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 eastern ‘partnership’ of gas. Gazprom and CNPC strike a deal on gas supplies to China. OSW COMMENTARY No. 139, 2014-06-16

The CEOs of Gazprom and China’s CNPC signed a contract concerning Russian gas supplies to China on 21 May 2014 in Shanghai. The contract had been under negotiation for many years and was signed in the presence of the two countries’ presidents. Under this 30-year deal, ultimately 38 billion m3 of natural gas will be exported annually from eastern Siberian fields (Chayandinskoye and Kovyktinskoye) via the Power of Siberia pipeline planned for construction in 2015–2019. The lengthy negotiation process (initial talks regarding this issue began back in the 1990s), the circumstances surrounding the signing of the contract (it was signed only on the second day of Vladimir Putin’s visit to Shanghai, and the Russian president’s personal engagement in the final phase of the talks turned out to be a key element) and information concerning the provisions of the contract (the clause determining the contract price has not been revealed) all indicate that the terms of the compromise are more favourable for China than for Russia. This contract is at present important to Russia mainly for political reasons (it will use the future diversification of gas export routes as an instrument in negotiations with the EU). However, the impact of this instrument seems to be limited since supplies cannot be redirected from Europe to Asia. It is unclear whether the contract will bring the anticipated long-term economic benefits to Gazprom. The gas price is likely to remain at a level of between US$350 and US$390 per 1000 m3. Given the high costs of gas field operation and production and transport infrastructure development, this may mean that supplies will be carried out at the margin of profitability. The Shanghai contract does not conclude the negotiation process since a legally binding agreement on gas pipeline construction has not been signed and not all of the financial aspects of the project have been agreed upon as yet (such as the issue of possible Chinese prepayments for gas supplies).

Germany and the Eastern Partnership. OSW Commentary No. 37, 2010-06-17

Germany perceives the Eastern Partnership as an initiative that is conducive to German interests, but at the same time as one that could undermine them. Berlin would like the Eastern Partnership to be an instrument that brings the partner countries closer to the EU economically but not politically. Germany has opted for a tightening of the economic cooperation with the partner countries, by signing deals on deep free trade areas and harmonising part of the legislation of these countries with the acquis communautaire. On the other hand, Germany does not want the Eastern Partnership to evolve and turn into an initiative that offers the partner countries prospects of membership and antagonises Russia. Therefore Germany is trying to counteract any elements of the Eastern Partnership that would help it develop in the aforementioned direction. Moreover, Germany has set its own bilateral cooperation with partner countries in the east above the joint projects of the Eastern Partnership. In doing so, Berlin’s guiding principle is that German money allocated for the projects on development cooperation in the east should bring political and economic benefits first of all to Germany.

The fragile ‘reset’. The balance sheet and the prospects for changes in Russian-US relations. OSW Point of View (Policy Brief), April 2011

The ‘reset’ policy proposed by the USA has brought Russia a number of geopolitical, prestigious and economic benefits. The most important of those are: the resumption of arms control, the USA’s withdrawal from plans to locate elements of its strategic missile defence system in Poland and the Czech Republic, and the entry into force of the so-called 123 Agreement. In response, Russia has assisted the United States in resolving the Iranian crisis, and offered help with the Afghanistan operation, covering the transit of supplies and supporting the Afghan government. Moscow has also eased up on its anti-American rhetoric. The changes which have taken place in Russian-US relations are not durable. The two parties have not resolved their major disputes (for example, regarding missile defence), and any differences are hushed up for tactical reasons.

Russia's development assistance. OSW Commentary No. 62, 2011-10-10

In its attempts to catch up with the global trend, Russia began granting development assistance in 2004. From the onset of Russia’s commitment, the aid delivered has increased fivefold and reached approximately US$ 500 million in 2010. Russian aid, albeit distributed nearly exclusively via international organisations, has been granted above all to members of the Commonwealth of Independent States (CIS). In recent months work on the establishment of the Russian development assistance system has been accelerated (a national strategy is being prepared and a specialised agency is to be established). This move proves that the Kremlin attaches weight to activity in this area which is an element of soft power politics, the foundations of which Moscow is currently attempting to lay. In its commitment to development co-operation Russia has sought on the one hand to increase its prestige on the international stage and on the other hand to gain another instrument of exerting its ascendancy in the CIS. The scale of aid and the way of delivering it have not made Russia an important global actor. Over the last five years Russia increased the funding allocated to development assistance several times, however, compared to other donors its aid does not appear impressive. The resources dedicated to this end stand at a mere 0.035% of Russian GDP. Unlike other non-Western superpowers such as China or India, Russia is not a competitor for Western countries in this area on the global scale. Nevertheless, within the CIS, Russia’s aid is building the country’s position as a donor. The long-term results of this aid are however being counteracted by the fact that Russia is expecting measurable and direct political and economic benefits in return. Although this policy helps Moscow achieve its objectives in the CIS, it does not develop Russian potential in the sphere of soft power or create a positive image of the country.

EU’s quest for energy security. What role for the Energy Union? EPC Policy Brief, 3 March 2015

From the Introduction. The past year has pushed energy security high on the EU agenda, and with it, the need for stronger cooperation on a common energy policy. For years the EU member states have been driven by different reasons to – or not to – collaborate. The internal energy market's economic benefits have not have not provided a sufficient driver for cooperation. The first climate and energy targets were an achievement, but in reality action has been undermined by concerns over competitiveness. Being a global leader in setting targets has not translated in cross-border collaboration in meeting them. National interests and bilateral energy deals have weakened EU's common voice vis-à-vis supplier countries. Whether the recognition of EU's energy vulnerability will become a real driver for creating an Energy Union worth its name remains to be seen. The need for action could not be stronger.

