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321. NATO and the European Union: Bridging the gap

Author:
Andrew Duff
Publication Date:
05-2024
Content Type:
Working Paper
Institution:
European Policy Centre (EPC)
Abstract:
In this Discussion Paper, Andrew Duff examines how Russia’s invasion of Ukraine has exposed structural flaws in how the West organises its European defence and how the European Union and NATO have struggled to coordinate, risking duplication and competition. Despite largely overlapping membership, neither organisation has been able to realise conventional solid defence forces. Europe’s armaments industries remain largely fragmented. Ukraine’s application to join the EU and NATO upturns the status quo. The author analyses how the Union's political and financial heft can best be combined with the Atlantic Alliance's military strength and recommends forging a permanent organic link between the two at the executive level. However, a joint command will enhance the EU’s development in security and defence, revitalise NATO, and ensure that the US and UK remain engaged in Europe.
Topic:
Defense Policy, NATO, European Union, and Regional Integration
Political Geography:
Europe

322. Russia’s war against Ukraine: Lessons on infrastructure security and new technologies

Author:
Auriane Técourt and Maria Martisiute
Publication Date:
07-2024
Content Type:
Policy Brief
Institution:
European Policy Centre (EPC)
Abstract:
In 2022, Russia hit Ukraine with a major cyberattack and unleashed a full-scale war of aggression. This includes new technologies and AI-enabled capabilities such as the Bylina electronic warfare command-and-control system. Nord Stream and the Balticconnector also fell victim to sabotage attacks by hostile actors. In this Policy Brief, it is highlighted that the EU has stepped up its resilience and cybersecurity of critical infrastructure. However, the capacity to leverage innovative technologies and defensive AI remains underdeveloped. Furthermore, the protection of industrial control systems (ICS) remains unaddressed. As Russia upgrades its 2030 National AI Development Strategy, there is an urgency to integrate the security of industrial controls into the EU’s approach to the cybersecurity of critical infrastructure before Moscow strikes with deadlier offensives. It is also time to start building a measured, albeit scalable, deployment plan for new technologies that may be AI-enabled for European critical infrastructure in connectivity with Ukraine and Moldova. The Paper explains that the EU has strengthened cybersecurity and resilience of critical infrastructure, but there is still room for improvement. Considering the pace at which new technologies and AI-enabled technologies are developing, the following steps would enhance the security of European infrastructure: Possible attack scenarios. Mandatory SOCs and cyber hubs. Industrial control systems (ICS). Synergies between the EU and NATO. A deployment plan for new technologies that may include AI.
Topic:
Infrastructure, European Union, Cybersecurity, Artificial Intelligence, and Russia-Ukraine War
Political Geography:
Russia, Europe, and Ukraine

323. Next Commissioner for Enlargement: Which criteria should inform the selection?

Author:
Berta López Domènech
Publication Date:
08-2024
Content Type:
Policy Brief
Institution:
European Policy Centre (EPC)
Abstract:
With war raging on European soil, the European Union (EU) needs competent leadership – ready and willing to tackle head-on the polycrisis and polytransition confronting the Union and its member states. Enlargement will be one of the most politically heavy dossiers in the upcoming politico-institutional cycle. Therefore, the choice of the European Commissioner in charge of this dossier is of utmost importance. This Policy Brief examines what the candidate needs to possess for the role: Commitment to EU democratic values. Support for enlargement. Capacity to forge consensus among member states and candidates. Trustworthiness in the eyes of all relevant stakeholders. The Paper argues that without this combination of credentials, it is difficult to imagine how the next Commissioner for Enlargement will translate into practice the member states’ current discourse about the geopolitical imperative of delivering a wider and more secure Union of 30+ countries.
Topic:
European Union, Regional Integration, and Enlargement
Political Geography:
Europe

324. Keeping the Promise: Reform of governance in the enlarged European Union

Author:
Andrew Duff
Publication Date:
09-2024
Content Type:
Working Paper
Institution:
European Policy Centre (EPC)
Abstract:
Provoked by Putin, the EU is having to rapidly revise its strategy for the future of Europe. Enlargement, long dormant, is now a top geopolitical priority. Defence has become a principal driver of European integration. This Discussion Paper examines how the two themes of widening and deepening the Union are interconnected. Ursula von der Leyen’s second Commission is preparing pre-enlargement reforms of EU common policies and decision-making processes. Despite disagreements among member states and nationalist political parties, the presumption of enlargement and the necessity of self-defence leaves the EU little choice but to continue on its federative path. No institution will escape the imperative of reform. Negotiations to expand the size and compass of the EU budget will be particularly difficult. Treaty change is inevitable — and should be well prepared by an expert reflection group. Faced with accelerating European unity, the UK will, sooner than expected, have to confront the issue of EU membership.
Topic:
Governance, Reform, European Union, Geopolitics, and Enlargement
Political Geography:
Europe

