In Putin’s Shadow: Dmitry Medvedev’s presidency. OSW Point of View, November 2011

Dmitry Medvedev’s presidency was an experiment carried out by the Russian ruling elite. Even though the new president has been a loyal member of the ruling camp, this decision involved certain risk that the extensive constitutional powers could eventually encourage the new president to seek emancipation, which could provoke internal conflicts and splits in the elite. This paper analyses Medvedev’s presidency and tries to answer the question why this scenario did not take place and why Medvedev failed to overcome the restrictions imposed on him at the start of his presidential term. The paper also presents the activation of certain social groups during Medvedev’s presidency and their calls for a new social contract with the government.

The Middle East in the shadow of the Islamic State. OSW Point of View Number 52, August 2015

Since June 2014, Islamic State (IS) has been regarded as the principal security threat in the Middle East and one of the most important problems for European and global security. Islamic State, which for many years was just one of many terror organisations with links to al-Qaeda, has succeeded in achieving much more than other similar organisations: it has taken over control of large swathes of territory in Syria and Iraq by military means, created its own para-state structures in that area, and become the greatest civilisational challenge for the region in a century as it established a self-proclaimed caliphate and credibly pledged to expand further on a global scale. Those successes have been accompanied by widely publicised acts of systemic brutality which meets the definition of crimes against humanity. One outcome of these developments is the emergence of an exotic informal alliance to combatthe Islamic State, which has brought together all the states from the Middle East and many from beyond the region. However, contrary to what could have been predicted, after almost a year of the declared war against IS, the Caliphate still holds most of the ground it gained in 2014.

In the shadow of history. Romanian-Moldovan relations. OSW Studies 53, September 2015

Romania and Moldova have developed very strong ties, resulting mainly from many years of common history (including joint statehood), language and cultural heritage. On the one hand, this closeness fosters bilateral relations, but on the other hand it places a serious burden upon them. This is because Moldovan statehood and identity has in some way been built in opposition to Romanian statehood and identity. Part of Moldovan society (especially the Russian-speaking minority) fears closer cooperation with Bucharest, seeing it as threatening a loss of independence and the declaration of unification with its western neighbour. Historic sentiment is also reflected in Bucharest’s policy towards Moldova. Officially, relations with Chisinau are considered as exceptional, and representatives of the Romanian political class are full of declarations of assistance and support for their eastern neighbour, appealing to the national, cultural and linguistic community. In practice, however, Romanian policy towards Moldova (and hence also the two countries’ bilateral relations) is most often shaped not by sentiment but by political pragmatism, resulting among others from a desire to win the support of the Romanian electorate.

Macedonia: a superficial democracy in the shadow of crises. OSW COMMENTARY NUMBER 206/31.03.2016

Until 2008, Macedonia was leading the process of EU and NATO integration, and (after Croatia) was the fastest-reforming Western Balkan country. However, since Macedonia’s negotiations on joining the EU and NATO were blocked, in connection with its dispute with Greece, the Macedonian government has moved away from a policy of reform towards reinforcing its autocratic system and consolidating society behind nationalist slogans. Also the EU, which had hitherto been the driving force behind the changes, has due to its internal crises been paying little attention to violations of democratic standards in the Republic of Macedonia, tensions in relations between the Slavic Macedonians and the Albanian minority (which make up over 25% of the population), and the country’s permanent political domestic crises.

The shadow of Chornobyl. Ukraine thirty years after the disaster. OSW COMMENTARY NUMBER 210/22.04.2016

Thirty years after the Chornobyl nuclear power plant disaster, its aftermath and consequences are still a permanent element of the economic, environmental and social situation of Ukraine, Belarus and some regions of Russia. Ukraine, to which the scope of this text is limited, experienced the most severe shock because, among other factors, the plant where the accident took place was located just 100 km away from Kyiv. Its consequences have affected the course of political developments in the country, and have become part of the newly-shaped national identity of independent Ukraine. The country bore the huge cost of the clean-up effort but did not give up on nuclear energy, and today nuclear power plants generate more than half of its electricity. The system of social benefits for people recognised as disaster survivors, which was put in place by the Soviet government, has become a huge burden on the country’s budget; if implemented fully, it would account for more than 10% of total public spending, and is therefore being implemented to only a partial extent. This system has reinforced the Ukrainian people’s sense of helplessness and dependence on the state. The disaster has also become part of the ‘victim nation’ blueprint of the Ukrainian national myth, which it has further solidified. The technological and environmental consequences of the disaster, and hence also its economic costs, will persist for centuries, while the social consequences will dissipate as the affected generation passes away. In any case, Chornobyl will remain an important part of the life of the Ukrainian state and society.

