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111. 'Grexit': Who would pay for it?

Author:
Daniel Gros, Cinzia Alcidi, and Alessandro Giovannini
Publication Date:
05-2012
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies
Abstract:
What would be the cost if Greece were to exit from the eurozone? This much-debated question cannot be answered with a single number. The consequences of Greece's exit would depend decisively on the exact circumstances of events in the country itself as well as the general state of financial markets in the eurozone.
Topic:
Debt, Markets, Regional Cooperation, Monetary Policy, and Financial Crisis
Political Geography:
Europe and Greece

112. Europe's Recurrent Employment Problems

Author:
Daniel Gros
Publication Date:
05-2012
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies
Abstract:
As the euro crisis continues and unemployment climbs to new heights, the clamour calling for Europe to 'do something' is getting louder. But the real question is: can Europe, or rather the EU, do 'something' that would actually have a real impact on unemployment? In other words, does a European plan or employment strategy make sense?
Topic:
Economics, Markets, Labor Issues, and Financial Crisis
Political Geography:
Europe

113. The Euro Crisis: Implications for the Internal Market and Harmonisation of Corporate Taxes

Author:
H. Onno Ruding
Publication Date:
05-2012
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies
Abstract:
The so-called 'euro crisis' is of the utmost economic, financial and political importance for all member countries of the euro area and for the future of the Economic and Monetary Union (EMU). In my view, however, it is not primarily a euro crisis in the strict sense. The euro itself is of course involved, but, as a currency with a rather stable exchange rate vis-à-vis other currencies and with a major role in global financial markets, it is not at the heart of the crisis. Rather the crisis is a matter of the serious imbalances in the economies of several euro-area countries, particularly their budget deficits and sovereign debts and as well as their lack of competitiveness and balance-of-payments deficits.
Topic:
Economics, Markets, and Monetary Policy
Political Geography:
Europe

114. Turkey's Standing in Gas Pipeline Games

Author:
Olgu Okumus
Publication Date:
03-2012
Content Type:
Policy Brief
Institution:
Global Political Trends Center
Abstract:
Since September 2011, the Eurasian gas market has been facing shocking bi-monthly announcements: on September 23, British Petroleum (BP) announced the South East Europe Pipeline (SEEP); on December 26, Turkish and Azeri authorities announced their joint agreement for the Trans-­Anatolian Pipeline (TANAP); and on February 26, the Shah Deniz II Consortium announced it was undertaking exclusive negotiations with the Trans Adriatic Pipeline (TAP). The shock wave intensified when the Turkish Energy Minister hinted that a new agreement allowing Russia to build its own South Stream pipeline under the Black Sea using Turkish territorial waters was in the works. Now the ultimate question of the Eurasian energy market is: “Which of these projects will be built?” This Policy Brief seeks to answer this question by analyzing Turkey's standing in Eurasian energy diplomacy in the perspective of energy transit projects competing for building the Southern Energy Corridor of gas transit from the Caspian zone to Europe. First, I present a short review of Turkish strategy in Eurasian energy diplomacy. Secondly, I detail the driving forces behind Turkish energy policy. I then conclude with some remarks about different scenarios of Turkish energy policy in the framework of the Southern Energy Corridor.
Topic:
Security, Diplomacy, Energy Policy, Markets, and Natural Resources
Political Geography:
Europe and Turkey

115. Prospects for Global Growth in 2012

Author:
Onur Bayramoğlu
Publication Date:
03-2012
Content Type:
Policy Brief
Institution:
Global Political Trends Center
Abstract:
The current concern among many is that what we are faced today is not a usual crisis that is part of the economic cycle, but an era of great stagnation with low growth and high unemployment, not witnessed since the Great Depression of the 1930's. One wonders which country will drive global growth while major actors such as the European Union are now financial casinos, the United States is continuously losing its dynamism, Japan is struggling under demographical problems, and the emerging markets are still too small and volatile. Once again, policy makers acknowledge that the problems of growth are global and systematic; such that if one faces an issue, all of them get contaminated. However, they still seek for solutions in mercantilist national policies.
Topic:
Economics, Globalization, International Trade and Finance, Markets, and Financial Crisis
Political Geography:
United States and Europe

