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191. Increasing the International Role of the Euro: A Long Way to Go

Author:
Marek Dabrowski
Publication Date:
08-2020
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
The euro is the second most important global currency after the US dollar. However, its international role has not increased since its inception in 1999. The private sector prefers using the US dollar rather than the euro because the financial market for US dollar-denominated assets is larger and deeper; network externalities and inertia also play a role. Increasing the attractiveness of the euro outside the euro area requires, among others, a proactive role for the European Central Bank and completing the Banking Union and Capital Market Union.
Topic:
European Union, Economic growth, Central Bank, Currency, and Trade
Political Geography:
Europe

192. Study and Reports on the VAT Gap in the EU-28 Member States: 2020 Final Report

Author:
Adam Śmietanka, Grzegorz Poniatowski, and Mikhail Bonch-Osmolovsky
Publication Date:
10-2020
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
This Study contains Value Added Tax (VAT) Gap estimates for 2018, fast estimates using a simplified methodology for 2019, the year immediately preceding the analysis, and includes revised estimates for 2014-2017. It also includes the updated and extended results of the econometric analysis of VAT Gap determinants initiated and initially reported in the 2018 Report (Poniatowski et al., 2018). As a novelty, the econometric analysis to forecast potential impacts of the coronavirus crisis and resulting recession on the evolution of the VAT Gap in 2020 is reported. In 2018, most European Union (EU) Member States (MS) saw a slight decrease in the pace of gross domestic product (GDP) growth, but the economic conditions for increasing tax compliance remained favourable. We estimate that the VAT total tax liability (VTTL) in 2018 increased by 3.6 percent whereas VAT revenue increased by 4.2 percent, leading to a decline in the VAT Gap in both relative and nominal terms. In relative terms, the EU-wide Gap dropped to 11 percent and EUR 140 billion. Fast estimates show that the VAT Gap will likely continue to decline in 2019. Of the EU-28, the smallest Gaps were observed in Sweden (0.7 percent), Croatia (3.5 percent), and Finland (3.6 percent), the largest – in Romania (33.8 percent), Greece (30.1 percent), and Lithuania (25.9 percent). Overall, half of the EU-28 MS recorded a Gap above 9.2 percent. In nominal terms, the largest Gaps were recorded in Italy (EUR 35.4 billion), the United Kingdom (EUR 23.5 billion), and Germany (EUR 22 billion). The Policy Gap and its components remained stable. For the EU overall, the average Policy Gap level was 44.24 percent. Of this, in 2018, 10.07 percentage points were due to the application of various reduced and super-reduced rates (the Rate Gap) and 34.17 were due to the application of exemptions without the right to deduct. The results of the econometric analysis show that the VAT Gap is influenced by a group of factors relating to the current economic conditions, institutional environment, and economic structure as well as to the measures and actions of tax administrations. Out of a broad set of tested variables, GDP growth and general government balance appeared to explain a substantial set of VAT Gap variation across time and countries. Within the control of tax administrations, share of IT expenditure proved to have the highest statistical significance in explaining the size of the VAT Gap. In addition, the VAT Gap appeared to be inter-related with the values of risky imports of goods, indicating the role of fraud in driving the overall share of the VAT Gap. Since the COVID-19 recession will likely have a dire impact on the EU economies, the VAT Gap in 2020 is forecasted to increase. If the EU economy contracts by 7.4 percent in 2020 and the general government deficit jumps as forecasted in the Spring Forecast of the European Commission, the Gap could increase by 4.1 percentage points year-over year up to 13.7 percent and EUR 164 billion in 2020. The hike in 2020 could be more pronounced than the gradual decrease of the Gap observed over the three preceding years. Moreover, a return to the VAT Gap levels observed in 2018 and 2019 will take time and require significant action from tax administrations. This Report has been written for the European Commission, DG TAXUD, for the project TAXUD/2019/AO-14, “Study and Reports on the VAT Gap in the EU-28 Member States”, and is a follow-up to the seven reports published between 2013 and 2019.
Topic:
European Union, Fiscal Policy, VAT, and COVID-19
Political Geography:
Europe and Global Focus