Bank versus non-bank credit in the United States, Europe and China. Bruegel Policy Contribution, 2012/07, 5 June 2013

In the wake of recent crisis developments in the US and Europe, non-bank credit channels have often been portrayed as 'shadow banking' and have been considered primarily through the lens of the risks they may pose to financial stability. However, the debate about financial system structures remains immature, in large part due to lack of reliable and comparable data. The available evidence actually points towards a correlation between the development of non-bank credit and higher resilience against systemic risk, at least in developed economies. Policy should aim at better statistical information, and at strengthening the infrastructure for the gradual development of sustainable nonbank credit provision.

Europe between financial repression and regulatory capture. Bruegel Working Paper 2014/08, July 2014

From the Introduction. In the long shadow of the euro-area crisis, the relationship between governments and their banks has been brought to the the centre of the policy debate in Europe by the implementation of regulatory reforms, the risks associated with financial fragmentation, and the fight to sustain the flow of credit to governments and corporates. The attempt to interpret the patterns of pressure and influence running between governments and their financial system has led commentators to rediscover and give new life to concepts originating from academic debates of the 1970s such as “regulatory capture” and “financial repression”. Government agencies have been frequently described as being at the mercy of the financial sector, often allowing financial interests to hijack political, regulatory and supervisory processes in order to favouring their own private interests over the public good1. An opposite view has instead pointed the finger at governments, which have often been portrayed as subverting markets and abusing the financial system to their benefit, either in order to secure better financing conditions to overcome their own financial difficulties, or with the objective of directing credit to certain sectors of the economy, “repressing” the free functioning of financial markets and potentially the private interests of some of its participants2

Historic turning point or just another chapter? The results of a foreign-policy summit. EPC Post-Summit Analysis, 24 March 2014

The March 2014 European Council could enter the history books as a turning point, not only in the EU’s relations with Russia but also in its role as a foreign policy actor. Events in Ukraine inevitably dominated the Summit, with EU leaders adopting a balanced approach aimed at achieving three key objectives – de-escalation, containment/deterrence and cooperation – based on political and economic support for Ukraine, increased but limited pressure on Russia, and moves to strengthen ties with other EU neighbours. The Summit also discussed a range of economic and environmental policy issues, with the situation in Ukraine casting a long shadow over the discussion on energy policy, but failed to reach agreement on the EU’s climate goals to 2030, or to put more flesh on the bones of calls for a European “industrial renaissance”. However, two other developments were particularly significant: the creation of the second pillar of the future banking union, establishing a single regime for winding down failing banks; and changes to the savings tax directive, bringing years of negotiation to an end.

The NSA: the impact of the wiretapping scandal on German-American relations. OSW Commentary No. 124, 14.01.2014

Edward Snowden revealed that America’s National Security Agency (NSA) had tapped Chancellor Angela Merkel’s mobile phone and had collected date en masse. This has caused the largest crisis of confidence in relations between Germany and the US since the Iraq war. Due to the technological advantage which American intelligence services have, Germany wishes to continue close co-operation with the US but is making efforts to change the legal basis of this co-operation dating back to Cold War times. Berlin would like to secure part of provisions similar to the Five Eyes alliance – agreements signed between the US, the UK, Canada, New Zealand and Australia in the second half of the 1940s, aimed at intelligence sharing and a ban mutual bugging. This could spell the end of the last (not including the military presence) relic of Germany’s dependence on the US which emerged following World War II and took shape in the shadow of the Cold War. The process of Germany’s emancipation in trans-Atlantic relations, which began after Germany’s reunification, would be complete. The US is however opposed to such far-reaching changes as it is interested in continued co-operation with Germany without limiting it. Were it not to sign agreements satisfactory for Berlin, this would lead to a protracted crisis of confidence in German-American relations.

Slovakia: the Eurogroup’s enfant terrible. OSW Commentary No. 63, 2011-10-14

When Slovakia’s parliament rejected the European Financial Stability Facility (EFSF) reform on 11 October it undermined Slovakia’s reputation as a credible partner within the EU. Moreover, Prime Minister Iveta Radicova combined the vote on the strengthening of the EFSF – a key anti-crisis mechanism in the Eurozone – with a vote of confidence for her cabinet. This eventually led to the collapse of the government. Before Slovakia’s decision, the strengthening of the EFSF had been endorsed by the national parliaments of all the eurozone countries. Slovakia, which had opted to be the last one to carry out the ratification procedure, adopted the EFSF reform only in a re-vote on 13 October, due to the support of the opposition left-wing party. However, problems with ratification have cast a shadow over the achievements of Slovakia which as one of the freshest members of the eurozone had been actively seeking to influence the creation of EU mechanisms for dealing with the debt crisis. For the past eighteen months the Slovak government, formed by conservative and liberal parties, has consistently called for the controlled bankruptcy of Greece, a tightening of the rules of the Stability and Growth Pact, and for the private sector’s participation in financing the rescue packages for indebted states. It was in part down to Slovakia that these proposals, previously regarded as extreme, were introduced into the mainstream EU debate. The constructive position presented by Slovakia’s diplomacy in recent months has brought Bratislava tangible results, such as the reduction of its contribution to the permanent anti-crisis fund, the European Stabilisation Mechanism (ESM). Thus Slovakia, which adopted the single currency on 1 January 2009, has become an informal spokesman for the new, poorer members of the eurozone.

