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1. A battle against time – and against Putin’s Russia

Author:
Erwan Fouéré
Publication Date:
02-2024
Content Type:
Working Paper
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
With Putin’s war against Ukraine about to enter its third year, the EU’s enlargement policy remains at the top of its foreign policy priorities, with the focus being on both Ukraine and Moldova. This is following the European Council’s decision to open accession negotiations with both countries. But where does this leave the countries of the Western Balkans and their very long journey towards the EU which began over 20 years ago? Will these countries’ hopes for much needed political momentum in their accession prospects be fulfilled during 2024, despite the repeated delays and the EU’s failure to respect its commitments to the region over the past few years? With elections taking place across Europe offering fertile ground for Russia to deploy its arsenal of disinformation tactics, time is not on the EU’s side. To counter Russian attempts to influence developments in the region, as well as to reverse the dangerous trend of backsliding in democratic and rule of law reforms, the EU will need to adopt a more robust, consistent and determined approach towards the Western Balkans. Without any further delay, it needs to set out a much needed geopolitical and security direction for its enlargement policies in the Western Balkans.
Topic:
Security, European Union, Democracy, Geopolitics, Rule of Law, Regional Integration, and Russia-Ukraine War
Political Geography:
Europe, Ukraine, Moldova, and Balkans

2. The State of EU-US Digital and Energy Cooperation

Author:
Federica Marconi, Wolfgang Münchau, and Irene Paviotti
Publication Date:
02-2024
Content Type:
Working Paper
Institution:
Istituto Affari Internazionali
Abstract:
In a time of rapid technological advancements and changing energy paradigms, the European Union and the United States are trying to coordinate their efforts to navigate the complexities of an ever-evolving landscape. Transatlantic dialogues and cooperative endeavours are key mechanisms for mitigating tensions and fostering a common assessment of the opportunities and risks arising from these advancements. Critical in this regard are the problems of governance emanating from technological development and its consequences in the digital sphere as well as the delicate balance between security, competitiveness and environmental targets in the energy dimension.
Topic:
Climate Change, International Cooperation, Political Economy, Governance, European Union, Transatlantic Relations, Digital Policy, and Energy
Political Geography:
Europe, North America, and United States of America

3. The Future of the Belt and Road in Europe: How China’s Connectivity Project is Being Reconfigured across the Old Continent – and What It Means for the Euro-Atlantic Alliance

Author:
Nicola Casarini
Publication Date:
02-2024
Content Type:
Working Paper
Institution:
Istituto Affari Internazionali
Abstract:
China’s Belt and Road Initiative (BRI) has entered the twilight zone in the old continent, following a deterioration of bilateral relations between the EU member states and China over the last years. Italy’s official exit from the BRI at the end of 2023 was a further blow to Chinese President Xi Jinping’s signature foreign policy. Yet, the BRI in Europe is being reconfigured rather than being terminated. In Western Europe, the BRI is moving away from physical infrastructure projects and investment in industrial assets – the latter being increasingly protected from Chinese takeovers by both national and EU legislation – to financial and monetary connectivity. This shift is welcomed by various European actors, including some policymakers at the national level, eurozone institutions and major banks. Concurrently, most of Eastern European countries continue to promote BRI projects and seek to attract Chinese investments, suggesting that there is a two-speed Europe when it comes to China, both in terms of geography and sectors.
Topic:
Infrastructure, Foreign Direct Investment, European Union, Belt and Road Initiative (BRI), and Currency
Political Geography:
China, Europe, Asia, and Italy

4. Challenges to Transatlantic Digital Infrastructure: An EU Perspective

Author:
Anselm Küsters, André Wolf, and Eleonora Poli
Publication Date:
02-2024
Content Type:
Working Paper
Institution:
Istituto Affari Internazionali
Abstract:
Recent disruptions in the Baltic Sea and elsewhere highlight the integral role of digital and physical conduits such as gas pipelines, telecommunications cables and undersea data cables in maintaining European connectivity and security. Overall, the EU’s responses to emerging challenges to its digital sovereignty, particularly from China and Russia, aim to enhance the security and resilience of its digital landscape, from the Global Gateway Strategy to the Gaia-X project. However, the complexity of the submarine cable infrastructure requires a broader and more holistic assessment of the opportunities and obstacles to ensuring the uninterrupted flow of information across borders. Ultimately, a concerted transatlantic effort is needed to strengthen the backbone of Europe’s digital infrastructure against both man-made and natural adversities, thereby securing a future where sovereignty and resilience are paramount for both the EU and the US.
Topic:
International Political Economy, Politics, Infrastructure, European Union, Institutions, Transatlantic Relations, and Digital Policy
Political Geography:
Europe

