The known unknowns and the unknown unknowns of the EMU. Bruegel Policy Contribution 2012/18, October 2012

Extensive prior research on the economics of European monetary union highlighted some potential risks (the known unknowns) but overlooked others (the unknown unknowns). Asymmetries among participating countries, the potentially destabilising character of a one-size-fits all monetary policy, the weakness of adjustment mechanisms, the lack of incentives for fiscal discipline, the possibility of sovereign solvency crises and their adverse consequences were all known and understood. But policymakers often relied on a complacent reading of the evidence. • The potential for financial disruption was vastly underestimated. Economists generally did not consider, or underestimated, the possibility of balance of payment crises such as those experienced by southern European countries, or the risk of a feedback loop between banks and sovereigns. • Remedying EMU’s systemic deficiencies is on the policy agenda. Banking union would go a long way towards addressing the fault lines. The urgent question for economists is if it is going to be enough and, if not, what else should complement the ‘bare-bones’ EMU of Maastricht.

Diritti sociali e crisi del costituzionalismo europeo [Social rights and the crisis of European constitutionalism]. WP C.S.D.L.E. “Massimo D’Antona”.INT – 95/2012

In the face of what looks like a real impasse of the the line of European constitutionalism, partly due to an orientation of the Court of Justice which tends to favor the protection of economic freedoms over the protection of social rights, two opposing trends occurr. The first amounts to a new "constitutional patriotism"; the second entrusts the protection of fundamental social rights no longer to a single Chart or to a single court but to a multi-level system of protection. A dialogue between the European courts that truly valorizes fundamental rights, however, might be hindered by what someone has seen as a resurgence of the dualist theories, evident in an ECJ’s decision as Kadi.

Electricity without borders: a plan to make the internal market work. Bruegel Blueprint Series 20, 5 September 2013

The most straightforward European single energy market design would entail a European system operator regulated by a single European regulator. This would ensure the predictable development of rules for the entire EU, significantly reducing regulatory uncertainty for electricity sector investments. But such a first-best market design is unlikely to be politically realistic in the European context for three reasons. First, the necessary changes compared to the current situation are substantial and would produce significant redistributive effects. Second, a European solution would deprive member states of the ability to manage their energy systems nationally. And third, a single European solution might fall short of being well-tailored to consumers’ preferences, which differ substantially across the EU. To nevertheless reap significant benefits from an integrated European electricity market, we propose the following blueprint: First, we suggest adding a European system-management layer to complement national operation centres and help them to better exchange information about the status of the system, expected changes and planned modifications. The ultimate aim should be to transfer the day-to-day responsibility for the safe and economic operation of the system to the European control centre. To further increase efficiency, electricity prices should be allowed to differ between all network points between and within countries. This would enable throughput of electricity through national and international lines to be safely increased without any major investments in infrastructure. Second, to ensure the consistency of national network plans and to ensure that they contribute to providing the infrastructure for a functioning single market, the role of the European ten year network development plan (TYNDP) needs to be upgraded by obliging national regulators to only approve projects planned at European level unless they can prove that deviations are beneficial. This boosted role of the TYNDP would need to be underpinned by resolving the issues of conflicting interests and information asymmetry. Therefore, the network planning process should be opened to all affected stakeholders (generators, network owners and operators, consumers, residents and others) and enable the European Agency for the Cooperation of Energy Regulators (ACER) to act as a welfare-maximising referee. An ultimate political decision by the European Parliament on the entire plan will open a negotiation process around selecting alternatives and agreeing compensation. This ensures that all stakeholders have an interest in guaranteeing a certain degree of balance of interest in the earlier stages. In fact, transparent planning, early stakeholder involvement and democratic legitimisation are well suited for minimising as much as possible local opposition to new lines. Third, sharing the cost of network investments in Europe is a critical issue. One reason is that so far even the most sophisticated models have been unable to identify the individual long-term net benefit in an uncertain environment. A workable compromise to finance new network investments would consist of three components: (i) all easily attributable cost should be levied on the responsible party; (ii) all network users that sit at nodes that are expected to receive more imports through a line extension should be obliged to pay a share of the line extension cost through their network charges; (iii) the rest of the cost is socialised to all consumers. Such a cost-distribution scheme will involve some intra-European redistribution from the well-developed countries (infrastructure-wise) to those that are catching up. However, such a scheme would perform this redistribution in a much more efficient way than the Connecting Europe Facility’s ad-hoc disbursements to politically chosen projects, because it would provide the infrastructure that is really needed.

Opportunities and challenges in the area of employment, social affairs, skills and labour mobility. EPC Commentary, 30 September 2014

On 1 October 2014, Marianne Thyssen, Commissioner-designate for Employment, Social Affairs, Skills and Labour Mobility, will face a European Parliament (EP) hearing. On this occasion, Thyssen will have to perform a delicate balancing act consisting of on the one hand, taking into consideration the significant budget constraints that a number of Member States are still facing and following the still prevailing political line of fiscal consolidation and sound public finances, and on the other hand, of demonstrating her strong commitment for Social Europe. In the context of the upcoming hearing, this commentary aims to outline the features, opportunities and challenges of the new portfolio related to employment and social affairs in view to providing an input into the political debate.

How far do the borders of the west extend? Russian/Polish strategic conflicts in the period 1990-2010. OSW Report, 2010-03-18

From a historical perspective, the last two decades can almost be regarded as a 'golden age' of Polish-Russian relations. This is the first time in several centuries that a sovereign Poland and Russia have been able to develop mutual relations without resorting to force; moreover, they have established a bilateral legal basis and put into practice its provisions on "the inviolability of borders, territorial integrity, non-interference with internal affairs and the nations' right to self-determination. This does not change the fact that since 1990 the atmosphere between the two countries has much more often been chilly and tense. Contrary to the widely-held belief, Polish-Russian conflicts do not stem from genetic Russophobia on the part of Poland, or irrational prejudice on the part of Russia. Their substance is real and concerns strategic issues. At the deepest level, though, this is a dispute about how far the borders of the Western world extend, and about the Russian Federation's sphere of influence. However, it is not a clash between two states; moreover, Poland is certainly not the most important actor in this regard, although due to the historical context and its geographic location, it is one of the countries that lies closest to the 'line of contact', and is therefore particularly entangled in the disagreement.

The EU cannot remain a passive observer of the Karabakh conflict. EPC Commentary, 7 April 2016

When Federica Mogherini visited the South Caucasus in March, she was quoted as saying that the Nagorno-Karabakh conflict was a top priority for the EU. Facts, however, do not seem to match the words of the EU High Representative for Foreign Affairs and Security Policy. As violent clashes in the conflict zone unfolded over the past week, the EU was a passive observer, with few visible signs of engagement apart from a cursory phone call urging Armenia and Azerbaijan to show restraint. The escalation has shown how quickly and dangerously the situation can develop, and the unassailable nature of the Line of Contact (LoC). If the diplomatic efforts to resolve the conflict show no progress, a repetition is very probable. Furthermore, it is likely the next incident will be more devastating in human and material costs than this recent one, and may not be contained so quickly. The EU needs to be part of the renewed diplomatic effort.