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81. Trading Up: An EU Trade Policy for Better Market Access and Resilient Sourcing

Author:
Fredrik Erixon, Oscar Guinea, Philipp Lamprecht, Oscar du Roy, Elena Sisto, and Renata Zilli
Publication Date:
05-2024
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
Europe’s competitiveness could be substantially improved by a trade policy that facilitates more trade and other forms of cross-border exchange. The evidence is clear: the EU trades less with the rest of the world than would be expected given the size of its economy. With 85 percent of global growth happening outside of the EU – and with an increasing share of all new technologies, innovations, patents, human capital, and R&D expenditure emerging in other parts of the world than Europe – the EU needs to find better ways to integrate with international markets. It is now becoming urgent for the EU to revive its international trade policy. Europe’s increasing detachment from global markets lead to two major economic concerns: deteriorating market access and less capability to build economic resilience. Market access can be defined as an export challenge, as EU firms face increasing trade barriers that hinder their ability to sell products and services abroad. These barriers ultimately limit the EU’s ability to scale up production, specialise, and increase R&D spending. Economic resilience is an import challenge. To become more resilient, the EU must diversify its sources of supply, particularly for critical raw materials, and secure a stable and frictionless access to foreign high-end goods, services, and technologies. The next five years present a critical opportunity for the EU to address the challenges limiting the contribution of international trade to EU’s competitiveness. This Policy Brief outlines seven trade policy recommendations that tackle the lack of market access and address the need for economic resilience. These policy recommendations are there for the EU to take: they are realistic and achievable. The EU has the power to make these seven policy recommendations a reality.
Topic:
Markets, Treaties and Agreements, European Union, Trade, and Resilience
Political Geography:
Europe

82. Keeping Up with the US: Why Europe’s Productivity Is Falling Behind

Author:
Fredrik Erixon, Oscar Guinea, and Oscar du Roy
Publication Date:
05-2024
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
The European Union stands at a crossroads. For decades, the EU’s productivity growth has consistently lagged the United States, leading to slower growth in living standards and decline in global economic power. While short-term factors like the strong US fiscal expansion have widened the gap in nominal GDP growth in recent years, the fact is that Europe has trailed the US economic development for several decades and the root of the problem lies in deeper structural issues within the European economy. Four major forces fuel this productivity divide. Firstly, the EU’s investment in research and development (R&D) pales in comparison to the U.S., leading to fewer patents and a slower pace of technology-fuelled innovation. Secondly, Europe trails America in the stock and growth of intangible capital investments, which are crucial for adopting and diffusing new technologies that drive productivity. Thirdly, the EU market exhibits slower business creation and destruction compared to the US. This rigidity hinders the flow of resources towards the most productive firms. Lastly, despite boasting higher levels of trade openness, the EU attracts less Foreign Direct Investment (FDI) than the US, curbing its access to cutting-edge global technologies and expertise. To close the gap, European policymakers should implement a comprehensive strategy for faster productivity growth. The first step is turning up the dial on R&D spending, targeting 4-5 percent of GDP by 2040. Next, Europe should prioritise investments in intangible assets and lay down the digital infrastructure that will underpin future growth. Revitalising the single market is also crucial: reducing internal and external market barriers for services, the primary vehicle for trading intangible assets. Moreover, the EU should foster a market environment that encourages entrepreneurship and facilitate the entry and exit of firms so resources cascade towards the most productive sectors. By harnessing the strengths of the single market and implementing these recommendations, European policymakers can propel the EU towards a more competitive and prosperous future.
Topic:
Markets, European Union, Productivity, and Economic Competition
Political Geography:
Europe, North America, and United States of America

83. Trade in the Great Sea: A Brief State of Play of EU-Southern Neighbourhood Trade Relations

Author:
Jan A. Micallef
Publication Date:
05-2024
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
The Mediterranean is a vibrant economic geography that could grow significantly. This paper reviews the trade relations between the EU and Southern Neighbourhood Countries (SNCs) – their history and the current status of the bilateral trade agreements. While these agreements have many similarities, there are also some differences in scale and scope. The paper also looks at the development of trade between the EU and SNCs and concludes that developments have generally been positive.
Topic:
Treaties and Agreements, Bilateral Relations, European Union, and Trade
Political Geography:
Europe and Mediterranean

