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1641. 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

1642. Is the economy doomed to a long recession?

Author:
Andrzej Halesiak and Andrzej Rzońca
Publication Date:
09-2020
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
Forecasting during a strong shock is burdened with exceptionally high uncertainty. This gives rise to the temptation to formulate alarmist forecasts. Experiences from earlier pandemics, particularly those from the 20th century, for which we have the most data, don’t provide a basis for this. The mildest of them weakened growth by less than 1 percentage point, and the worst, the Spanish Flu, by 6 percentage points. Still, even the Spanish Flu never caused losses on the order of 20% of GDP – not even where it turned out to be a humanitarian disaster, costing the lives of 3-5% of the population. History suggests that if pandemics lead to such deep losses at all, it’s only in particular quarters and not over a whole year, as economic activity rebounds. The strength of that rebound is largely determined by economic policy. The purpose of this work is to describe possible scenarios for a rebound in Polish economic growth after the epidemic. A separate issue, no less important, is what world will emerge from the current crisis. In the face of the 2008 financial crisis, White House Chief of Staff Rahm Emanuel said: “You never want a serious crisis to go to waste. And what I mean by that is an opportunity to do things that you think you could not do before.” Such changes can make the economy and society function better than before the crisis. Unfortunately, the opportunities created by the global financial crisis were squandered. Today’s task is more difficult; the scale of various problems has expanded even more. Without deep structural and institutional changes, the world will be facing enduring social and economic problems, accompanied by long-term stagnation.
Topic:
Financial Crisis, Economy, Economic growth, Crisis Management, Fiscal Policy, and Trade
Political Geography:
Global Focus

1643. 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

1644. The Rule of Law and its Social Reception as Determinants of Economic Development. A Comparative Analysis of Poland and Germany

Author:
Christopher Hartwell, Kateryna Karunska, Krzysztof Głowacki, and Maria Krell
Publication Date:
11-2020
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
The rule of law, by securing civil and economic rights, directly contributes to social prosperity and is one of our societies’ greatest achievements. In the European Union (EU), the rule of law is enshrined in the Treaties of its founding and is recognised not just as a necessary condition of a liberal democratic society, but also as an important requirement for a stable, effective, and sustainable market economy. In fact, it was the stability and equality of opportunity provided by the rule of law that enabled the post-war Wirtschaftswunder in Germany and the post-Communist resuscitation of the economy in Poland. But the rule of law is a living concept that is constantly evolving – both in its formal, de jure dimension, embodied in legislation, and its de facto dimension, or its reception by society. In Poland, in particular, according to the EU, the rule of law has been heavily challenged by government since 2015 and has evolved amid continued pressure exerted on the institutions which execute laws. More recently, the outbreak of the COVID-19 pandemic transformed the perception of the rule of law and its boundaries throughout the EU and beyond (Marzocchi, 2020). Against this background, this study examines the rule of law as a determinant of economic development in Germany and Poland from both the de jure and de facto perspectives.
Topic:
Economic growth, Rule of Law, Trade, and Economic Development
Political Geography:
Europe, Poland, and Germany

1645. Guidebook: Direction: An Efficient State

Author:
Gvantsa Ichkiti, Hasmik Grigoryan, Agnieszka Kulesa, Salome Kandelaki, and Stanislav Bieliei
Publication Date:
12-2020
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
The Polish Decentralisation Guidebook aims at presenting in a synthetic way the experience of Poland regarding the re-introduction of local government and the decentralisation process since 1989. Its main goal is to provide representatives of central and regional authorities, experts, and representatives of opinion-forming circles in Armenia and Georgia with relevant information and knowledge. The idea of the authors of this Guidebook was to facilitate mutual learning between the countries, the exchange of good practices, and lessons learned. The territorial division of Armenia was established in 1995. Now the country has two levels of administrative division – regions and communities – and the local self-government is exercised only on the level of communities. In the case of Georgia, administrative reform aimed at introducing local government started in 1997. Currently, self-government in Georgia is exercised on just one level – in municipalities (including self-governing cities and self-governing communities). Poland’s experience, in which local government units are established on all three levels of territorial division, might be useful to Armenia and Georgia, if they wish to further reform their territorial administration and pursue decentralisation. This Guidebook is comprised of four main parts. The first part is devoted to the presentation of the Polish experience in five selected areas: Empowerment of local communities Financing of local government units Providing public services Absorption of external funds by local governments Crisis responses The second part is dedicated to the presentation and analysis of needs and main blocking points in decentralisation in Armenia, while the third one concentrates on Georgia. Both of them are structured around the five above-listed areas. The last but very most important section of this Guidebook provides a set of recommendations for Armenia and Georgia based on the Polish experience in introducing local government and decentralisation. The country-specific sections of this Guidebook were prepared mainly on the basis of the results of desk research. This included reviewing the existing literature, relevant state strategies and action plans as well as reports developed by local and international organisations. Key legal acts were also reviewed. In addition, interviews with representatives of local municipalities and other stakeholders were carried out in Armenia and Georgia. This Guidebook was developed as part of the project called ‘Direction: an efficient state. Polish experiences of decentralisation and modernisation, lessons learned for Armenia and Georgia’ co-funded by the Ministry of Foreign Affairs of the Republic of Poland. It is the joint work of three partner institutions: CASE – Center for Social and Economic Research based in Warsaw, the Tbilisi-based Georgian Institute of Politics (GIP), and the Analytical Centre on Globalization and Regional Cooperation (ACGRC) from Yerevan.
Topic:
Demographics, Labor Issues, Governance, Economic growth, Social Policy, Trade, and Decentralization
Political Geography:
Eastern Europe, Poland, and Armenia

