The Political Logic of Disintegration: Seven Lessons from the Soviet Collapse. CEPS Essay (No. 1), September 2012

In short, the European Union, as we know it, no longer exists. The very foundations on which it was built are eroding. Shared memories of the Second World War have faded away – half the 15- and 16-year-olds in German high schools do not know that Hitler was a dictator, while a third believe that he protected human rights. The collapse of the Soviet Union has stripped away the geopolitical rationale for European unity. The democratic welfare state that was at the heart of the post-war political consensus is under siege by, among other things, sheer demographics. And the prosperity that bolstered the European project’s political legitimacy is vanishing. More than six out of ten Europeans believe that the lives of today’s children will be more difficult than those of people from their own generation. Against this background, how unthinkable is the EU’s disintegration? Should Europeans make the mistake of taking the Union for granted? Should they assume that the Union would not collapse because it should not collapse? Here, Europe’s capacity to learn from the Soviet precedent could play a crucial part. For the very survival of the EU may depend on its leaders’ ability to manage a similar mix of political, economic and psychological factors that were in play in the process of the Soviet collapse. The game of disintegration is primarily a political one driven much more by the perceptions and misperceptions of the political actors than simply by the constellation of the structural factors – institutional and economic.

The Border Management Programme in Central Asia: Explaining the European Union's Choice of Implementing Partners. Bruges Regional Integration & Global Governance Papers 3/2014

Between 2003 and 2014 the European Union’s (EU) Border Management Programme in Central Asia was implemented by the United Nations Development Programme (UNDP). However, the latter’s implementing responsibilities have just come to an end, with the next phase of the programme to be implemented by an EU member state consortium. This paper seeks to explain why the EU chose the UNDP to implement the programme in the first place; why the programme was redelegated to the UNDP over successive phases; and why, in the end, the EU has opted for a member state consortium to implement the next phase of the programme. The paper will draw on two alternative accounts of delegation: the principal-agent approach and normative institutionalism. Ultimately, it will be argued that both the EU’s decision(s) to delegate (and redelegate) implementing responsibilities to the UNDP, and its subsequent decision to drop the organisation in favour of an EU member state consortium, were driven for the most part by a rationalist ‘logic of consequentiality’. At the same time, a potential secondary role of a normative institutionalist ‘logic of appropriateness’ – as a supplementary approach – will not be discounted.

Mutual Recognition: economic and regulatory logic in goods and services. Bruges European Economic Research (BEER) Papers 24/June 2012

Mutual recognition is one of the most appreciated innovations of the EU. The idea is that one can pursue market integration, indeed "deep' market integration, while respecting 'diversity' amongst the participating countries. Put differently, in pursuing 'free movement' for goods, mutual recognition facilitates free movement by disciplining the nature and scope of 'regulatory barriers', whilst allowing some degree of regulatory discretion for EU Member States. This BEER paper attempts to explain the rationale and logic of mutual recognition in the EU internal goods market, its working in actual practice for about three decades now, culminating in a qualitative cost/benefit analysis and its recent improvement in terms of 'governance' in the so-called New Legislative Framework (first denoted as the 2008 Goods package) thereby ameliorating the benefits/costs ratio. For new (in contrast to existing) national regulation, the intrusive EU procedure to impose mutual recognition is presented as well, with basic data so as to show its critical importance to keep the internal goods market free. All this is complemented by a short summary of the scant economic literature on mutual recognition. Subsequently, the analysis is extended to the internal market for services. This is done in two steps, first by reminding the debate on the origin principle (which goes further than mutual recognition EU-style) and how mutual recognition works under the horizontal services directive. This is followed by a short section on how mutual recognition works in vertical (i.e. sectoral) services markets.