116. The Euro Area Crisis and Turkey in the First Half of 2012

Author:
Evrydiki Fotopoulou and Erdal Tanas Karagöl
Publication Date:
08-2012
Content Type:
Policy Brief
Institution:
SETA Foundation for Political, Economic and Social Research
Abstract:
It has been almost four years since the global financial crisis started in 2008 and it has become an inherently European affair. One after another, weaker European economies seeing their growth plummeting have become unable to recover on their own and are resorting to loans from the International Monetary Fund (IMF), European Central Bank (ECB) and the European Union (EU). Already, Ireland, Greece and Portugal have requested full bailouts with Southern Cyprus as the newcomer, still under negotiation, while Spain has requested only partial assistance not acknowledging it may soon need full support. Many experts predict that Italy will follow suit as it is quite possible that it will be the next which without any access to credit markets to finance its needs. This policy analysis sheds some light on the current status of these countries: how the crisis was brought about, what measures they took, how have they performed thus far and what are the prospects for them. The role of the European Union is also being discussed in reference to the hesitant way it has addressed the problem and the cracks that appeared in the European establishment due to lack of mutual understanding and cooperation. In contrast to the weaker European economies, neighboring Turkey has managed to recover fast and exhibit positive signs that the economy is moving towards more sustainable growth rates while dealing with domestic vulnerabilities. This comparison serves as a reminder to reconsider both the usefulness of the single currency as well as whether Turkey's economy would benefit from closer ties with it, given that Europe faces a continued slowdown at least until 2014.
Topic:
Markets, Global Recession, and Financial Crisis
Political Geography:
Europe and Turkey

117. A Sovereign Wealth Fund to Lift Germany's Curse of Excess Savings

Author:
Daniel Gros and Thomas Mayer
Publication Date:
08-2012
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies
Abstract:
For most of the time since the early 1950s, national savings in Germany have tended to exceed national investment, resulting in a current account surplus. Most of these excess savings have been intermediated by the domestic banking system, which has had difficulties investing these German surpluses abroad given that it is prohibited by law from taking any exchange rate risk. This tended to keep the surplus within limits most of the time (less than 1- 2% of GDP). With the advent of the euro, however, German surpluses could become much larger and seem now to have become structurally engrained at 6% of GDP, or over one-quarter of savings. Since the start of the euro crisis, German private savers have repatriated their investments – effectively unloading their exposure onto the public sector as German banks have deposited hundreds of billions of euro at the Bundesbank. These funds are being lent by the ECB to banks in the euro area periphery (at 75 bps) – ensuring effectively a negative real return.
Topic:
Economics, International Trade and Finance, Markets, and Sovereign Wealth Funds
Political Geography:
Europe and Germany

118. Can Italy and Spain survive rates of 6-7%?

Author:
Daniel Gros
Publication Date:
07-2012
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies
Abstract:
The sentiment that the euro is now in real danger is based in large part on the widespread conviction that interest rates of 6-7% are simply unsustainable for both Italy and Spain., After taking a closer look at the fundamentals, however, Daniel Gros concludes in this new Policy Brief that both countries should be able to live with this level of interest rates for quite some time, but only if they mobilize domestic savings, which remain strong in both countries. For Spain, some debt/equity swaps are also needed.
Topic:
Debt, Economics, Markets, and Financial Crisis
Political Geography:
Europe, Spain, and Italy

119. Unholy compromise in the eurozone and how to right it

Author:
Stefano Micossi
Publication Date:
07-2012
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies
Abstract:
Two years after the first Greek rescue in May 2010, crisis management in the eurozone has still failed to restore confidence. A vivid picture of the situation can be found in Figure 1: the constellation of spreads on ten-year sovereign debts over the Bund in the eurozone is wider than it was before monetary union, as though financial markets had already discounted its breakdown. Temporary respites, notably in the early part of 2012, have not interrupted the trend of increasing divergence that risks undermining the credibility of adjustment efforts under way.
Topic:
Debt, Economics, Markets, Monetary Policy, and Financial Crisis
Political Geography:
Europe

120. Pre-empting Technical Barriers in the Single Market

Author:
Jacques Pelkmans and Anabela Correia de Brito
Publication Date:
07-2012
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies
Abstract:
Effective enforcement and compliance with EU law is not just a legal necessity, it is also of economic interest since the potential of the Single Market will be fully exploited. Enforcement barriers generate unjustified costs and hindrances or uncertainty for cross-border business and might deprive consumers from receiving the full benefit of greater choice and/or cheaper offers.
Topic:
Economics, Markets, Monetary Policy, and Law
Political Geography:
Europe