1646. WHY HEALTHY SKEPTICISM ABOUT THIS YEAR’S NOBEL PEACE PRIZE IS WARRANTED

Author:
Ida Rudolfsen
Publication Date:
12-2020
Content Type:
Commentary and Analysis
Institution:
Political Violence @ A Glance
Abstract:
Today the World Food Program (WFP) receives this year’s Nobel Peace Prize. The award has been called happily uncontroversial, following last year’s prize, which was awarded to Abiy Ahmed, the prime minister of Ethiopia, for making peace with Eritrea. The current conflict in the Tigray region calls into question the durability of that peace. The award is also timely, as estimates show that, accelerated by the COVID-19 pandemic, more than a quarter of a billion people will face acute hunger by the end of the year, increasing from 135 million to 265 million.
Topic:
Food, Hunger, and World Food Program (WFP)
Political Geography:
Global Focus

1647. GENDER AND POLITICAL VIOLENCE

Author:
Rose McDermott
Publication Date:
12-2020
Content Type:
Commentary and Analysis
Institution:
Political Violence @ A Glance
Abstract:
Recent commentary has noted that countries run by women have done a markedly better job at containing the COVID-19 pandemic than countries run by men. Previous commentary has also suggested that the public tends to think that female leaders do a better job on issues related to health and education. But the COVID-19 pandemic is not simply a health issue; it also presents major challenges in international relations, which begs the question: how does gender influence international relations? Gender affects international relations in many ways. It is at the root of many types and forms of conflict, from domestic violence to war. War is usually thought of as being something that is supported primarily by men even if the negative effects disproportionately fall on women. However, a great deal of conflict begins in and around battles over status between men, and between men and women. This is true in both domestic and international realms. Conflict, like much else, begins in the home. Children watch their parents disagree and observe how fights take place. Do parents have reasoned arguments that end in negotiated compromises? Or does their father beat their mother into submission? Children learn from watching, and take lessons about how to resolve conflict—and the role of domination and coercion in relationships—into the larger world, and use these models as the basis for how they feel they, and their nations, should behave.
Topic:
Political Violence, Gender Issues, Women, Leadership, Violence, and Peace
Political Geography:
Global Focus

1648. TWENTY YEARS AFTER UNSCR 1325: ANY PROGRESS ENDING WARTIME SEXUAL VIOLENCE?

Author:
Robert Nagel, Dara Kay Cohen, and Ragnhild Nordås
Publication Date:
10-2020
Content Type:
Commentary and Analysis
Institution:
Political Violence @ A Glance
Abstract:
Tomorrow is the 20th anniversary of the groundbreaking UN Security Council Resolution 1325 on Women Peace and Security (WPS). Where are we on the road to ending conflict-related sexual violence? There is good news and bad news. When the UN Security Council passed resolution 1325 on Women Peace and Security it was a momentous event. Women’s rights and violence against women had never before been on the agenda of the Security Council. Resolution 1325 emphasized the need for increased participation of women in national, regional, and international institutions, and for women’s inclusion in peace negotiations. Perhaps even more importantly, it acknowledged the agency of women in matters of war and peace, in contrast to the predominant idea of women as merely passive victims. A central component of 1325 was to explicitly call on all parties to armed conflict to take special measures to protect women and girls from violence, particularly sexual and gender-based violence.
Topic:
Gender Issues, United Nations, Women, Gender Based Violence, Sexual Violence, and UN Security Council
Political Geography:
Global Focus

1649. WHAT DO THE BAHRAIN-ISRAEL-UAE AGREEMENTS MEAN?

Author:
Jeremy Pressman
Publication Date:
09-2020
Content Type:
Commentary and Analysis
Institution:
Political Violence @ A Glance
Abstract:
How do the Bahrain-Israel-UAE agreements signed on September 15 demonstrate a shift in the Arab-Israeli peacemaking paradigm? While the basic differences from past agreements such as the Egyptian-Israeli Peace Treaty (1979) are very significant, the new agreements also suggest a major shift for potential pathways to Israeli-Palestinian conflict resolution. Directly trading Arab normalization with Israel for Israeli concessions to the Palestinians is out; alternative pathways include everything from Palestinian surrender to Emirati persuasion to Israeli societal transformation.
Topic:
Diplomacy, Treaties and Agreements, Peacekeeping, and Trade
Political Geography:
Israel, Bahrain, and United Arab Emirates

1650. THE BIG LESSON OF PEACEKEEPING IN SUDAN: BEWARE OF HOST-COUNTRY OBSTRUCTION

Author:
Allard Duursma
Publication Date:
09-2020
Content Type:
Commentary and Analysis
Institution:
Political Violence @ A Glance
Abstract:
Every student that takes a class on United Nations (UN) peace operations will be told on day one that, along with impartiality and the non-use of force (except in self-defense and defense of the mandate), the consent of the conflict parties is one of the three fundamental principles of UN peacekeeping. But students will soon realize that the principle of consent is just that—a principle. Which is often compromised. Host-state consent was compromised during the deployment of UN peacekeepers in the Ivory Coast when Laurent Gbagbo was in power. UN peacekeepers in South Sudan also face the challenge of compromised host-state consent. Peacekeepers in the Democratic Republic of Congo have occasionally also been confronted by government actors trying to undermine their work. The withdrawal of host-state consent has even led to the termination of peacekeeping operations in Chad, Burundi, and Eritrea/Ethiopia.
Topic:
Conflict Resolution, United Nations, and Peacekeeping
Political Geography:
Africa, Sudan, South Sudan, and Ivory Coast