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3121. EU-Africa: “Dealing” with Migration?

Author:
Matteo Villa
Publication Date:
10-2025
Content Type:
Special Report
Institution:
Italian Institute for International Political Studies (ISPI)
Abstract:
This ISPI Report explores how European and African governments remain “stuck” in a policy limbo on migration – a limbo where political narratives collide with structural realities. Migration is not a passing emergency but a structural force linking the two continents. Yet policies swing between deterrence, externalization, and fragile bargains with transit states, while quietly expanding legal work channels. This paradox defines today’s EU-Africa migration regime: restrictive in rhetoric, somewhat expansive in practice, and fragile in results. Can Europe harden asylum while simultaneously widening labor visas? Can responsibility outsourced abroad ever replace solidarity within the Union? What happens when rights and accountability clash with opaque agreements? And why do irregular routes keep adapting, undermining every promise of control?
Topic:
Migration, Reform, European Union, Securitization, and Externalization
Political Geography:
Africa and Europe

3122. Measuring GDP at risk in the low-carbon transition

Author:
Dirk Schoenmaker and Willem Schramade
Publication Date:
08-2025
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
As sustainability challenges push economies into low-carbon transitions, the question arises of what share of GDP is exposed to transition? We develop a two-stage model to examine the share of GDP facing transition risk. The first stage examines which sectors are directly exposed to transition(s) and the second stage assesses the transition preparedness of the exposed sectors. Applying this model to the energy transition in the European Union, we find that Sweden and France have low shares of GDP facing transition risk, while Poland and Bulgaria have high shares of GDP facing transition risk. The main driver is a country’s carbon intensity, which we use as a proxy for transition preparedness. Our GDP-facing-transition risk model can inform policymaking. Countries can stimulate directed change towards low-carbon activities with a combination of taxes for high-carbon technologies and subsidies for low-carbon technologies. Moreover, countries can accelerate reallocation of labour towards low-carbon technologies and sectors by investing in education and retraining.
Topic:
Climate Change, GDP, Economy, Sustainability, and Carbon Emissions
Political Geography:
Europe

3123. Europe’s dependence on US foreign military sales and what to do about it

Author:
Juan Mejino-López and Guntram B. Wolff
Publication Date:
10-2025
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
Worries about Europe’s dependence on the United States military industrial base have increased with the worsening security situation in Europe and the deterioration of the transatlantic relationship. With a new dataset covering all notifications under the US Foreign Military Sales programme since 2008, we show that Europe has substantially increased its purchases from the US defence industrial base during the last four years, deepening its dependence on US military equipment in the short to medium term. The dependence is particularly significant for high-tech equipment, including air defence, missiles and fighter jets, and for additional equipment and services included in purchases, such as advanced software and sustainment and modernisation required in future years. This strategic reliance on the US, even when the risks associated are low, provide the US with significant bargaining leverage over Europe that can potentially be used in different policy areas, such as trade. Moreover, the US military industrial base faces its own constraints and current and future US administrations might prioritise deliveries to Asia. In response, European policymakers must assess the extent of dependence on the US and develop a strategy on how to minimise the risks. At a time of rising defence budgets, it is crucial that European production of key weapon systems grows faster than demand, so that dependence on the US defence industrial base is gradually reduced. Policymakers should review critical technological dependencies, even for procurement directed at national producers, and should plan to upgrade Europe’s technological base without increasing external dependence. Learning from and cooperating with Ukraine to boost Ukrainian production is one important step. Establishing a timeline to determine the pace at which certain dependencies should be minimised is equally necessary. Europe also needs to reduce its reliance on structural strategic systems provided by the US, such as command, control and communications systems. Given the diverging strategic cultures across Europe, building consensus is of paramount importance. European companies need to grow to the scale that is only achievable in a larger market. Failing to implement a strategy risks Europe losing its freedom and autonomy.
Topic:
Security, Defense Policy, Industrial Policy, Science and Technology, Macroeconomics, Trade Policy, and Transatlantic Relations
Political Geography:
North America and United States of America