5. Chips: EU’s Ambition in a Transatlantic Technology Bridge

Author:
Nicola Bilotta
Publication Date:
02-2024
Content Type:
Working Paper
Institution:
Istituto Affari Internazionali
Abstract:
Semiconductors are vital building blocks of digital technologies. In line with its aspiration for strategic autonomy, the EU has recognised vulnerabilities in its chip supply chain, which heavily relies on foreign firms. The intricate relationship between economic security and open trade underlies the EU’s quest to bolster its domestic capacity while enhancing connections with key global partners. Despite the challenges of finding a policy balance, fostering transatlantic cooperation in the semiconductor domains remains a key ambition. To cultivate a more balanced and effective partnership with the US, the EU should capitalise on its comparative advantages to amplify and fortify its strategic positioning in the global supply chain.
Topic:
International Political Economy, Science and Technology, Governance, European Union, Transatlantic Relations, and Industry
Political Geography:
Europe

6. Industrial policy for electric vehicle supply chains and the US-EU fight over the Inflation Reduction Act

Author:
Chad P. Bown
Publication Date:
05-2023
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
The Inflation Reduction Act (IRA) of 2022 provoked a transatlantic trade spat. After the law was passed, the Biden administration addressed some of the concerns raised by the European Union by writing controversial rules to implement the legislation. These regulations are expected to have complex effects that, in some instances, may offset the intended impact of other provisions in the original legislation. This paper examines how the law, its implementing regulations, policy decisions on leasing, as well as potential critical minerals agreements all have the potential to affect the electric vehicle (EV) supply chain. The EV case study showcases the political-economic complications involved in US and EU attempts to cooperate over clean energy transition policy to address the global externality of carbon dioxide emissions. EVs are but one example of the challenge facing partners with integrated supply chains and similar levels of economic development that share concerns about climate change, rising inequality, workers, other social issues, and democracy itself. The EV conflict laid bare the differing US and EU prioritization of these issues relative to economic efficiency, World Trade Organization rules, the approach to nonmarket economies, and national security vulnerabilities that arise from depending on an authoritarian regime such as China for import sourcing of critical inputs.
Topic:
Industrial Policy, International Trade and Finance, European Union, Supply Chains, and Electric Vehicles
Political Geography:
Europe, North America, and United States of America

7. The NewSpace market: Capital, control, and commercialization

Author:
Robert Murray
Publication Date:
04-2023
Content Type:
Working Paper
Institution:
Atlantic Council
Abstract:
Commercial opportunities in space-based technologies are expanding rapidly. From satellite communications and Earth observation to space tourism and asteroid mining, the potential for businesses to capitalize on these emerging technologies is vast and known as “NewSpace.”1 The NewSpace model is important for governments to understand because the dual-use nature of space, specifically its growing commercialization, will influence the types of space-based technologies that nations may leverage, and consequently, impact their national security paradigms. By capitalizing on the private sector’s agility and combining it with the essential research efforts and customer role played by the public sector, the NewSpace industry can play a critical function in addressing current and future national security challenges through public-private codevelopment. As the NewSpace industry expands, the role of government is evolving from being the primary developer and operator of space assets to facilitating their commercialization, while still prioritizing key advancements. US and allied governments can capitalize on this competitive landscape by strategically investing in areas that align with their national security objectives. However, it is crucial for them to first understand and adapt to their changing roles within this dynamic environment. Indeed, the benefits of the burgeoning NewSpace industry extend beyond the United States. International collaboration and competition in this area can lead to faster technological advancements and economic gains. The global NewSpace landscape is driving down costs, increasing access to space, and fostering innovation that can improve not only economic well-being, but also impact national security models. To that end, this memo will examine the broad state of the space market, discuss the industry drivers, and propose recommendations for US and allied policymakers as they consider future government investments in those enabling space-based activities that support wider national security ambitions.
Topic:
Defense Policy, International Trade and Finance, National Security, Science and Technology, European Union, Space, and Defense Industry
Political Geography:
Russia, China, Eurasia, Canada, Asia, and United States of America