193. Promoting and Projecting Stability: Challenges and Perspectives

Author:
Amanda Lapo, Bastain Giegerich, and James Hackett
Publication Date:
12-2020
Content Type:
Working Paper
Institution:
International Institute for Strategic Studies
Abstract:
The ambition to promote stability and foster peace in an increasingly volatile security environment is an established element of EU and NATO policy. There is a risk that the coronavirus pandemic will increase the demand for stabilisation measures while at the same time complicating their supply. This paper focuses on the role that military and security actors can play in supporting stabilisation efforts. The ambition to promote stability and foster peace in an increasingly volatile security environment is an established element of European Union and NATO policy. This ambition is also reflected in many of their member states’ national-level policy and strategy documents. The direction and implementation of these policies are influenced by a range of motivations including security worries, humanitarian concerns and historical ties. Stability is a challenging endeavour at the best of times, and there is a risk that the coronavirus pandemic will increase the demand for it while at the same time complicating its supply.
Topic:
Foreign Policy, NATO, Regional Cooperation, Military Strategy, European Union, Political stability, Public Health, Pandemic, and COVID-19
Political Geography:
Europe, North Atlantic, and North America

194. EU-Turkey Policies in Iraq & Syria: Challenges & Opportunities

Author:
Dlawer Ala'Aldeen
Publication Date:
02-2019
Content Type:
Working Paper
Institution:
Middle East Research Institute (MERI)
Abstract:
Turkey is in every way ideally placed to bridge the EU with its southern neighbours and together tackle their common challenges and myriad business opportunities. The question is, can they align priorities and policies to make the most of the opportunities? The answer is: not easily. Given the complexity of and uncertainty in Turkey and Iraq, as well as Syria’s security dynamics, sustained EU-Turkey convergence in all areas of common interest is unlikely in the foreseeable future. Although both Turkey and the EU have adopted multifaceted foreign policies vis-a-vis the Middle Eastern countries, yet they have converged only on specific issues, such as dealing with the Iran nuclear deal. Both sides consider the US withdrawal from the deal as a “matter of concern”, believing that maintaining the deal and keeping Iran engaged through diplomatic and economic means instead of sanctions or military threats is crucial even after the US withdrawal. Otherwise, Turkey and the EU diverge on the overall approach to the most troubled neighbours, namely Iraq and Syria, which have been sources of grave concern to all. Iraq continues to be a fragile country, struggling to keep its integrity. The country was at the brink of failure between 2014-2017 after the emergence of the so called Islamic State (IS), and further threatened by the Kurdish referendum for independence in 2017. Iraq was pulled back to survival, mainly by international assistance. Interestingly, in 2018 Iraq saw two transformative general elections, one for the Federal and the other for the Kurdistan Region’s Parliament. The outcome of these elections brought about a degree of change in the political landscape, a sense of optimism for future recovery and a clear promise for creating new business opportunities for international partners. However, in keeping with the past, the formation of government in both Baghdad and Erbil became protracted and problematic. These features indicate that the Iraqi leaders remain ill focused on the country’s priorities in terms of state-building and provision of services or addressing the root causes of its fragility. Turkey and the EU share the objectives of accessing Iraq’s market and energy supply, and prevent onward migration of the displaced populations. Of course, the EU is to a large extent dependent on Turkey to achieve its goals. Therefore, it would make sense for the two sides to converge and cooperate on these issues. However, Turkey’s foreign policies in the southern neighbourhood are driven primarily by its own domestic and border security considerations and – importantly – Turkey sees the economic, political and security issues as inextricable. While Iraq has lost its state monopoly over legitimate violence and is incapable of securing its borders, Turkey often takes matters into its own hands by invading or intervening in Iraq, both directly and indirectly (through proxies). Of course, the Iraqi government considers Turkey’s interventions as acts of aggression and violations of its borders, but is unwilling to take measures against them. For Iraq, Turkey is a regional power and an indispensable neighbour. It has control over part of Iraq’s oil exports, water supply and trade routes. The EU, on the other hand, considers Turkey’s interventions as acts of self-defence but frowns upon them as destabilising factors, adding to the fragility of Iraq. In Syria, the political landscape and security dynamics are very different from Iraq, but the EU-Turkish policies follow similar patterns. Syria remains a failed state with its regime struggling to secure survival and regain control over its territories. Meanwhile, Turkey has become increasingly interventionist in Syria via direct military invasion and through proxies, culminating in the occupation of a significant area west of Euphrates, and threatening to occupy the Eastern side too. Turkey has put extreme pressure on the USA for permission to remove the Syrian Democratic Front (SDF) and its lead organisation (Democratic Union Party, PYD) from governing North East Syria (also referred to as Rojava). However, the EU and USA consider the SDF and PYD indispensable in the fight against IS and fear the Turkish interventions may have grave consequences. Federica Mogherini, the EU High Representative and Vice-President of the European Commission recently emphasised that “Turkey is a key partner of the EU”, and that the EU expect the “Turkish authorities to refrain from any unilateral action likely to undermine the efforts of the Counter-IS Coalition”. Therefore, EU-Turkey divergence or even conflict with some EU Member States is possible over Syria.
Topic:
Security, Regional Cooperation, Military Strategy, European Union, Islamic State, and Political stability
Political Geography:
Iraq, Europe, Turkey, Middle East, Asia, and Syria

