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2721. European Union recovery funds: strings attached, but not tied up in knots

Author:
Jean Pisani-Ferry
Publication Date:
10-2020
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
The European Union’s plan for aiding recovery in member states hit by the coronavirus crisis has been rightly hailed as a major breakthrough for the bloc. But there is much less clarity on the plan’s economic aims, its priorities and the content of the contractual arrangements it should entail between the EU and member countries. The plan’s main plank, the Recovery and Resilience Facility (RRF) is widely seen as a short-term Keynesian stimulus. The EU debt is expected to be repaid through contributions from member states, but this has not stopped the resulting transfers as being seen, including by national governments, as money from heaven. There has also been controversy over the conditions attached to grants and loans. Such fuzziness over objectives and overloaded procedures can derail the RRF. The EU needs to make an effort to provide clarity from the outset and put the plan on the right track. It should acknowledge and emphasise that the main goal of the RRF is not to contribute to immediate relief or a Keynesian stimulus, but to foster structural transformation, especially in less-advanced and harder-hit member states. The EU should hold back from trying to impose through overall policy conditionality its reform agenda on the member states. Instead, there should be a narrow-conditionality approach in which reforms that strongly complement intended investments should be identified and bundled with that investment. A grant aimed at encouraging decarbonisation in the transport sector, for example, would, be made conditional on the elimination of transport fuel subsidies. Therefore, in national recovery and resilience plans, each bundle of investments and reforms should be focused on the limited set of policy measures that need to be implemented to maximise the impact of EU-financed investment. Meanwhile, complementarity across objectives should be addressed through a dialogue with each member state on the sectoral allocation of EU funding and the overall architecture of their recovery and resilience plans. And the EU should emphasise when relevant the cross-border dimension of investment plans and find ways to encourage member states to cooperate on the design and the implementation of their plans.
Topic:
Governance, Budget, European Union, Macroeconomics, and COVID-19
Political Geography:
Europe

2722. Lessons from the Swedish Experience with Negative Central Bank Rates

Author:
Fredrik N. G. Anderson and Lars Jonung
Publication Date:
10-2020
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Interest rates declined in the wake of the 2007–2009 global financial crisis. They remained low for most of the 2010s, only rising modestly toward the end of the decade. In some European countries, interest rates even became negative. While limited to a few countries initially, the likelihood of more central banks following suit is growing in the wake of the COVID-19 pandemic. Not least, the Federal Reserve System is under pressure to adopt a negative federal funds rate (Bernanke 2020; Lilley and Rogoff 2020).
Topic:
Monetary Policy, Interest Rates, and Central Bank
Political Geography:
Europe and Sweden

2723. Russian grand Strategy and the COVID Crisis

Author:
Andrew Monaghan
Publication Date:
12-2020
Content Type:
Policy Brief
Institution:
NATO Defense College
Abstract:
The sense of Great Power competition and challenge to the liberal international order that characterised the Euro-Atlantic commu- nity’s debate through the 2010s has become more acute in 2020. Government responses to the spread of COVID-19 have provided much ammunition for those who describe a weakening of the liberal order and the threat posed by authoritarian regimes. And the sense of competition between the powers was il- lustrated by the race to create a vaccine, redolent for many of the Cold War era, with Russia’s “Sputnik V” vaccine controversially being registered first in August. Yet the spread of the COVID-19 pandemic sug- gests a new stage, with a greater emphasis on emer- gent bipolarity in international affairs. If Russia was the original point of focus in the “New Cold War/ Cold War 2.0” of the 2010s, attention has now shift- ed to the rise of China. In September 2020, then-US Secretary of Defence Mark Esper stated that China is now the main concentration for his department, and that departmental attention would be on the Indo-Pa- cific region. Other senior officials consider Russia to be “bursts of bad weather”, while China represents “climate change”, the greater long-term adversary. China’s economic recovery – already returning in late 2020 to growth while the US, UK and Eurozone re- main in red and facing surging debt – is seen to be the foundation for a more assertive international activity.2 What, then, of Russia? What has the crisis meant for Russian strategy? Does the pandemic change Mos- cow’s view of international affairs and its international posture?
Topic:
Grand Strategy, Public Health, Pandemic, and COVID-19
Political Geography:
Russia and Europe

