Visegrad development aid in the Eastern Partnership Region. OSW Report, February 2014

The international development cooperation systems of the Visegrad countries are all rather new, in most cases only about a decade old. They are still undergoing reforms and the countries are striving to strengthen their own profiles as development donors in the world by gradually increasing their bilateral ODA. Although their resources are limited and were further cut due to the financial and economic crisis, the bilateral ODA ratio of the Visegrad countries as a group spent in the EaP region gradually increased after 2009. Given that the individual systems are still developing and the countries are focusing on creating their own brand, it is highly unlikely that in the near future it would be in their interest to set up a common development fund – either for the EaP region or in general. Instead of creating new institutions, however, a rationalization of the current cooperation systems and a consolidation of existing resources is feasible and should be considered.

Reforms in Moldova: Moderate progress and an uncertain outlook for the future. OSW Commentary No. 100, 2013-01-22

After coming to power in September 2009, the Alliance for European Integration (AIE)1 coalition began implementing a wide-ranging programme of reforms, with a view to bringing Moldova closer to the European Union, and ultimately to ensure the country’s full membership of the EU. Today, Moldova is considered a clear leader in European integration among the members of the EU’s Eastern Partnership programme. This, however, has less to do with the concrete reforms introduced by the Moldovan government, and more to do with, on the one hand, Chișinău’s excellent public relations with Brussels, achieved through effective diplomacy; and on the other hand, the growing disillusionment with the lack of progress in other Eastern Partnership countries, particularly in Ukraine. Attempts to evaluate Moldova’s reforms have proven rather problematic. On the one hand, the ruling coalition has managed to make significant progress in the areas of civil liberties, human rights and electoral reform. The government has also successfully implemented regulations which have brought Moldova closer to signing a Deep and Comprehensive Free Trade Agreement (DCFTA) with the EU, and it has made headway in talks on visa liberalisation with Brussels. On the other hand, Chișinău has still not carried out the structural and economic reforms without which real change in the country will be impossible. No reforms have been introduced in the Ministry of the Interior, the Moldovan police force, or the judiciary. The AIE has also failed to decentralise governance and has had no real success in reducing corruption; its attempts to rebuild the country’s financial institutions have proved equally unsuccessful. The main reasons for this poor performance include mutual mistrust and conflicting interests among the coalition members, a shortage of financial resources, strong resistance to change by public administration staff, and significant pressure from those political and business groups whose interests could suffer as a result of the proposed reforms. It should also be noted that since the AIE took power, the international context of the reform efforts has undergone significant changes. On the one hand, the EU has been facing an economic crisis, which has had a negative impact on Moldovan exports and contributed to the worsening of the economic situation in the country; and on the other hand, Moldova has been offered membership of the Customs Union as a viable alternative to EU membership.

State of the Union and key challenges for Europe's future. CHALLENGE EUROPE Issue 22 - Challenges and new beginnings: Priorities for the EU's new leadership, September 2014.

In the last five years deep cracks have appeared in the European project. The 'euro-area crisis' triggered by a severe global financial and economic crisis has put European integration to a major test, more profound than ever before. The experience of recent years has revealed and exacerbated significant deficiencies in the European Union's (EU) economic and political construction. At time it has cast doubt on fundamentals of the European project and raised questions about whether Europe will be able to deal effectively not only with the immediate crisis, but also with the many other serious socio-economic, politico-institutional, societal and global challenges that Europe is and will be confronted with. At the start of a new institutional-political cycle (2014-2019) and while the crisis situation has for a number of reasons improved significantly since the summer of 2012, at least in systemic terms, the Union's new leadership and Member States will now have to take strategic decisions about the future of European integration.

