euro-area countries, would however remain in the G20, which could potentially expand and would remain the prime forum for discussion on all remaining matters at global level.

Making the impossible possible: the prospects for visa-free movement between the EU and its eastern partners. OSW Point of View Number 27, May 2012

To make the abolition of visas in relations between the EU and the Eastern European countries possible, the ”spell cast” must be broken on this issue. With the present levels of mobility and people-to-people, business and political contacts the introduction of a visa-free regime will be a natural consequence of the liberalisation processes which have been at work for years.Moreover, the decision to lift the visa requirement is unlikely to significantly stimulate an increase in migration pressure from Eastern European countries but could reduce the operating costs of expanded Schengen consular network. Lifting the visa requirement for Eastern European citizens can be temporary and conditional and allow for actual implementation of an increased conditionality rule. In political terms, making visa liberalisation a key issue would fundamentally change the partners’ approach to the Eastern Partnership and would provide a link to the Partnership for Modernisation targeted at Russia.

An Asian alternative? Russia's chances of making Asia an alternative to relations with the West. OSW Point of View, June 2008

Under Vladimir Putin's rule, Russia consistently and systematically expanded its activity in Asia, establishing closer political contacts with key countries in the region, rebuilding relations with former allies from Soviet times, and strengthening its presence in the Asian markets, in the energy sphere also. These activities were accompanied by intensive Russian propaganda, the message of which was that relations with the West can be restricted in favour of developing closer relations with Asian states. A justified question concerning the Russian Federation's realistic possibilities arises in this context: To what extent can it make Asia an alternative to theWest in geopolitical, economic and energy terms? Can Russia build an anti-Western alliance with Asian states? Is it able to reduce its dependence on the European market by developing its trade with Asia? Is it possible to redirect a substantial portion of Russian energy resource exports onto Asian markets? A presentation of the existing ties between Russia and theWest (here considered as the USA and the EU) will serve as a starting point for answering these questions. The following chapters will analyse Russia's opportunities in Asia in terms of geopolitical issues, the economy and energy

Integration or imitation? EU policy towards its Eastern neighbours. OSW Study 36/2011

Does the European Union’s policy towards its Eastern neighbours have any chance of success? To what extent can the objective of ‘external integration’, i.e. the adoption of EU standards by its Easternneighbours, be achieved? The European Neighbourhood Policy is currently being reviewed and the revolutions in North Africa have triggered a fresh debate on this policy. Alongside this process, Poland's forthcoming presidency of the EU (given that Poland grants high priority to rapprochement with its Eastern neighbours) provides yet another pretext for posing the above questions. However, these considerations extend beyond current events and the EU calendar. There are aspects of the central question, namely: Is the EU capable of exporting its own model of governance? This question is currently more focused on the local than the global potential of the European Union. Can it continue the process of ‘making Europe wider’?

No more compulsory engagement. The emancipation of German security policy. OSW Commentary no. 57, 2011-07-18

Germany’s stance on Libya at the UN Security Council and its later decision not to take part in the military intervention gave rise to heated controversy both in Germany and abroad. At home, this was criticised as “an enormous mistake of historic impact”1; while abroad this raised questions about Germany’s willingness to co-operate with its key Western allies. With its decision on Libya, Germany sealed the process of making its security policy independent from the stances of the US and France. It thus ceased to feel any compulsion to provide not only military engagement but also political support for overseas operations initiated by its key allies, even if these are legitimised by the UN Security Council. Germany’s stance, apart from finishing off a certain process, is also setting a starting point for a discussion inside Germany about its military engagement in international security policy. This will bring about a more assertive and selective approach to cooperation with NATO and the EU’s Common Security and Defence Policy.

A Contribution to The Study of Global Competition for Talent: the determinants of student mobility and its consequences for the internationalization of the labor market. Bruges European Economic Policy (BEEP) Briefing 27/2013

In a globalized economy the skills of the workforce are a key determinant of the competitiveness of a country. One of the goals of Higher Education is precisely to develop the students’ skills in order to allow them to match the increasing demand for highly qualified workers while it is simultaneously the best period of life to acquire multicultural skills. For this reason, the European Union has fostered student mobility through several programs: the Erasmus program and the Bologna process are the best known among them. Although student mobility is a growing phenomenon, publications and research on the subject remain relatively scarce. This paper aims to contribute to that literature through an empirical analysis which exploits a questionnaire submitted to university alumni and focuses on two research questions: what drives studies abroad and what drives expatriation of graduates. Our empirical analysis first shows that exposure to international experiences before entering tertiary education and family background are the main factors influencing student mobility. A second conclusion is that studying abroad increases the international mobility on the labor market. Both confirm previous studies. Moreover, by making a distinction between participating in the Erasmus program and in other exchange programs or internships abroad, we found that the Erasmus program and the other programs or internships have an equivalent influence on the international mobility on the labor market: they increase by 9 to 12.5 percentage points a student’s chance to be mobile on the international labor market. This result shows the legitimacy of the Erasmus program, but it also reveals the important impact of other forms of experience abroad. It provides support for policy makers to encourage mobility programs, in order to foster integration of the European labor market.