84. The EU’s Trillion Dollar Gap in ICT and Cloud Computing Capacities: The Case for a New Approach to Cloud Policy

Author:
Matthias Bauer, Fredrik Erixon, and Dyuti Pandya
Publication Date:
05-2024
Content Type:
Working Paper
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
An inward-looking EU approach to cloud computing and data policies risks stifling innovation and competitiveness by promoting domestic champions at the expense of accessing global cloud capabilities. Limiting market diversity and access to best-in-breed solutions could hinder digital transformation across sectors, raising costs and constraining growth opportunities. By contrast, a free trade approach to cloud offer guardrails and security but champions non-discriminatory cross-border and regulatory policies, yielding economic advantages by stimulating investments, fostering innovation, and enhancing competition. Unfortunately, some EU policymakers envision Europe building an independent ICT infrastructure, exemplified by initiatives like the European Alliance on Industrial Data, Edge and Cloud. This approach prioritises technological sovereignty, aiming not just to maintain European control over critical infrastructure and data but favouring localisation policies, including in AI and quantum computing. However, the approach is simply not going to work because the amount of resources that are needed for “pure-EU firms” to rise up as significant competitors to global leaders is so large that it would drain other sectors of investments and human capital. The investment gap between the EU and the US in ICT and cloud-related sectors, totalling some USD 1.36 trillion, presents a significant challenge for native European companies. To catch up by 2030, 2040, and 2050, European technology companies would need to substantially increase annual investments, ranging from approximately USD 157 billion to USD 1.2 trillion annually, representing 0.8 percent to 6.4 percent of the EU’s GDP. This would – hypothetically – require a significant commitment of resources. Despite recent efforts such as state aid for R&D in cloud and edge computing, the scale of investment needed far exceeds the current levels, underscoring the urgency for an open and non-discriminatory EU policy approach to bolster Europe’s position in the rapidly growing and technologically changing digital landscape. There are different components to a successful cloud policy, including policies to spur adoption and cross-border cloud integration in the EU, and more investment in R&D. EU policymakers should adopt a dynamic perspective rather than fixating on static market shares, and pursue policies that prioritise innovation and technological advancement over merely seeking to catch up on current technologies. The cloud market and the broader Internet market are going through rapid changes, leading to new services and new competition. A future-oriented approach to cloud policy advocates for policies that foster competition, drive technological progress, and enable interoperability, all of which align with the dynamic nature of cloud services and global markets.
Topic:
Communications, European Union, Digital Economy, Cloud Computing, and Information Technology
Political Geography:
Europe