8. In Support of Market-Driven Standards

Author:
Matthias Bauer, Fredrik Erixon, Oscar Guinea, and Vanika Sharma
Publication Date:
03-2023
Content Type:
Working Paper
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
The EU published its new Standardisation Strategy in 2022. The strategy contains some good ideas to improve the way European standards are set. However, in its attempt to gain more control over technical standards, the EU risks killing the goose that lays the golden egg. The primary motivation behind the strategy is the belief that the process governing the way CEN, CENELEC, and ETSI – the three European Standardisation Organisations – take decisions over EU standards favours non-EU multinationals. To address this perceived imbalance, EU National Standardisation Bodies will have the exclusive power to accept standardisation requests, and adopt, revise and withdraw European technical standards. These changes are particularly significant for ETSI, Europe’s Standardisation Body in charge of telecommunication standards and one of Europe’s most successful organisations. ETSI is a prime example of EU normative power since it hosts companies from more than 60 countries, while retaining a large membership of EU firms. The regulatory changes included in the strategy are not risk-free. There could be unintended consequences that may undermine a standardisation system that has delivered significant economic benefits for the EU and the world. First, giving more responsibility to EU’s National Standardisation Organisations will turn a European discussion into 30 (EU and EEA) national debates. As a consequence, small companies will not be able to contribute to each and every one of the National Standardisation Organisations, diluting their contribution, while multinational companies, with the resources needed to cooperate with a larger number of bodies, will benefit from an expanding role in the EU standard setting process. Second, if standards are fragmented along national borders and companies must multiply their efforts to take part in several Standardisation Development Organisations, there will be less resources for Research and Development spending. Finally, if each and every National Standardisation Organisation needs to have a position with regards to the acceptance of a standardisation request, or adoption, revision and withdrawal of European technical standards, the time period required to adopt a technical standard may be extended rather than shortened, which is the exact opposite of what the European Commission wants to achieve. The regulatory changes included in the EU Standardisation Strategy are akin to cracking a nut with a sledgehammer. If the European Commission is concerned about the influence of non-EU companies in European Standardisation Bodies, it does not need to overhaul their governance systems. Supporting greater participation of European firms in the European standard system will ease EU’s concerns without the downside risks associated with changing the rules of the game that govern Europe’s Standardisation Bodies. The success of the European standardisation system, which is market-driven and based on consensus, has had significant economic benefits in the development of specific industries, like the European Information and Communication Technologies (ICT). Technical standards in ICT have shaped a European industry that is not only dynamic and international but also enjoys some of the highest levels of wages and Research and Development spending. Moreover, if technical standards are not developed through an open, consensus-based, and industry-led voluntary process, they will be developed in different ways. For instance, governments and private companies can develop standards by themselves. Both solutions are inferior to the current market-driven approach that governs European standards. However, the European market-driven approach to set standards is voluntary, and its success and continuation must not be assumed. European policymakers should be worried about tinkering with a European standardisation system which has produced economic specialisation and innovation to the benefits of EU firms and consumers.
Topic:
Markets, European Union, Regulation, Economy, and Standardization
Political Geography:
Europe

9. What is Wrong with Europe’s Shattered Single Market? – Lessons from Policy Fragmentation and Misdirected Approaches to EU Competition Policy