Prime Minister Fico’s Russian card. OSW COMMENTARY NUMBER NUMBER 175/01.07.2015

Since the beginning of the Ukrainian-Russian conflict, the position of Slovakia’s left-wing government towards Russia has been ambiguous. Bratislava has accepted the EU sanctions targeting Russia and the plan for strengthening NATO’s eastern flank. At the same time, however, Prime Minister Robert Fico’s government has maintained close political relations with the Kremlin. It has called for the intensification of Slovak-Russian economic relations and has repeatedly criticised the sanctions, speaking in tandem with Russian propaganda in so doing. Slovakia’s Prime Minister is hoping that by playing the role of one of the leaders in the EU and NATO who are most willing to cooperate with Russia, he will gain economic benefits and win votes in next spring’s upcoming parliamentary elections. Despite numerous pro-Russian gestures, Slovakia has been limiting the number of areas in which Moscow could exert pressure on Bratislava. As it strives to become independent of Russia, Slovakia has ensured possible alternative fuel supplies for itself. Moreover, it has been gradually replacing Russian-made military equipment with equipment made in the West. The Slovak government does intend to develop the country’s cooperation with Russia, including in strategic areas involving supplies and transit of oil and gas, as well as supplies of nuclear fuel. Nevertheless, it has been making efforts to gain easy access to an alternative source of supplies in each of these areas. Beset by crises, Russia has ever fewer economic cooperation opportunities to offer Slovakia, and Slovak businesses operating on the Russian market have to take into account the growing risk of insolvency of local contractors. To a great extent, therefore, Slovak-Russian relations have been reduced to rhetorical statements confirming the desire for closer cooperation, and to visions of joint projects accompanied by an ever shorter list of feasible cooperation initiatives.

The Circular Economy: Barriers and Opportunities for SMEs. CEPS Working Documents No. 412/September 2015

The ‘circular economy’ is gaining momentum as a concept in both academic and policy circles, and circular business models have been linked to significant economic benefits. This paper identifies barriers and enablers to adopting circular economy business practices, and presents key messages for policy-makers. It draws on input from a literature review, on discussions held in the context of the GreenEcoNet project and on an analysis of two SME circular business models.

Who profits most from globalization? Policy Brief #2014/01

Globalization, understood as the economic, political and social interconnection of countries, leads to increased economic growth. On average, the more a country proceeds its interconnection with the rest of the world, the greater its economic growth will be. If real per capita gross domestic product (GDP) is chosen as the reference index for the economic benefits of globalization, Finland can point to the largest gain from globalization from 1990 to 2011. Ranked according to this perspective, Germany holds fourth place out of a total of 42 economies evaluated.

Labour Mobility in the EU: Addressing challenges and ensuring ‘fair mobility’. CEPS Special Report No. 139, July 2016

Labour mobility creates economic benefits for the EU at large and the mobile workforce. The same can be said for the special case of posted workers – a form of labour mobility that is crucial to the functioning of the internal market for services. Moreover, the number of posted workers is set to grow if the single market is further deepened. However, regulating the cross-border posting of workers – and ensuring a notion of ‘fair mobility’ – also epitomises the inherent difficulties in squaring the differences of 28 different sets of labour market regimes and regulations with the freedom to provide services in situ. In addition, the regulation has to work effectively in countries with large differences in income levels and social policies. This paper reviews the state of play with regard to posted workers and spell out the trade-offs involved to be kept in mind when considering the targeted revision of the posted workers Directive.

European Integration and Europeanisation: Benefits and Disadvantages for Business. Bruges European Economic Policy (BEEP) Briefing 29/2013

European integration is a project of great economic importance for the 500 million consumers and 21 million companies in Europe. With the economic borders between Member States removed, Europeanisation becomes inevitable for companies. The paper proposes a framework to analyse the benefits and disadvantages for business that come with the process of European integration, structured according to the logic of the four fundamental freedoms of movement within the Internal Market (freedom of movement of goods, services, capital and people) complemented by the section on technology and innovation, and the general EU regulatory environment. Whereas the business decisions need to be taken on a case-by-case basis, taking into consideration firm’s own capabilities and resources as well as industry specificities, several recommendations for companies willing to Europeanise are made, based on an analysis of the regulatory macro-environment of the EU. Above all, any company willing to be successful in the EU has to become a learning organisation, responsive to the advancements of the macro-environment. The ability to anticipate the regulatory developments and to adjust one’s own business and corporate strategy accordingly is the key to achieving sustainable competitive advantage in the European Union.

How Germany Benefits from the Euro in Economic Terms. Policy Brief #2013/01

There can be no doubt about the fact that Germany benefits from the euro in a significant number of ways. For ex-ample, monetary union membership helps to reduce the cost of international trade, and provides protection against excessive exchange rate volatility. This means that even if Germany had to write off a large percentage of the loans that it has made available to the heavily indebted states of southern Europe as part of the various euro rescue measures, the economic advantages of its membership of the monetary union would continue to predominate. Reverting to the deutschmark would thus be disadvantageous even in purely economic terms.

Benefits and drawbacks of European Unemployment Insurance. Bruegel Policy Brief 2014/06, September 2014

The issue: Unemployment in Europe has increased to high levels and economic growth has remained subdued. A debate on additional policy instruments to address the situation is therefore warranted. Fiscal stabilisation mechanisms have not provided adequate fiscal stabilisation during the crisis in some countries nor in the euro area as a whole. Different preferences and historical developments mean that national labour markets are differently organised, which sometimes hinders the efficient working of the monetary union. European Unemployment Insurance (EUI) has been proposed as a measure to contribute to fiscal policy management and improve labour markets. | Read more at Bruegel http://www.bruegel.org/publications/publication-detail/publication/847-benefits-and-drawbacks-of-european-unemployment-insurance/