Defying the Treaty: The Influence of the Polish and Lithuanian Council Presidencies on the Development of the Eastern Partnership. EU Diplomacy Paper No. 6, October 2014

Many scholars now argue that the Treaty of Lisbon has removed the role and influence of the rotating Council Presidency in the domain of the European Union’s foreign affairs. This paper will, however, go beyond a superficial, treaty-based analysis of the influence of the post-Lisbon rotating Council Presidency and instead look at two primary, residual, informal Presidential roles, namely agenda-shaping and brokering. It will examine the extent to which these informal roles allowed the Polish and Lithuanian Council Presidencies of July to December 2011 and 2013 respectively to influence the development of the bilateral, multilateral and internal tracks of the Eastern Partnership. The paper will argue that the considerable influence of these rotating Presidencies defied the logic of the Lisbon Treaty, suggesting that the ‘golden age’ of this six-month position, whereby individual Member States pursue foreign policy issues of significant domestic interest at the European level, has not yet passed.

Integrating Europeans: The Political Economy and Social Aspects of Europeanization. ACES Working Papers (Curriculum Development), 2012

This course, then, investigates the effects of integration on European citizens as well as the duality of the EU as a competitive and social model. It is sensitive to the involvement of social groups, protest, and domestic politics in the study of market integration. Some of the questions we explore are: What are the effects of regulatory policy-making on social actors, how do such actors’ strategies and behaviors change as a consequence, and how to they overcome their collective action problems? Why is it that the logic of integration has at times followed a logic of “permissive consensus” while at other times it has been described as a “constraining dissensus”? What is the importance of discourse in domestic politics in order to articulate and legitimate Europeanization? How do European identities change as a consequence of policymaking as well as of protest? To what extent do ordinary Europeans matter in terms of accepting and opposing the project of European integration, how do European citizens in core and peripheral EU states experience Europeanization, and how is their involvement in the integration project to be conceptualized?

Strategic Voting in Proportional Systems: The Case of Finland. IHS Political Science Series No. 138, September 2014

Voters try to avoid wasting their votes even in PR systems. In this paper we make a case that this type of strategic voting can be observed and predicted even in PR systems. Contrary to the literature we do not see weak institutional incentive structures as indicative of a hopeless endeavor for studying strategic voting. The crucial question for strategic voting is how institutional incentives constrain an individual’s decision-making process. Based on expected utility maximization we put forward a micro-logic of an individual’s expectation formation process driven by institutional and dispositional incentives. All well-known institutional incentives to vote strategically that get channelled through the district magnitude are moderated by dispositional factors in order to become relevant for voting decisions. Employing data from Finland – because of its electoral system a particularly hard testing ground - we find considerable evidence for observable implications of our theory.

The European Union-an expanding security community? EU Diplomacy Paper 06/2012, August 2012

This paper investigates why and how the geographical scope of the security community centered around the European Union (EU) is expanding. It starts from the assumption that the EU itself is a ‘tightly-coupled mature pluralistic security community’. The analysis of the expansion of this peaceful area is based on the theoretical framework first designed by Karl Deutsch and later developed by Emmanuel Adler and Michael Barnett. Contrary to the logic of the adage ‘si vis pacem para bellum’, I argue that the security community is expanding because the EU’s own origins and self-perception are driven by an ambition to create lasting peace. The key mechanisms I explore are the EU’s enlargement and neighborhood policies, which are best understood when analyzed against the concept of concentric circles: the regional EU-centered security community is a multi-speed security community, stronger at its core and weaker as it spreads towards its margins.

Reaching for a Calculator or a Mirror? Why the EU Joins International Human Rights Treaties. EU Diplomacy Paper 01/2013

Why does the European Union (EU) join international human rights treaties? This paper develops motivational profiles pertaining either to a ‘logic of appropriateness’ or a ‘logic of consequentialism’ in order to answer this question. It compares the EU’s motivations for its recent accession to the United Nations Convention on the Rights of Persons with Disabilities (UNCRPD) with those dominating the EU’s nonaccession to the Council of Europe Convention on preventing and combating violence against women and domestic violence (Istanbul Convention). Based on this cross-case analysis, I argue that the EU’s accession decisions are best viewed as cost-benefit calculations and explained by the strength of opposition and the desire to spread its norms. The EU is only marginally concerned with efforts to construct an ‘appropriate role’, although its accession considerations are positively influenced by (varying degrees) of an internalized commitment to human rights. The paper aims at deepening the understanding of the EU’s motivations in the paradigmatic hard case of accession to international human rights treaties not least to evaluate the EU’s ‘exceptional nature’, facilitate its predictability for stake-holders and contribute to political and ethical debates surrounding future rites of passage as a global actor.