Testing for Subsidiarity. Bruges European Economic Policy (BEEP) Briefing 13/2006

In the EU circuit (especially the European Parliament, the Council and Coreper) as well as in national parliaments of the EU Member States, one observes a powerful tendency to regard 'subsidiarity' as a 'political' issue. Moreover, subsidiarity is frequently seen as a one-way street : powers going 'back to' Member States. Both interpretations are at least partly flawed and less than helpful when looking for practical ways to deal with subsidiarity at both EU and Member states' levels. The present paper shows that subsidiarity as a principle is profoundly 'functional' in nature and, hence, is and must be a two-way principle. A functional subsidiarity test is developed and its application is illustrated for a range of policy issues in the internal market in its widest sense, for equity and for macro-economic stabilisation questions in European integration. Misapplications of 'subsidiarity' are also demonstrated. For a good understanding, subsidiarity being a functional, two-way principle neither means that elected politicians should not have the final (political!) say (for which they are accountable), nor that subsidiarity tests, even if properly conducted, cannot and will not be politicised once the results enter the policy debate. Such politicisation forms a natural run-up to the decision-making by those elected for it. But the quality and reasoning of the test as well as structuring the information in a logical sequence ( in accordance with the current protocol and with the one in the constitutional treaty) is likely to be directly helpful for decisionmakers, confronted with complicated and often specialised proposals. EU debates and decision-making is therefore best served by separating the functional subsidiarity test (prepared by independent professionals) from the final political decision itself. If the test were accepted Union-wide, it would also assist national parliaments in conducting comparable tests in a relatively short period, as the basis for possible joint action (as suggested by the constitutional treaty). The core of the paper explains how the test is formulated and applied. A functional approach to subsidiarity in the framework of European representative democracy seeks to find the optimal assignment of regulatory or policy competences to the various tiers of government. In the final analysis, this is about structures facilitating the highest possible welfare in the Union, in the fundamental sense that preferences and needs are best satisfied. What is required for such an analysis is no less than a systematic cost/benefit framework to assess the (de)merits of (de)centralisation in the EU.

Can Policy Make Us Happier? Individual characteristics socioeconomic factors, and life satisfaction in Central and Eastern Europe. Bruges European Economic Research (BEER) Papers 22/November 2011

In the last decade, Central and Eastern European (CEE) countries have witnessed a rapid economic convergence vis-à-vis Western Europe. However, this rapid growth has not been matched by a similarly rapid increase in life satisfaction, which has remained low in the European context. This paper sets out to address this conundrum, by looking at the individual and macro-level determinants of individual life satisfaction in ten CEE countries. The results highlight that while Central and Eastern Europeans share the same individual determinants of happiness as people in the West (despite some significant cross-country variation), macroeconomic and institutional differences are the key factors behind the lack of convergence in life satisfaction. On the macroeconomic side, GDP growth is still a source of increasing well-being, but the happiness bonus associated with it is becoming smaller. The different levels of individual happiness in CEE are therefore mostly determined by institutional factors such as corruption, government spending and decentralisation, making policies aimed at enhancing institutional quality capable of bringing about substantial improvements in the overall life satisfaction of the people in the region.

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.

Lessons for the EU from the Senkaku/Diaoyu Islands Crisis. IES Policy Brief Issue 2013/01 • February 2013

Summary. From April until October 2012, China witnessed a series of public protests against the Japanese purchase of the Senkaku/Diaoyu Islands. Besides providing further evidence of growing Chinese nationalism, this unrest is interesting for other reasons relevant to EU policy. The Beijing leadership, which is traditionally perceived as the only source of foreign policy decisions in China, faces a changing domestic constellation. Domestic opinion increasingly constrains Chinese foreign policy, and it becomes obvious that foreign policy decision-making in Beijing is not insulated from larger social developments. Even if foreign policy decisions in China are still made without direct input from civil society, the influence of social forces on Chinese foreign policies has to be taken seriously. The EU thus might want to reconsider its approach to China: as long as EU concerns about human rights are met with a rather uncompromising attitude by the Chinese political elites, Brussels should double its efforts to reach Chinese civil society.

Regulatory Gaps in the Global Governance of Synthetic Biology. IES Policy Brief Issue 2014/11 • December 2014

Summary. Synthetic biology is an emerging technology with potentially far-reaching benefits and risks. As a cross-cutting issue, different aspects of synthetic biology fall within the scope of different international agreements. Contemporary biosafety and biosecurity frameworks are characterized by important regulatory gaps which policy makers need to address to minimize risks that may arise in the future both from commercial use and weaponization. In some cases, this may require formal treaty amendments, whereas others can possibly be resolved at lower levels, for instance through interpretive statements of treaties’ decision-making bodies.