3124. What Germany’s medium-term fiscal plan means for Europe

Author:
Jeromin Zettelmeyer, Zsolt Darvas, and Lennard Welslau
Publication Date:
10-2025
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
Germany’s July 2025 medium-term fiscal-structural plan exposes the tension between raising public investment in a low-risk country and the requirement in European Union fiscal rules for member state debt to comply with the 60 percent of GDP public debt ratio benchmark. Germany’s plan seeks to reconcile this tension by adopting overly optimistic GDP growth and inflation assumptions, and by proposing a large, backloaded fiscal adjustment. The European Commission endorsed the plan without rigorously assessing these assumptions. Under more realistic economic assumptions, both the budget deficit and the public debt would be significantly higher than the plan’s projections. Rather than beginning to fall by the end of the allowed seven-year adjustment period, German debt will likely continue to rise, even if Germany keeps its promise to sharply reduce expenditure growth after 2026. This outcome would be inconsistent with the EU fiscal framework, but not threaten the sustainability of German public debt, as the fiscal adjustment required to stabilise the debt would remain feasible. Germany will likely ultimately deliver the necessary consolidation, but over a longer period than foreseen by the EU rules. However, the Commission’s approval of the German plan establishes a precedent that could undermine the credibility of the EU’s fiscal framework. Other EU countries may cite the Commission’s leniency to justify higher expenditure growth not grounded in sound economic assumptions during the next round of national fiscal plan submissions in 2028, or even earlier through mid-term revisions. To prevent such an outcome, EU fiscal rules should be adjusted. The best option would be to permit low-risk countries with credible investment plans longer adjustment periods than the current seven-year maximum. Such a reform would result in a coherent system that ensures both debt sustainability and allows more public investment. The second-best option would be to raise the Treaty’s debt reference value from 60 percent to 90 percent of GDP. If neither proves politically feasible, technical adjustments to the debt sustainability analysis could still be made, but these would yield only marginal improvements.
Topic:
Governance, European Union, Investment, Fiscal Policy, and Public Debt
Political Geography:
Europe and Germany

3125. Tariffs, deals and multilateral ideals: can the World Trade Organization survive?

Author:
Petros C. Mavroidis
Publication Date:
10-2025
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
The second administration of United States President Donald Trump has shaken the foundations of the multilateral trading system by implementing unilateral tariffs on imports from most of its partners, and by signing ‘deals’ with a few of them. It is impossible to legally reconcile these actions with the letter and spirit of the World Trade Organization (WTO). The fundamental purpose of the WTO is to promote non-discriminatory trade liberalisation, primarily through the most-favoured nation (MFN) principle, while subjecting disputes to compulsory third-party adjudication (CTPA). The high, new US tariffs and so-called deals run afoul of MFN, CTPA and several other WTO legal institutions. The US view under Trump seems to be that legality should not stand in the way of political expediency when it comes to promoting US interests as understood by the current US administration. This is happening when the policy relevance of the WTO had already been undermined. Geopolitical concerns have turned its traditional consensus-based voting mechanism into a formidable impediment to block its legislative functions. Its adjudicative function has been moribund since 2019, when the first Trump administration took steps to make the WTO Appellate Body largely redundant. While the WTO still has offices in Geneva, the emerging disequilibrium is hardly sustainable. The WTO has been practically reduced to redundancy, at least with respect to influencing relations between the US and each of its partners. Assuming that current US policy does not change, the relevance of the WTO could wane further. Reviving the multilateral organisation will require a valiant effort from the key stakeholders, and the determination to address issues that the membership has previously avoided. This paper highlights some of them.
Topic:
Governance, Multilateralism, Trade Policy, Transatlantic Relations, and Global Economy
Political Geography:
North America and United States of America

