The Economics of State Aid for the Rescue and Restructuring of Firms in Difficulty: Theoretical Considerations, Empirical Analysis and Proposals for Reform. Bruges European Economic Research (BEER) Papers 27/September 2013

State aid for rescue and restructuring (R&R) of companies in difficulty causes a significant distortion of competition. It prevents the market from eliminating inefficient companies. Because of this, the European Commission has to be specially strict when it assesses rescue or restructuring aid. This paper examines recent cases of corporate restructuring partly funded with public money. It explains the main aspects of the current guidelines which are applicable to R&R State Aid and establishes a theoretical framework for the economic assessment of R&R aid. It then analyses decisions adopted by the European Commission concerning R&R state aid during the period 2000-2013. It finds that there is little economic rationale in the granting of R&R aid. The paper concludes by applying the lessons drawn from the empirical analysis to the anticipated revision of the R&R guidelines in the context of the State Aid Modernisation process.

The Malleable Politics of Welfare-to-Work Reform: Germany's "Hartz" activation compared with Dutch, British and Irish cases. ACES Cases No. 2009.1

We compare the Hartz reforms in Germany with three other major labor market activation reforms carried out by center-left governments. Britain and Germany developed radically neoliberal “mandatory” activation policies, whereas in the Netherlands and Ireland radical activation change took a very different “enabling” form. The Irish and German cases were path deviant, the British and Dutch path dependent. We explain why Germany underwent “mandatory” and path deviant activation by focusing on two features of the policy discourse. First, the elite level discourse was “ensilaged” sealing policy formation off from dissenting actors. This is what the British and German cases had in common and the result was reform that identified long term unemployment as social delinquency rather than market failure. Second, although the German policy-making system lacked the “authoritative” features that facilitated reform in the British case, and the Irish policy-making system lacked the “reflexive” mechanisms that facilitated reform in the Dutch case, in both Germany and Ireland the wider legitimating discourses were reshaped by novel institutional vehicles (the Hartz Commission and FÁS) that served to fundamentally alter system-constitutive perceptions about policy. The findings suggest that major reform of welfare-to-work policy may be much more malleable than previously thought.

Euro-area governance: what to reform and how to do it. Bruegel Policy Brief 2015/01 February 2015

The Issue Reform of the governance of the euro area is being held back by disagreement on what is at the root of the euro area’s woes. Pre-crisis, the euro area suffered from the built-up of financial imbalances, price and wage divergence and an insufficient focus on debt sustainability. During the crisis, the main problems were slow resolution of banking problems, an inadequate fiscal policy stance in 2011-13 for the area as a whole, insufficient domestic demand in surplus countries and slow progress with structural reforms to overcome past divergences. Policy Challenge Euro-area governance needs to move beyond the improvements brought about by banking union and should establish institutions to prevent divergences of wages from productivity. We propose the creation of a European Competitiveness Council composed of national competitiveness councils, and the creation of a Eurosystem of Fiscal Policy (EFP) with two goals: fiscal debt sustainability and an adequate area-wide fiscal position. The EFP should have the right in exceptional circumstances to declare national deficits unlawful and to be able to force parliaments to borrow more so that the euro-area fiscal stance is appropriate. A euro-area chamber of the European Parliament would have to approve such decisions. No additional risk-sharing would be introduced. In the short term, domestic demand needs to be increased in surplus countries, while in deficit countries, structural reform needs to reduce past divergences.

Will this time be different for Greece? How to assess its ability to deliver on the reform agenda. CEPS Commentary, 13 March 2015

Taking its inspiration from the ongoing debate on whether this time will be different for Greece and whether Syriza will deliver on its reform promises to the European partners, this Commentary expresses bemusement that the public debate on such an important issue as well as internal discussions among senior policy-makers frequently resort to ‘gut feelings’ or simple stereotypes. To counteract this tendency, the author presents a simple analytical framework that can be used to assess the likelihood that a government will deliver on its reform agenda. Its purpose is not to allow for a precise probabilistic calculation, but to enable better structuring of the knowledge we have. It emphasises that the change depends NOT only on the capacity of the state to design and deliver policies, but even more crucially on state autonomy from both illegitimate and legitimate interests and cognitive models used by policy-makers to make sense of the world.

Die proto-konstitutionelle Etablierung der europäischen Innenpolitik, Rückblick und Ausblick auf Bedingungen föderaler Ordnung in Europa = The proto-constitutional establishment of European domestic policy. Review and outlook on conditions of federal order in Europe. ZEI Discussion Paper C225, 2014

ZEI Director Prof. Ludger Kühnhardt recalls the leading ideas of federalism as territorial equivalent for political pluralism. Celebrating the 80th anniversary of Bonn historian and political scientist Prof. Dr. Hans-Peter Schwarz, he reflects on the emerging EU domestic policies in ZEI Discussion Paper C 225.

Judicial Selection, Lay Participation, and Judicial Culture in the Czech Republic: A Study in a Central European (Non)Transformation. College of Europe Research Paper in Law 03/2014

Introduction. The idea that “merit” should be the guiding principle of judicial selections is a universal principle, unlikely to be contested in whatever legal system. What differs considerably across legal cultures, however, is the way in which “merit” is defined. For deeper cultural and historical reasons, the current definition of “merit” in the process of judicial selections in the Czech Republic, at least in the way it is implemented in the institutional settings, is an odd mongrel. The old technocratic Austrian judicial heritage has in some aspects merged with, in others was altered or destroyed, by the Communist past. After 1989, some aspects of the judicial organisation were amended, with the most problematic elements removed. Furthermore, several old as well as new provisions relating to the judiciary were struck down by the Constitutional Court. However, apart from these rather haphazard interventions, there has been neither a sustained discussion as to how a new judicial architecture and system of judicial appointments ought to look like nor much of broader, conceptual reform in this regard. Thus, some twenty five years after the Velvet Revolution of 1989, the guiding principles for judicial selection and appointments are still a debate to be had.

Don’t complicate it even further: Macroeconomic Conditionality as a Substitute for new Structural Reform Contracts. European Policy Brief No. 15, May 2013

The idea of introducing contracts between Member States and the EU on structural reforms has its merits, it also has several disadvantages. Most notably, the contracts risk rendering European economic governance even more complex and cumbersome. It is therefore sensible to first try to integrate the structural reform contracts into one of the foreseen economic governance instruments. This Policy Brief argues that macroeconomic conditionality can serve this purpose. With some minor reforms, it could even become a full-fledged substitute for structural reform contracts – without suffering some of latter’s disadvantages.

Institutional Reform in the EU. European Policy Brief No. 19, February 2014

This Policy Brief discusses the potential reforms of the EU institutions that can take place during the 2014-2019 legislative term. It argues that negotiations on Treaty change are a possibility, but they should only start in the second part of the legislature. In the meantime, several institutional reforms that can improve the functioning of the EU – and hence increase its legitimacy – should already be considered.