195. Great Britain and the European Union Beyond Brexit

Author:
Ana Muhar Blanquart
Publication Date:
03-2019
Content Type:
Working Paper
Institution:
Institute for Development and International Relations (IRMO)
Abstract:
Brexit is a term coined of the words “British exit”, referring to the United Kingdom leaving the European Union. First used in 2012 by the founder of the British Influence think-tank Peter Wilding, it became the most frequently used political term in 2016, the year when the British electorate chose to leave the European Union and thus change the political landscape of the United Kingdom and the European Union.
Topic:
Foreign Policy, International Trade and Finance, Regional Cooperation, European Union, and Brexit
Political Geography:
United Kingdom, Europe, England, North Ireland, Ireland, Scotland, and Wales

196. Elections that will shape the EU more than ever befor

Author:
Augustin Palokaj
Publication Date:
05-2019
Content Type:
Working Paper
Institution:
Institute for Development and International Relations (IRMO)
Abstract:
European elections this year, to take place on 23-26 May, are considered to be one of the most important in the history of the European Union. This might sound exaggerated or at least something that has been heard before. But there are many reasons why this time things are different. The EU is at the crossroads, performance, record low unemployment and fewer member states find themselves in economic difficulties or excessive deficit. Trust in the EU and support for membership is increasing among citizens in most member states. However, the general picture remains mixed and any flaw is widely exploited by with mixed picture on the state of the union: divided more than ever on core issues such as common values, solidarity, migration, free movement and the rule of law. On the positive side, however, there is a pretty good economic eurosceptic forces. Many challenges will have to be addressed urgently, starting immediately after the European elections. The results, which will most probably confirm a decline in support for traditional mainstream parties, will affect the election of a new President of the European Commission, a new President of the European Council and other key figures in EU institutions. This time it will not be easy, since many national leaders have questioned the automatic respect for the principle of “Spitzenkandidat” (the lead candidate put forward by the political group able to create a majority in the European Parliament, that becomes the President of the European Commission) and will try to return this power to elect the Commission’s President to the heads of states and governments, with the Parliament expected to rubber-stamp their choice. The Parliament could fight back and this may create a politically motivated power struggle between two major EU institutions.
Topic:
Regional Cooperation, Elections, European Union, and Brexit
Political Geography:
Europe and Brussels

197. EU Strategy for the Danube Region – Bridging the gap between national and European policies

Author:
Sandro Knezović
Publication Date:
09-2019
Content Type:
Working Paper
Institution:
Institute for Development and International Relations (IRMO)
Abstract:
Integration policies and trends have made international affairs increasingly complex over the course of last few decades. We are witnessing the development of a number of sub-regional, regional, European and global institutions and organisations. This directly influences decision- making at the multilateral level, increasing European integration, policy-making powers and processes have been transferred from the national to the supranational/European level. In this context, while some policies were made at the national level and others were transferred to the European one, there were numerous issues ‘in between’ where coordinated policies the number of layers and stakeholders in wereneeded.Thegapswerefilledwithdifferent the process, thus giving broader diversity sub-regional and regional initiatives, covering and multidimensionality to newly created a wide range of different issues and being political entities. Especially in the process of guided by a variety of different consensual decision-making procedures. However, this has not dealt with issues related to wider regions, geographically determined by an important natural phenomena or an ecosystem. The EU attempted to respond to this challenge by developing macro-regional strategies. The first one was the Baltic Sea Region Strategy from 2009, followed by the European Union Strategy for the Danube Region (EUSDR), adopted by the European Commission in 2010 and endorsed by the European Council in 2011, along with the Adriatic Ionian Strategy from 2014 and the Alpine Region Strategy from 2015. All of these strategies are presently being developed in the wider EU policy framework as a new concept of territorial governance.
Topic:
Nationalism, Regional Cooperation, European Union, and Regionalism
Political Geography:
Europe, Central Europe, and Danube

