In their assessment of the state of the Eastern Partnership, as the Polish Presidency of the EU Council drew to a close at the end of 2011, two Russian policy specialists describe the initiative as an experimental EU project that, as demonstrated by other similar initiatives launched by the EU (Northern Dimension and the Barcelona Process), will most likely undergo serious institutional transmutation. For a variety of reasons, however, they found that none of the major actors was either willing or capable of making radical moves at this time.

In his assessment of the recent agreements struck during the COP 17 negotiations in Durban, November 29th to December 9th, Andrei Marcu concludes in this new CEPS Commentary that global climate change is approaching a new crossroads.

Even if the best possible agreement is struck by the European Council meeting in Brussels December 7th-8th, the crisis will not suddenly be over. But this Commentary suggests a formula whereby it could at least be contained, thus giving countries such as Italy or Spain the time they need to show that they can get their deficits under control and turn their economies around.

Daniel Gros is Director of the Centre for European Policy Studies, Brussels.

This Commentary surveys the latest round of stress tests administered to EU banks by the European Banking Authority (EBA) and finds their exclusive focus on a single measure of capital, the Tier 1 capital ratio of Basel III, short-sighted. While the first two stress tests underestimated the capital needs in the European banking system, the third test risks overestimating the picture in some cases.

CEPS Senior Fellow Paul De Grauwe expresses astonishment in this new Commentary at the continued insistence in both Brussels and Frankfurt on budgetary austerity as the necessary and sufficient response to stop the government debt crisis in the eurozone. In his view, the austerity programmes should be softened and spread over a longer period of time, allowing the automatic stabilisers in the national budgets to prevent the economies from spiralling downwards.

This contribution by CEPS Director Daniel Gros lays the blame for Italy’s poor growth, which presently poses an existential threat to the entire eurozone, squarely on the country’s abysmal record on such governance factors as corruption and the rule of law. Reversing this political decline will take years of national commitment – of which he sees little sign.

In his latest Commentary, Michael Emerson surveys the dramatic events in this autumn’s political landscape in the European neighbourhood and finds the most astonishing feature is the contradictory trend between the East’s slide backwards towards authoritarianism, while the Arab world proceeds with its anti-authoritarian revolution.

Michael Emerson is Senior Associate Research Fellow at CEPS.

Unlike the banking crisis of 2008; when governments had significantly lower debt burdens, governments today cannot recapitalize banks without triggering downgrades and renewed fears of sovereign default. In order to stop this downward spiral in the eurozone, a credible floor has to be put in place on the prices of government bonds. This CEPS Commentary argues that the European Central Bank is the only institution capable of imposing such a floor and breaking this vicious circle.

In this Commentary, Piotr Maciej Kaczyński looks at seemingly different recent political developments in Poland and Slovakia, but draws a common lesson: any new party entering the political scene needs some time to consolidate internally before it enters the government. Both the Slovak and the Czech governments have suffered recent instability due to their political backing by newly emerging actors. He warns that Poland should not make the same mistake.
Piotr Maciej Kaczyński is a Research Fellow at CEPS.
 

The European Union should move quickly to enact an American-style ‘TARP’ in the eurozone to strengthen the financial sector and maintain lending, argues CEPS CEO Karel Lannoo.

In all likelihood, the European Commission’s proposed tax on financial services, the financial transaction tax (FTT), will raise sizeable tax revenues, which explains its political appeal in the current context. However, the tax fails to address the key factors that contributed to the global financial crisis. In the absence of global or even EU-wide cooperation, many of the transactions subject to a tax will relocate to non-cooperating countries, thereby reducing revenue prospects and the effectiveness of supervision.

In light of the continued difficulties experienced by the Greek government to implement the promises it gave to its creditors and convince its own population of the need for further rounds of tough reforms in combination with investors’ doubts that the country will ever be able to grow out of its public debt, this CEPS Commentary reiterates the authors’ earlier proposal to take advantage of the low prices of Greek debt to implement a market-based approach to debt reduction.
Daniel Gros is Director of CEPS. Thomas Mayer is Chief Economist of Deutsche Bank.

Under extreme pressure from the financial markets and from Germany, member countries of the eurozone feel obliged to introduce balanced budget clauses into their constitutions. In this new Commentary, CEPS Senior Associate Research Fellow Paul De Grauwe explains why the balanced budget rule is a bad idea.
 

In his latest Commentary, Karel Lannoo expresses frustration over the inconsistency between the latest Eurobarometer survey indicating is a clear indication of public support for EU institutions to more aggressively take the lead in resolving the economic crisis and the timidity of those institutions, with the possible exception of the ECB, to do so.