The creation of euro area financial safety nets. Bruegel Working Paper 2012/09, July 2012

The financial crisis has exposed the need to devise stronger and broader international and regional safety nets in order to deal with economic and financial shocks and allow for countries to adjust. The euro area has developed several such mechanisms over the last couple of years through a process of trial and error and gradual enhancement and expansion. Their overall architecture remains imperfect and leaves areas of vulnerabilities. This paper provides an overview of the recent financial stability mechanisms and their various shortcomings and tries to brush the outline of a more comprehensive safety net architecture that would coherently address the banking, sovereign and external imbalances crises against both transitory and more permanent shocks. It aims to provide a roadmap for further improvements of the current mechanism and the creation of new devices including a banking resolution mechanism and amore powerfulmechanismto provide financial assistance addressing both the sovereign and external dimensions of the shocks thereby reducing the need for the ECB to fill the current void.

The nuclear safety framework in the European Union after Fukushima. Egmont Paper No. 73, December 2014

Summary. On 11 March 2011, a devastating earthquake struck Japan and caused a major nuclear accident at the Fukushima Daiichi nuclear plant. The disaster confirmed that nuclear reactors must be protected even against accidents that have been assessed as highly unlikely. It also revealed a well-known catalogue of problems: faulty design, insufficient back-up systems, human error, inadequate contingency plans, and poor communications. The catastrophe triggered the rapid launch of a major re-examination of nuclear reactor security in Europe. It also stopped in its tracks what had appeared to be a ‘nuclear renaissance’, both in Europe and globally, especially in the emerging countries. Under the accumulated pressure of rising demand and climate warming, many new nuclear projects had been proposed. Since 2011 there has been more ambivalence, especially in Europe. Some Member States have even decided to abandon the nuclear sector altogether. This Egmont Paper aims to examine the reactions of the EU regarding nuclear safety since 2011. Firstly, a general description of the nuclear sector in Europe is provided. The nuclear production of electricity currently employs around 500,000 people, including those working in the supply chain. It generates approximately €70 billion per year. It provides roughly 30% of the electricity consumed in the EU. At the end of 2013, there were 131 nuclear power reactors active in the EU, located in 14 countries. Four new reactors are under construction in France, Slovakia and Finland. Secondly, this paper will present the Euratom legal framework regarding nuclear safety. The European Atomic Energy Community (EAEC or Euratom) Treaty was signed in 1957, and somewhat obscured by the European Economic Community (EEC) Treaty. It was a more classical treaty, establishing institutions with limited powers. Its development remained relatively modest until the Chernobyl catastrophe, which provoked many initiatives. The most important was the final adoption of the Nuclear Safety Directive 2009/71. Thirdly, the general symbiosis between Euratom and the International Atomic Energy Agency (IAEA) will be explained. Fourthly, the paper analyses the initiatives taken by the EU in the wake of the Fukushima catastrophe. These initiatives are centred around the famous ‘stress tests’. Fifthly, the most important legal change brought about by this event was the revision of Directive 2009/71. Directive 2014/87 has been adopted quite rapidly, and has deepened in various ways the role of the EU in nuclear safety. It has reinforced the role and effective independence of the national regulatory authorities. It has enhanced transparency on nuclear safety matters. It has strengthened principles, and introduced new general nuclear safety objectives and requirements, addressing specific technical issues across the entire life cycle of nuclear installations, and in particular, nuclear power plants. It has extended monitoring and the exchange of experiences by establishing a European system of peer reviews. Finally, it has established a mechanism for developing EU-wide harmonized nuclear safety guidelines. In spite of these various improvements, Directive 2014/87 Euratom still reflects the ambiguity of the Euratom system in general, and especially in the field of nuclear safety. The use of nuclear energy remains controversial among Member States. Some of them remain adamantly in favour, others against or ambivalent. The intervention of the EAEC institutions remains sensitive. The use of the traditional Community method remains limited. The peer review method remains a very peculiar mechanism that deserves more attention.