European Integration and Europeanisation: Benefits and Disadvantages for Business. Bruges European Economic Policy (BEEP) Briefing 29/2013

European integration is a project of great economic importance for the 500 million consumers and 21 million companies in Europe. With the economic borders between Member States removed, Europeanisation becomes inevitable for companies. The paper proposes a framework to analyse the benefits and disadvantages for business that come with the process of European integration, structured according to the logic of the four fundamental freedoms of movement within the Internal Market (freedom of movement of goods, services, capital and people) complemented by the section on technology and innovation, and the general EU regulatory environment. Whereas the business decisions need to be taken on a case-by-case basis, taking into consideration firm’s own capabilities and resources as well as industry specificities, several recommendations for companies willing to Europeanise are made, based on an analysis of the regulatory macro-environment of the EU. Above all, any company willing to be successful in the EU has to become a learning organisation, responsive to the advancements of the macro-environment. The ability to anticipate the regulatory developments and to adjust one’s own business and corporate strategy accordingly is the key to achieving sustainable competitive advantage in the European Union.

A Spatial Analysis of Agricultural Land Prices in Bavaria. Factor Markets Working Document No. 50, June 2013

This paper empirically analyses a dataset of more than 7,300 agricultural land sales transactions from 2001 and 2007 to identify the factors influencing agricultural land prices in Bavaria. We use a general spatial model, which combines a spatial lag and a spatial error model, and in addition account for endogeneity introduced by the spatially lagged dependent variable as well as other explanatory variables. Our findings confirm the strong influence of agricultural factors such as land productivity, of variables describing the regional land market structure, and of non-agricultural factors such as urban pressure on agricultural land prices. Moreover, the involvement of public authorities as a seller or buyer increases sales prices in Bavaria. We find a significant capitalisation of government support payments into agricultural land, where a decrease of direct payments by 1% would decrease land prices in 2007 and 2001 by 0.27% and 0.06%, respectively. In addition, we confirm strong spatial relationships in our dataset. Neglecting this leads to biased estimates, especially if aggregated data is used. We find that the price of a specific plot increases by 0.24% when sales prices in surrounding areas increase by 1%.

The Role of Environmental and Land Transaction Regulations on Agricultural Land Price: The example of Brittany. Factor Markets Working Document No. 52, June 2013

Using data from individual transactions for the period 1994-2010 in the French NUTS2 region Brittany, the authors investigated how environmental regulations and transaction land regulations influence the price of sold plots. Regressions on three sub-samples of buyers were performed in order to assess whether different buyers have different attitudes or plans regarding the farmland purchased: a sub-sample including only farmer-buyers, a sub-sample including non-farmer individual buyers, and a sub-sample including non-farmer non-individual buyers. Estimations were performed ignoring and accounting for spatial interactions (model SARAR). Results indicate that the price of land decreases when buyers are farmers, that the nitrate surplus area zoning increases the price of land, even more so for farmer-buyers. Regarding land transaction regulations, there is a negative effect, on land price, of the purchaser being the current tenant or being the land regulating public body SAFER. Estimating the model on different sub-samples depending on the buyers’ type shed light on the factors that are more important for each buyer.

The ICC Debate and the EU-U.S. Struggle for Influence: The Case of the Balkan-6. ACES Working Paper No. 11, October 2007

The objectives of the European Union (EU) and the United States (US) for the countries of the Balkan region are generally assumed to be complementary. They both stress and condition their support and assistance on the progress that these countries make with regards to economic modernization, build-up of social institutions, and respect for international law. However, this rhetoric doesn't always match the facts on the ground. Often, instead of dealing with a cohesive set of policy recommendations, the countries in the region are faced with contradictory alternatives and zero-sum choices. The debate over the development of the International Criminal Court (ICC) was such a case. It centered on whether the countries in the region should exempt US personnel from the jurisdiction of the Court while in the country and thus rendering them immune from prosecution for any crimes committed for which the US courts were not willing or able to take any action. The final outcome was mixed. Three of the countries - Croatia, Serbia (and Montenegro), and Slovenia - decided not to give in to US pressure, while the remaining three - Albania, Bosnia and Herzegovina, and Macedonia - ignored the pleas and threats of the EU and of the various international non-governmental organizations and decided to sign Bilateral Immunity Agreements (BIAs) with the US. How can one explain such divergent outcomes? I argue that the credibility of actors involved played an important role in determining whether threats coming from the US or the EU were more credible, thus tipping the scales in favor of signing BIAs with the US. However, the issue of threat credibility serves only to narrow down the choices of actors. Further determination of the outcome necessitates a look at the nature of the security context in which these countries exist and operate.