The Western Balkans: deadlock in the EU enlargement process. OSW Commentary No. 43, 2010-11-24

On 9 November the European Commission presented the annual reports assessing the progress of the Balkans states in their preparations for EU membership, the enlargement strategy up to autumn 2011, and the assessment of the EU membership applications submitted by Albania and Macedonia. All these documents show that the reform process in the Balkan states has slowed down in comparison to previous years. The main reason for this slowdown is the negative consequences of the global economic crisis for these countries. Nonetheless, the transformation process is continuing, despite these difficulties. Another increasingly serious challenge for integrating the Balkan states is the EU's growing reluctance to enlarge any further. Among other measures, the EU states have blocked the formal acknowledgement of the integration progress (objections have been raised to the submission of membership applications by Albania, Serbia and Montenegro, and to granting Albania candidate status), which has significantly prolonged the accession process. In fact, this illustrates the lack of political will to accept new members. The European Commission is aware that the integration process may be blocked, and so in the coming year it is planning to focus on fostering the idea of enlargement among the EU member states. It will also focus on persuading the Balkan states to move on with reforms, especially those designed to strengthen state institutions (administration, the judiciary), even if their progress will not be formally considered during the integration process. The Commission assumes that by the end of next year, the reforms implemented by the Balkan states will be comprehensive enough to persuade the EU states to step up the integration process in subsequent years. However, if the EU member states' standpoint on the enlargement process does not change, the Commission's efforts will not bring about the expected results. Considering that their prospects for EU membership are receding, the Balkan states may not have sufficient motivation to go on with long-term reform efforts. As a result, the transformation process may become impeded, and in the longer perspective, the situation in the entire region may be destabilised.

Ukraine's cooperation with the IMF - unfulfilled hopes for deeper reforms. OSW Commentary No. 52, 2011-06-15

The Party of Regions took power in early 2010, after Ukraine had been plunged deep in economic crisis. Over the next year, with the external markets recovering, the country’s economic situation started to improve gradually. Ukraine’s economic stabilisation was also strengthened by its resumed cooperation with the International Monetary Fund, which provided for a loan worth $15.1 billion. The issuing of successive tranches of the loan was made dependent on the implementation of a comprehensive reform programme. The cooperation went quite smoothly at first; however, as the economic situation in Ukraine improved, the reformist zeal of the Ukrainian government started to fade, and obstacles began piling up. As a result, Ukraine was refused the third tranche, scheduled for this March, and for the moment the credit line remains frozen. Even though the IMF has numerous reservations about the Ukrainian government’s economic policy, the fundamental condition for resuming cooperation is reform of the pension system, which the parliament should adopt. The difficulties with fulfilling the obligations made to the IMF reflect the wider problem with implementing reforms in Ukraine, as the Party of Regions promised after taking power. Changes which do not affect the interests of influential lobbies are quite easy to carry out. Often, however, these changes are not conducive to the economy’s liberalisation; moreover, the influential lobbies are successful in blocking reforms that could harm their businesses. Another impediment to the changes is that some reforms are likely to bring about painful social consequences, and that can affect public support for the ruling group. Even though theoretically possible, it does not seem likely that Ukraine’s cooperation with the IMF will be terminated. But even if this cooperation is continued, deeper reforms in Ukraine are likely to be postponed until after the parliamentary elections in autumn 2012.

European Neighbourhood Policy Package - Conclusions for the Eastern Partners. OSW Commentary No. 78, 2012-05-25

In 2011 the European Union began a process aimed at reforming its policy on the Eastern and Southern Neighbourhood. The change in circumstances in neighbouring countries following the Arab Spring, along with the lack of significant progress regarding Eastern Europe’s integration with the EU, formed the main driving force behind this process. The prime objective of the changes to the European Neighbourhood Policy (ENP) was the need to introduce new incentives for partner countries to modernise and integrate more closely with the EU Another aim was to increase the flexibility of EU instruments (by adapting them to the specific context of each partner state). One year later, on 15 May 2012, the European Commission and the EU High Representative for Foreign Affairs and Security Policy published the European Neighbourhood Policy Package which reported on the progress made in the implementation of the ENP over the preceding year and set out the aims and Action Plans for 20131. An analysis of the outcomes of changes made to the EU policy towards Eastern Europe and the South Caucasus suggests that the aim of the revision was aimed more at addressing the changing political landscape in the region rather than at the implementation of a substantial reform of the neighbourhood policy. The ENP is largely based on bureaucratic procedures (the negotiation of bilateral agreements, the implementation of support programmes). These have only a limited capacity to bring about lasting change in the region, as has been exemplified by the deterioration of democratic standards in a number of countries; this was highlighted in EU’s own reports. This problem is particularly clear in the case of Ukraine; until recently it was seen as the leader of European integration but is now raising much concern due to a deterioration in the state of democracy there. EU instruments have a limited influence on the situation in Eastern Partnership countries and the region’s significance on the EU’s agenda is falling (the priority is now given to counteracting the economic crisis, and prominence in the neighbourhood policy has been given to the Southern Mediterranean). In response to this EU policy on Eastern Europe will focus to a larger extent on technical and sectoral cooperation.

