On Ukrainian Gas Transit and South Stream. There may be more than meets the eye. CEPS Commentaries, 21 March 2014

The EU relies to a considerable degree on imports to meet its demand for natural gas. Whereas Norwegian export pipelines are directly connected to the EU gas system, a major share of Russian gas flows through the Ukrainian territory before reaching consumers located other consumers located down in the supply chain (e.g. Slovakia, Hungary or Italy). But is the Ukrainian gas transit route still a risk? Will the construction of the South Stream pipeline further reduce the importance of Ukraine as a transit country? Or is there more at stake here than meets the eye?

The Case for EU Police Mission Ukraine. CEPS Commentary, 14 May 2014

The EU appears to be out of its depth as a geopolitical actor trying to deal with the crisis in Ukraine. In this new CEPS Commentary, Steven Blockmans and Daniel Gros argue that the EU should concentrate on what really matters now: namely, preventing any further escalation of the conflict by sending a substantial stabilisation force to the areas that have so far remained relatively calm.

The European Parliament’s New Role in Trade Policy: Turning power into impact. CEPS Special Report No. 89, 21 May 2014

The power of the European Parliament in EU trade policy has increased significantly with the Lisbon Treaty. Even though it had already acquired a greater informal role, the codification of its involvement enables the EP to have a stronger say in trade policy. Against the background of increased legal competences granted by the Treaty of Lisbon to the European Parliament in EU trade policy, this Policy Brief addresses two important questions. The first concerns the extent to which the EP’s power in trade policy has increased: Has the EP effectively played a bigger role since the end of 2009? The second relates to the substance of the EP’s trade policy preferences: Does the EP attempt to push EU trade relations into a more or less normative and/or protectionist direction? Its main argument is that the Lisbon Treaty not only heralds a major leap forward in legal terms, but that the current EP legislature has also managed to increase its political clout in trade policy-making. Nevertheless, a major challenge for the new EP legislature 2014-2019 will be to turn this into effective influence.

Bail-in Provisions in State Aid and Resolution Procedures: Are they consistent with systemic stability? CEPS Policy Brief No. 318, 21 May 2014

This CEPS Policy Brief examines the provisions for bail-in in the European Union – that is, the principle whereby any public measure to recapitalise a bank with insufficient prudential capital must be preceded by a write-down or conversion into equity of creditors’ claims – in state aid policies and in the new resolution framework for failing banks, with two aims: i) to assess whether and how they are coordinated and ii) more importantly, whether they address satisfactorily the question of systemic stability that may arise when investors fear that creditors’ claims are likely to be bailed-in in a bank crisis. The issue is especially relevant in the present context, as the comprehensive assessment exercise underway for EU banks falling under the direct supervision of the European Central Bank may lead supervisors to require substantial capital injections simultaneously for many of the banks involved, possibly shaking investors’ confidence across EU banking markets. The authors conclude that the two sets of rules are, broadly speaking, mutually consistent and that they already contain sufficient safeguards to address systemic stability concerns. However, the balance of the elements underpinning the European Commission’s decisions in individual cases may not be clear to bank creditors and potential investors in financial markets. The impression of unneeded rigidity on this very sensitive issue has been heightened by official statements over-emphasising that each case will be assessed individually under competition rules, thus feeding the concern that the systemic dimension of the issue may have been underestimated. Therefore, further clarification by the Commission may be needed on how the various criteria will be applied during the ongoing transition to banking union – perhaps through a new communication completing the state aid framework for banks in view of the adoption of the new resolution rules.