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11. Poland and Spain: How to Cooperate in a Europe in Flux

Publication Date:
07-2013
Content Type:
Policy Brief
Institution:
The Polish Institute of International Affairs
Abstract:
The lingering effects of the eurozone crisis have weakened the European project as a whole. As a result, stronger and more effective cooperation between enthusiastic EU countries such as Poland and Spain is very much needed. Besides cooperation within the EU in such fields as completing the single market and promoting a more holistic approach to the European Neighbourhood Policy, both countries should focus on improving their economic ties in bilateral relations and beyond. Through "smart" trade triangulation, Poland could open new markets in Eastern Europe for Spain, and Spain could reciprocate by doing the same for Poland in Latin America. This could help Poland make the economy more competitive and give Spain a lever for economic recovery.
Topic:
Economics, Bilateral Relations, Monetary Policy, and Financial Crisis
Political Geography:
Europe and Latin America

12. An Economic NATO: A New Alliance for a New Global Order

Author:
C. Boyden Gray
Publication Date:
02-2013
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
In the aftermath of World War II, the greatest concern facing the United States and its European allies was restraining the Soviet Union and preventing the spread of communism. Cooperation on military security was paramount, and the United States and Europe rose to the challenge by creating NATO, a new type of multilateral defense agreement. Once again, the transatlantic relationship is at a new and perilous crossroads. But now it is economic, rather than military security that is at risk. Crisis grips the economies of Europe, just as the United States, mired in historic levels of unemployment in the wake of the 2008 recession, is rethinking its strategic priorities and place in the world. As before, fears mount concerning the future of liberal democracy and Western capitalism. The question is whether transatlantic cooperation will again rise to the challenge.
Topic:
NATO, Economics, International Trade and Finance, Treaties and Agreements, Financial Crisis, and Reform
Political Geography:
United States, Europe, and North America

13. The German Election: No vote for Europe?

Author:
Timo Behr and Tuomas Iso-Markku
Publication Date:
08-2013
Content Type:
Policy Brief
Institution:
Finnish Institute of International Affairs
Abstract:
The outcome of the German federal elections on September 22nd will have a significant impact on the management of the on-going eurozone crisis and set the tone for the future course of European integration. Although the EU and the euro are largely absent from current electoral debates, significant differences on these issues exist both inside and between German political parties in the run-up to the September polls. However, in the absence of significant debate, fundamental decisions over the future of EU integration will be postponed until after the election, when a cross-party compromise appears more feasible. Regardless of the election outcome, the next German government is likely to prove more conciliatory on austerity policies in Europe and will boost domestic spending, but will retain some red lines on further EU integration. While the rhetoric and the pace of change might differ significantly depending on the shape that the next coalition government takes, German eurozone policies will continue to trade fiscal solidarity for structural reforms.
Topic:
Economics, Markets, Financial Crisis, and Governance
Political Geography:
Europe and Germany

14. Fighting the Fed

Publication Date:
08-2013
Content Type:
Policy Brief
Institution:
Oxford Economics
Abstract:
Since the US Federal Reserve signalled that a turn in the interest rate cycle may be on the horizon, UK and to a lesser extent Eurozone interest rates have tracked US rates higher. But the UK and Eurozone economies are less well placed than the US to cope with higher interest rates. Simulations carried out on our Global Economic Model show that higher rates would be particularly harmful to the UK economy's embryonic recovery. In an attempt to stem the rise in interest rates, the Bank of England and the ECB have introduce forward guidance but with little, if any, success. Markets do not seem convinced by the Bank of England's commitment to forward guidance and are testing its resolve. It seems likely that over time both central banks may have to strengthen their forward guidance, in the case of the Bank of England by augmenting it with further quantitative easing.
Topic:
Economics, Markets, Monetary Policy, and Financial Crisis
Political Geography:
United States, United Kingdom, and Europe

15. Draghi's "Whatever it takes" speech was turning point in euro crisis

Publication Date:
07-2013
Content Type:
Policy Brief
Institution:
Oxford Economics
Abstract:
Mario Draghi's commitment a year ago to do “whatever it takes” to save the euro looks to have been an important turning point in the Eurozone crisis. Systemic risk has fallen, the euro has strengthened, spreads on peripheral debt have narrowed and bond and equity markets have become less sensitive to bad Eurozone news flow. Indeed, to date markets seem to have taken Draghi at his word and seem unwilling to test his resolve. But although confidence in the outlook for the Eurozone among investors has risen over the past year, the real economy is yet to emerge from recession. We continue to expect this to happen in the second half of this year, a view supported by this week's improvement in the PMI data. However, unless action is taken to reduce borrowing costs paid by households and companies in the peripheral economies, the recovery will be anaemic. With that in mind, the ECB's announcement that it will ease its collateral rules only marginally is disappointing.
Topic:
Economics, Markets, Monetary Policy, and Financial Crisis
Political Geography:
Europe

