In the wake of the collapsed talks on a new EU budget for 2014-20, a new CEPS Commentary by Jorge Núñez Ferrer allows that there is a good chance that agreement will be reached before the summer but that the instrument will remain largely disconnected from the fundamental needs of the EU, foremost of which is the imperative to address imbalances in the eurozone.
The author is an Associate Research Fellow at CEPS.

This CEPS Commentary argues that the way in which the burden of adjustment to the imbalances in the eurozone is borne almost exclusively by the deficit countries in the periphery produces a deflationary bias in the region as a whole. Against the threat of double-dip recession, Paul De Grauwe asserts that the adjustment could be done differently and calls for implementation of a more symmetric macroeconomic policy that reduces the deflationary bias.

Paul De Grauwe is Professor at the London School of Economics and Associate Senior Fellow, CEPS.

This Commentary attempts to discern the distinguishing features between the present euro crisis and the financial crisis brought on in the US by the subprime lending disaster and the ensuing collapse of banks and other financial institutions in 2007-08.

Despite their surprising similarities – in size and their housing booms – Ireland and the American state of Nevada sharply parted company  when it came to who bore responsibility for bailing out their failed banks when the booms turned to bust. This latest Commentary by Daniel Gros vividly illustrates the importance of that difference and thus the shock-absorbing capacity of an integrated banking system and a banking union.

Daniel Gros is Director of CEPS.

Steven Blockmans characterises the award of the Nobel Peace Prize to the EU as “a marvellous honour and a much-needed boost" for an integration project that is suffering grave economic difficulties and considerable social unrest, but he regrets that the growing role of the EU to act as a peacemaker beyond its geographical borders was not acknowledged in the award announcement.

Steven Blockmans is Senior Research Fellow at CEPS and head of the EU Foreign, Security and Neighbourhood Policies research unit.

Citing evidence from around the world, including the recent Turkish-Greek reconciliation, Adam Balcer suggests in this CEPS Commentary that establishment of economic cooperation between the business communities of Cyprus and Turkey can facilitate a political rapprochement or at least can prevent a rise in tensions.

Adam Balcer is Programme Director at demosEUROPA Centre for European Strategy in Warsaw.

Relations between the European Union and Argentina have been under severe strain for several years now owing to a diplomatic dispute between the Argentinean government and the United Kingdom over the status of the Falkland Islands. This dispute was exacerbated by Argentina’s expropriation in April of the 51% stake held by the Spanish company Repsol in YPF, a former state-owned oil company, which had been privatized in the early 1990s. This action provoked a public outcry in Madrid and beyond, especially in the European Commission.

Arguing that the planned move to put the ECB in charge of banking supervision would be incomplete without a European Deposit Insurance and Resolution Authority (EDIRA), Daniel Gros and Dirk Schoenmaker spell out in a new CEPS Commentary some underlying principles to guide a gradual transition under which only future risks would be shared while past losses would remain at the national level. They show that ultimately such a new institution would serve as a genuine source of confidence in the European banking system.

A new and far-reaching round of sanctions imposed recently on Iran by the EU is starting to hurt the country, its economy and its citizens. Yet Iran’s leadership seems deaf to demands for international weapons inspectors to be allowed unhindered access to its nuclear enrichment facilities.

In this CEPS Commentary, Steven Blockmans notes that a prolonged period of instability lies ahead for Syria, with an on-going risk of spill-over effects affecting the entire region. The author argues that the EU’s plans for a post-Assad Syria should extend beyond the half-hearted responses to the monumental changes that have ripped through other parts of the Arab world.

By the end of the summer, the EU will launch new crisis management missions in the Horn of Africa, Niger and South Sudan. In this CEPS Commentary, Giovanni Faleg and Steven Blockmans question whether the new deployments will revive the EU’s persona as a global security actor. The authors point out that, without the backing of a comprehensive security strategy rationale, the EU’s re-engagement as a crisis manager that opts for small-scale operations will be seen as a continuation of its sleepwalking through a changing geostrategic landscape.

Eight years have passed since the EU launched its European Neighbourhood Policy, aimed at inducing its neighbours to the east to converge on modern European values and economic norms. In this Commentary, Michael Emerson reflects on the curious and circuitous turn of events in the region during this period. Michael Emerson is Senior Associate Research Fellow at CEPS.

Mobi format

Spain, needing a bailout for its banks, was granted a vague promise by EZ leaders for up to €100 billion. The details remain obscure, yet they matter enormously. This column argues that the so-called ‘subordination effect’ of fresh official lending could put Spain on the slippery road to ruin. It argues that if sovereign bonds must be bought, this should be done in the secondary market which, would be on an equal footing with private investors and thus avoid the subordination trap.

Daniel Gros is Director of CEPS.

In this new CEPS Commentary, Jacopo Carmassi, Carmine Di Noia and Stefano Micossi present a rationale and detailed outline for the creation of a banking union in Europe.