Ukraine and the European Union: Time for a Re-Think. ACES Working Papers, 2011

There are two reasons for the virtual nature of the West’s dialogue with Ukraine. The first is institutional as the EU has until now only been willing to use ‘carrots’ and ‘sticks’ in ‘enlargement-heavy’ (i.e. full membership) whereas it has only used ‘carrots,’ but never ‘sticks’, in ‘enlargement-light’ (i.e. the DCFTA). European Council Foreign Relations Senior Fellows Nicu Popescu and Andrew Wilson argue that the EU should be more willing to use both carrots and sticks; that is integrating its soft and hard power. The second is a disconnection between the West and Kyiv over definitions of democracy. The Ukrainian authorities have until now wanted to have their cake and eat it, too; rolling back democracy in Kyiv while claiming to sign up to ‘European values’ in Brussels.

The Baltic states on the conflict in Ukraine. OSW Commentary [no doc #] 2015-01-23

Before Russia began its aggression against Ukraine, including the annexation of Crimea, Lithuania, Latvia and Estonia had felt a higher level of security due to their membership in NATO and the EU. This has now changed. The authorities of these states claim that Russia has been pursuing an aggressive policy towards them for a long time, using various instruments of pressure. They claim that Russia is now able to organise acts of sabotage against them in several areas and that these could threaten both their internal stability and the territorial integrity of the region. The Baltic states’ reaction to the threat from Russia has demonstrated that the level of cooperation between them is low. It has also revealed certain weaknesses in several areas of how these states function, which Moscow may be willing to use for its own purposes. Paradoxically, this has created a chance for the Baltic states’ governments to take measures which in different political circumstances would meet with resistance from society, such as strengthening the military sector and the level of energy security.

Growth for Europe – Is the Juncker Plan the answer? EPC Discussion Paper, 20 March 2015

Executive Summary. The euro area is still suffering from low growth and high unemployment. For the recovery to become a reality, there needs to be a balance between fiscal discipline, supply side improvements and actions aimed at stimulating demand and growth. Increasing investment, both private and public, are important components in overcoming the recession. This becomes especially clear when comparing investment dynamics during the crisis with pre-crisis levels. Total investment is still much lower than before the crisis and public investment is well below its pre-crisis peak as well. In late November 2014, European Commission President Jean-Claude Juncker submitted a long-awaited proposal for a European Investment Plan that aims to stimulate private investment. Apart from the creation of the new European Fund for Strategic Investment (EFSI), through which private investors will receive public guarantees, the investment plan also aims to provide project assistance and improve the Single Market by removing sector-specific or other financial barriers to investment. While generally perceived as a first positive step towards increasing private investment, some commentators have expressed reservations about the plan. These include, among others, the lack of fresh money for the initial contributions to EFSI. Since a substantial amount of these contributions is reshuffled from other places in the European budget, the question was raised whether EFSI can fund additional projects or just replicates investment projects that would have happened without the plan. Other criticism relates to the high estimate of the expected leverage ratio of 1:15, and to the risk that the plan will only have a limited impact on stressed economies. The Juncker Plan addresses private investment, but so far there really is no clear strategy to stimulate productive public investment on the European and national level. Countries with fiscal space are reluctant to engage in higher spending, while those willing and in need of it the most are restricted by the rules. Member States and the Commission should therefore discuss options for further improving the euro area's economic governance. In addition to urging countries with fiscal space to increase investing in national public goods, investment could be treated with budget flexibility. One could, for instance, upgrade the importance of public investment in the European Semester. Additional deficit granted for public investment purposes could be attached to certain Country-Specific Recommendations. Another solution would be to allow some form of budget flexibility, such as the formulation of a new Golden Rule for productive public investment becoming part of the Stability and Growth Pact's application. Besides relying on a larger amount of flexibility in the rules, the Financial Transaction Tax (FTT) could be another solution to fund investment in European public goods. It will also be necessary to overcome the mistrust among Member States that is preventing further action. The political bargain of stronger conditionality, such as through contractual arrangements, could improve the situation. Increased trust will also be an important condition for tackling long-reaching economic governance reforms such as the creation of a Fiscal Capacity, which could take the form of a macroeconomic shock insurance. Such a Fiscal Capacity could make a real difference in providing the necessary funding to maintain productive public investment, even in times of deep recessions. The proposals presented do not attempt to be conclusive, but shall rather be an input for a wider debate on how to increase growth and employment in Europe. The paper draws heavily on the discussion of a Workshop on Growth and Investment, which the European Policy Centre (EPC) hosted on 10 December 2014 under Chatham-House Rule, with a group of economists and representatives from the European institutions.