Ukrainian economy on the verge of recession. OSW Commentary No. 96, 2012-11-21

In the third quarter of 2012, Ukraine’s economy recorded negative growth (-1.3%) for the first time since its 2009 economic crisis. Q4 GDP is projected to suffer a further decline, bringing Ukraine into formal recession. In addition to the worsening macroeconomic indicators, Ukraine is also facing a series of concomitant economic problems: a growing trade deficit, industrial decline, shrinking foreign exchange reserves, and the weakening of the hryvnia. Poor economic growth is expected to result in lower than projected budget revenues, which in turn could lead to the sequestration of the budget in December. The decline evident across the key economic indicators in the second half of 2012 brings to a close a period of relative economic stability and two years of economic growth, which had been seen as a significant personal achievement of President Viktor Yanukovych and the ruling Party of Regions. The health of the Ukrainian economy largely depends on the state of the country’s export- -oriented industries. The current economic forecasts for foreign markets are not very optimistic. It is impossible to determine whether the current economic downturn is likely to be merely temporary or whether it heralds the onset of a prolonged economic crisis. The limited capacity to deal with the growing economic problems may mean that Kiev will need to seek financial support from abroad. This is particularly significant with regard to external debt servicing, since in 2013 Ukraine will need to pay back around 9 billion USD, including over 5.5 billion USD to the International Monetary Fund. In order to overcome the recession and stabilise public finances, the government may be forced to take a series of unpopular measures, including raising the price of natural gas and utilities. These measures have been stipulated by the IMF as a condition of further financial assistance and the disbursement of the 12 billion USD stabilisation loan granted to Ukraine in July 2010. The only alternative for Western loans and economic reforms appears to be financial support from Russia. The price for Moscow’s help might however turn out to be very high, and precipitate a turn in Kiev’s foreign policy towards a gradual re-integration of former Soviet republics under Moscow-led geopolitical projects.

A Strong Europe in a Globalized World: From the Hungarian to the Polish presidency of the Council of the European Union. ACES Working Papers, 2011

On June 17, 2011, the Center for Transatlantic Relations – together with the Center for European Policy Analysis, the Polish Institute of International Affairs in Warsaw, and the Embassies of Hungary and Poland – hosted authors writing on the theme “A Strong Europe in a Globalized World,” and who offered in-depth, substantive reflections about how the United States and Europe can work together more closely in meeting global challenges. Drawing on the agendas of the outgoing and incoming EU Presidencies of the Council of the European Union – Hungary and Poland respectively – authors focused on the importance of a strong US-EU partnership in the face of mounting global challenges, from the current financial and economic crisis through the insecurities of energy markets and the promise of the Arab Spring. Authors explored in depth four key areas of shared interests: A Global Perspective (Transatlantic Partnership in a Globalized World); Achievements and Deliverables of Eastern Partnership; Euro-Atlantic Perspectives for the Balkans; and Common Challenges of Energy Security. Senior Hungarian and Polish government officials, subject matter experts, private sector actors, and think tank scholars participated.

Russian nationalists on the Kremlin’s policy in Ukraine. OSW Commentary No. 156|24.12.2014

