Ukraine, Belarus and Moldova and the Chinese economic expansion in Eastern Europe. OSW Commentary No. 79, 2012-05-28

The countries of Eastern European and China have been increasingly interested in deepening bilateral contacts over the past few years. In the case of Ukraine, Belarus and Moldova this has been caused by the bad economic situation which was in part caused by the consequences of the global economic crisis of 2008 and the desire to establish closer political relations with a country whose significance on the international arena is continually growing. Each of these countries has different expectations regarding the scale and the nature of co-operation with China. Chisinau wishes only to boost trade, whereas in Minsk and Kyiv, Beijing is also presented as a strategic partner whose investments may not only help the indebted economies recover but also strengthen the position of these countries in their dealings with the EU, and especially with Russia. Beijing sees co-operation with these countries in differently, and its offer is much more modest than Belarus and Ukraine are expecting. Eastern Europe is one of the last parts of the world with which China is activating its co-operation. This is not a priority region for Beijing. China wants to derive economic benefits and to diversify the markets on which it invests its financial surplus, and it does not intend to extend its political dialogue with Ukraine, Belarus and Moldova beyond the framework which determines its economic interests. The main reason for this is the nature of relations between Russia and China. Beijing sees its partnership with Moscow as more beneficial, and will not offer these countries support in their relations with Russia since in its opinion they belong to Russia’s sphere of influence. Minsk and Kyiv are pinning too much hope on their co-operation with Beijing, while China offers no real counterbalance to the Russian and EU influences in these countries. Nevertheless, it should be expected that China will capitalise on the beneficial political climate in Ukraine, Belarus and Moldova to reinforce its influence in a region whose location will facilitate its expansion to the EU and the Customs Union markets. In the medium term, Beijing may become a major economic player in Eastern Europe. In a decade’s time this may translate into political influence. Meanwhile, in the short term, China’s financial engagement in Ukraine, Belarus and Moldova will contribute to increasing the debts and deepening the foreign trade deficits of these countries.

The Sahel Crisis: Where do European and African Perspectives Meet? IES Policy Brief Issue 2013/02/March 2013

Summary. The crisis in Mali has brought the Sahel to the centre of international attention. This fragile region not only suffers from longstanding development challenges, but also from an acute security vacuum that has triggered military intervention. Many questions have arisen as a consequence of the crisis. Has the European Union the ability to cope with such a complex and dynamically evolving security environment? How have divergent views on the political roadmap to be adopted, and the lack of resources at the African level, impacted the crisis response? Can the different players involved agree on what are the most pertinent needs and challenges to be addressed? Are they ready for long-term engagement? Can regional organisations effectively collaborate and are they able to successfully integrate different agendas? Following a conference organised by the Institute for European Studies, the Egmont Institute and the Observatoire de l’Afrique on these questions this Policy Brief builds on the findings of the conference and provides an analytical overview of the regional crisis by focusing on the main challenges facing the Sahel, the local and regional dynamics at play and the military and security response.

Images of Europeans: In-Group Trust and Support for European Integration. Jean Monnet/Robert Schuman Paper Series Vol. 14 No. 3, March 2014

Prior research on citizen support for European integration does not consider how individuals’ evaluations of European nationalities are associated with support. This paper fills this gap by developing a political cohesion model based on social identity theory. I claim that the probability of supporting integration increases with greater levels of trust in fellow Europeans, which assumes to reflect their positive images. Also, trust in eastern European Union nationalities has the highest impact on the probability for support, followed by trust in the southern nationalities, and then northern nationalities due to the eastern and southern nationalities relatively lower economic development. Controlling for various factors, the ordered logistic regression analysis of the European Election Study (2004) data support these claims.

Greece & the European Agenda: EU Enlargement and European Monetary Union. CES Germany & Europe Working Papers, No. 08.2, 1998

In the decade to come, the European Union will embark on two new projects, each destined to transform it in fundamental ways: (i) Eastern enlargement, and (ii) economic and monetary union. Neither of these projects will affect all members equally or in the same way. But Greece will, for two reasons, be affected in a manner qualitatively different to all other member states. First, Greece is the only country physically affected by the Luxembourg Summit's decision to begin accession negotiations with some, but not all, Central and Eastern European applicant countries: as a result of this decision, she will continue, for at least another eight to ten years, to be the only member country not to share a common border with another member state, with all the consequent implications in economic and geostrategic terms. Second, when the European Council meets in early May to select those member states that are deemed to have met the convergence criteria, it will find that Greece is the only member state falling short of those criteria. This development may create additional difficulties for her economy during the transitional period of derogation. It will also pose new risks to Greece, insofar as she will be absent during the initial-and crucial-years of establishing a common monetary policy.