198. Volodymyr Zelensky’s Sweeping Victories: Is Ukraine’s Turn Toward the West Definite?

Author:
Krševan Antun Dujmović
Publication Date:
12-2019
Content Type:
Working Paper
Institution:
Institute for Development and International Relations (IRMO)
Abstract:
For more than half a decade Ukraine has been one of epicenters on the map of geopolitical crises in the world and consequently drawn a lot of international attention worldwide. Ever since it gained its independence form the crumbling Soviet Union in 1991, Ukraine was a of the country also changed. Ukraine has been dominated by Russia as the Russian Empire penetrated deep toward the Black Sea in the 17th century, and the position of inferiority towards Moscow was also the case in the USSR. The first upheaval dubbed the Orange Revolution sort of buffer zone between the West and East, between the United States and European allies on the one hand, and the Russian Federation on the other. With the change of political elites and their political preferences, the orientation in 2004, brought to power Viktor Yushchenko, who tried to conduct reforms and bring Ukraine closer to the West, but the effect of his Presidency were ephemeral. President Viktor Yanukovych turned Ukraine’s sight towards Russia again, but also kept the process of EU association alive before suddenly deciding not to sign the Association Agreement with the EU just days before the planned signing ceremony on 29th November 2013. This Yanukovych’s abrupt turn from EU in favor of stronger ties with Russia triggered the wave of massive public demonstrations which later become known as the Euromaidan and subsequently the Ukrainian revolution in February 2014. The Euromaidan Revolution toppled Yanukovych and the new pro-Western government was formed. Russia soon reacted to the change of tide in Ukraine by annexing the Crimean peninsula in March and soon the armed conflict between the pro- Western government in Kiev and Russia backed rebels in Donetsk and Luhansk Oblasts broke out. Ever since the spring of 2014, Ukraine has been engulfed in a brutal conflict in the east of the country that is hampering its efforts to reform and get closer to the EU. Nonetheless, Ukrainian leadership is under the new President Volodymir Zelensky is striving to forge stronger links with the West and the EU.
Topic:
Foreign Policy, Diplomacy, Military Strategy, European Union, and Geopolitics
Political Geography:
Russia, United States, Europe, Ukraine, Eastern Europe, and Crimea

199. Data Protection and Digital Agency for Refugees

Author:
Dragana Kaurin
Publication Date:
05-2019
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation
Abstract:
For the millions of refugees fleeing conflict and persecution every year, access to information about their rights and control over their personal data are crucial for their ability to assess risk and navigate the asylum process. While asylum seekers are required to provide significant amounts of personal information on their journey to safety, they are rarely fully informed of their data rights by UN agencies or local border control and law enforcement staff tasked with obtaining and processing their personal information. Despite recent improvements in data protection mechanisms in the European Union, refugees’ informed consent for the collection and use of their personal data is rarely sought. Using examples drawn from interviews with refugees who have arrived in Europe since 2013, and an analysis of the impacts of the 2016 EU-Turkey deal on migration, this paper analyzes how the vast amount of data collected from refugees is gathered, stored and shared today, and considers the additional risks this collection process poses to an already vulnerable population navigating a perilous information-decision gap.
Topic:
United Nations, Refugee Issues, European Union, Asylum, and Humanitarian Crisis
Political Geography:
Europe, Turkey, and Asia

200. Digital Trade at the WTO: The CPTPP and CUSMA Pose Challenges to Canadian Data Regulation

Author:
Patrick Leblond
Publication Date:
10-2019
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation
Abstract:
On the margins of the Group of Twenty leaders’ meeting in Osaka, Japan on June 28-29, 2019, Canada and 23 others signed the Osaka Declaration on the Digital Economy. This declaration launched the “Osaka Track,” which reinforces the signatories’ commitment to the World Trade Organization (WTO) negotiations on “trade-related aspects of electronic commerce.” In this context, unlike its main economic partners (China, the European Union and the United States), Canada has yet to decide its position. The purpose of this paper is thus to help Canada define its position in those negotiations. To do so, it offers a detailed analysis of the e-commerce/digital trade chapters found in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Canada-United States-Mexico Agreement (CUSMA), the North American Free Trade Agreement’s replacement, in order to identify the potential constraints that these agreements could impose on the federal government’s ability to regulate data nationally as it seeks to establish a trusting digital environment for consumers and businesses. The analysis leads to the conclusion that Canada’s CPTPP and CUSMA commitments could ultimately negate the effectiveness of future data protection policies that the federal government might want to adopt to create trust in the data-driven economy. As a result, Canada should not follow the United States’ position in the WTO negotiations. Instead, the best thing that Canada could do is to push for a distinct international regime (i.e., separate from the WTO) to govern data and its cross-border flows.
Topic:
International Cooperation, International Trade and Finance, World Trade Organization, European Union, and Digital Economy
Political Geography:
United States, China, Europe, Canada, Asia, and North America