85. Reinventing Europe’s Single Market: A Way Forward to Align Ideals and Action

Author:
Matthias Bauer, Dyuti Pandya, Vanika Sharma, and Elena Sisto
Publication Date:
06-2024
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
It is essential for EU institutions and Member State governments to shift their focus from the abstract concept of the “Single Market” to the concrete objective of “legal harmonisation in the EU.” This transition represents a strategic realignment towards more pragmatic policymaking. Adopting a 28th regime to address national regulation discrepancies would align with this goal and enhance the Single Market’s effectiveness in promoting economic growth and competitiveness. Given the EU’s ongoing loss of relative global economic clout, it is crucial to establish an ambitious timeline for implementing the most critical Single Market reforms. The Letta Report serves as a wake-up call to revitalise the EU’s Single Market, emphasising the need for decisive action. Its vision largely hinges on legal harmonisation within Europe, building on early efforts to liberalise markets and establish a truly integrated European market. Despite efforts, “integration fatigue” remains a significant challenge due to legal fragmentation across European economies. Previous reports, from the Cecchini Report in 1992 to the Europe 2020 Strategy, have highlighted persistent issues like regulatory divergences and declining political support for market integration. Despite numerous proposals, progress has been limited, and many challenges persist or have worsened (see Section 2). An analysis of EU reports reveals a shift in policy priorities over time. Initially, there was a strong focus on liberalisation and market opening, with less attention given to state aid and industrial policymaking. The Letta Report highlights the importance of regulatory convergence and harmonisation, reflecting a deeper understanding and recognition of the drivers of EU competitiveness. The rise of nationalism and a shift towards “Strategic Autonomy” within the EU have hindered crucial market reforms. This highlights the importance of aligning laws across Member States to strengthen and reinforce EU’s economic resilience and international competitiveness (see Section 3). EU institutions and Member State governments should set specific goals for “legal harmonisation in the EU.” This shift would address real challenges faced by businesses and citizens, and build political will for necessary reforms. Prioritising legal harmonisation would enhance internal cohesion and align national laws with Union-wide goals. An actionable roadmap – potentially with a 2028 deadline – is crucial to address the substantial gap between ambitious EU strategies and Europe’s economic realities. (see Section 4). Implementing sector-specific and horizontal policies in a new regulatory regime would improve cross-border operations and competitiveness. The Letta Report advocates for a European Code of Business Law to establish a unified regulatory framework, introducing a 28th legal regime to address national regulation discrepancies. Extending this regime to include tax and labour market policies would significantly enhance cross-border operations. The EU and Member State governments can eliminate substantial internal barriers by prioritising key horizontal policies affecting all businesses, such as fragmented tax laws, labour market policies, and social security systems. Simplifying and harmonising these policies on the basis of the facilitation of four freedoms is crucial for unlocking the Single Market’s potential for businesses and workers, boosting the EU’s global competitiveness. Allowing coalitions of willing countries to advance in certain areas of legal integration provides a viable solution to the long-standing Single Market “fatigue”. By enabling smaller groups of Member States to pursue integration in specific areas, the EU can bypass the constraints imposed by rigid voting requirements and achieve greater agility, accountability, and acceptance in EU law-making. This approach not only fosters flexibility but also upholds the fundamental principles and objectives of the EU. To ensure the integrity of the EU legal order and prevent unjustified barriers or discrimination against non-participating members, it is essential to establish safeguards and oversight mechanisms. These measures would maintain cohesion within the Union while allowing for progressive legal integration among willing Member States.
Topic:
Markets, European Union, Digital Economy, and Economic Integration
Political Geography:
Europe

86. What if…? 12 Dragon King scenarios for 2028

Author:
Florence Gaub
Publication Date:
03-2024
Content Type:
Special Report
Institution:
NATO Defense College
Abstract:
At first glance, this publication appears to be a collection of Early Warning essays – they are, to some extent, but they should not be exclusively read as such. Conventional Early Warning systems have a much shorter time horizon – normally hours, perhaps months at most – than these scenarios, and they are solely mitigation mechanisms, that is to say they provide no insight into how the event they are warning of can be avoided. They are thus not an intellectual thought exercise, but solely an alarm bell. Our Dragon Kings in this volume provide insight into how they can be avoided, but they also challenge our assumptions in more ways than one. They are therefore awareness-raisers no matter how credible or plausible you will find them. Just reading them will have a readiness-increasing effect. (In fact, the more absurd you find them, the more pronounced this is because your mind will learn more when the emotion they generate is greater.) These scenarios can become even more useful, however, if you use them for simulation exercises in a team. You can use them as a blueprint for a wider scenario exercise, whether one wishes to adopt a blue or red team approach to them, and ask questions such as: how could this have been prevented, what would have to be done? What are alternative pathways of this scenario that are even worse, and how can we prevent those? The most important aspect is that every exercise of this kind must lead to some concrete policy steps. Merely thinking about improbable futures is never enough – doing something about them is what makes them a useful policy-tool. In that case, they lead to active, rather than passive, engagement with the content, foster collaboration, encourage innovation, practice decision-making, provide a space for failure and experimentation with alternative courses of action. It is precisely because of this that scenarios are a common feature in military education, but they work just as well in any other strategic context – provided, time and space is made for it. If yes, they contribute to increasing preparedness and readiness, and accelerate the response time to surprise. What’s more, generally engaging in fringe thinking about the future will strengthen these capabilities no matter what kind of surprise eventually occurs. Much like how vaccines teach the immune system, disruptive thinking strengthens our neural networks, making us more resilient for extreme situations.
Topic:
NATO, Natural Disasters, Elections, Crisis Management, Coup, UN Security Council, Biological Weapons, Resilience, Arctic Council, and Readiness
Political Geography:
Russia, China, Iraq, Europe, India, Taiwan, Latin America, Nigeria, and Tunisia