Drivers of agricultural capital productivity in selected EU member states. Factor Markets Working Paper No. 30, September 2012

The aim of this Working Paper is to provide an empirical analysis of the marginal return on working capital and fixed capital in agriculture, based on data gathered by the Farm Accountancy Data Network from seven EU member states. Particular emphasis is placed on the detection of credit market imperfections. The key idea is to provide farm group-specific estimates of the shadow price of capital, and to use these to analyse the drivers of on-farm capital use in European agriculture. Based on Cobb Douglas estimates of farm-type specific production functions, we find that working capital is typically used in more than economically optimal quantities and often displays negative marginal returns across countries and farm types. This is less often the case with regard to fixed capital, but it is only in a small set of sectors where access to fixed capital appears severely constrained. These sectors include field crop and mixed farms in Denmark, dairy farms in East Germany, as well as mixed farms in Italy and the UK. The relationship between farm financial indicators and the estimated shadow prices of capital varies considerably across countries and sectors. Among the farms with a high shadow price for fixed capital in Denmark, high debt levels and little owned land tended to induce more intensive capital use, which may reflect the liberal Danish banking system. In East Germany, Italy and the UK, high debt levels made farmers more tightly capital constrained. Hence, in the latter group of countries, more traditional mechanisms of capital allocation based on debt capacity seemed to be at work. As a general conclusion, EU agriculture appears to be characterised by overcapitalisation rather than by credit constraints.

Identifying Factor Productivity from Micro-data: The case of EU agriculture. Factor Markets Working Paper No. 34, January 2013

The classical problem of agricultural productivity measurement has regained interest owing to recent price hikes in world food markets. At the same time, there is a new methodological debate on the appropriate identification strategies for addressing endogeneity and collinearity problems in production function estimation. We examine the plausibility of four established and innovative identification strategies for the case of agriculture and test a set of related estimators using farm-level panel datasets from seven EU countries. The newly suggested control function and dynamic panel approaches provide attractive conceptual improvements over the received ‘within’ and duality models. Even so, empirical implementation of the conceptual sophistications built into these estimators does not always live up to expectations. This is particularly true for the dynamic panel estimator, which mostly failed to identify reasonable elasticities for the (quasi-) fixed factors. Less demanding proxy approaches represent an interesting alternative for agricultural applications. In our EU sample, we find very low shadow prices for labour, land and fixed capital across countries. The production elasticity of materials is high, so improving the availability of working capital is the most promising way to increase agricultural productivity.

Synthesis Report on the Impact of Capital Use. Factor Markets Working Document No. 57, August 2013

This paper examines the drivers of productivity in EU agriculture from a factor markets perspective. Using econometrically estimated production elasticities and shadow prices of factors for a set of eight EU member states, we focus on field crop farms represented in the FADN database for the years 2002-08. As it turned out that output reacts most elastically to materials input, we investigate this factor further and find different rationing regimes represented in different member states. Marginal return on materials is low in Denmark and West Germany, but significantly above typical market interest rates in East Germany, Italy and Spain. In the latter countries and in Denmark it also increased towards the end of the observed period. This finding is consistent with a perception of tightening funding access, possibly induced or reinforced by the unfolding financial crisis. Marginal returns to land, labour and fixed capital are generally low. We conclude that the functioning of factor markets plays a crucial role for productivity growth, but that factor market operations display considerable heterogeneity across EU member states.

The EU and its Neighbours: Predictions for 2015. CEPS Commentary, 5 January 2015

Against a backdrop of chaos and violence in the EU’s neighbourhood, Steven Blockmans acknowledges that the troubles of 2014 will cast a long, dark shadow over 2015. In this new CEPS Commentary the author attempts to predict some of the EU foreign policy developments that are likely to mark the New Year.

Commission on the Loose? Delegated Lawmaking and Comitology after Lisbon

The Treaty of Lisbon has altered the institutional mechanism of the European Union. The introduction of formal hierarchy of legal acts has important implications for the balance of power among the EU institutions. This paper argues that the Commission is likely to enjoy some discretion in delegated lawmaking while remaining in the shadow of the legislators’ activism. The Commission has also successfully positioned itself to diminish the influence of comitology committees on the adoption of implementing acts, though a new layer of complexity was added. The possible outcomes of this new institutional battle are analysed in the context of the new challenges to the Community method. Some important inferences of this institutional shift for the debate on the democratic deficit in the EU are also drawn up.