Banking Union in sight five years on. CEPS Commentary, 13 September 2013

On the fifth anniversary of the start of the financial crisis, Karel Lannoo looks at the regulatory steps that have been taken to date, and argues that the EU should apply the same logic of reinforced integration at the federal level that informed the Single Supervisory Mechanism to the bank resolution systems and deposit guarantee schemes.

Subsidiarity between Law and Economics. Research Papers in Law, 1/2005

From the Introduction. The present contribution is an attempt to raise awareness between the 'trenches' by juxtaposing the two approaches to subsidiarity. Subsequently, I shall set out why, in economics, subsidiarity is embraced as a key principle in the design and working of the Union and how a functional subsidiarity test can be derived from this thinking. Throughout the paper, a range of illustrations and examples is provided in an attempt to show the practical applicability of a subsidiarity test. This does not mean, of course, that the application of the test can automatically "solve" all debates on whether subsidiarity is (not) violated. What it does mean, however, is that a careful methodology can be a significant help to e.g. national parliaments and the Brussels circuit, in particular, to discourage careless politicisation as much as possible and to render assessments of subsidiarity comparable throughout the Union. The latter virtue should be of interest to national parliaments in cooperating, within just six weeks, about a common stance in the case of a suspected violation of the principle. The structure of the paper is as follows. Section 2 gives a flavour of very different approaches and appreciation of the subsidiarity principle in European law and in the economics of multi-tier government. Section 3 elaborates on the economics of multi-tier government as a special instance of cost / benefit analysis of (de)centralisation in the three public economic functions of any government system. This culminates in a five-steps subsidiarity test and a brief discussion about its proper and improper application. Section 4 applies the test in a non-technical fashion to a range of issues of the "efficiency function" (i.e. allocation and markets) of the EU. After showing that the functional logic of subsidiarity may require liberalisation to be accompanied by various degrees of centralisation, a number of fairly detailed illustrations of how to deal with subsidiarity in the EU is provided. One illustration is about how the subsidiarity logic is misused by protagonists (labour in the internal market). A slightly different but frequently encountered aspect consists in the refusal to recognize that the EU (that is, some form of centralisation) offers a better solution than 25 national ones. A third range of issues, where the functional logic of subsidiarity could be useful, emerges when the boundaries of national competences are shifting due to more intense cross-border flows and developments. Other subsections are devoted to Union public goods and to the question whether the subsidiarity test might trace instances of EU decentralisation: a partial or complete shift of a policy or regulation to Member States. The paper refrains from an analysis of the application of the subsidiarity test to the other two public functions, namely, equity and macro-economic stabilisation.2 Section 5 argues that the use of a well-developed methodology of a functional subsidiarity test would be most useful for the national parliaments and even more so for their cooperation in case of a suspected violation of subsidiarity. Section 6 concludes.

How much did China’s WTO accession increase economic growth in resource-rich countries? CEPS Working Document No. 384, 3 October 2013

This Working Document provides an estimate of China’s impact on the growth rate of resource-rich countries since its WTO accession in December 2001. The authors’ empirical approach follows the logic of the differences-in-differences estimator. In addition to temporal variation arising from the WTO accession, which they argue was exogenous to other countries’ growth trajectories, the authors exploit spatial variation arising from differences in natural resource wealth. In this way they can compare changes in economic growth in the pre- and post-accession periods between countries that benefited from the surge in demand for industrial commodities brought about by China’s WTO accession and countries that were less able to do so. They find that that roughly one-tenth of the average annual post-accession growth in resource-rich countries was due to China’s increased appetite for commodities. The authors use this finding to inform the debate about what will happen to economic growth in resource-rich countries as China rebalances and its demand for commodities weakens.