325. Security and Eastern Enlargement: Bridging the Gap for Wartime EU Accession

Author:
Monika Sus and Michał Matlak
Publication Date:
10-2024
Content Type:
Policy Brief
Institution:
European Policy Centre (EPC)
Abstract:
Given the unprecedented situation of wartime accession and the significant security implications of Ukraine’s EU membership for the Union and its Eastern neighbourhood, the EU should consider aligning the enlargement process with its broader security policy toward the candidate country. Failure to do so risks stalling the enlargement agenda due to unresolved security challenges. While some experts argue that linking security and enlargement policies could further complicate an already complex negotiation process, the opposite needs to be discussed. This Policy Brief proposes three institutional ideas that would facilitate integrating security concerns into the enlargement process without risking prolonging it. This includes examining the enlargement methodology, better collaboration between relevant Directorates-General (DGs), commissioners responsible for security, defence and enlargement, and the European External Action Service, as well as advancing the debate about the operationalisation of Art 42.7 to provide Ukraine with security guarantees in coordination with NATO.
Topic:
Security, European Union, Russia-Ukraine War, and Enlargement
Political Geography:
Europe and Ukraine

326. On the Importance of Placebo and Nocebo Effects in International Trade

Author:
Lucian Cernat
Publication Date:
06-2024
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
Trade agreements are powerful drivers of global economic integration, leading to increased trade flows between countries. Usually, trade agreements are extensive documents with hundreds of provisions and different levels of enforceability. Are all these provisions useful, even those that are “best endeavours” and do not introduce legally binding obligations on trading partners? This policy brief proposes a new methodological approach to evaluate these effects. The basic idea is inspired by the “placebo effect” in medicine: under the right conditions, one can get positive results, even when the actual intervention is simply a “sugar pill”. Similarly, trade policies may have positive effects even when they lack strong, enforceable commitments. A placebo trade policy effect can emerge from “soft provisions” that bring positive trade effects, compared to the “do nothing” scenario. The main hypothesis behind this new methodology is that even if trade interventions lack the force to solve problems outright, a positive placebo effect can arise if stakeholders believe that such a policy will generate favourable market access. Conversely, a negative nocebo effect might emerge when stakeholders are convinced that certain trade policy initiatives (notably FTAs) have a detrimental impact, despite undeniable evidence to the contrary. The paper concludes with a few concrete examples illustrating both the placebo and nocebo effects and identifies factors that may lead to more positive outcomes from current and future trade policies.
Topic:
Globalization, Treaties and Agreements, European Union, Trade, and WTO
Political Geography:
Europe

327. A Strategy for a Competitive Europe: Boosting R&D, Unleashing Investment, and Reducing Regulatory Burdens

Author:
Andrea Dugo and Fredrik Erixon
Publication Date:
07-2024
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
The EU stands at a crucial economic juncture. Economic growth in Europe’s mature economies has stagnated, with productivity and other indicators of economic vitality showing poor results. Public debt is alarmingly high in several countries, and the region faces new fiscal demands due to an ageing population, conflicts and war, and the energy transition. To reverse its economic decline, Europe must adopt a new strategy for improved competitiveness. The starting point of this strategy should be an honest assessment of Europe’s declining productivity compared to leading economies like the US. Historically, some European countries matched or even surpassed US productivity levels, but this gap has widened over the past three decades. While the US economy has also faced challenges, its technology, R&D, and innovation sectors have significantly boosted productivity growth. This paper identifies three key areas for policy improvement to rejuvenate Europe’s economic dynamism: Radical expansion of R&D Expenditure: Governments must significantly increase funding for universities and create better conditions for private R&D investments. The EU currently fails to meet its own target of R&D expenditures at 3 per cent of GDP. Achieving parity with US R&D expenditure levels would require an additional €200 billion annually. Mobilisation of European Savings for Investment: Despite a higher savings rate than the US, Europe’s underdeveloped capital markets hinder economic growth and investment in new enterprises. The EU needs policies to channel savings into a vibrant corporate market. Expanding the European bond market, which is currently half the size of the US one, is essential for European firms to secure funding and keep the pace of American innovation. Regulatory Reform: The EU’s restrictive regulatory environment increases business costs and stifles innovation. A shift in regulatory attitudes, for instance in the banking sector, could unlock €4.5 trillion annually, providing much-needed capital for European firms, especially small and medium-sized enterprises, to finance innovation during the green and digital transition. By addressing these areas, Europe can create a more favourable environment for business growth, innovation, and long-term economic stability.
Topic:
European Union, Regulation, Digital Economy, Investment, and Research and Development
Political Geography:
Europe

328. The External Side of Europe’s Great Economic Transformation: International Trade in Services

Author:
Lucian Cernat and Carmen Díaz Mora
Publication Date:
07-2024
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
Europe’s digital transition is starting to bear fruits. Europe’s economic landscape is becoming increasingly digital, with sectors like information and communication technology (ICT) capturing a growing share of EU GDP. This Policy Brief examines the impact of these economic shifts on Europe’s trade profile and the policies that the EU can pursue to support this transformation.
Topic:
International Trade and Finance, European Union, Regional Economy, and Digital Transition
Political Geography:
Europe