87. Fly me to the moon: Why Europe needs to move into space

Author:
Samantha Cristoforetti and Alessandro Marrone
Publication Date:
06-2024
Content Type:
Special Report
Institution:
NATO Defense College
Abstract:
Outer space is experiencing a paradigm shift from exploration to exploitation, whereby orbits become more congested and contested than ever. NATO militaries are adapting not only to integrate space in military operations on Earth but also to operate in this domain. U.S. is leading the spacepower doctrinal evolution, while Europe holds important space capabilities but lags behind in certain key areas. Human space transportation is the new frontier that Europeans should address through civil-military cooperation.
Topic:
NATO, Space, Civil-Military Relations, and Military
Political Geography:
Europe and Space

88. How to write a strategy

Author:
Christopher M. Schnaubelt
Publication Date:
06-2024
Content Type:
Special Report
Institution:
NATO Defense College
Abstract:
Writing a strategy is difficult because the purpose is to change the behavior of humans. The most common context for strategy is in the sphere of military activities: how to apply force in a manner that breaks the will of an enemy, causing that enemy to stop fighting. However, strategy can also be useful at less intense levels of conflict such as crisis management and stability operations. Indeed, strategy can be used for peaceful but competitive purposes such as government tax policy or corporate marketing of consumer products. This paper expresses strategy as a formula: Strategy = Ends + Ways + Means + Risk wherein Ends are the objectives or the “what” the strategy intends to accomplish; Ways are the strategic concepts/courses of action or the “how” that describes the methods of applying the means to attain the ends; and Means are the resources. Risk is the degree to which the Ends exceed the Ways + Means. The following steps should be used to write a strategy. They may be performed in a different order. In most cases, some of the steps will be repeated during the development process: • Estimate the development timeline: determine the deadlines for writing the strategy. • Develop understanding: gather information and relate it to conditions and actors. • Frame the problem( s) and opportunities: determine what is the question or problem to be solved. Questions should address internal context for the strategy development process as well as the external problem context. • Draft proposed ends: envision what is to be accomplished. • Determine the ways and means: compare the contemporary problem frame with the vision of what should be achieved, ascertain the set of resources that are currently available (or can reasonably be made available within the necessary time frame), and identify how these resources can be applied to produce the desired end state. • Consider risk: assess whether the ends, ways, and means are in sustainable balance. The degree to which the perceived cost of Ways + Means exceeds the perceived value of the Ends is Risk. • Reframe the problem: consider the likely evolution of the situation in light of proposed actions. • Finalize the statement of Ends, Means, and Ways: write the strategy using the steps in this list as an outline. • Monitor strategy implementation and effect; revise as necessary: assess whether the strategy is being properly implemented, is producing the expected effects, and progressing adequately towards the desired ends. If not, revise the strategy or the plans and/or activities that implement the strategy.
Topic:
NATO, Military Affairs, and Crisis Management
Political Geography:
Europe and North America

89. Float like a butterfly, sting like a bee* How Allies adapt to drones

Author:
Brian R. Miletich
Publication Date:
05-2024
Content Type:
Special Report
Institution:
NATO Defense College
Abstract:
Drone proliferation and technological advancements in contemporary confl ict represent an evolutionary trend. Despite the growing scope and scale as a combat multiplier, drones have not yet changed the character of war. Drones are part of a broader evolutionary trend in military technology for three reasons: drones fail to achieve decisive eff ects on the battlefi eld, are vulnerable to basic adaption, and do not profoundly change existing military doctrine. The article recommends three policy provisions within NATO’s strategic construct that will help NATO meet the challenges proposed by drones. While technology alone is often insuffi cient to generate a Revolution in Military Aff airs (RMA), a new warfi ghting approach such as Multi Domain Operations (MDO) must be implemented to seize the opportunities presented by drones.
Topic:
NATO, Military Affairs, Weapons, and Drones
Political Geography:
Europe and North America