On the Day of National Unity, celebrated in Russia every 4 November, members of nationalist movements organise a so-called Russian March in Moscow. In 2014 the nationalists took part in three competing marches, which illustrated the divisions present in these circles. The reason for these divisions is a difference of opinions on the policy pursued by Russia towards Ukraine. The pro-Russian, Russia-inspired protests in south-eastern Ukraine organised under the slogan of ‘defending’ the Russians living there (the ‘Russian Spring’) and the annexation of Crimea were received enthusiastically by the nationalists and contributed to a consolidation of these circles around the Kremlin which lasted for several months. In spite of this, opinions on the Russian government’s current policy towards the so-called Donetsk and Lugansk People’s Republics have been varied. The most radical groups have demanded that military support be offered, and that the ‘confederation’ of these republics, the so-called ‘Novorossiya’, should be officially recognised. They consider the Kremlin’s policy to have been too soft, and see the signing of the peace agreements in Minsk as a betrayal of the interests of the Russians. For the remaining representatives of nationalist circles, who are not so numerous and are less visible in the public sphere, finding a solution for Russia’s domestic problems remains a priority. Some of them oppose the very notion of Russia’s involvement in the conflict. Since the beginning of the ‘Russian Spring’, the Kremlin has fostered active attitudes among the nationalists and solicited their support, hoping to win a valuable ally. This has boosted hopes in these circles that their political position may be strengthened. The involvement in the fighting in Ukraine has led to a radicalisation of attitudes among the nationalists, and demonstrated that this group is ideologically motivated and has considerable potential for mobilisation. Moreover, the ‘Great Russian’ and anti-Western slogans some of them have propagated are reflected in views displayed by average Russians, who have been influenced by the patriotic enthusiasm which followed the annexation of Crimea. Due to all this, from among all the actors active on the opposition side, it is the nationalists – and not the representatives of the liberal and pro-Western opposition – that have the best prospects for access to the political stage in Russia. It cannot be ruled out that a further strengthening of the radical groups might also be boosted by the possible growing social frustration caused by the economic crisis, which additionally increases the risk of political destabilisation.

Labour Mobility in Europe: An untapped resource? CEPS Policy Brief No. 327, March 2015

Despite public perceptions, labour mobility is low in the EU, particularly within the euro area. The authors of this Policy Brief make four main points: first, that the economic and financial crisis has affected mobility patterns by redirecting flows away from the periphery, thus showing the limits of labour mobility potential within the current eurozone - largely due to the negligible mobility of nationals from large countries hit by the crisis. Second, east-west mobility has not been fundamentally affected by the crisis, and ten years after the eastern enlargement the number of East Europeans living in EU15 should be of no overall concern. Third, the long-term economic effects of mobility are uncertain, but potential negative effects are more likely to show up in sending countries than in receiving ones. Finally, in view of the lessons learned from the economic crisis, the Commission and member states should adopt a longer-term view on labour mobility. The authors recommend a further upgrade of job-matching tools, namely the EURES system, and should foster better recognition of qualifications and the exchange of best practices among mobility networks. In order to improve mobility in the longer term, the Commission and member states should improve the mobility of third-country nationals – starting with those completing tertiary education at an EU institution and able to find employment. The aim of improving mobility gives new impetus to the ‘mother tongue + two foreign languages’ objective and the European Benchmark of Language Competences Initiative, in particular competence in the first foreign language taught at school.

Smart electricity grids: A very slow deployment in the EU. Egmont Paper No. 74, February 2015

Summary. The European electricity sector will have to deal with a huge challenge in the decades to come. On the one hand, electrical power is increasingly substituted for other forms of energy. It has been forecast that electricity demand will increase in the future (notably because of new needs in transport and heat sectors), although it is currently stagnant, mainly because of the economic crisis. Unless a major alternative energy source is discovered, electricity will become the central energy pillar in the long term. On the other hand, electricity production remains uncertain and will depend on numerous factors: the growth of renewable energy and decentralized energy, the renewal of old power generation capacities, increased external dependency, CO2 charges, etc. This increases the demand for electricity networks that are more reliable, more efficient, and more flexible. Europe’s current electricity networks are ageing, and, as already indicated by the International Energy Agency, many of them will need to be modernized or replaced in the decades to come. Finally, the growing impact of energy trading also needs to be taken into account. These considerations explain the need to modernize the electric grid through various ICT means. This modernization alone may allow the grid to become more flexible and interactive, to provide real time feedback, more adaptation to a fluctuating demand, and finally to reduce the global electricity costs. The paper begins with a description of the EU definition of the term ‘smart grid’ (§ 1) and of the body in charge of advising the Commission (§ 2). The EU legal framework applicable to smart grids is also detailed (§ 3). It is a rather complex domain, connected to various regulations. The paper then examines three critical factors in the development of smart grids (and smart meters as a precondition). Standardization is quite complex, but absolutely essential (§ 4). Innovation is not easily put into action (§ 5). Finally, as digital insecurity has worsened dramatically in recent years, the security of electricity networks, and especially their multiplied electronic components, will become increasingly important (§ 6). Lastly, the paper provides a concise overview of the progress of smart grids in the EU in recent years (§ 7). In a nutshell, the conclusion is that progress is quite slow, many obstacles remain, and, given the appearance of many new regulatory problems, it would be useful to organize a review of the present EU strategy.