329. Future-proofing the EU’s Investment Attractiveness: A Bold Reform Agenda for Competition Enforcement, Taxation and Digital Policy

Author:
Matthias Bauer, Dyuti Pandya, and Oscar du Roy
Publication Date:
07-2024
Content Type:
Working Paper
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
Reducing the deterrent effects from EU and Member State laws in three key cross-sector policy areas – competition policy, business taxes and VAT, and digital policies – could significantly enhance the business environment within the Single Market and boost the EU’s attractiveness to both domestic and foreign investors. The EU’s future competitiveness is at risk due to a significant disparity in investments, particularly in technological innovation, compared to the US. Despite having a larger population and labour force, the EU lags behind in large business activities, with US firms consistently outspending their European counterparts in key tech-intensive sectors such as software, computer services, pharmaceuticals, and biotechnology. Moreover, China and other emerging nations are rapidly catching up, dramatically diminishing the EU’s relative economic and political influence on the global stage. The urgency for the EU to bridge these gaps is more critical than ever (Section 2). The EU’s profound investment gap highlights a systemic advantage for the US in fostering innovation and economic growth. The EU’s regulatory complexity, largely driven by legal fragmentation in horizontal policies, further exacerbate the situation, deterring cross-border activities reducing the region’s attractiveness to global investors (Section 3).
Topic:
Markets, Reform, European Union, Digital Economy, Investment, and Digital Policy
Political Geography:
Europe

330. Negotiating Uncertainty in UK-EU Relations: Past, Present, and Future

Author:
David Henig
Publication Date:
09-2024
Content Type:
Special Report
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
Ten key points to negotiating the UK-EU relationship: Europe has been weakened by difficult UK-EU relations at a time of international challenge. Eight years after the Brexit referendum a new UK government and European Commission provides a good opportunity to reset approaches and put obstructions aside. Too big for either side to ignore, this will always be an important, time-consuming, and slightly chaotic relationship – which thus needs a much firmer footing based on the following shared understanding: Probably the broadest, deepest bilateral relationship in the world, adding the world’s second largest trade flow to integrated neighbourhood challenges, meaning inevitable complexity and ongoing negotiation of many different topics. This has been insufficiently recognised, and should ideally be considered jointly, e.g. in terms of a shared vision, road map, scoping, implementation, otherwise even agreeing sequencing will always be problematic; Wide scope, with inevitable challenges and tensions, requiring regular senior-level contact, this should start with annual summits that develop mutual understanding, supported by regular meetings between UK Ministers and Commissioners, senior official meetings, and the sharing of information at expert level. There should not be a single undertaking negotiation; Divorce taking time to overcome, emotions on both sides are settling but still livelier than normal between nominal allies, with many involved who would simply like the unattainable return to the pre-2016 state, and others just as strongly opposed in various ways; EU needs to be less rigid given the UK will not neatly fit into existing models, there being too many mutual interests, from which will flow multiple arrangements and deals. Showing greater willing to a now more constructive counterpart means creativity in how to structure the relationship to deliver mutual interests as well as specific asks of both sides; Negotiations must informally include many actors, such as businesses, civil society, lower-level governments, academics, listening to whom should be the basis for the UK and EU shaping mutually acceptable deals. All of these stakeholders will equally have to learn to live with the uncertainty and difficulties of an ongoing relationship with multiple strands; UK previously a naïve negotiator failing to understand this collaborative yet still competitive, and increasingly public, nature of modern trade negotiations, or its new third country status. Positive signs of learning shown with the Windsor Framework should be developed – to include ‘Team UK’ negotiating, openly testing ideas with specialists, and understanding the EU, importance of trust in implementation, and limits of taking back control; Northern Ireland will always require special handling as a part of the UK whose peace process requires strong relations with the rest of the country and the EU. Ambiguity and flexibility will continue to be needed; There is no perfect model for future UK-EU relations, all potential options having drawbacks rendering them somewhat unstable, and no swift negotiating path to most of them. While the UK is not a member of the EU there will always be barriers to trade and movement of people which both sides with their priorities will aim to discuss, negotiate, and seek to ease; Public communications and understanding around the relationship must be improved, whether that is in terms of negotiating progress, realistic options for both sides, care with overly-simplistic messaging, or particular terminology with often multiple meanings; Despite uncertainty there will be a steady move towards deeper, more robust arrangements, since both UK and EU have strong interests in making these happen, but this will not be a quick or steady process, instead it will come from considerable engagement, flexibility, and patience, to create something that is tolerable if always slightly sub-optimal.
Topic:
Bilateral Relations, European Union, Regional Integration, and Regional Politics
Political Geography:
United Kingdom and Europe