90. The new NATO Force Model: ready for launch?

Author:
John R. Deni
Publication Date:
05-2024
Content Type:
Special Report
Institution:
NATO Defense College
Abstract:
NATO Allies are in the process of a dramatic change to the Alliance’s force structure, which will see the NATO Response Force (NRF) replaced with a threetiered structure of Allied forces, to include an Allied Reaction Force (ARF), all of which is designed to better defend and deter. This new NATO Force Model faces a variety of challenges, from whether Allies will have suffi cient forces at appropriate readiness levels to fulfi l their own objectives to whether SACEUR will still have the authority to “alert, stage and prepare” Allied forces as a crisis emerges, through whether and how the Alliance’s command structure now needs a re-examination as well. To avoid the potential pitfalls and ensure the Alliance fulfi ls its own vision, NATO and its member nations ought to consider an array of mitigating steps, such as using snap exercises and inspection visits to ensure forces are indeed manned, trained and equipped, and emphasizing mass and capacity in Allied acquisition plans and capability targets.
Topic:
Defense Policy, NATO, Alliance, and Force Model
Political Geography:
Europe and North America

91. NATO 2099: The science fiction anthology

Author:
Florence Gaub
Publication Date:
04-2024
Content Type:
Special Report
Institution:
NATO Defense College
Abstract:
N ATO is a fundamentally future-oriented organization: the entire North Atlantic Treaty is written in the future tense. The word “will” appears ten times, the word “shall” even fifteen times. And yet, it features very little in the genre that is dedicated to all things future, science fiction. In the 75 years since its inception, the Alliance has appeared in just six films and five books, with most of these not even strictly science fiction. To some, this does not matter: they equate science fiction with fantasy, a realm of the impossible. But to others, it does: science fiction has a knack for detecting trends, imagining the rare, extrapolating consequences, and sparking important debates about what is to come. It is precisely this quality that makes science fiction useful for security and defence purposes. In part, this is because science fiction often focuses on technology, projecting innovations such as sliding doors, mobile phones and tablets (Star Trek 1966 - 1969), Virtual Reality (The Matrix 1999), and space travel (Francis Godwin, Cyrano de Bergerac, Johannes Kepler in the 17th century). But it also asks moral questions about the implications of these innovations, such as Mary Shelley’s Frankenstein (1818), Isaac Azimov’s I, Robot (1950) or Aldous Huxley’s Brave New World (1931). Science fiction can also have a warning effect, highlighting were things might go wrong in the political sense, whether it is 1984 warning of a totalitarian society or Snow Crash (1992) showcasing the effects of excess capitalism on democracy. For military purposes, science fiction can imagine conflicts precisely in order to prevent or mitigate them. Since the late 19th century, authors have used this genre to anticipate and prepare for conflicts to come, with George Chesney’s The Battle of Dorking (1871) being one of the first of this kind, describing an invasion of Britain by a German-speaking country, including the destruction of the Royal Navy by a futuristic wonder-weapon (“fatal engines”). H.G. Wells’s The Land Ironclads (1903) in turn featured tank-like armoured fighting vehicles.1 It is for this reason that science fiction has been used repeatedly by military organizations. In the 1980s, US President Ronald Reagan’s Strategic Defense Initiative was influenced by science fiction material, and Ghost Fleet (2015) was said by then SACEUR Admiral James Stavridis to be “a startling blueprint for the wars of the future and therefore needs to be read now!” But the military has not just used existing science fiction, but also used the genre to develop its own thinking, be it in the United States – such as the US Army TRADOC Mad Scientist Initiative which produced Science Fiction: Visioning the Future of Warfare 2030-2050 (2016) – or in France, where the project La Red Team hires science fiction authors to imagine what future opponents might think and do.2 Similar initiatives are also underway in the United Kingdom and Germany. Of course, imagining the future of NATO is a much bigger task than solely imagining the future of conflict, and perhaps this explains why the Alliance features little in regular science fiction. While NATO might be about defence, it is first and foremost a political enterprise, a promise for the future. Envisioning what challenges it will face and overcome, how it will adapt to a changing political, technological and even physical environment and maintain unity makes for a much bigger task than coming up with a new weapon that could change everything. And this is precisely what we asked the authors in this volume to do 75 years after NATO was born: imagine what it will look like 75 years from now, in 2099.
Topic:
NATO, Future, and Science Fiction
Political Geography:
Europe and North America