The Re-emergence of Russia and its Collision Course with Europe. Jean Monnet/Robert Schuman Paper Series Vol. 14 No. 4, March 2014

From the Introduction. In order to understand the historical roots of the current geopolitical confrontation between the EU and Russia, we have to go back to the end of the Cold War and to the catastrophic decade that it was followed by in Russian history. The dissolution of the USSR imposed serious economic hardship for Russia and for all the ex-communist East-European states. Russia was the hardest hit amongst them, as the center of the USSR's economic system it suffered most from the dissolution of regional economic ties. This crisis was just deepened by the IMF's privatization and reform campaign, which imposed austerity measures and state-asset privatization as a “shock-therapy” answer to the country's economic problems. This policy package did nothing to save Russia from economic collapse (which eventually happened in 1998), the only thing it achieved was an even stronger social and economic crisis and the enrichment of the rent-seeking ex-communist top bureaucrats by state-assets, which were sold out under-priced through diverse channels of corruption

Towards Explaining Anti-Foreign Violence in Germany. CES Germany & Europe Working Papers, No. 04.8 (Series 53), 1993

Gennany has recently witnessed a vast increase in anti-foreign violence. Assembling data from a wide variety of recent research, the paper addresses two basic questions: to what extent is the outburst of xenophobic attacks a German peculiarity? and what are the explanations for the mcreasing violence? An analysis of criminal statistics of various European countries and of comparative opinion polls in the European Community shows that Germany has indeed witnessed a growth of anti-foreign sentiment, and a level of violence that is conspicuous from a com­ parative perspective. Four possible determinants of this peculiarity of recent German history are discussed: (1) the growing ethnic and cultural heterogeneity due to the vast increase in immigration from non-European countries; (2) the increasing costs of foreigners' claims on the German welfare state; (3) the economic context of immigration; and (4) the transformation of national identity in the context of German unification. It is shown that neither the rate of immigration nor the position of foreigners in the German welfare state yields satisfactory explanations for the recent upsurge in violence, which only occurred after unification. The key for an explanation lies in a particu­lar macro-constellation that is characterized by the concurrence of a massive wave of immigration with an economic crisis, and with the ethnicization of German national identity in the context of unification. Anti-foreign sentiments do not automatically follow increases in immigration, but grow in a specific political climate to which the political elites actively contribute.

Paris 2015: What’s in it for the EU? CEPS Commentary, 8 May 2015

The European Union, together with all countries, is making a second effort to reach a comprehensive global climate change agreement at the United Nations Climate Change Conference (COP21 or CMP11) in Paris in December 2015, after the unsuccessful attempt to do so in Copenhagen in 2009. At a time when the EU is still preoccupied with recovery from the economic crisis, and is facing geopolitical challenges and a number of conflicts, why should it see the importance of continuing to offer leadership in the field of climate change? And why would such an agreement be important for the EU? In short: “What’s in it for the EU?” This commentary reviews the wider context of the negotiations, looking not only at the geopolitical shifts that have taken place on the road to Paris, but also at the interests of the EU both as far as its domestic climate policy is concerned, as well as its role as a diplomatic ‘soft power’.

Ukraine on the financial front – the problem of Ukraine’s foreign public debt. OSW COMMENTARY NUMBER 178|05.08.2015

One of the key challenges that Ukraine is facing is the scale of its foreign debt (both public and private). As of 1st April it stood at US$ 126 billion, which is 109.8% of the country’s GDP. Approximately 45% of these financial obligations are short-term, meaning that they must be paid off within a year. Although the value of the debt has fallen by nearly US$ 10 billion since the end of 2014 (due to the private sector paying a part of the liabilities), the debt to GDP ratio has increased due to the recession and the depreciation of the hryvnia. The value of Ukraine’s foreign public debt is also on the rise (including state guarantees); since the beginning of 2015 it has risen from US$ 37.6 billion to US$ 43.6 billion. Ukraine does not currently have the resources to pay off its debt. In this situation a debt restructuring is necessary and this is one of the top priorities for the Ukrainian government as well as for the International Monetary Fund (IMF) and its assistance programme. Without this it will be much more difficult for Ukraine to overcome the economic crisis.