3126. Advantages and pitfalls of green public procurement as a European strategic tool

Author:
Marie-Sophie Lappe and Francesco Nicoli
Publication Date:
09-2025
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
Public procurement, or the purchasing of goods and services by governments, is among the most powerful policy tools available to the public sector. Accounting for nearly 14 percent of European Union GDP, it shapes markets, signals priorities and can in principle create demand for transformative innovation. Green public procurement (GPP), which aims to include environmental considerations in the procurement process, has been identified as an important lever to deploy public spending in line with the EU’s climate goals. In this paper, we examine GPP as a strategic tool to support the EU’s decarbonisation, industrial and geopolitical objectives, and assess it in context of the EU’s broader policy agenda. While we acknowledge the importance of GPP in the European decarbonisation process, we argue that its widespread use might also lead to policy tensions with the EU’s other strategic objectives, such as fiscal stability and strategic autonomy. Throughout the paper, we illustrate how the interplay of these goals leads to trade-offs that are very complex to accommodate. While procurement can empower and add financial weight to European actions aimed at achieving strategic goals, including decarbonisation, it can only be effective if the EU’s underlying strategic policy goals remain consistent with each other. Trying to fit procurement practices to multiple contrasting objectives might result in longer procurement timelines, less competition, more administrative burden and higher costs for governments. These risk hindering the effectiveness of European public administrations in delivering on the objectives, and also in their daily operations, disrupting the public administration’s purchasing practices. Finally, after having illustrated the potential benefits and pitfalls of green procurement, we discuss and evaluate several policy tools that could help the EU resolve the tensions that a widespread introduction of GPP might produce.
Topic:
Climate Change, European Union, Decarbonization, and Public Procurement
Political Geography:
Europe

3127. Climate risks to global supply chains

Author:
Madalena Barata da Rocha, Heather Grabbe, and Niclas Poitiers
Publication Date:
09-2025
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
Extreme weather events are increasing in both intensity and frequency as climate change progresses. Understanding their impacts on the world economy thus takes on increased importance. While most extreme weather events are localised, their economic impacts reverberate through global supply chains (GSCs). The importance of this is widely recognised, but the potential scale of economic risks to GSCs from such ‘fast onset’ events is still poorly understood. In this paper we look at how past extreme weather events affected supply chains, and how the public and private sectors should prepare for and try to mitigate future shocks. We examine three distinct forms of disruption: lower manufacturing production due to natural disasters; reduced agricultural yields caused by floods and drought conditions; and damage to infrastructure and disruption of trade routes by climate conditions. In recent history, such events have had measurable effects, though limited by the diversified nature of global supply chains. Extreme events, such as the 2011 Thai floods or the 2022 drought affecting the Panama Canal, had measurable macroeconomic effects but remained short lived. As such events become more frequent and intense, the impact will become significantly larger and mitigation measures more important. To prepare for the future, businesses need to invest not only in a better understanding of the risks to their supply chains, but also in mitigation measures. For governments, it will become increasingly important to set the right incentives for companies to mitigate their risks. At the international level, as the example of the 2007-2008 global rice crisis showed, uncoordinated policy responses can strongly exacerbate the effect of otherwise manageable climate-related production shortfalls. This highlights the need for globally coordinated policies.
Topic:
Climate Change, Infrastructure, Economy, Manufacturing, Trade, Supply Chains, and Weather
Political Geography:
Global Focus

3128. COVID-19’s economic impact on low-income countries: preparing for the next shock

Author:
Niclas Poitiers and Costanza Greppi Maturana
Publication Date:
09-2025
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
The COVID-19 pandemic sent shockwaves through global supply chains as borders closed, lockdowns went into effect and demand plummeted. This shock was felt particularly by low and lower-middle income countries with economies reliant on a limited set of exports. While some effects of this shock were more short-lived than initially feared, the pandemic nevertheless left a long-lasting mark on many of the countries most affected. Commodity prices dropped sharply as pandemic measures were enacted. This initial drop was a serious problem for developing countries that relied heavily on exports of those commodities, even after prices rebounded. Amid falling export revenues, their currencies depreciated and they faced problems financing imports of vital goods such as food staples and medicines. This, coupled with increased interest rates, caused issues in servicing debt denominated in foreign currency. Countries involved in textile manufacturing suffered from a breakdown of the supply chain caused by a drop in demand from advanced economies and closures of textile mills. This had severe consequences for the large labour force involved in textile manufacturing in low-income countries. Overall, countries with a more diversified export base and a wider set of destination countries weathered the storm better. When designing their near-shoring and friend-shoring strategies to deal with geopolitical risk, advanced economies should take into account the risks faced by low and lower-middle-income countries in term of lack of diversification.
Topic:
Financial Crisis, Trade Policy, COVID-19, and Emerging Economies
Political Geography:
Global Focus