92. Towards Meaningful Human Rights Impact Assessments: From supermarket commitments to best practice action

Author:
Eline Achterberg
Publication Date:
01-2024
Content Type:
Working Paper
Institution:
Oxfam Publishing
Abstract:
This discussion paper focuses on the commitments that Dutch, German and UK supermarkets made as part of the Behind the Barcodes campaign to conduct human rights impact assessments (HRIAs). To understand whether supermarkets are meaningfully implementing those commitments and to support learning, this paper analyses the HRIAs that supermarkets have published in the past four years and identifies best practice efforts and points of improvement. Oxfam also outlines key recommendations for supermarkets and other food companies to improve HRIA processes to ensure that the rights of people making our food are better protected and respected.
Topic:
Human Rights, Food, Labor Rights, and Supply Chains
Political Geography:
Europe

93. Two Years at the Forefront: Exploring the needs and experiences of women-led, women’s rights and LGBTQIA+ led organizations two years into the Ukraine humanitarian response

Author:
Charlotte Greener
Publication Date:
02-2024
Content Type:
Policy Brief
Institution:
Oxfam Publishing
Abstract:
Two years on from the escalation of the war in Ukraine, Oxfam spoke with a number of people leading the work of local and national women-led organisations (WLOs), women’s rights organisations (WROs), LGBTQIA+ led organizations, and other local non-governmental organizations (NGOs) addressing the needs of women, girls and gender minorities in Poland and Ukraine. We wanted to understand how the humanitarian crisis has impacted them, personally and as organizations, and their needs and priorities for the future. At the beginning of the humanitarian crisis following the escalation of the war in Ukraine, local WLOs, WROs and LGBTQIA+ led organizations were some of the first on the ground responding to their communities’ needs, both within Ukraine and in neighboring countries, and two years on, they are still at the forefront of providing assistance. The conversations that we had with these organisations highlighted that they are facing key challenges in continuing to sustain their vital role in responding to humanitarian needs; the need for greater investment in their voice and agency as decision-makers in the humanitarian response; and the need for flexible support to these organisations that allows them to carry out their important work across all stages of the response to the humanitarian crisis.
Topic:
Human Rights, Women, Refugees, LGBT+, Humanitarian Crisis, Civil Society Organizations, Gender, and Humanitarian Response
Political Geography:
Europe, Ukraine, and Poland

94. Essential but Invisible and Exploited: A literature review of migrant workers’ experiences in European agriculture

Author:
Carlos Ruiz-Ramírez, Juan Castillo-Rojas-Marcos, and Yoan Molinero-Gerbeau
Publication Date:
06-2024
Content Type:
Special Report
Institution:
Oxfam Publishing
Abstract:
This report – derived from work implemented by Oxfam Intermón and the University Institute for Studies on Migration (IUEM) of Comillas University in the EU SafeHabitus project – is based on a review of academic and non-academic literature from the past five years. It assesses research on working, living, health and transport conditions for migrants working in the agri-food sector in Europe, and cross-cutting gender issues.
Topic:
Agriculture, Food, European Union, Migrant Workers, Supply Chains, Equity, Production, and Gender
Political Geography:
Europe

95. The EU Tobacco Tax Structure: Impact on Prices, Revenues, and Smoking Patterns

Author:
Oxford Economics
Publication Date:
05-2024
Content Type:
Special Report
Institution:
Oxford Economics
Abstract:
Multilateral organisations such as the World Bank and the IMF have made the argument that specific excise taxes for cigarette taxation can provide significant benefits over ad valorem excise taxes. Chief among the benefits they identify are: more stable and predictable government excise tax receipts; a lower administrative burden for tax management and collection; and internalising the externalities produced by cigarette consumption. Across the EU, Member States have been restructuring their excise tax systems to create an increasingly prominent role for specific excise taxes. Between 2010 and 2023, authorities in the EU opted to rebalance towards specific excise and away from ad valorem excise, with the average ad valorem rate across Member States falling from 36.7% to 27.0% of retail selling price (RSP). As a result, in this period the average specific excise burden across the EU increased from 30.9% to 44.5% of total taxation. However, this shift has not been uniform across Member States and the approach to cigarette taxation has diverged. Countries like Denmark and Sweden have moved to an almost total reliance on specific excise taxes. Meanwhile in some Member States such as Italy and Spain, the share of specific excise tax in total taxation has remained very low. In this study, we examine the experience of eight EU Member States that have all taken differing approaches to cigarette excise policy in recent years. In four countries that have rebalanced to achieve a higher proportional use of specific excise taxes since 2010, we found excise tax receipts to have remained stable or increased, despite flat or falling rates of legal consumption. In four countries that have not significantly rebalanced towards specific excise taxes, the results were more mixed. Italy and Spain, notably, have seen a decline in their cigarette excise tax receipts over the period, despite below-average declines in cigarette consumption. Ad valorem-based excise tax systems do not provide as strong an incentive for manufacturers to raise prices as a specific excise-based system would. In addition, ad valorem dominated excise tax systems can encourage downward substitution from consumers for cheaper alternatives, exacerbating the decline in excise tax receipts.
Topic:
Economics, European Union, Tax Systems, Tobacco, Price, and Revenue
Political Geography:
Europe

