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.

Why the Open Method of Coordination (OMC) is bad for you: a letter to the EU. Research Papers in Law, 5/2006

From the Introduction. The aim of the present “letter” is to provoke, rather than to prove. It is intended to further stimulate the – already well engaged – scientific dialogue on the open method of coordination (OMC).1 This explains why some of the arguments put forward are not entirely new, while others are overstretched. This contribution, belated as it is entering into the debate, has the benefit of some hindsight. This hindsight is based on three factors (in chronological order): a) the fact that the author has participated himself as a member of a national delegation in one of the OMC-induced benchmarking exercises (only to see the final evaluation report getting lost in the Labyrinth of the national bureaucracy, despite the fact that it contained an overall favorable assessment), as well as in a OECD led exercise of coordination, concerning regulatory reform; b) the extremely rich and knowledgeable academic input, offering a very promising theoretical background for the OMC; and c) some recent empirical research as to the efficiency of the OMC, the accounts of which are, to say the least, ambiguous. This recent empirical research grounds the basic assumption of the present paper: that the OMC has only restricted, if not negligible, direct effects in the short term, while it may have some indirect effects in the medium-long term (2). On the basis of this assumption a series of arguments against the current “spread” of the OMC will be put forward (3). Some proposals on how to neutralize some of the shortfalls of the OMC will follow (4).

Bringing South Caucasus Closer to Europe: Achievements and Challenges in ENP Implantation. Natolin Research Paper 03/March 2011

While the initial Commission Communication on Wider Europe (March 2003) did not include Armenia, Georgia and Azerbaijan in the forthcoming policy for the EU’s new neighbourhood, the Southern Caucasus region has now gained considerable attention in the framework of the ENP and beyond, not least because of security considerations. The ENP undoubtedly represents a step forward in the EU’s policy towards Armenia, Azerbaijan and Georgia, yet its implementation highlights major differences between the three countries and important weaknesses in all three of them. The Eastern Partnership addresses some of these weaknesses and it also significantly strengthens the EU’s offer to South Caucasus countries, which is now fully in line with the perspectives proposed to the Western NIS. The paper highlights five main conclusions and recommendations: • Political, economic, social and diplomatic developments in the South Caucasus in the 2000's highlight both diverging trends and the persistence of tensions between the three countries. They also have different aspirations vis-à-vis the EU and different records in ENP implementation. The EU should therefore mainly rely upon an individual approach towards each country. • While bilateral relations should form the basis of the EU's approach, most of the challenges faced by Georgia, Armenia and Azerbaijan are not confined to national borders and require regional solutions. This applies primarily, but not exclusively, to the unresolved conflicts. The EU should promote targeted regional cooperation including, inter alia, confidence-building measures to address indirectly the protracted conflicts and measures supporting drivers of change, which play a critical role in the confidence-building process; • Under the ENP, especially since the opening of negotiations for association agreements and with the perspective of DCFTA, trade-related issues, market and regulatory reform have become prominent in the EU's relations with all three Caucasus countries. At the same time, the priorities identified when the ENP was launched, i.e. good governance and the rule of law, still correspond to major challenges in the South Caucasus. The EU should more clearly prioritise good governance and the rule of law as the basis of both the ENP and successful reforms; • In all partner countries (but even more so in the South Caucasus), ENP implementation has been adversely affected by poor administrative capacities and weak institutional coordination. The EU should increasingly focus on institutional reform/capacity building in its support to partner countries and ensure that the link between the ENP and domestic reform processes is strengthened; • In the South Caucasus the EU has recently concentrated on a few assistance tools such as budget support, Twinning and TAIEX. While these instruments undoubtedly bring an added value, they should be better combined with tools allowing for greater flexibility and targeting non-governmental actors, e.g. EIDHR/NSA.

The Economics of EU Railway Reform. Bruges European Economic Policy (BEEP) Briefing 8/2004

The EU began railway reform in earnest around the turn of the century. Two ‘railway packages’ have meanwhile been adopted amounting to a series of directives and a third package has been proposed. A range of complementary initiatives has been undertaken or is underway. This BEEP Briefing inspects the main economic aspects of EU rail reform. After highlighting the dramatic loss of market share of rail since the 1960s, the case for reform is argued to rest on three arguments: the need for greater competitiveness of rail, promoting the (market driven) diversion of road haulage to rail as a step towards sustainable mobility in Europe, and an end to the disproportional claims on public budgets of Member States. The core of the paper deals respectively with market failures in rail and in the internal market for rail services; the complex economic issues underlying vertical separation (unbundling) and pricing options; and the methods, potential and problems of introducing competition in rail freight and in passenger services. Market failures in the rail sector are several (natural monopoly, economies of density, safety and asymmetries of information), exacerbated by no less than 7 technical and legal barriers precluding the practical operation of an internal rail market. The EU choice to opt for vertical unbundling (with benefits similar in nature as in other network industries e.g. preventing opaque cross-subsidisation and greater cost revelation) risks the emergence of considerable coordination costs. The adoption of marginal cost pricing is problematic on economic grounds (drawbacks include arbitrary cost allocation rules in the presence of large economies of scope and relatively large common costs; a non-optimal incentive system, holding back the growth of freight services; possibly anti-competitive effects of two-part tariffs). Without further detailed harmonisation, it may also lead to many different systems in Member States, causing even greater distortions. Insofar as freight could develop into a competitive market, a combination of Ramsey pricing (given the incentive for service providers to keep market share) and price ceilings based on stand-alone costs might be superior in terms of competition, market growth and regulatory oversight. The incipient cooperative approach for path coordination and allocation is welcome but likely to be seriously insufficient. The arguments to introduce competition, notably in freight, are valuable and many e.g. optimal cross-border services, quality differentiation as well as general quality improvement, larger scale for cost recovery and a decrease of rent seeking. Nevertheless, it is not correct to argue for the introduction of competition in rail tout court. It depends on the size of the market and on removing a host of barriers; it requires careful PSO definition and costing; also, coordination failures ought to be pre-empted. On the other hand, reform and competition cannot and should not be assessed in a static perspective. Conduct and cost structures will change with reform. Infrastructure and investment in technology are known to generate enormous potential for cost savings, especially when coupled with the EU interoperability programme. All this dynamism may well help to induce entry and further enlarge the (net) welfare gains from EU railway reform. The paper ends with a few pointers for the way forward in EU rail reform.

The European Parliament and the Future of Comitology after Lisbon: Lessons to be drawn from the Regulatory Procedure with Scrutiny for Delegated Acts

The history of comitology – the system of implementation committees that control the Commission in the execution of delegated powers – has been characterised by institutional tensions. The crux of these tensions has often been the role of the European Parliament and its quest to be granted powers equal to those of the Council. Over time this tension has been resolved through a series of inter-institutional agreements and Comitology Decisions, essentially giving the Parliament incremental increases in power. This process came to a head with the 2006 Comitology reform and the introduction of the regulatory procedure with scrutiny (RPS). After just over three years of experience with the RPS procedure, and having revised the entire acquis communautaire, the Treaty of Lisbon made has made it redundant through the creation of Delegated Acts (Article 290 TFEU), which gives the Parliament equal rights of oversight. This article aims to evaluate the practical implications that Delegated Acts will entail for the Parliament, principally by using the four years of experience with the RPS to better understand the challenges ahead. This analysis will be of interest to those following the study of comitology, formal and informal interinstitutional relations, and also to practitioners who will have to work with Delegated Acts in the future.