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1951. Nord Stream 2: A Boon or a Threat to European Energy Security?

Author:
David Koranyi
Publication Date:
04-2018
Content Type:
Working Paper
Institution:
Institute for Development and International Relations (IRMO)
Abstract:
There has been much controversy around Nord Stream 2, a planned extension of the undersea gas pipeline stretching from Russia to Germany. By lying down two extra pipes in addition to the two already in operation since 2011-2012, the second phase would see the doubling of the capacity of the route, from 55 to 110 billion cubic meters (bcm) and commence operations in 2019 at a cost of 9.5 billion euros. This would mean that over 70% of Russian gas exports could be channeled through a single pipeline through Germany. Nord Stream 2, coupled with constructing the �irst two lines of Turkish Stream (with a capacity of 31.5 bcm) would also allow for the complete circumvention of the Ukrainian transit route.
Topic:
European Union, Gas, and Trade
Political Geography:
Russia, Europe, Turkey, and Germany

1952. Spitzenkandidaten and shifting electorates: Towards the 2019 European Parliament elections

Author:
Milan Igrutinović
Publication Date:
09-2018
Content Type:
Working Paper
Institution:
Institute for Development and International Relations (IRMO)
Abstract:
European political parties are preparing themselves for the European Parliament elections in May 2019. With the UK formally leaving the EU at the end of March, the number of MEP seats for the election will decrease from 751 to 705, with a wider range of Brexit issues that will have to be dealt in the run-up. Also, Jean-Claude Juncker will not run again and that will leave the position at the head of the European Commission open for a new candidate. During the mandate of the current Commission sweeping changes occurred across the EU and, maybe more importantly, outside of it. The migrant crisis that exploded in late 2015 has shifted the way politics is debated in the EU and in the member states. The advent of ISIS in the Middle East and North Africa and the number of terrorist attacks in Europe have highlighted the security nexus between internal EU security and its neighbourhood. Russia has remained a strategic challenge and with it the security of Eastern Europe remains in question. The election of Donald Trump in the US and uncertainty of Transatlantic relations and global trade rules that came with him have become a new and important factor in international politics. Brexit has shown that the “ever closer Union” slogan rings hollow and that the process of EU expansion is reversible. A string of national elections has shown how deep and complex political issues in Europe really are, and how centre-left parties are under pressure with diminishing vote share. On top of that, political debates about the internal EU reform are yet to offer any tangible result.
Topic:
Regional Cooperation, European Union, Brexit, Election watch, and Transatlantic Relations
Political Geography:
United States and Europe

1953. Partnership in Peril

Author:
Vikram Singh, Dalibor Rohac, and Danielle Pletka
Publication Date:
07-2018
Content Type:
Special Report
Institution:
Center for American Progress - CAP
Abstract:
Populism, in and of itself, is not inherently bad. However, authoritarian populists who deny their political opponents’ legitimacy and divide society into a group of good, ordinary people and a corrupt, out-of-touch elite pose a threat to democracy and tend to degrade democratic institutions once in power. In Turkey and Hungary, for example, populist leaders have subverted independent institutions and weakened checks on executive power.1 Beyond frequently attacking domestic media, stacking their courts, and oppressing political opposition, authoritarian populists also often rail against multinational organizations and agreements.2 In earlier publications this year, a joint Center for American Progress and American Enterprise Institute team examined what is driving the success of populists in the United States3 and Europe.4 This report examines how populism on both sides of the Atlantic has weakened core transatlantic institutions such as the European Union (EU) and North Atlantic Treaty Organization (NATO) and emboldened the West’s adversaries, including Russian President Vladimir Putin.
Topic:
NATO, International Cooperation, European Union, Partnerships, and Transatlantic Relations
Political Geography:
Europe and North America