2724. "NATO 2030. United for a new Era.": A Digest

Author:
Thierry Tardy
Publication Date:
12-2020
Content Type:
Policy Brief
Institution:
NATO Defense College
Abstract:
On 25 November 2020 the independent Reflection Group, established by the NATO Secretary Gen- eral following the December 2019 London Lead- ers meeting, released its report titled “NATO 2030: United for a New Era”.1 Composed of ten leading personalities,2 the Group was mandated to look at NATO’s current and future role and suggest recommendations on how to rein- force Alliance unity, political consultation between Allies, and NATO’s political role. The initiative came implicitly as a response to the French President’s statement about NATO being “brain dead”, made in the context of the October 2019 US withdrawal from northern Syria and the subsequent Turkish operation there, both apparently carried out without consultation within NATO. The Report is divided into three parts, looking in se- quence at: the vision and main findings; the security and political environment; and recommendations.
Topic:
Security, NATO, Regional Cooperation, and Military Strategy
Political Geography:
Europe, North Atlantic, and North America

2725. "NATO-Mation": Strategies for Leading in the Age of Artificial Intelligence

Author:
Andrea Gilli
Publication Date:
12-2020
Content Type:
Research Paper
Institution:
NATO Defense College
Abstract:
The increasing power of processors, accuracy of algorithms, and availability of digital data are driving the dramatic artificial intelligence (AI)-centred technological transformation now in progress. These changes have already turned companies, industries and markets upside down, and we are also starting to see their effects on the battlefield. The employment of unmanned vehicles, reliance on big data for target detection, identification and acquisition, as well as the potentials of machine learning in other critical functions such as logistics and maintenance are only some of the possible examples of how warfare will evolve in the near future. The North Atlantic Treaty Organization (NATO) and its Allies cannot be bystanders during this technological transition. Some countries and organizations have already taken important steps. Others are more hesitant. The Atlantic Alliance has a moral obligation to act, both to preserve and extend its military leadership – and thus the wealth and security of its citizens – and to shape this process in keeping with its democratic principles, freedom-inspired values and commitment to fundamental human rights. As NATO works on its Artificial Intelligence Strategy, which could be published in 2021, this Research Paper aims at contributing to both the policy debate and the public discussion about AI and its implications for the Alliance. The paper offers a series of analyses, lessons learned, proposals, and recommendations, that build on best practices and solutions adopted in the civilian and military fields, on perspectives drawn from the academic literature as well as on ideas generated in the broader AI community. The various parts of the paper are all linked to the single overarching concept of “NATO-mation”, or the idea that NATO has an important role to play so as to prepare for and to shape this technological transformation. NATO Allies need to be proactive: without common, coordinated, cooperative or joint solutions, they will not be able to achieve all their goals effectively and efficiently.
Topic:
NATO, Diplomacy, Regional Cooperation, Military Strategy, Leadership, and Artificial Intelligence
Political Geography:
Europe, North Atlantic, and North America

2726. The Projected Economic Impact of COVID-19 on the U.K. Creative Industries

Author:
Alice Gambarin and Osman Ismail
Publication Date:
06-2020
Content Type:
Working Paper
Institution:
Oxford Economics
Abstract:
This report explores the short-term effects of Covid-19 on the financial sustainability of the creative industries in the UK. Along with the tourism sector, Creative Industries (CIs) are among the most affected by the current Covid-19 crisis. Creative workers, one of the more vulnerable sectors of the workforce, are already seeing devastating impacts on their income, not only in turnover terms, but also in their charitable contributions and sponsorship. Leaving behind the more fragile part of the sector could cause irreparable socio-economic damage. We find that the Creative Industries are projecting a combined £77bn turnover loss over the course of 2020 compared to 2019 (-31%). This is expected to translate into a GVA shortfall of £29bn in 2020 compared to 2019 (-26%), over half of which is in London. In 2020, CIs are projecting a 122,000 drop in employment among employees (despite the Coronavirus Job Retention Scheme - JRS) and a further 287,000 job losses among self employed workers, compared to 2019 levels. In total, 409,000 CIs jobs are considered at risk, 27% of which are in London and 20% are in the South East.
Topic:
Economics, Public Health, Pandemic, COVID-19, and Socioeconomics
Political Geography:
United Kingdom and Europe