Author:
Matthias Bauer
Publication Date:
04-2023
Content Type:
Working Paper
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
What is wrong with Europe’s Single Market? The brief answer to that question is that it does not really exist – it is unsingle. The Single Market is in many ways a political illusion. It exists only nominally. Any company doing business in Europe faces significant barriers to cross-border exchanges within the EU, and it is these barriers that hamper companies’ ability to scale and compete internationally on the back of innovation and economic integration. We outline that Brussels and national governments need to beat the drum for eliminating policy fragmentation in Europe’s internal market and at the same time change course in competition policy to sufficiently support investments in innovation, business growth, and the adoption of advanced technologies across industries. Major economic indicators show that Europe is caught in a protracted corporate and technology crisis. The EU has for a very long time now been tailing US corporate and innovation leadership. At the same time, competition with technology-intensive imports from China is getting increasingly intense. Europe’s underperformance is rooted in a legally fragmented internal market which is disincentivising business growth and innovation. On top of that, an outdated approach to competition policy is discouraging businesses from adopting innovation and scaling across national borders, risking that EU companies continue to lose clout and international competitiveness. 30 years have passed since the formal establishment of Europe’s Single Market. Data reveals that regulatory convergence has reversed or come to a halt in most policy areas. Recent policies for technologies and digital business models, which are key sources of cross-industry competitiveness, created new layers of regulation and legal uncertainty in EU and Member State law. Overall, EU policies have not significantly helped European companies, large and small, to do business in another Member State or use advanced technology-enabled services. EU competition policy does not live up to its promise to “enable the proper functioning of the EU’s internal market”. Europe’s competition policy is still fragmented along national borders and largely ignorant to dynamic effects of competition, especially investments in innovation. Due to mixed legal competences, competition rules are often enforced differently by Member States’ national authorities and can be appropriated to support protectionist industrial policy ambitions. The recently enacted Digital Market Act (DMA) demonstrates that the European Commission and Member State authorities favour protection and discretionary enforcement over innovation and economic disruption, without providing solid evidence of abusive business behaviour and consumer harm. With the DMA, the EU introduced legislation with serious ambiguities in objectives, concepts, and rules, and explicitly allows national Member States to regulate competition at their own discretion. A recent attempt by Germany’s competition authority, the Bundeskartellamt, to enforce its own rulebook for large digital companies (Section 19a of the German Competition Act) risks creating a patchwork of competition rules for large providers of advanced digital services across the EU. Local adopters of advanced digital services, particularly small businesses, that use advanced technology services to compete in their markets would be confronted with less choice and quality. Recently imposed policies under the umbrella of European Strategic Autonomy will hardly help policymakers in their ambition to achieve “innovation and technology leadership”. The paramount task for the EU and national governments is to eliminate policy fragmentation in Europe’s internal market, accompanied by an approach to competition policy that embraces investments in innovation and business growth while accounting for the substantial value created through the adoption of innovative technologies and disruptive business models across industries in the EU.
Topic:
Markets, European Union, Economy, and Competition
Political Geography:
Europe

10. Strategic Autonomy and the Competitiveness of Europe’s Innovative Pharmaceutical Sector: A Wake-up Call

Author:
Fredrik Erixon and Oscar Guinea
Publication Date:
04-2023
Content Type:
Working Paper
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
It is high time for Europe to break its relative decline in the pharmaceutical sector. Europe used to be the preeminent region in the world for Research and Development and innovation in the sector – being the location for a majority of R&D and the development of new medicines. However, its competitiveness has been going down for several decades – and, in more recent time, the pace of the decline is now accelerating. Europe is not just outpaced by the United States. Unless there is a new direction, China will soon be ahead of Europe too. Europe is behind the global frontier in innovation and new product development in medicines. It is not just Europe’s share of global R&D that is going down. Of all the new chemical and biological entities that are developed, Europe is contributing a falling share. There is a similar development in the drug pipeline – medicines that are in the regulatory approval process. The location of clinical trials for Advanced Therapy Medicinal Products – an area of new frontline drug development – is moving out of Europe. If Europe is to improve its strategic autonomy and restore competitiveness in the pharmaceutical sector, better policies are needed to incentivise innovation and attract R&D investment. A new strategy for the pharmaceutical industry should include – among other things – better protection of intellectual property, more and focused R&D expenditures, and streamlined regulatory and reimbursement processes.
Topic:
European Union, Pharmaceuticals, Strategic Autonomy, Research and Development, and Competition
Political Geography:
Europe