1954. A Snapshot of Turkish Public Opinion Toward the European Union

Author:
Max Hoffman
Publication Date:
09-2018
Content Type:
Policy Brief
Institution:
Center for American Progress - CAP
Abstract:
n the wake of Turkey’s June 24 presidential and parliamentary elections, Ankara has undertaken a coordinated campaign aimed at rejuvenating ties with the European Union in the face of a dramatic downturn in the Turkish economy. Turkish-European relations had grown strained in recent years over Turkey’s stalled accession process to join the bloc, as well as the country’s authoritarian drift, sweeping crackdown on dissent, management of the migration crisis, and the cases of EU citizens held in Turkish prison on what European governments considered trumped-up charges.1 Turkish President Recep Tayyip Erdoğan took repeated rhetorical shots at European leaders in 2016 and 2017,2 even suggesting German Chancellor Angela Merkel exhibited “Nazism” for saying that Turkey’s EU accession bid could be reconsidered in light of the deteriorating human rights situation.3 While President Erdoğan’s attacks may have reflected his real animus at perceived European abandonment of Turkey in the face of regional crises and a stalled EU accession process, they were also likely aimed at mobilizing and uniting domestic constituencies with deeply anti-Western views.4 But with the end of the election season and a rapid deterioration of the Turkish economy, the focus has now shifted to restoring ties with Europe. Europe is Turkey’s most important trade and investment partner, and the Turkish charm offensive is motivated by the country’s economic crisis and the crash in the value of the Turkish lira, as well as by faltering ties with the United States.5 The lira’s free fall has brought Turkey’s reliance on external financing into stark relief and even raised the possibility of an embarrassing turn to the International Monetary Fund (IMF) or European Bank for Reconstruction and Development for financial assistance. Turning to the IMF would be a bitter pill for Erdoğan, who seeks to project an image of Turkey as strong, economically self-sufficient, and independent from outside influence. The Trump administration’s tough line on Turkey for the ongoing detention of U.S. citizens—including largely symbolic sanctions on two Turkish cabinet ministers in line with the Global Magnitsky Act and new steel and aluminum tariffs under Section 232 of the Trade Expansion Act6—has cast another cloud over the Turkish economy and further underlined the necessity of patching up relations with the Europeans. In light of this situation, CAP thought it useful to offer insights stemming from its recent nationwide polling of Turks, shedding light on public attitudes toward the European Union and the political dynamics shaping the Turkish government’s approach.7 The nationwide survey was conducted by Metropoll from May 24 to June 4, 2018, and is based on 2,534 face-to-face interviews in 28 provinces. The overall results on each question have a margin of error of 1.95 percent. Like all public opinion surveys, the material presented here is only a snapshot. Moreover, it is a snapshot taken prior to the June 24 elections and further economic deterioration, both of which could somewhat alter the results were the questions asked today. Nevertheless, taken together with other data, these results underscore trends that persist to this day and are likely to continue for some time.
Topic:
International Cooperation, Public Opinion, European Union, and Regionalism
Political Geography:
Europe and Turkey

1955. 10 Things to Watch for on Brexit

Author:
Ken Gude
Publication Date:
12-2018
Content Type:
Working Paper
Institution:
Center for American Progress - CAP
Abstract:
On December 11, British Parliament will vote on Prime Minister Theresa May’s deal to leave the European Union (EU)—commonly known as Brexit. As of now, it seems clear that she is nowhere close to having the votes to pass it.1 The vote comes after a contentious referendum campaign in the United Kingdom and two years of difficult negotiations with the EU, which saw Prime Minister May and Jean-Claude Juncker, the president of the European Commission, formally agree on a Brexit withdrawal agreement on November 25.2 The deal would establish a transition period at least through the end of 2020, during which the United Kingdom would be formally outside the EU but still abiding by its rules and regulations.3 During this transition period, U.K. and EU leadership will negotiate the final terms of the future economic and trading relationship that will see the United Kingdom leave the EU single market and formal customs union yet likely remain in close alignment with the EU on many customs rules.4 If the United Kingdom does remain close to EU customs rules, it would limit the scope of any free trade deals the nation wants with non-EU countries that diverge from EU customs requirements.5 Furthermore, it would allow the United Kingdom to place new limits on the previously free movement of EU nationals into the nation.6 May’s Conservative Party is in the unenviable position of not having enough members of Parliament (MPs) to form an overall majority and, in order to form a government, it relies on an agreement with 10 MPs from the Democratic Unionist Party (DUP) to vote with them on important legislation.7 Yet the DUP opposes the withdrawal deal, as do many of May’s own Tory MPs.8 And then there is Britain’s main opposition, the Labour Party, which is against the deal, as is the third-largest party in Parliament, the Scottish National Party (SNP).9 The reality is that there still is no political consensus in the United Kingdom between the mutually exclusive positions of those who want a hard Brexit and a sharp break from the EU, a soft Brexit that maintains close alignment with the EU, and no Brexit at all.
Topic:
International Cooperation, Social Movement, European Union, Brexit, and Regionalism
Political Geography:
United Kingdom and Europe

1956. Executive compensation in Europe: Realized gains from stock-based pay

Author:
Patricia Kotnik, Mustafa Erdem Sakinç, and Dejan Guduraš
Publication Date:
07-2018
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
This paper adds to the empirical evidence on the extent to which stock-based pay incentivizes and rewards European corporate executives. It shows that the actual realized gains (that is, take-home compensation) from stock-based pay of CEOs in European publicly-listed firms may be underestimated by the use of “estimated fair value” measures. The paper also documents the heterogeneity among countries in terms of the levels and components of CEO take-home pay. We base our work on a sample of 301 large, publicly-traded companies listed in the S&P Europe 350 index from 11 EU countries: Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Netherlands, Spain, Sweden and United Kingdom for the fiscal year 2015. Through analyzing companies’ annual reports, we have hand-collected data on various elements of compensation of the company’s CEO in 2015, including the gains that executives realize from stock-based pay. We document that on average half of the total compensation of the European CEOs in our sample is stock-based, measured by actual realized gains, with large differences among countries. Although in some European countries the majority of total compensation is stock-based, the proportions are still well below those that prevail in the United States. A comparison of the realized-gains measure of CEO compensation with the data based on fair value estimates shows that the latter underestimates the relevance of stockbased pay, in the case of some countries dramatically. Our research findings add to the existing research on CEO pay and the link between pay of EU-based corporate executives and the performance of the companies that they manage. Based on our work, we argue that realized gains measures of CEO pay should be the standard for assessing the incentives and rewards of senior corporate executives in Europe. Our research is the first step in building time series of European executive compensation that will be useful for policies concerning corporate governance and economic performance.
Topic:
European Union, Business, Corporations, and stocks
Political Geography:
Europe