96. The Environmental Impact of Digital Over Cash Payments in Europe

Author:
Jan Sun, Hannah Zick, and Johanna Neuhoff
Publication Date:
06-2024
Content Type:
Special Report
Institution:
Oxford Economics
Abstract:
On behalf of the European Digital Payment Industry Alliance (EDPIA), our report on “The Environmental Impact of Digital over Cash Payments in Europe” seeks to evaluate carbon emissions across payment systems at point of sales. Businesses and governments are becoming more and more focused on mitigating the effects of climate change through processes and policies, and the payment sector is no exception. As digital payments become more prevalent—with the number of non-cash payments doubling from 21% in 2016 to 41% in 2022 in the euro-area alone according to the European Central Bank—there has been a growing need to understand the environmental effects of these shifting preferences. Although some evidence indicates that digital payments have a smaller environmental footprint than cash payments, there has not been a comparative lifecycle assessment done between the two of them. In addition, given large differences across geographies, the actual impacts of payment methods at points of sales (POS) can differ widely from country to country. To examine this issue, this study utilises a Life-Cycle Assessment (LCA) following the International Organization for Standardization (ISO) guidelines. A method Oxford Economics has added to its toolkit, the LCA is a holistic approach that appraises environmental impacts across stages of a product lifecycle on a variety of categories. Which, in this case, includes a total of different 18 categories including for example, global warming potential, mineral resource scarcity, and ionizing radiation. This cradle-to-grave approach is used for three purposes: Firstly, to consider the separate processes of cash and non-cash payments in order to isolate the environmental “hotspots” and their respective impacts. Secondly, to understand the processes in three countries with different rates of payment adoption—Italy, Germany, and Finland—for comprehensive results. Thirdly, to compare the environmental impact of cash and non-cash payments at point of sales in the different impact categories.
Topic:
Climate Change, Economics, Carbon Emissions, Radiation, and Digital Payments
Political Geography:
Europe, Finland, Germany, and Italy

97. The Security Side of Gulf Visions. Adapting Defence to the Connectivity Age

Author:
Eleanora Ardemagni
Publication Date:
03-2024
Content Type:
Special Report
Institution:
Italian Institute for International Political Studies (ISPI)
Abstract:
The GCC states are adapting defence strategies to the challenges raised by their “Visions”, their post-hydrocarbon national plans. Far from being just economic programmes, the Visions are broad national transformation platforms displaying also a security dimension, and with many security implications. New cities and industrial poles, infrastructures, mega events and tourism raise unprecedented security risks, at which the GCC states are answering through a combination of economic-oriented foreign policy, multipolar international alliances, and ambitions towards “defense autonomisation”. What are the Visions’ security dimensions and implications, and how does the post-oil path affect and reshape foreign policies? This Report analyses how GCC states are adapting deterrence and defence tools to the connectivity age, navigating a troubled neighbourhood of both conventional and asymmetric threats. In a central but more vulnerable Gulf, how may the EU and NATO accommodate transformations in GCC states’ defense policies, postures, and means, to support their own security?
Topic:
Security, Foreign Policy, Defense Policy, Gulf Cooperation Council, and Strategic Planning
Political Geography:
Europe, Middle East, India, Saudi Arabia, Qatar, United Arab Emirates, United States of America, and Gulf Nations