11. Increasing Systemic Legal Risks in the EU: The Economic Impacts of Changes to the EU’s Product Liability Legislation

Author:
Matthias Bauer and Elena Sisto
Publication Date:
06-2023
Content Type:
Working Paper
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
The EU’s Product Liability Directive (PLD) determines the rules for strict product liability in the EU. It establishes a framework in which manufacturers’ liability is determined solely based on the presence of defects in the product, regardless of the manufacturer’s fault. The PLD is intended to serve as a “safety net” when fault-based or contractual liability rules do not offer sufficient compensation to consumers. It operates independently from contractual arrangements between businesses and consumers, and it cannot be weakened by contractual agreements between businesses and consumers. The PLD is a horizontal regulation that applies to a wide range of industries in the EU because it applies to all products available on the EU market. The recently proposed changes by the European Commission would increase systemic legal uncertainty for producers and sellers of technology-intensive goods and services in the EU. The impact assessment of the European Commission does not sufficiently account for changes to the PLD proposed in 2022. Nor does it sufficiently account for the major impacts of increased legal uncertainty for European businesses. Legislators in the Council and the European Parliament should slow negotiations to allow time for policymakers to collect more evidence on the impacts on businesses, insurers, and courts we detail in this paper. This would be an opportunity to improve regulatory quality in light of the high levels of legal uncertainty associated with the changes proposed by the Commission.
Topic:
Economics, European Union, Legislation, and Risk
Political Geography:
Europe

12. Erdoğan's Re-election as President Raises Concerns among Allies

Author:
Aleksandra Maria Spancerska
Publication Date:
06-2023
Content Type:
Working Paper
Institution:
The Polish Institute of International Affairs
Abstract:
Recep Tayyip Erdoğan’s win in the presidential election and ministerial appointments promises to further weaken democracy, move Türkiye further away from EU standards, and continue so-called personal diplomacy and transactionalism in foreign policy. This could prolong the Turkish parliament’s ratification of Sweden’s accession to NATO.
Topic:
Foreign Policy, NATO, Diplomacy, Elections, European Union, and Recep Tayyip Erdoğan
Political Geography:
Europe, Turkey, Middle East, and Sweden

13. EU-South Korea Extend Cooperation Beyond the Economy

Author:
Oskar Pietrewicz
Publication Date:
06-2023
Content Type:
Working Paper
Institution:
The Polish Institute of International Affairs
Abstract:
The 10th EU-Republic of Korea Summit, held on 22 May in Seoul, reaffirmed the importance of South Korea as a critical Asian partner of the Union. The meeting also signalled the growing importance of security issues in bilateral relations. South Korea shares the EU’s assessment of Russian aggression against Ukraine and intends to continue to support the invaded country, but not with supplies of military equipment for now. The announcement of a “green” partnership indicates both sides’ willingness to engage in other areas of cooperation, which also will benefit the development of Polish-South Korean relations.
Topic:
Security, International Cooperation, Bilateral Relations, and European Union
Political Geography:
Europe, South Korea, and Poland

14. EU Development Cooperation Policy Shifts from Charity to Self-interest

Author:
Patryk Kugiel
Publication Date:
06-2023
Content Type:
Working Paper
Institution:
The Polish Institute of International Affairs
Abstract:
In recent years, the EU’s development cooperation policy has evolved, moving away from an approach based on poverty eradication and the needs of partner countries to focusing more on its own interests. This change is supported by the majority of EU members. This gives the EU the opportunity to exert strategic influence in the world but risks the loss of its unique identity as an altruistic donor and attractive partner in development cooperation. The change in the Union’s approach is consistent with the position of Poland, which can use it to reform and strengthen its development aid system.
Topic:
Development, Regional Cooperation, European Union, and Development Aid
Political Geography:
Europe and Poland

15. Using Frozen Russian Assets to Rebuild Ukraine: Possibilities for the EU

Author:
Elzbieta Kaca
Publication Date:
05-2023
Content Type:
Working Paper
Institution:
The Polish Institute of International Affairs
Abstract:
The EU wants to finance the reconstruction of Ukraine, using for this purpose frozen Russian assets, among others. The European Commission proposes to improve the system of confiscation of private assets of sanctioned persons in case of criminal activity and to obtain income from the active management of immobilised Russian public assets. These solutions may yield limited results. To be more effective, the EU would have to reach an international agreement to confiscate the reserves of the Central Bank of the Russian Federation.
Topic:
Sanctions, Reconstruction, European Union, Assets, and Russia-Ukraine War
Political Geography:
Russia, Europe, and Ukraine