3129. Gender wealth inequality in the European Union: a distributional perspective

Author:
Zsolt Darvas and Nina Ruer
Publication Date:
10-2025
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
This paper investigates gender-related disparities in wealth in European Union countries using the 2010-2021 waves of the European Central Bank’s Household Finance and Consumption Survey. To address the difficulty of within-household wealth allocation and provide a cleaner comparison of men and women’s wealth positions, we focus on single, never-married individuals aged 25-65, without dependants. A full-sample regression controlling for demographic, labour market and socioeconomic characteristics does not reveal a statistically significant gender wealth gap in the EU overall, or in most EU countries. When examining the wealth gap against wealth distribution, we find negligible gaps among the less wealthy. However, we find significant gaps among the middle class and the wealthiest individuals. This distributional disparity was barely visible in 2010 but had become pronounced by 2021, suggesting that gender-based wealth disparities have widened over time. Men are more likely to own property, operate businesses and invest in risky financial assets, which are all major drivers of wealth. By contrast, women hold more bank deposits and low-risk assets. Although women have higher educational attainment, which is typically associated with greater wealth, this advantage does not fully translate into financial outcomes. Finally, we document substantial cross-country differences, possibly shaped by cultural norms, institutional settings, labour market histories and inheritance regimes.
Topic:
Education, European Union, Employment, Microeconomics, Gender, and Financial Literacy
Political Geography:
Europe

3130. European exports in geopolitical storms

Author:
Niclas Poitiers, Madalena Barata da Rocha, and Nicolas Boivin
Publication Date:
09-2025
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
The global trading system is undergoing profound changes, and current developments in the US and China will have significant implications for the European economy. Both countries were at the heart of globalisation but are now becoming less dynamic export markets. Chinese economic growth is expected to slow down as pressures on the economy accumulate. In the United States, trade policy has taken a sharp inward turn. For the EU, these shifts point to structurally weakening demand growth from two of its largest trading partners, which together account for nearly 30 percent of all EU-generated value-added exports. However, in this paper we show that the growth of EU exports is driven to a much greater extent by demand in other markets, and we argue for a stronger policy focus on the 70 percent of EU value added in trade with other partners. While reduced demand from the US or China would pose challenges – especially for highly exposed sectors like pharmaceuticals – there remains substantial scope for the EU to diversify and expand trade with the rest of the world. The EU already has an extensive network of trade agreements, covering 74 percent of trade with partners other than the US and China. Deepening these relationships and forging new partnerships should be priorities. Offering a stable and rules-based trade regime can help offset losses from reduced integration with the US and China.
Topic:
European Union, Geopolitics, Trade Policy, and Transatlantic Relations
Political Geography:
China, Europe, and Asia