98. The Sky Is Not the Limit. Geopolitics and Economics of the New Space Race

Author:
Alessandro Gili
Publication Date:
01-2024
Content Type:
Special Report
Institution:
Italian Institute for International Political Studies (ISPI)
Abstract:
Space is a contested domain for its very nature and today it is evidently becoming an increasingly important enabler of economic and military power. An increasing number of actors, infrastructures and technologies deployed in space also raises concerns for safety and security, especially in cyberspace. Many countries are striving to achieve space capabilities and autonomous access to space, and this is having a tremendous geopolitical impact, especially since space is emerging as an increasingly critical military and strategic domain. The development of the new space economy, which is increasingly involving the private sector and many industrial actors and services, will also be a game changer for the international economy. The space race likewise implies disruptive technologies that could contribute massively to the energy and digital transitions, accelerating solutions that could benefit humanity. A new international governance system for space is therefore needed urgently, considering that the current rules are no longer able to respond to a sector evolving at such a rapid pace. Which actors are leading the race? Which economic sectors could benefit the most and what could the new space economy mean for the world? How is space emerging as a military domain against a backdrop of increasing international tensions? What would a new system of global governance for space look like?
Topic:
Economics, Politics, Infrastructure, Geopolitics, Regulation, and Energy Security
Political Geography:
Russia, China, Europe, India, Italy, Global Focus, United States of America, and Space

99. The changing dynamics of European electricity markets and the supply-demand mismatch risk

Author:
Conall Heussaff and Georg Zachmann
Publication Date:
07-2024
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
Meeting Europe’s 2030 climate targets will require massive clean-electricity investment. To facilitate these investments, state-backed de-risking schemes such as contracts for difference (CfDs) are needed. Their role in supporting renewables has been consolidated by the European Union’s recently agreed electricity market design reform. Under such state-backed schemes, the distribution of costs between the market and the state will depend on the balance of supply and demand. Lower demand will decrease spot-market prices, reducing market costs but increasing the cost to CfD-issuing states. If electrification of European energy demand does not keep pace with the electricity supply expansion, tens of billions of euros annually could be channelled through state contracts, generating costs that must ultimately be recovered from consumers. A cost-efficient, managed transition will require European coordination of electricity supply, demand and network investments. Clean electricity supply and demand should be synchronised through a combination of state interventions and market mechanisms. Undersupply of clean power will mean a failure to meet climate targets, but oversupply can be costly too. To manage the costs of renewable de-risking schemes and to accelerate energy-system decarbonisation, flexible electricity systems should be promoted, policies to encourage electrification could be implemented and cost-recovery arising from state-backed renewable support schemes should be fair.
Topic:
Climate Change, Markets, Electricity, Energy, and Supply and Demand
Political Geography:
Europe

100. Overcome divisions and confront threats: Memo to the Presidents of the European Commission, Council and Parliament

Author:
Maria Demertzis, André Sapir, and Jeromin Zettelmeyer
Publication Date:
07-2024
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
In the last five years, the European Union managed to find its way through a series of major shocks, including the pandemic and the 2022 surge in energy prices. The response was in many ways remarkable, including unprecedented EU borrowing to fund the NextGenerationEU economic recovery programme and a coordinated reduction in energy demand. However, these crises have left the EU in a bruised state. The pandemic recession and energy-support measures have squeezed fiscal space. Higher energy prices have persisted and EU industrial competitiveness has been eroded. The productivity and per-capita income gap with the United States has widened. Meanwhile, the world around the EU has become more threatening and fragmented. The military situation in Ukraine remains precarious. China has become both more authoritarian and more assertive. The US shift toward protectionism has become entrenched. There is less consensus for measures to combat climate change. In the face of all this, the challenges confronting you are substantial. In the next five years, you must continue to support Ukraine while implementing measures to reinvigorate EU growth, meet the 2030 climate targets and lay the ground for meeting the 2040 goals, and secure faster emissions reductions beyond the EU’s borders. Social cohesion needs to be restored to head off threats to the EU model. More needs to be done to improve EU external security. Promoting growth and enhancing cohesion will entail further deepening of the single market in areas with the highest growth impact, doing more to support innovation and defending competition, openness and multilateralism. Safeguarding the European Green Deal means boosting green industrialisation and fair burden-sharing, while scaling up international climate finance. Strengthening security requires continued support for Ukraine and the addressing of economic security risks. Underpinning all of this, a serious effort must be made to improve EU governance – and it must be done without creating further division.
Topic:
Security, European Union, European Parliament, European Commission, Energy, Regional Politics, Competition, European Council, and Threat Assessment
Political Geography:
Europe