Discussions in Europe on Variable Compensation in the Financial Sector. EU Centre Singapore Working Paper no. 20, February 2014

Bonuses – which are often used to mitigate principal-agent problems and to encourage employees to work harder – have increased tremendously in the financial sector during the last decade, and have often been seen as a contributing factor to the financial crisis of 2008. The recent European Union (EU) action to adopt a policy that restricts bonuses paid to bankers may seem promising at first, but this does not address the real issues behind variable rewards. Compensation policies should be changed to encourage responsible risk-taking and decision-making through the implementation of broader performance metrics, forfeitable holdbacks and hybrid bonds. Furthermore, a change in organisational culture is needed to improve ethical behaviour leading to a re-balancing of stakeholders’ interests in the financial sector.

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.

Balance-of-payments adjustment in the Eurozone. CEPS Policy Brief No. 338, January 2016

This policy contribution describes the unresolved adjustment problems confronting the eurozone, and places them in historical perspective by comparing developments in key real economic variables under EMU with those observed under the Bretton Woods system. The main finding is that the eurozone is afflicted by a strong deflationary bias and that, therefore, under current trends, deep economic

One year of Ukraine’s De-communisation. A change in the historical narrative. OSW COMMENTARY NUMBER 211/16.05.2016

A year ago, the Parliament of Ukraine adopted four bills on the policy of national memory: on granting access to the archives of the repressive organs of the Communist totalitarian regime in the years 1917–1991, on the legal status and commemoration of Ukrainian independence fighters in the twentieth century, on the immortalisation of the victory over Nazism in the Second World War, 1939–1945, and on the condemnation of the Communist and National Socialist (Nazi) totalitarian regimes and the forbidding of their symbolism from being promoted. The laws came into force on 21 May 2015. After a year, it can be stated that only the latter two are being observed – the official narrative regarding World War II has been changed, mainly due to the activity of the Ukrainian Institute of National Remembrance (UINR), but also as a result of public statements by President Petro Poroshenko. The process of removing from public places the names and commemorations referring to the Soviet era is underway, and the fears that this may trigger serious conflicts have not proved true. From roughly a thousand placenames subject to de-communisation some two thirds have been changed so far (parliamentary bills regarding the remaining ones are awaiting approval) and most statues of Communist leaders have been removed. However, the law concerning independence fighters, which raised the most serious controversies, did not have any practical consequences. Moreover, nothing suggests that this could change. The implementation of the de-communisation laws is associated with a significant change in Ukrainian patriotic narrative: it is no longer focused on national martyrdom and it is beginning to emphasize heroic motives, which is in line with wartime needs. The fact that some of these motives are likely to trigger problems in Ukraine’s relations with Poland seems to be viewed as a marginal ‘by-product’.