2727. The Economic Impact of Music in Europe

Author:
Oxford Economics
Publication Date:
11-2020
Content Type:
Working Paper
Institution:
Oxford Economics
Abstract:
The European music sector has a major impact on the economies of the EU and the UK. In 2018 the recorded music industry supported an €81.9 billion contribution to EU27 and UK GDP, according to a study by Oxford Economics, commissioned by IFPI. This was larger than the GDP of nine of the 28 EU Member States in that year. Of this contribution, €37.5 billion was generated by the music sector itself through its output, wages and tax payments. To give a sense of scale, this was 1.5 times larger than that made by the wine-making and brewing sectors. The European music sector also had a significant indirect impact on the labour market and fiscal position around Europe. We estimate the music sector supported 2 million jobs across the EU27 and UK, which meant that 1 in every 119 jobs in the 28 countries were dependent on the sector’s activities to some degree. All of this economic activity also benefited public finances, with the sector supporting a total contribution of €31.0 billion to EU27 and UK tax revenues, equivalent to 19.4% of the entire EU budget for the same year. In addition to this, we also conservatively estimate that the European music sector earned €9.7 billion in export revenue in 2018 from customers around the rest of the world. These earnings are 13% higher than all exports of European GI-protected wines to non-EU countries (including champagne).
Topic:
Economics, Culture, Music, popular culture, and Job Creation
Political Geography:
Europe

2728. Digital Services in Europe

Author:
Oxford Economics
Publication Date:
11-2020
Content Type:
Commentary and Analysis
Institution:
Oxford Economics
Abstract:
n this study, commissioned by the Computer and Communications Industry Association, we explore the economic and social impacts of digital services in Europe, and identify the actions digital services providers are taking to tackle illegal and harmful content. We conclude by suggesting points for the European Commission to consider as it develops its upcoming Digital Services Act. The rapid growth of digital services has had a transformative impact on daily lives and economic activity across Europe. Much of Europeans’ online activity is enabled by a dynamic and innovative network of online platforms. These sustain jobs and revenues themselves, and support economic activity amongst the ecosystems of businesses and individuals who use them. Even more importantly, digital services enhance economic competitiveness. They reduce barriers to growth for SMEs, enabling them to access infrastructure and customers, and to trade internationally, without making large up-front investments. Digital services also create value for consumers, delivering more choice, convenience and lower prices, and other benefits which are more social in nature. However, the technologies have been misused by some users for purposes which are harmful or illegal. Providers recognise this challenge and have developed a range of individual and collective initiatives to address it.
Topic:
Infrastructure, Digital Economy, Internet, and Digitalization
Political Geography:
Europe

2729. Global Health: A Pressing Foreign Policy Issue of our Time

Author:
Ayanda Ntsaluba
Publication Date:
12-2020
Content Type:
Journal Article
Journal:
Conflict Trends
Institution:
The African Centre for the Constructive Resolution of Disputes (ACCORD)
Abstract:
Recognition of the nexus between foreign policy and public health is not new; it has found episodic expression that tended to dissipate, only to re-emerge with time. This has been the case because traditional notions of advancing national interests through foreign policy have tended to be anchored around the fields of trade and defence, with health seen as part of so-called “low politics”. This has tended to underplay the foreign policy dimensions of health.
Topic:
Foreign Policy, Civil Society, International Cooperation, Ebola, and Public Health
Political Geography:
Africa and Europe

2730. The Political Economy of Industrial Policy in the European Union.

Author:
Fabio Bulfone
Publication Date:
10-2020
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
The Great Recession renewed calls for a return of state activism in support of the European economy. The widespread nationalization of ailing companies and the growing activism of national development banks led many to celebrate the reappearance of industrial policy. By reviewing the evolution of the goals, protagonists, and policy instru- ments of industrial policy since the postwar period, this paper shows how state intervention never ceased to be a crucial engine of growth across the EU. It argues that the decline of the Fordist wage-led production regime marked a turning point in the political economy of industrial policy with the transition from inward-looking to open-market forms of state in- tervention. The main features of open-market industrial policy are then discussed referring to the cases of the internationalization of national champions in public service sectors and the proliferation across the EU of industrial clusters. Finally, the paper reviews postcrisis in- stances of state intervention and highlights how, rather than breaking with past tendencies, the Great Recession further accelerated the shift towards open-market industrial policy.
Topic:
Development, Economics, Political Economy, Regional Cooperation, European Union, Integration, and Industry
Political Geography:
Europe