3131. Europe’s electricity capacity mechanisms need to be better coordinated

Author:
Pär Holmberg, Christoph Maurer, Monika Morawiecka, Fabien Roques, and Georg Zachmann
Publication Date:
11-2025
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
A growing number of European governments believe that guaranteeing adequate energy supplies requires specific ‘capacity mechanisms’ to compensate power plants for their availability, not solely for electricity generation. Capacity mechanisms appear set to become a permanent feature of electricity market design across much of Europe. However, poorly coordinated national capacity mechanisms could undermine consumer gains from the expansion of interconnectors and years of progress in coupling Europe’s power markets. A patchwork of capacity mechanisms developed according to national preferences would erode predictability for market participants, undermine investment efficiency and weaken competition. Improving the design of capacity mechanisms and, in particular, their cross-border coordination is thus important to prevent potential distortions from spilling over to other energy market segments, which would hinder scaling up of efficient solutions for secure, affordable and sustainable electricity supplies in Europe. Conversely, joint or closely coordinated capacity mechanisms at regional level that allow access to neighbours’ portfolios will increase security of supply and save money for households and industry. Coordinating or joining up national capacity mechanisms is politically and technically challenging. EU countries prefer to retain sovereignty over their electricity mixes and adequacy levels, and national policymakers baulk at solutions perceived as sending consumers’ money abroad or as financing domestic capacity that ends up addressing adequacy shortfalls elsewhere. Technically, coordinating capacity mechanism design and ensuring confidence in delivery of power across borders in times of scarcity is an important prerequisite. Harmonising the commitments traded in national capacity mechanisms or creating interfaces between very different mechanisms is complex. Overcoming such inefficiencies requires high-level political commitment to compromise, including on rules for energy sharing during scarcity, cost-sharing, cross-border compatibility of capacity mechanisms and credible institutions that can perform regional adequacy assessments and enforcement. Compromise must emerge through a political process that builds trust among stakeholders. The EU could make approval of national capacity mechanisms conditional on engagement in regional coordination. Done right, this could reduce the cost of securing adequate capacities, reinforce the internal electricity market and strengthen broader energy-policy coordination across borders.
Topic:
Climate Change, European Union, Electricity, Green Deal, and Energy
Political Geography:
Europe

3132. Efficiency and distribution in the European Union’s digital deregulation push

Author:
Mario Mariniello
Publication Date:
11-2025
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
To boost the European Union’s digital economy, the European Commission is seeking to reduce the burden of its digital rulebook. However, the Commission’s deregulatory strategy lacks a rigorous, evidence-based analysis of the expected effects entailed by proposed burden reductions, is insufficiently transparent and accountable in relation to potential distributive trade-offs, and is overly focused on a narrow geopolitical goal of ‘catching up’ with the United States, which may neglect Europe’s distinct social and institutional priorities. This paper introduces a framework to analyse these issues. It distinguishes between efficiency effects that enhance total societal value, and distributive effects which determine how value is shared within society. The framework explains how total factor productivity (a proxy for competitiveness) may have a complementary and a substitutive relationship with digital regulatory protection. The Commission’s deregulatory initiatives may entail both efficiency and distributive effects, but that the Commission typically only acknowledges the former. This misrepresentation leads to unrealistic goals, such as EU companies matching the same level of data use as US companies without compromising European privacy standards. Digital regulation can be designed to generate value and can distribute that value in accordance with the goals the Commission intends to pursue. A distinction should be introduced between ‘mitigating’ distributive effects, in which the proposed initiatives shift the distribution of value among players without fundamentally altering business models, and ‘steering’ distributive effects, in which proposed initiatives may encourage the development of alternative approaches to technological development. In pursuing a deregulatory strategy, the Commission should be more transparent about its aims. The Commission should ground reforms in robust impact analysis, without a preconceived goal in terms of the desired amount of reduction in regulatory burden. It should also clearly identify the end goals while detailing potential trade-offs between them, and adopt measurable indicators for efficiency, mitigating distributive effects and steering distributive effects, in order to assess the potential effectiveness of its initiatives and to understand their actual impacts.
Topic:
European Union, Digital Economy, Institutions, Microeconomics, Innovation, and Artificial Intelligence
Political Geography:
Europe