The Dilemmas of Diffusion: Institutional Transfer & the Remaking of Vocational Training Practices in Eastern Germany, CES Germany & Europe Working Papers, No. 05.10, 1996

Through a case study of the diffusion of the celebrated West Gennan "dual system" of vocational training to the territory of the fonner German Democratic Republic, we develop the argument that local sociopolitical relations matter crucially for the successful transfer and implementation of institutional arrangements. Notwithstanding massive levels of government funding, the presence of complementary supports, and the concerted efforts of Ger­many's social partners, the dual system is experiencing significant difficulties in the new federal states of the East. These difficulties are not due simply to the particular politics of unification (the wholesale transfer of West German institutions whether or not they were appropriate to Eastern Germany) nor even simply to the paucity of dynamic private firms capable of and willing to train new apprentices. The difficulties stem also from the under­ lying weaknesses of the East German sociopolitical infrastructure on which the entire dual system rests. This. hy­ pothesis is elaborated and substantiated through a range of data on training in the East and especially through the use of detailed case studies of Leipzig and Chemrutz.

Prime Minister Fico’s Russian card. OSW COMMENTARY NUMBER NUMBER 175/01.07.2015

Since the beginning of the Ukrainian-Russian conflict, the position of Slovakia’s left-wing government towards Russia has been ambiguous. Bratislava has accepted the EU sanctions targeting Russia and the plan for strengthening NATO’s eastern flank. At the same time, however, Prime Minister Robert Fico’s government has maintained close political relations with the Kremlin. It has called for the intensification of Slovak-Russian economic relations and has repeatedly criticised the sanctions, speaking in tandem with Russian propaganda in so doing. Slovakia’s Prime Minister is hoping that by playing the role of one of the leaders in the EU and NATO who are most willing to cooperate with Russia, he will gain economic benefits and win votes in next spring’s upcoming parliamentary elections. Despite numerous pro-Russian gestures, Slovakia has been limiting the number of areas in which Moscow could exert pressure on Bratislava. As it strives to become independent of Russia, Slovakia has ensured possible alternative fuel supplies for itself. Moreover, it has been gradually replacing Russian-made military equipment with equipment made in the West. The Slovak government does intend to develop the country’s cooperation with Russia, including in strategic areas involving supplies and transit of oil and gas, as well as supplies of nuclear fuel. Nevertheless, it has been making efforts to gain easy access to an alternative source of supplies in each of these areas. Beset by crises, Russia has ever fewer economic cooperation opportunities to offer Slovakia, and Slovak businesses operating on the Russian market have to take into account the growing risk of insolvency of local contractors. To a great extent, therefore, Slovak-Russian relations have been reduced to rhetorical statements confirming the desire for closer cooperation, and to visions of joint projects accompanied by an ever shorter list of feasible cooperation initiatives.

The OSCE marks 40 years since the Helsinki Final Act: Its principles are more valid than ever. CEPS Essay No. 19, 24 July 2015

Forty years after world leaders from Vancouver to Vladivostok signed up to the ten principles of the Helsinki Final Act, in this CEPS Essay Erwan Fouéré considers the historic significance of the agreement that laid the foundations for today’s Organization for Security and Co-operation in Europe. The author concludes with a number of recommendations that recall the principles of the Helsinki Final Act of 1975 and argues that, if participating states are willing to uphold them, these principles have even greater relevance today for the resolution of Europe’s complex and protracted conflicts.

Will Cameron get what he wants? Anticipating reactions to Britain’s EU reform proposals. CEPS Commentary, 29 October 2015

After months of speculation about the British Prime Minister’s specific demands in terms of the “renegotiation” of the UK’s relationship with the EU, David Cameron has bowed to pressure from the heads of state or government of the other EU member states and committed himself to setting out the UK’s specific “concerns” in writing by early November. While we cannot be certain of the contents of David Cameron’s missive to the EU, his recent pronouncements before Parliament set out an agenda whose contours have become quite clear. In this Commentary the authors consider how far the other EU member states might be willing to accommodate Cameron’s demands and provide him with the political capital he seeks to lead the ‘in’ campaign. They distinguish four different attitudes among EU countries, and advocate a constructive approach that sets the scene for a Convention after 2017 – one that opens the treaty for a revision that could accommodate both the British demands for an ‘opt-out’ from ever closer union and gives leeway to those who wish to integrate further. Putting emphasis on strengthening the single market in the more immediate term would allow the Prime Minister to show his home audience that he is a leading reformer and that the EU gives oxygen to the British economy.This is an obvious area where he might be able to seal deals during the UK’s Presidency of the Council of the EU in the second half of 2017. The authors also consider what the European Council Conclusions on the UK’s wish list for EU reform might look like, given that any treaty revision before the time set for the UK referendum is unattainable. They present the results of a two-day simulation exercise involving a cross-section of national experts and present mock European Council Conclusions on the areas of ever closer union; the role of national parliaments; competitiveness; economic and monetary integration; and the free movement of labour.