EU enlargement to the Balkans: will the leopard change its spots? EPC Commentary, 29 September 2014

As the leadership of the European Union hands over the baton to a new management this autumn, will the winds of change blow also through the cobwebs of the EU’s enlargement agenda? Jean-Claude Juncker – the incoming President of the European Commission – has already promised to put the gearbox of further EU widening in neutral for the next five years of his mandate, and has designated the Austrian Johannes Hahn as Commissioner for the re-baptised portfolio of now European Neighbourhood Policy and Enlargement Negotiations, instructing him to focus on the Union’s political and economic ties with Southern and Eastern Europe, and in particular with the Balkans. Such an approach in the field of enlargement – once crowned the jewel of EU foreign policy – has all the appeal of a damp rag but does not necessarily depart from the festina lente strategy of the recent past. Inside the Union, political appetite and public support for expansion have been fizzling since Bulgaria and Romania joined in 2007, and were then severely curbed in the context of the on-going crisis by growing fears of importing organised crime and migrants from the Balkans. Juncker’s logic of consolidation sounds depressingly similar to what it supposedly replaces and incidentally, it also fits neatly with the unambitious and inward-looking mantra favoured at present in discussions at all levels on the future of European integration, more generally. With the 28-member block determined to catch its breath in the immediate time period, and given that even the forerunner countries in the Balkans – that is, Montenegro and Serbia – will realistically need more than five years to complete their accession talks, what priorities should guide Commissioner Hahn, soon to be Directorate-General for Neighbourhood and Enlargement Negotiations – when they get down to business on 1 November?

European Industrial Policy. Bruges European Economic Policy (BEEP) Briefing 15/2006

This survey of European industrial policy aims to set out and explain the great significance of European integration in determining (changes in) structure and performance of industry in the EU. This influence is explored from the policy side by analysing the transformation of the framework within which both EU and Member States' industrial policy can be pursued. Empirical economic analysis is not included because this BEEP Briefing was originally written for a handbook3 in which other authors were assigned a range of industrial economics subjects. In the last 25 years or so, the transformation is such that the nature and scope of industrial policy at both levels of government has profoundly changed as well. Indeed, the toolkit of measures has shrunk considerably, disciplines have been tightened and the economic policy views behind industrial policy have altered everywhere. The pro-competitive logic of deeper market integration itself is rarely questioned nowadays and industrial policy at the two levels takes on different forms. The survey discusses at some length the division of powers between, and the complementarity of, the Member States' and EU levels of government when it comes to industrial policy, based on a fairly detailed classification of industrial policy instruments. The three building blocks of the wide concept of industrial policy as defined in this BEEP Briefing consist of the EU framework of market integration, EU horizontal industrial policy and its EU sectoral or specific counterpart. Each one is surveyed at the EU level. Preceding these three sections is a discussion of three cross-cutting issues, namely, the indiscriminate use of the 'competitiveness' label in the EU circuit of business and policy makers, the relation between services and EU industrial policy and, finally, that of European infrastructure. One major conclusion is that, today, the incentive structure for industry and industrial markets is dominated by the stringency of the overall EU framework and to some moderate degree by the horizontal approach.

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.

Focal points and fiscal discipline. ACES Cases No. 2013.2

Many studies suggest that balanced budget rules can restrain sovereign debt and lower sovereign borrowing costs, even if those rules are never enforced in court. Typically, this is explained as a result of a legal deterrence logic, in which the threat of judicial enforcement deters sovereigns from violating the rules. By contrast, we argue that balanced budget rules work by coordinating decentralized punishment of sovereigns by bond markets, rather than by posing a credible threat of judicial enforcement. Therefore, the clarity of the focal point provided by the rule, rather than the strength of its judicial enforcement mechanisms, determines its effectiveness. We develop a formal model that captures the logic of our argument, and we assess this model using data on US states. We then consider implications of our argument for the impact of the balanced budget rules recently imposed on eurozone states in the Fiscal Compact Treaty.