1957. Factors Driving Wealth Inequality in European Countries

Author:
Sebastian Leitner
Publication Date:
11-2018
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
This paper analyses how microeconomic factors drive inequality in household wealth across nine European countries when applying the Shapley value approach to decomposition. The research draws on micro data from the Eurosystem Household Finance and Consumption Survey 2014. Disparity in inheritance and gifts obtained by households are found to have a considerable effect on wealth inequality that is on average stronger than that of income differences and other factors. In Austria, Germany, France, Portugal and Spain, the contribution of real and financial assets received as bequests or inter vivos transfers attains more than 30% to explained wealth inequality. The distribution of household characteristics (age, education, size, number of adults and children in the household, marital status) within countries however also shapes the observed wealth dispersion. The results resemble those obtained in a similar study (Leitner, 2016) based on data from the first wave of the Eurosystem Household Finance and Consumption Survey (HFCS 2010).
Topic:
Economics, Labor Issues, European Union, Inequality, Wealth, Inheritance, and Income Distribution
Political Geography:
Europe

1958. Measuring Economic Openness

Author:
Claudius Gräbner, Philipp Heimberger, Jakob Kapeller, and Florian Springholz
Publication Date:
12-2018
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
This paper surveys existing measures of economic openness understood as the degree to which non-domestic actors can or do participate in a domestic economy. We introduce a typology of openness indicators which distinguishes between ‘real’ and ‘financial’ openness as well as between ‘de facto’ and ‘de jure’ measures of openness, and show that this classification indeed captures different dimensions of economic openness. The main contribution of the paper is to supply a comprehensive and novel data set of openness indicators available for interested researchers. Based on this effort, we analyse some trends in economic openness over time and provide a correlation analysis across indicators. Finally, we explore the practical implications of choosing from different openness measures within a growth regression framework and highlight that researchers should make the choice of the indicator based on explicit theoretical justifications that correspond to their specific research questions.
Topic:
Globalization, European Union, Finance, Economy, Trade, and Regional Economy
Political Geography:
Europe

1959. Immigration and Innovation

Author:
Michael Landesmann and Sandra Leitner
Publication Date:
12-2018
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
Do High-Skilled Third-Country (i.e. Non-EU) Migrants Contribute to Productivity Growth? In order to foster innovation and enhance economic development and growth, attracting skilled professionals from abroad has become an important policy goal in many economies, initiating a global race for talent. This paper looks at the private company sector in a group of 13 old EU Member States and examines the role of high-skilled third-country (HS-TC) migrants for innovation – as captured by real labour productivity and total factor productivity (TFP) growth – between 2004 and 2015. It utilises four different indicators of HS-TC migration and defines high skills in terms of either educational attainment (ISCED classification) or the skills required in an occupation (ISCO classification) which helps identify the presence of a jobs-skills mismatch for HS-TC migrants. Taking into account the endogenous nature of HS-TC migration, we find some selective evidence of a negative causal link between the share of HS‑TC migrants, on the one hand, and labour productivity and TFP growth, on the other. Furthermore, differences in the results for the ISCED- and ISCO-based skills measures point to a non-negligible jobs‑skills mismatch in terms of an over-representation of HS-TC migrants in lower productivity occupations. We also find that HS-TC migrants are relatively less productive than HS EU migrants. Results for selected individual industries are more mixed, with some industries even benefiting in productivity terms from a higher share of HS-TC migrant workers.
Topic:
Immigration, European Union, Economic Growth, Innovation, Labor Market, Productivity, and Skilled Labor
Political Geography:
Europe

1960. The Relevance of the European Union and the North Atlantic Treaty Organization for the United States in the 21st Century

Author:
Joel R. Hillison
Publication Date:
09-2018
Content Type:
Special Report
Institution:
The Strategic Studies Institute of the U.S. Army War College
Abstract:
The “America First” approach to foreign policy seems to call into question the value of institutions like the North Atlantic Treaty Organization (NATO) and the European Union (EU). However, in a more competitive and uncertain strategic environment, NATO and the EU remain vital to promoting U.S. interests.
Topic:
Foreign Policy, NATO, Military Strategy, Armed Forces, European Union, Strategic Interests, and America First
Political Geography:
Europe, North America, and United States of America