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141. Europe’s under-the-radar industrial policy: intervention in electricity pricing

Author:
Ben McWilliams, Giovanni Sgaravatti, Simone Tagliapietra, and Georg Zachmann
Publication Date:
01-2024
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
The different ways in which European Union member-state governments add levies to the price of electricity creates huge discrepancies in the prices paid by consumers. Europe’s energy transition depends upon increasing electrification of the economy and increasing the share of that electricity produced by renewable sources. Both factors raise the importance of electricity taxes set by governments. The energy crisis drew attention to this: as electricity prices soared, governments responded with billions of euros in subsidies to protect households and companies. While the acute phase of the energy crisis has passed, growing concerns about industrial competitiveness create political pressure for governments to continue with such subsidies or tax exemptions. High profile examples include the French reform of nuclear-power generated electricity pricing, and a political debate in Germany over how aggressively to subsidise the electricity price paid by energy-intensive firms. We frame the debate on intervention in electricity pricing around five distributional dilemmas concerning the recuperation of electricity expenses: 1) whether to raise general or electricity taxes, 2) the split between household and companies, 3) the split between energy-intensive and non-energy intensive companies, 4) cross-border effects, and 5) trade-offs in attracting new clean-technology manufacturing factories. Priorities according to these distributional criteria will differ by country, but these factors should be central to discussions. Governments must recognise that efforts to lower prices artificially for one group of consumers will raise prices for others, including with cross-border implications. The current compromises in the French and German cases do not pose substantial issues to the integrity of the European single market and do not penalise non-energy-intensive domestic consumers excessively.
Topic:
Industrial Policy, European Union, Electricity, Price, and Energy Crisis
Political Geography:
Europe

142. Europe’s Democracy Catch-22

Author:
Richard Youngs
Publication Date:
07-2024
Content Type:
Commentary and Analysis
Institution:
East Asia Institute (EAI)
Abstract:
The dominant, epoch-making European storyline is now clear: the rise of the far right threatens the European Union (EU)’s future and democracy. This standard view is expressed in countless opinion pieces and political speeches and is now reshaping both national and EU-level politics. Even if the far right did not surge quite as dramatically as widely predicted in either the European Parliament or French parliamentary elections, its growing popularity clearly represents a pressing challenge both at the EU level and in national politics (Ash 2024). However, the continent’s predicament might be more accurately described as a more subtle and complex conundrum: in the immediate short term, what is good for the EU integration project might not be good for democracy, and vice versa. The EU and national governments have been struggling with this democracy catch-22 for several years now, and the election results make it an even sharper challenge. The postelection context has been dominated by the debate over whether to engage or isolate the far right—a debate that has been exhaustively covered and unfolding for many years. Yet, the empirical record suggests that neither engaging with the far right nor ostracizing it has worked especially well. Instead, a third approach might help map a way out of the democracy catch-22: a European democracy pact.
Topic:
Elections, European Union, Democracy, and Far Right
Political Geography:
Europe

143. The technical limits of the EU. Europe’s defense economy as a driving force for strategic autonomy and technological sovereignty

Author:
Loïc Simonet
Publication Date:
01-2024
Content Type:
Working Paper
Institution:
Austrian Institute for International Affairs (OIIP)
Abstract:
The Working Paper delves into the European Union’s defense sector’s evolution and current challenges, underscoring the urgency for strategic autonomy and technological sovereignty. It provides a historical backdrop of EU defense initiatives, highlighting the significant influence of recent geopolitical shifts, notably the conflict in Ukraine, on the EU’s defense strategies and industrial landscape. The fragmentation of the European defense market, rising equipment costs, and hefty R&D expenses undermining competitiveness and innovation are identified as key challenges. The author focuses on the war in Ukraine as a catalyst for a consolidated defense equipment market and a surge in military expenditures and defense investments among EU nations. He scrutinizes EU’s measures to foster innovation and integration in the defense market while grappling with national protectionism and divergent member state interests. Conclusively, the report advocates for an autonomous European defense capability as crucial for tackling both longstanding and emerging crises and threats. It underscores the imperative of a harmonized defense approach within the EU, highlighting its significance for the region’s stability and security.
Topic:
Defense Policy, European Union, Strategic Autonomy, and Russia-Ukraine War
Political Geography:
Europe and Ukraine