North Rhine-Westphalia and the European Union. ZEI Discussion Paper C232, 2015

Keynote speech at the Final Ceremony of the ZEI Class of 2015. On the occasion of the Final Ceremony of the ZEI Master of European Studies “Class of 2015”, Prime Minister Hannelore Kraft congratulated the this year’s graduates and at the same time the ZEI and its staff for its past twenty years of innovative and successful academic work. Twenty years in which the European Union has succeeded in making progress in many areas, like Economic and Monetary Union, EU enlargement, introduction of the Euro and the changing role of the regions in the EU. North Rhine-Westphalia, the 8th largest region in the EU, is conducting proactive policy both in Berlin and in Brussels and combines European and regional politics in many areas. The European Union has to face new challenges, which can be only solved successful and confidence building as a common and even closer Union.

The changing landscape of financial markets in Europe, the United States and Japan. Bruegel Working Paper 2013/02, 18 March 2013

We compare the structure of the financial sectors of the EU27, Japan and the United States, looking at a set of 23 indicators. We find a large variation within the European Union in the structure of the financial sector. Using principal components analysis, we identify robust groups of EU countries. One group consists of the eastern European members that entered the EU more recently.These have substantially smaller financial sectors than the old member states. A second group can be classified as market-based (MBEU) and the third group is more bank-based (BBEU). We compare US, MBEU, BBEU, Eastern EU and Japan with the following main results. First, the groups within Europe are geographically related. Second, in many indicators, MBEU countries are closer to the (market-based) US, while BBEU countries more closely resemble Japan. Paradoxically, however, market-based EU countries also have large banking sectors. Banks in market-based countries have larger cross-border assets and liabilities, and derive a larger fraction of their income from fees, rather than interest income, than banks in bank-based countries. Finally, for most indicators, the ordering of groups of countries is quite stable over time, but while the crisis has had no impact on the relative ordering of the groups, it has slightly widened the gap between the US and all EU regions insome respects. We also find that during the crisis, substitution between market-based and bank-based sources of finance occurred in the US, and to a lesser extent in MBEU and BBEU countries.

A Gas Hub for Ukraine. CEPS Commentary, 11 June 2014

For many years, when natural gas was mentioned in conjunction with Ukraine, it meant nothing but trouble. But at the very moment when Ukraine's territorial integrity is at stake, natural gas could become part of the solution. Due to its massive storage potential, namely one-third that of the EU (or seven-times that of the UK), Ukraine is a natural candidate for an eastern European gas hub. Becoming an integrated part of the European gas market has economic and political merits – both for Ukraine and the EU.

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.

EU integration and party politics in the Balkans. EPC Issue Paper No.77, September 2014

Throughout the Balkan region, popularly elected leaders consistently fail to meet the democratic standards set by the EU and, more importantly, they fall short of their voters’ expectations. Distrust in representative institutions and disengagement from political life runs dramatically high among the people of the Balkan countries, and this generalised sense of dissatisfaction is starting to breed cynicism also towards the idea of a better future inside the Union. This study highlights the interplay between EU integration and national politics in the region, and that both are consequential for the quality of Balkan democracies, as well as reminiscent of the Western and Central and Eastern European experience.

Productivity and Credit Constraints: Firm-Level Evidence from Propensity Score Matching. Factor Markets Working Paper No. 3, September 2011

Drawing on a unique, farm-level panel dataset with 37,409 observations and employing a matching estimator, this paper analyses how farm access to credit affects farm input allocation and farm efficiency in the Central and Eastern European transition countries. We find that farms are asymmetrically credit constrained with respect to inputs. Farm use of variable inputs and capital investment increases up to 2.3% and 29%, respectively, per €1,000 of additional credit. Our estimates also suggest that farm access to credit increases total factor productivity up to 1.9% per €1,000 of additional credit, indicating that an improvement in access to credit results in an adjustment in the relative input intensities on farms. This finding is further supported by a negative effect of better access to credit on labour, suggesting that these two are substitutes. Interestingly, farms are found not to be credit constrained with respect to land.