16. Businesses, EU Strengthening International Supply Chains

Author:
Piotr Dzierżanowski
Publication Date:
04-2023
Content Type:
Working Paper
Institution:
The Polish Institute of International Affairs
Abstract:
Over the past three years, global supply chains have experienced problems on an unprecedented scale. Given the rising political tensions and changes in the perception of the role of the economy in international rivalries, a return to international economic relations based on globalisation and trade liberalisation is highly unlikely. Instead, we will witness a necessary strengthening of supply chains, both at the individual business and national levels. For Western economies, the main challenge will be the reduction of related costs.
Topic:
Globalization, European Union, Economy, Business, and Supply Chains
Political Geography:
Europe and Global Focus

17. Triggering the Rule-of-Law Conditionality Mechanism against Hungary

Author:
Veronika Jóźwiak
Publication Date:
03-2023
Content Type:
Working Paper
Institution:
The Polish Institute of International Affairs
Abstract:
The mechanism that makes the payment of funds from the EU budget conditional on compliance with the principles of the rule of law is the newest instrument for protecting the Union’s financial and political interests. The tool allows the European Commission and the EU Council (Council) to exert influence on Member States that violate the fundamental principles of the Community. Triggering it against Hungary might result in a reduction of EU funds to the country as a consequence of rule-of-law violations for the first time in EU history. It is doubtful, however, that this will lead to systemic changes in Hungary.
Topic:
European Union, Rule of Law, European Commission, and Regional Politics
Political Geography:
Europe and Hungary

18. Refugees from Ukraine Adapting to the European Labour Market

Author:
Jolanta Szymańska
Publication Date:
03-2023
Content Type:
Working Paper
Institution:
The Polish Institute of International Affairs
Abstract:
Due to the length of the war in Ukraine, more and more refugees from this country have decided to take up employment in the EU. Preliminary data indicate that they are integrating into European labour markets faster than refugees from other regions. However, the mismatch between their jobs and qualifications remains a challenge. Despite the refugees’ inclusion, the deteriorating economic situation in Europe may lead to negative perceptions in host countries.
Topic:
Economics, European Union, Refugees, and Labor Market
Political Geography:
Russia, Europe, and Ukraine

19. China Adapts Policy in Response to Russia's Aggression Against Ukraine

Author:
Marcin Przychodniak
Publication Date:
03-2023
Content Type:
Working Paper
Institution:
The Polish Institute of International Affairs
Abstract:
China perceives the Russian aggression against Ukraine as an expression of resistance to the U.S. and NATO hegemony and an important element of building a new international order that marginalises the West. Based on this, China is strengthening strategic cooperation with Russia, striving to weaken the international position of the U.S., the EU, and their partners, while testing reactions to a possible escalation of Chinese actions towards Taiwan, for example. President Xi Jinping expressed this policy course during his March visit to Russia. At the same time, China is trying to gain support from the countries of the Global South. This approach means a continuation of China’s assertive policy towards the European Union, among others.
Topic:
Foreign Policy, NATO, European Union, and Russia-Ukraine War
Political Geography:
Russia, China, Europe, Ukraine, and Asia

20. With Charisma, Stick, and Carrot: Reviewing the Effectiveness of EU Climate Diplomacy

Author:
Zuzanna Nowak and Stefania Kolarz
Publication Date:
02-2023
Content Type:
Working Paper
Institution:
The Polish Institute of International Affairs
Abstract:
Last year’s COP27 in Sharm el-Sheikh, Egypt, was a major challenge for EU climate diplomacy, which, despite the unfavourable external circumstances (e.g., the war in Ukraine and economic turbulence), contributed to the conference’s positive outcome. The EU, as a global leader in the fight against climate change, seeks to increase its influence with external partners. Many of them would not have joined the climate action without its support. In addition to participation in policy dialogue, among the EU’s main tools of influence are various types of incentives and forms of support, as well as leverage measures such as political conditionality. However, the effectiveness of these tools is still being refined.
Topic:
Climate Change, Diplomacy, European Union, and Influence
Political Geography:
Europe