144. Identity Continuities, Far-Right Acquiescence, and the “New” and the “Old”: Finnish and Swedish NATO Accession and Neutrality

Author:
Erik Isaksson
Publication Date:
04-2024
Content Type:
Policy Brief
Institution:
Austrian Institute for International Affairs (OIIP)
Abstract:
With Finland and Sweden’s accession to NATO, the number of neutral or non-aligned states in the EU has been reduced to three: Austria, Ireland, and Malta. How did Finland and Sweden’s shifts come about? What do these shifting neutrality – alliance membership constellations mean for the concept of neutrality, and for Austria’s position as a neutral state? This paper first examines the Finnish and Swedish debates pertaining to their own respective shifts, with particular attention to the far-right parties in those countries. It argues three things: first, contrary to most commentary, both the Finnish and Swedish policy shifts were underpinned by identity considerations, identities that remain largely the same under NATO membership as under non-alignment. Second, the far right’s acceptance of NATO membership has been a mix of opportunism and broadly engrained views of Russia. Third, par-ticularly in Sweden, neutrality has become seen as a thing of the past, and alliance membership as new and exciting, with possible implications for how neutrality is understood internationally. The paper then examines the state of the neutrality debate in Austria, with particular attention to the notion of neutrality as Austrian identity, the role of the FPÖ, and the potential risks for “neutral Austria” going forward. It concludes with a summary of the paper’s findings; a look at how neutrality in Austria, too, might increasingly be seen as an “old” concept; and by offering examples of how foreign policy con-cepts have been successfully reimagined in the past.
Topic:
NATO, European Union, Regional Integration, Neutrality, and Identity
Political Geography:
Europe, Finland, and Sweden

145. Energy as a weapon - decoding blackmail tactics in Europe

Author:
Veronika Slakaityte and Izabela Surwillo
Publication Date:
01-2024
Content Type:
Policy Brief
Institution:
Danish Institute for International Studies (DIIS)
Abstract:
‘Energy blackmail’ became a buzzword following the Russian invasion of Ukraine in 2022 and the subsequent energy crisis, but the phenomenon is not new. Energy blackmail has been employed by states to leverage their strategic energy resources for decades. In Europe, the weaponisation of energy predates Vladimir Putin’s time in Kremlin. Despite EU efforts to diversify its energy supply, the threat of energy blackmail persists, posing challenges not only to traditional energy dependencies but also to the increasingly digitalised energy sector.
Topic:
European Union, Energy, Russia-Ukraine War, and Natural Gas
Political Geography:
Russia and Europe

146. EU technology resilience and autonomy

Author:
Flemming Splidsboel Hansen and Maria Mundt
Publication Date:
01-2024
Content Type:
Policy Brief
Institution:
Danish Institute for International Studies (DIIS)
Abstract:
In the face of growing international competition between both individual states and coalitions of states, the European Union is developing a new approach towards technological resilience and autonomy.
Topic:
Science and Technology, European Union, Autonomy, Resilience, and International Competition
Political Geography:
Europe

147. The European Union can go green and lower dependencies on China

Author:
Luke Patey
Publication Date:
02-2024
Content Type:
Policy Brief
Institution:
Danish Institute for International Studies (DIIS)
Abstract:
Some Western pundits see the ongoing policy push from the European Union to de-risk supply chain dependencies on China as a threat to gains from decades of economic globalisation. Others regard Chinese industrial strengths in green technologies as unbreakable and see attempts to diversify the EU’s reliance as setting back global efforts to fight climate change. Yet, diversifying sources of critical minerals away from China and other large suppliers is a necessity in today’s volatile geopolitical climate. As well as actively pursuing new partnerships overseas to lower large dependencies on single sources, EU member states should fully harness new regulatory tools, such as the Critical Raw Materials Act, to diversify sources of critical minerals and exploit the Net-Zero Industry Act to support the production of green technologies and leverage European resources, capabilities and know-how. Contrary to conventional thinking, Europe is not starting from scratch when it comes to developing strategic supply chains in green, digital and defence technologies. Over time, there is ample potential for de-risking critical minerals to have a positive impact on the EU’s supply chain resilience and its contribution to lowering global emissions.
Topic:
European Union, Green Technology, Supply Chains, Energy Transition, and Critical Minerals
Political Geography:
China and Europe