16. Our bond market, your problem?

Publication Date:
06-2013
Content Type:
Policy Brief
Institution:
Oxford Economics
Abstract:
Comments from the US Federal Reserve aimed at signalling that monetary policy cannot stay at historically low levels indefinitely have caused bond yields and credit spreads to rise both in the US and abroad. Higher borrowing rates are particularly inappropriate for the Eurozone which, unlike the US, is still struggling to emerge from recession. This tightening of financial conditions will place pressure on the ECB to act. Although surveys show that investors' bearishness on US government bonds is at an extreme level, suggesting that in the coming weeks bond yields are more likely to fall than rise, the longer-term trend in bond yields is now upwards. But we do not expect the rise in yields over the next two or three years to kill off the US recovery. Consequently, we believe that the US equity market is still on an upward uptrend, albeit one that will experience regular spikes in volatility as the Fed gradually moves away from its ultra-loose policy.
Topic:
Economics, International Trade and Finance, Markets, Monetary Policy, and Financial Crisis
Political Geography:
United States and Europe

17. UK housing market: bellows to a bubble?

Publication Date:
06-2013
Content Type:
Policy Brief
Institution:
Oxford Economics
Abstract:
The housing market is recovering, according to recent price and activity data. Post-crisis price corrections were smaller in the UK than in the US and much of Europe, and demand is now being bolstered by the government's Funding for Lending and Help to Buy schemes. This has given rise to some worries that the UK is in danger of inflating another house price bubble. While housing supply is very tight, we are not convinced that these schemes will have enough impact on demand to cause prices to take off.
Topic:
Economics, Markets, Monetary Policy, and Financial Crisis
Political Geography:
United States, United Kingdom, and Europe

18. Iceland and Europe: Drifting further apart?

Author:
Baldur Thorhallsso and Alyson J. K. Bailes
Publication Date:
09-2013
Content Type:
Policy Brief
Institution:
Finnish Institute of International Affairs
Abstract:
Iceland applied for EU membership in 2009 at the height of the economic crisis. Four years later, a new government has put the application on hold: the majority of Icelanders are opposed to entry, but want to continue the accession process and put the results to a vote. Iceland's longer-standing problems with European integration stem from the issue of sovereignty in general, and maintaining control over fisheries and agriculture in particular. Since 2009, anti-European feelings have been stoked by the 'Icesave' dispute, while the prospective benefits of entry (including use of the euro) have been tarnished by witnessing the fate of other small states during the euro crisis. The new government proposes remaining a member of the EEA and developing relations with other world powers. But the US commitment to Iceland has weakened over the years, and 'rising' powers like China are unable, as yet, to solve the country's core problems. In terms of both its security and its standing within the global economy, Iceland is becoming more rather than less dependent on Europe over time. The question raised by the latest political turn is whether it will have to maintain that relationship from a distance, with limited control and with no guaranteed goodwill.
Topic:
Economics, International Trade and Finance, Political Economy, Regional Cooperation, Treaties and Agreements, and Financial Crisis
Political Geography:
United States and Europe

19. Three Options for the EU: Assessing the EU's powers in a true economic and political union

Author:
Teija Tiilikainen
Publication Date:
09-2013
Content Type:
Policy Brief
Institution:
Finnish Institute of International Affairs
Abstract:
Safeguarding the EU's unity in the long-term development of the EMU is currently one of the major challenges for the Union. The de facto adjustments made to the EU's economic and fiscal powers due to the economic and financial crisis, including the completion of the Banking Union, create pressures to address the treaty-based division of powers and to strengthen the democratic control of the powers executed by the Union. The need to back the EU's macroeconomic goals with fiscal instruments has been made evident by the economic crisis; the position of these instruments outside the common budget might become increasingly controversial. A further increase in economic solidarity (jointly guaranteed debt, taxation power) might jeopardize the EU's stability and democratic legitimacy if carried out in the current political and institutional framework. A system of constitutional and fiscal federalism would produce a more stable outcome, but would require major changes in the EU's democratic system and system of policy implementation, in its external policies and the way its constitutional powers are arranged.
Topic:
Debt, Economics, Regional Cooperation, Monetary Policy, and Financial Crisis
Political Geography:
Europe

20. The added value of CSDP operations

Author:
Hadewych Hazelzet
Publication Date:
09-2013
Content Type:
Policy Brief
Institution:
European Union Institute for Security Studies
Abstract:
Over the past two years, many high-level discussions within the EU have centred around the question of the 'added value' of the Common Security and Defence Policy (CSDP). In times of fiscal austerity, member states want to make sure they invest their resources where their impact is strongest. In the current climate of financial crisis and retrenchment, there are no resources or time to waste on a 'beauty contest' between organisations or instruments. In order to prepare for the next decade of deployments, the question to ask is therefore not whether but under what conditions CSDP has brought added value, to date, in responding to given contingencies.
Topic:
Defense Policy, Economics, Regional Cooperation, and Financial Crisis
Political Geography:
Europe