Antitrust on the ‘G string’: What’s behind the Commission’s investigations of Google and Gazprom? CEPS Commentary, 15 June 2015

The past few weeks have marked a shift of gear in EU antitrust enforcement. First, the new European Commissioner for Competition Margarethe Vestager announced on April 15th that the Commission had sent a Statement of Objections to Google, arguing that the giant IT company abused its dominant position in the “general Internet search” market and also in the market for mobile operating systems, apps and services. Exactly one week later, she also sent a Statement of Objections to Gazprom for having created artificial barriers to trade between certain EU countries, preventing gas flows and competition across national borders and charging unfair prices in five Central and Eastern European countries. It is indeed hard to recall any other time in which two investigations of this size – both potentially leading to billions of euros of fines – have been launched almost simultaneously.

The Weakness of Post-Communist Civil Society Reassessed. CES Papers - Open Forum #11, 2012

During the last two decades, scholars from a variety of disciplines have argued that civil society is structurally deficient in post-communist countries. Yet why have the seemingly strong, active and mobilized civic movements of the transition period become so weak after democracy was established? And why have there been diverging political trajectories across the post-communist space if civil society structures were universally weak? This paper uses a wide range of data from various available sources to show that civil societies in Central and Eastern European countries are not as feeble as is commonly assumed. Some post-communist countries possess vigorous public spheres, and active civil society organizations strongly connected to transnational civic networks able to shape domestic policies. Following the calls by Anheier (2004) and Bernhard and Karakoç (2007) we adopt a multidimensional approach to the measurement of civil society. In a series of cross-section timeseries models, we show that our broader measures of civic and social institutions are able to predict the diverging transition paths among post-communist regimes, and in particular the growing gap between democratic East Central Europe and the increasingly authoritarian post-Soviet space.

Nord Stream II – Another test for EU unity. EPC Commentary, 9 October 2015

In September 2015, Gazprom and major European energy companies (Germany's E.ON and BASF/Wintershall, Austria's OMV, France’s ENGIE and Royal Dutch Shell) signed an agreement to double the Nord Stream gas pipeline’s capacity by 2019. The plan is to transport up to 55 billion additional cubic meters of gas a year to Germany through the Baltic Sea, bypassing Ukraine and other Central-Eastern European countries.

Nord Stream II-testing EU and credibility. EPC Commentary, 16 December 2015

In September 2015, Gazprom and major European energy companies (Germany's E.ON and BASF/Wintershall, Austria's OMV, France’s ENGIE and Royal Dutch Shell) signed an agreement to double the Nord Stream gas pipeline’s capacity by 2019. The plan is to transport up to 55 billion additional cubic metres of gas a year to Germany through the Baltic Sea, bypassing Ukraine and other Central-Eastern European countries.

Brexit will deepen the fault lines within the EU over mobility. CEPS Commentary, 12 July 2016

Much has been made of the divide that opened up in 2015 between eastern and western member states as a result of acrimonious discussions on how to handle the refugee crisis and distribute asylum applicants across the EU. Against the prevailing political sentiment in certain member state capitals, Germany and France pushed through a plan devised by the European Commission to relocate 120,000 refugees, by a qualified majority vote in the Council. Rather than creating an east/west divide, however, the vote split the group of (relatively) new Central and Eastern European countries (CEECs) of the EU into two factions: Romania, Czechia, Slovakia and Hungary voted against the plan, whereas several other CEECs, namely Poland, Bulgaria and the Baltic states, joined the controversial motion on the side of the other (northern, southern and western) member states. Finland abstained. Few member states have shifted their positions in the meantime. If anything, in fact, they have coalesced among the Visegrad 4, following a change of government in Poland; and they have hardened, as a result of new proposals by the Commission to fine member states that refuse to accept refugees. With Hungary’s referendum on the Commission’s relocation scheme scheduled for October 2nd, tensions are set to intensify even further.