3133. Shifting priorities, slow progress: an analysis of EU tax recommendations

Author:
Roel Dom, Costanza Greppi Maturana, and Pascal Saint-Amans
Publication Date:
11-2025
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
The European Commission is increasingly emphasising tax policy as a tool to respond to emerging challenges, ranging from growth and competitiveness to the climate transition and inequality. Through the European Semester, the European Commission proposes to European Union countries annual country-specific recommendations (CSRs) in various areas of economic governance, including tax policy guidance aligned with EU priorities. This paper examines how the content, focus and implementation of tax-related CSRs changed between 2011 and 2025. We draw on the Commission’s CSR database and classify each recommendation by targeted tax instrument and policy objective, and assess implementation over time. We find a clear shift in priorities away from labour and consumption tax reforms, and towards capital taxation, tax administration and environmental taxes. This mirrors a parallel reorientation of objectives, from growth and fiscal sustainability toward environmental sustainability and tackling tax avoidance. More recently, however, growth-related objectives appear to be making a comeback, possibly linked to renewed concerns about competitiveness. However, these shifts do not appear to reflect the successful implementation of older recommendations. Few tax-related CSRs are fully or substantially implemented, with notable differences between countries in degree of implementation. These findings suggest that changes in the Commission’s tax-related advice have been driven less by the successful implementation of earlier reforms and more by a reorientation of the Commission’s policy agenda toward new objectives. This widening scope highlights the European Semester’s flexibility in integrating emerging priorities. However, poor implementation also suggests there still are challenges to soft coordination on tax. Strengthening coordination requires clearer prioritisation, more specific guidance, sustained (national) commitment and greater attention to national contexts and reform feasibility.
Topic:
Governance, European Union, Economic Growth, Tax Systems, Macroeconomics, and Fiscal Policy
Political Geography:
Europe

3134. What will it take to stabilise debt in advanced countries?

Author:
Zsolt Darvas, Gonzalo Huertas, Lennard Welslau, and Jeromin Zettelmeyer
Publication Date:
11-2025
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
This paper analyses the prospects for debt stabilisation in the countries of the European Union, the United Kingdom and the United States, using two methodologies. First, we estimate the level of the structural primary balance that is required to asymptotically stabilise the debt ratio with a 70 percent probability, and assess the plausibility of reaching this level over the medium term, using both historical benchmarks and stochastic forecasts centred on International Monetary Fund projections. Second, we estimate ‘fiscal reaction functions’ that measure the reaction of the primary balance to the debt level. We find that: 1) debt-stabilising primary balances are generally within historical precedent – well below 3 percent of GDP; 2) the fiscal adjustment required to reach debt-stabilising primary balances is very high in several countries – specifically, the US, France, the UK, Slovakia, Poland and Romania, which must increase their primary fiscal balances by over 5 percentage points of GDP; 3) the feedback coefficient from debt to the primary balance remains positive in all countries, but has significantly declined since the global financial crisis and is not significantly different from zero in most countries. Our main conclusion is that public debt in the countries in our sample remains sustainable in the sense that the fiscal adjustment required to stabilise the debt is feasible. However, undertaking this adjustment will require a larger and/or more protracted fiscal effort than has been typical for most advanced countries and that is currently expected by the IMF. In the meantime, countries with large adjustment needs could be vulnerable to shifts in market sentiment.
Topic:
Economic Growth, Macroeconomics, Fiscal Policy, and Public Debt
Political Geography:
Global Focus

3135. The Western Balkan energy sector: between Russia, the European Union and the green transition

Author:
Nina Vujanović, Rouven Stubbe, and Maria Catarina Louro
Publication Date:
12-2025
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
To upgrade their energy sectors, Western Balkan countries should transition away from dependence on Russian energy, converge with the European Union through electricity market coupling and phase out coal. Significant strain characterises each of these transitions. Region-specific differences in each area are also pronounced: Serbia and Bosnia and Herzegovina still depend on Russian oil and gas, while Albania is the leader in the green transition, and Montenegro is relatively advanced in each of the three areas. Yet, all Western Balkan countries are behind on regulatory alignment with the EU, delaying market coupling that was initially planned for 2027. There are strong reasons to accelerate this process, given significant EU/Western Balkan energy integration already: up to 70 percent of electricity flows in the Western Balkans pass between EU countries, for example. Given the strategic role of the Western Balkans as a major electricity transit corridor for the EU, faster integration would also enhance system efficiency, provide security against Russian interference and bring the benefits of complementary electricity markets to both the EU and the Western Balkans. Meanwhile, the region’s green energy potential remains untapped and further investment is needed. Western Balkan countries should set goals on merging faster with the EU energy union, phasing out coal and benefitting from abundant solar and wind resources, in way that are conducive to their energy sector competitiveness and in line with the green transition.
Topic:
Industrial Policy, European Union, Geopolitics, Macroeconomics, Decarbonization, and Energy
Political Geography:
Europe

