Acknowledging that the French and Dutch no-votes were a huge blow to the Constitutional Treaty and that there is no plan for putting the Constitution into force, Richard E. Baldwin, Professor of International Economics at the Graduate Institute of International Studies in Geneva, asks in this paper: What is the EU’s next step? While conceding that the full answer to this question is unknowable at this point, he asserts that any answer must surely take into account the ‘trail to failure’ – the sequence of events that led up to the Constitution.

The accession stories of Bulgaria and Romania are an excellent illustration of the EU being caught unawares when making important (legal and political) commitments to two future members while taking in good faith the commitments pledged by the same members-to-be.

Following the amendments put forward by the European Parliament in February, a good compromise is in sight to move forward on the Commission’s proposal for a Services Directive, which is intended to serve as a cornerstone of the ailing Lisbon strategy to revive growth and jobs in the EU. In this new CEPS Policy Brief, Stefano Micossi, Director General of Assonime, reviews the Commission’s proposal and the Parliament’s position, against the background of the present situation without the directive.

In August 2005, President Saakashvili of Georgia and President Yushchenko of Ukraine met at Borjomi, Georgia, and decided to launch an initiative to promote democracy among a community of like-minded states of Central and Eastern Europe. This led to a meeting in Kyiv on 2 December 2005, of a wider group of countries of the Baltic-Black-Caspian Sea region, which adopted a declaration announcing the creation of a Community of Democratic Choice (CDC) as a governmental and non-governmental forum to promote the strengthening of democracy, human rights and civil society.

The Bush administration’s announcement of an ‘Advanced Energy Initiative’ poses challenges for the international climate change agenda as well as the US domestic energy policy agenda. The proposal is politically significant because it has altered the terms of reference in the domestic discourse about US energy and climate policy. However, while it proposes proportionately large increases in the funding levels of some programmes, it also suggests only marginal changes in several current programmes and proposes reductions or even the elimination of others.

Turkey, which officially started negotiations for EU membership in October 2005, currently has a lower per capita income than that of any of the EU-25 countries – about at the level of Romania and Macedonia. With the right institutions and policies, Willem Buiter, Professor of European Political Economy at the European Institute of the London School of Economics and Political Science, argues that Turkey could become a true tiger economy. But with the institutions and policies of the second half of the 20th century, it could end up a mangy cat instead of a tiger.

More than half way into the decade, it is clear that the EU will fall short of reaching its ambitious goal to make the EU the ‘most competitive economy’ by 2010. This contribution looks at an aspect that is often forgotten: namely the link between skills and employment, a central element in the Lisbon goal. It shows that the key problem of Europe in terms of employment is not so much the structure of its labour markets, but the insufficient skill levels of its population.

In this CEPS Policy Brief, Keith C. Smith, Senior Associate at the Center for Strategic and International Studies, Washington, D.C., argues that the recent ‘gas war’ between Ukraine and Russia does not reflect a policy change in Moscow, but rather represents a continuation of Russia’s use of its energy power to influence the foreign and security policies of its neighbours since 1990.

This policy brief provides an overview of the magnitude and importance of food aid as a development tool, and looks at whether the efficiency problem is intrinsic to food aid, or whether it arises from donor-country policies that tend to misuse food aid – in some cases for purposes for which it is demonstrably not effective – for example to support domestic farm prices, to promote commercial agricultural exports, to maintain a viable maritime industry or even to advance geo-strategic aims.

The EU and the US have found themselves supporting two polar views on which strategy is the most effective in achieving stabilisation of greenhouse (GHG) emissions: ‘market pull’ vs ‘technology push’. As an advocate of the latter, the US asserts that the principal emphasis should be on technology development, financed through typical public R&D programmes. In supporting the ‘market-pull’ approach, the EU argues that technological change is an incremental process emanating primarily from business and industry, induced by government incentives.

The debate on banking supervision over the last decade has largely focused on capital requirements and solvency of financial institutions. The interaction between solvency and liquidity has been much less debated. In this new Policy Brief, CEPS Chief Executive Karel Lannoo and Jean-Pierre Casey, CEPS Research Fellow, discuss the approach to be taken with regard to control of liquidity in the EU.

After almost seven years of hard work to produce a new substantive piece of legislation updating the current banking regulation for European credit institutions and investment firms – the Capital Requirements Directive (CRD) – it looks like its timely adoption is still uncertain. The main problem is the dissatisfaction of Parliament with its limited role in the Lamfalussy process in general and in the CRD in particular, which has led it to suspend ‘temporarily’ the comitology provisions of the CRD, casting doubt over the future ability to amend the legislation.

In this Policy Brief, Prof. Emad El-Din Shahin of the American University in Cairo assesses the prospects for the democratic reform movement in Egypt ahead of the parliamentary and presidential elections due to take place in the autumn. At stake are not only greater public freedoms demanded by the people, but also the prospect of a hereditary succession to the presidency if the regime governed by President Hosni Mubarak (and progressively his son Gamal) is successful in scuppering change.

In this new Policy Brief, CEPS Senior Research Fellow Michael Emerson asserts that the aftershocks of the EU’s failed referenda on the European Constitution will be most sharply felt – in an external sense – in the Black Sea region. He describes how Bulgaria, Romania, Turkey, Ukraine, Moldova and Georgia were the first hit by the tremors. But he traces its effects further than that, up the Danube basin to Belgrade, across the Caucasus to Armenia and Azerbaijan, and last but certainly not least up to Russia.