A partial success of trade cooperation within the ‘16+1’ formula: the case of food exports to China. OSW COMMENTARY #189, 2015-10-29

When in 2012 China approached the countries of Central and Eastern Europe (CEE) with a proposal of cooperation in the ‘16+1’ formula, it declared it was willing to meet the needs of CEE countries. Beijing had been aware of the political importance of the problem of trade deficit (which has been ongoing for years) and launched cooperation with the governments of 16 CEE countries to boost imports from these states. The years 2011–2014 brought an improvement in the balance of trade between China and: Hungary, Latvia, the Czech Republic, Romania, Bulgaria and Croatia. The remaining ten CEE countries recorded an increase in their trade deficits. Changes in CEE countries’ balance of trade with China resulted only slightly from political actions. Instead, they were due to the macroeconomic situation and to a deterioration of the debt crisis in the EU which, for example, caused a decline in the import of Chinese goods in some of these countries. Multilateral trade cooperation was successfully developed in the entire region only in the agricultural and food production sector – the area of greatest interest to China. The pace of bilateral cooperation with specific countries varied, with the fastest being Poland, Latvia, Romania, Hungary and Bulgaria. Actions by governments of CEE countries resulted in Chinese market opening up to hundreds of local companies which, in turn, translated into an increase in the volume of foodstuffs sold by ‘the 16’ to China from US$ 137 million in 2011 to US$ 400 million in 2014. The success achieved in the agricultural and food production sector has demonstrated the effectiveness of trade cooperation in the ‘16+1’ formula. It is, however, insufficient to generate a significant improvement of the trade balance. At present, the sector’s share in the total volume of goods sold to China by CEE states is a mere 3.7%, and any reduction of the trade deficit would require long-term and more comprehensive solutions still to be implemented by the governments of individual CEE states.

European security after the Paris attacks. CEPS Commentary, 24 November 2015

The November 13th terrorist attacks in Paris have prompted the European Union to activate the mutual assistance clause contained in Art. 42.7 of the EU Treaty. Member states are now entering the unchartered territory of large-scale conflict: will they join a French-led coalition of the willing, or is the military intervention against Daesh being Europeanised? This Commentary explores implications of the Paris attacks on European security and recommends coordinated and comprehensive responses to be taken within the EU framework.

Challenges for the European Union in times of crisis: reactions

Since the beginning of its existence in the form of communities, this entity faced a lot of challenges that could had been stopped the European dream without the fast, prompt and appropriate reaction of the decision makers. There were a lot of difficult times in its history of more than 60 years but the ambition and need of going forward on the way of integration prevailed and today we can talk about European Union as one of the most important global players, having one of the most complex and fascinating political systems. The tenacity and the willing to succeed off the decision makers made this possible. Moments like “The Empty Chair Crisis“, changes with regards to the decision- making process, convenient for ones but inconvenient for the others, lack of consensus with regards to the new accessions, the big changes that Europe went through in the late 80s etc. showed that the decision makers can have an appropriate response whatever the problem would be and that we must stay together and go on dreaming to a united nation in the form of a federation. Nowadays we are facing maybe the most difficult moment in European Union history. Many of the member states were and still are on the edge. A lot of immediate and prompt actions were taken since the start of financial crisis, either political or economic, drove by the need of going on. We are too much into the integration process, too much dependent one of each other so that we cannot stop and simply go back only to the concept of national state.

EU-Turkey Summit on the refugee crisis Law and (dis)order? EPC Commentary, 21 March 2016

After many meetings and long hours of negotiations, the overwhelming feeling when a deal between the EU and Turkey was struck, was one of “mission accomplished”! Faced with an unprecedented crisis and forced to appease increasingly hostile public opinions back home, EU leaders had only one objective in mind: reducing the number of migrants arriving in the EU so that order can return in the framework of EU rules. However, a closer look at the Summit Conclusions and the EU-Turkey statement leaves a bitter taste, according to Yves Pascouau. In this Commentary, he questions the feasibility of the final EU-Turkey deal, saying that it creates more problems than it solves: besides the obvious legal and practical issues, it is far from certain which member states will be willing to do their part, or whether or not the EU can come up with a strategic vision on human mobility for the future.