3136. How resilient is Russia’s economy after four years of war?

Author:
Marek Dabrowski
Publication Date:
12-2025
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
In 2022-2025 the Russian economy demonstrated resilience despite the increasing costs of the war in Ukraine and the extensive economic and financial sanctions imposed on Russia by the coalition of Western countries. Fiscal accounts, though under strain, have remained under control. However, after nearly four years of war, the associated fiscal and quasi-fiscal costs have grown significantly and started to challenge macroeconomic and financial stability. Inflation has been well above the Bank of Russia’s target. The high growth rates in 2023-2024, fuelled by war-related public spending and a corporate credit boom, have decelerated in 2025 due to capacity constraints. Nevertheless, the Russian government still has the fiscal capacity to continue the war in the short term. It has some fiscal reserves, can increase domestic borrowing and may seek to raise further non-hydrocarbon taxation. The long-term perspectives look much worse. Structural and institutional weaknesses, such as the adverse demographic trends, the continuous dependence on hydrocarbon production and exports and the poor business and investment climate will be magnified by the costs of the war and sanctions, increasing isolation from the West and entrenching an inward-oriented development strategy.
Topic:
Geopolitics, Economic Growth, Macroeconomics, Fiscal Policy, Public Debt, and Russia-Ukraine War
Political Geography:
Russia and Eurasia

3137. Steeled for Protectionism

Author:
Clark Packard and Alfredo Carrillo Obregon
Publication Date:
10-2025
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
ver the last 60 years, the federal government has showered the domestic steel industry with every conceivable form of protection from import competition, from tariffs, quotas, and trade remedies to voluntary export restraints, Buy American procurement preferences, and restrictions on trade and foreign investment under the guise of national security. These policies have further entrenched the steel industry as a protected constituency that wields significant influence over trade policy, which in turn has led to more—and increasingly complex—schemes for further shielding the industry from imports. As steel is an essential input for many products, from vehicles and appliances to construction materials and machinery, the unholy alliance between Washington and Big Steel has come at a high cost for steel-using firms in the United States, and therefore for Americans who consume final goods made with steel and who fund public infrastructure projects through their taxpayer dollars. Moreover, the federal government’s endeavors to protect the domestic steel industry have sowed political dysfunction both at home and abroad, with industry advocates cycling through the proverbial revolving door of Washington politics, and officials’ attempts to cater to Big Steel undermining international trade negotiations, relationships with long-standing trading partners, and even the functioning of the World Trade Organization. And yet for all the protection that the government has conferred to the industry and all its costs, the steel industry’s prospects show remarkably little improvement: Major producers are struggling to innovate and compete, output and capacity utilization have stagnated, employment continues its long-term decline, and prices are among the highest in the world. Altogether, the history of steel protectionism in the United States is yet another case study in the failures of protectionism to reinvigorate declining industries and the consequences of pursuing these policies.
Topic:
Economy, Tariffs, Trade, Protectionism, and Steel
Political Geography:
North America and United States of America