148. Where Georgia's U-Turn Comes from and Where it is Heading

Author:
Kakha Gogolashvili
Publication Date:
07-2024
Content Type:
Commentary and Analysis
Institution:
Georgian Foundation for Strategic International Studies -GFSIS
Abstract:
For 30 years, Georgian governments have pursued European integration, reflecting the will of the majority. They have implemented European standards and reforms, culminating in 2022 with the ‘European Perspective’ and EU candidate status in 2023. Then, unexpectedly, the ruling Georgian Dream (GD) party began to ignore EU recommendations, prioritizing state sovereignty and independent decision-making. This stance, reminiscent of Putin’s “sovereign democracy,” led to controversial actions like resisting judicial reforms and improving the election code. Instead of aligning with the EU, the government began strengthening its economic ties with Russia, even after the invasion of Ukraine. The most notable action was adopting the Law on Transparency of Foreign Influence, mirroring Russia’s 2012 law aimed at controlling civil society and the media. This provoked protests, divided society, and alarmed international partners, increasing Georgia’s isolation from the democratic world and its vulnerability to authoritarian powers, especially Russia. Thus, the key questions are: Why has GD chosen this risky path? With most Georgians supporting European integration, how should the EU and the international community respond to GD’s policies steering the country away from Europe?
Topic:
Foreign Policy, Elections, European Union, and Regional Integration
Political Geography:
Ukraine, Caucasus, Eastern Europe, and Georgia

149. The Weimar Triangle's Path to Leadership Moments and Future Prospects

Author:
Nino Macharashvili
Publication Date:
09-2024
Content Type:
Commentary and Analysis
Institution:
Georgian Foundation for Strategic International Studies -GFSIS
Abstract:
In two separate speeches—one at the Sorbonne University in April and the other during his visit to Germany at the end of May—French President Emmanuel Macron said that Europe is “fighting to the death” (Macron 2024). Indeed, Europeans who are caught between Xi Jinping’s China, Vladimir Putin’s Russia, and the future possibility of Donald Trump’s USA, are the ones who most need unity at this point, but it is precisely because of this sense of insecurity that European unity is eroding. Macron’s last visit to Germany (Scally 2024) showed that Franco-German relations were only a facade manifestation of friendship and solidarity, and that the French and German governments are no longer able to independently decide on the geopolitical direction of Europe. Moreover, even if they can agree on a specific agenda, it is unlikely that it will be shared by the rest of the European Union. The solution to this dilemma is to strengthen the Franco-German union and add Poland as a third member. This makes sense, given that Russia’s invasion of Ukraine reduced the differences in the three states’ perceptions of European security, and renewed the Weimar format for collaboration in the interest of peace and security in Europe. In our article, we will try to briefly answer the following questions: 1. What is the Weimar Triangle? 2. What political factors led to its activation? and 3. What changes might it undergo in the future?
Topic:
Security, European Union, Geopolitics, Regional Politics, Russia-Ukraine War, and Weimar
Political Geography:
Europe

150. Resource curse or darling: Rethinking EU energy interests in Kazakhstan

Author:
Giulia Cretti and Louise Van Schaik
Publication Date:
03-2024
Content Type:
Policy Brief
Institution:
Clingendael Netherlands Institute of International Relations
Abstract:
With its abundant natural resources and potential for renewable energy production, Kazakhstan – one of world’s most important fossil fuel producers – will play an increasingly prominent role in EU energy security. In the Central Asian Republic, geopolitical players like Russia and China have long-standing security and economic interests and compete with the EU for access to resources. To build a sustainable energy partnership with Kazakhstan that moves beyond a fossil fuel-interdependent relationship, the EU needs to further operationalise its green energy diplomacy based on local needs. This policy brief highlights two key areas of mutually beneficial cooperation: green hydrogen and critical raw materials. The EU could support Kazakhstan with developing its own clean industry locally, which would facilitate domestic decarbonisation and socioeconomic development rather than simply the export of raw materials. Moreover, investments in the Kazakh renewable energy sector need to go hand in hand with a gradual phase-out of oil and gas investments from European energy companies. This would reduce the security risks of continued fossil fuel dependency on the stability of the country.
Topic:
Natural Resources, European Union, Partnerships, Energy, and Green Transition
Political Geography:
Central Asia and Kazakhstan