3138. Licensing Requirements Would Block Care and Justice for Sexual Assault Victims

Author:
Jeffrey A. Singer, Akiva Malamet, Spencer Pratt, and Michael F. Cannon
Publication Date:
10-2025
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
Sexual assault is a deeply traumatic experience. The emotional toll often includes feelings of shame, guilt, and fear, contributing to a sense of powerlessness and vulnerability. Survivors may grapple with post-traumatic stress disorder, anxiety, depression, and other mental health challenges. Sexual assault victims typically seek care at hospital emergency departments mere hours after the most traumatic event of their lives. Entrepreneurial nurses created the specialty of sexual assault nurse examiner (SANE) to provide high-quality, compassionate care for sexual assault victims and reliable evidence collection for prosecutors. These nurses have created voluntary, third-party educational and certifying organizations to develop and revise SANE professional standards. Research shows that sexual assault nurse examiners provide high-quality, compassionate care and that sexual assault prosecution rates rise after communities establish SANE programs. Yet SANEs are in short supply. In some states, regulations block competent nurses from examining sexual assault victims. SANE licensing, mandatory training, or certification requirements increase barriers to care for sexual assault victims, slow the SANE profession’s development, and routinely subvert the needs of sexual assault victims to those of the practitioners they regulate. Worse, state licensing authorities have repeatedly and knowingly upheld or reinstated the licenses of physicians who have sexually assaulted patients. Some then go on to assault other patients. Licensing is not the right model for protecting sexual assault victims. States should avoid creating barriers to nurses who wish to develop SANE certification programs or to specialize as SANEs. States that have already done so should remove those barriers.
Topic:
Sexual Violence, Public Policy, Licensing, and Nursing
Political Geography:
North America and United States of America

3139. Their Own Two Feet: How Europeans Can Lead on Conventional Deterrence in Europe

Author:
Benjamin Giltner
Publication Date:
10-2025
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
Fiscal constraints at home, China’s rise in the East, and America’s limited interests in Europe make reducing the US force presence in Europe an appealing concept for policymakers. Europe has economic and military advantages over Russia that make such action possible. As a narrow military analysis, this paper explains how a European-led NATO can deter Russia without US troops on the continent. A European-led NATO should adopt a defensive doctrine using a “defense-in-depth” force deployment. As part of a defense-in-depth deployment, European countries within NATO should eschew deep strikes into Russian territory, instead investing in and deploying light defenses in the Baltics and deploying their mechanized and armored capabilities throughout Germany and Poland. To successfully implement a defensive doctrine exercising defense-in-depth force deployment, the Europeans must spend more on defense and reduce tensions with Russia. The United States should begin withdrawing American troops from Europe for several reasons, including to induce Europe to implement such policies. This doctrine and force deployment would enable a European-led NATO to deter Russia while minimizing risks of escalation. They would also signal to Russia that it would be defeated on the battlefield should it attempt to conquer NATO territory. Although European forces likely would be incapable of fully protecting the Baltics, their lack of geographic depth makes them exceptionally difficult to defend regardless of force deployment and America’s involvement on the continent. Europe is wealthy and populous enough to carry out a defensive doctrine and defense-in-depth force deployment, and for it to do so would be less risky and costly than the status quo for the United States.
Topic:
Security, Defense Policy, NATO, and Armed Forces
Political Geography:
Europe and United States of America

3140. The $15 Trillion Emergency Spending Loophole

Author:
Dominik Lett
Publication Date:
09-2025
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
Congress has designated $12.5 trillion in spending for emergencies over the past 35 years, resulting in $2.5 trillion in additional interest costs. Poorly designed emergency spending rules allow Congress to evade spending limits and routinely designate non-emergency line items as emergencies, increasing wasteful and excessive spending. High deficits, an escalating federal debt, and the insolvency of major entitlement programs mean that Congress is facing several budgetary challenges that will only grow in importance. Congress cannot afford further abuse of emergency spending. It is time for Congress to rein in the emergency spending loophole. This paper presents comprehensive estimates of emergency spending and resulting interest costs, with data going back to 1991. According to my estimates, Congress designated 9 percent of federal budget authority as emergency spending during that time. Emergency spending is roughly equal to the amount that Congress has spent on Medicaid and veterans’ programs combined. Roughly half of the emergency spending since 1991 has been discretionary spending (federal programs that receive funding through annual appropriations), mostly in response to the Great Recession and COVID-19 pandemic, and for disaster relief and military operations. Mandatory spending, also called direct spending, accounts for the other half. Five Great Recession and pandemic-related laws alone account for 87 percent of mandatory emergency spending. The budgetary share of emergency spending has grown to 11 percent of total budget authority over the past decade. In this analysis, I provide several specific reforms that would reduce emergency spending, decrease abuse, and enhance oversight.
Topic:
Reform, Budget, Public Spending, and Congress
Political Geography:
North America and United States of America