Publisher: CEPS Centre for European Policy Studies

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Democratisation in the European Neighbourhood

Democratisation in the European Neighbourhood

Author(s): / Language(s): English

Keywords: Democratisation; European Neighbourhood; process of democratisation; EU enlargement; Orange, Rose and Cedar Revolutions; European CIS states; Mediterranean Arab world; comprehensive critique;

This is the first state-of-the-art work on the process of democratisation in the wider European neighbourhood since the seminal events of 2004, with the EU's enlargement and the Orange, Rose and Cedar Revolutions beyond. Covering both the European CIS states and the Mediterranean Arab world, leading experts from these regions interpret the recent revolutions and prospects for further democratisation in the European neighbourhood. These analyses are accompanied by a comprehensive critique of the EU as promoter of democracy.

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Sinking to Zero: the role of carbon capture and negative emissions in EU climate policy

Sinking to Zero: the role of carbon capture and negative emissions in EU climate policy

Author(s): Milan Elkerbout,Julie Bryhn / Language(s): English

Keywords: European Union; Eu climate policy; carbon capture; negative emissions; long-term climate strategy; zero-emissions; greenhouse gas emissions; CO2; bioeconomy; material substitution;

The updated EU long-term climate strategy with its net-zero emissions objective and the IPCC’s Special Report on the 1.5°C target prompt a renewed strategic look at negative emissions and carbon capture. Reaching net-zero greenhouse gas emissions requires more carbon sinks and other approaches to remove CO2 from the atmosphere. Furthermore, it will also require carbon capture technology to deal with residual emissions in energy-intensive industry that are otherwise difficult to avoid. Carbon capture and negative emissions are necessary, not just to compensate for any residual emissions, but also in their own right to reach the objectives set out in the Paris Agreement. Conventional mitigation should get precedence over compensation through negative emissions, owing to its high costs and resource demand. Trade-offs between mitigation and various negative emissions technologies should be acknowledged. Some approaches have only limited potential. Others require significant amounts of low-carbon energy and infrastructure.

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Systemic rivalry and balancing interests: Chinese investment meets EU law on the Belt and Road

Systemic rivalry and balancing interests: Chinese investment meets EU law on the Belt and Road

Author(s): Steven Blockmans,Weinian Hu / Language(s): English

Keywords: European Union; EU law; globalisation; China; economic competitors; technological leadership; Belt and Road Initiative; transport; EU's connectivity strategy with Asia; Chinese market; economic cooperation;

For years, the EU has refrained from criticising China’s attempts to shape globalisation according to its own interests. Member states have allowed the Belt and Road Initiative (BRI) to tip the balance of power towards the companies that China owns or subsidises. Alarmed by recent Chinese takeovers in strategic industries, the EU has flagged up its intention to toughen rules on foreign investment flows into Europe. The brand-new EU Strategic Outlook on China adopts a multifaceted approach and defines the ‘Middle Kingdom’ simultaneously as a cooperation and negotiation partner with whom the Union needs to find a balance of interests, an “economic competitor” in pursuit of technological leadership, and a “systemic rival” promoting alternative models of governance. This paper takes stock of BRI investments in Europe and of member states’ concerns about economic and national security. It then examines the EU-wide legal bulwarks and regulatory responses that are intended to hedge against unfair practices. It concludes that, while a more realistic and assertive European approach toward Chinese market behaviour is welcome, the EU should take China up on its pledge to embolden the BRI with ‘soft connectivity’, i.e. a legal infrastructure, rather than risk mutual harm by adopting too protectionist a stance. This should benefit not just the EU and China but also the other ‘16+1’ countries along the central corridor of the BRI, which passes through the Caucasus, the Balkans and Eastern Europe – all in the spirit of the EU’s 2018 connectivity strategy with Asia.

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Leveraging funding for energy efficiency in buildings in South East Europe

Leveraging funding for energy efficiency in buildings in South East Europe

Author(s): Jorge Núñez Ferrer / Language(s): English

Keywords: Enegy efficiency; South Eastern Europe; energy efficiant buildings; energy efficiency renovation programmes; financial instruments for energy efficiency; legal framework; energy poverty; funding;

This paper addresses the possibility of creating financial instruments so that large scale energy efficiency renovation programmes can be substantially financed by the private sector. Aimed at decision-makers and those wishing to understand the issue, it avoids excessive technicalities. The paper presents some selected examples of financial instruments for energy efficiency that could represent possible blue prints for South East Europe. It concludes by proposing to develop variations of one of the simplest models to avoid ambitious, complex but ineffective instruments. A clear warning is given on the need for a careful ex-ante assessment of the legal framework, other barriers and the capacity of building associations to request loans on behalf of the owners. It also insists that business strategy development requires special attention.

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The Enduring Popularity of the Euro throughout the Crisis

The Enduring Popularity of the Euro throughout the Crisis

Author(s): Felix Roth,Lars Jonung,Felicitas Nowak-Lehmann / Language(s): English

Keywords: Euro support; Crisis; financial and sovereign debt crisis; European Central Bank; Public trust;

This paper analyses the evolution of public support for the euro from 1990 to 2011, using a popularity function approach, focusing on the most recent period of the financial and sovereign debt crisis. Exploring a huge database of close to half a million observations covering the 12 original euro area member countries, we find that the ongoing crisis has only marginally reduced citizens’ support for the euro – at least so far. This result is in stark contrast to the sharp fall in public trust in the European Central Bank. We conclude that the crisis has hardly dented popular support for the euro while the central bank supplying the single currency has lost sharply in public trust. Thus, the euro appears to have established acredibility of its own – separate from the institutional framework behind the euro.

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Do Germans support the euro?

Do Germans support the euro?

Author(s): Daniel Gros,Felix Roth / Language(s): English

Keywords: Euro support; Germany and German public; financial and sovereign debt crisis; Allensbach surveys;

This paper analyses public support for the euro in Germany. Drawing from the results of regular Eurobarometer surveys, it finds that the ongoing financial and sovereign debt crisis has reduced support for the euro among German citizens, but not dramatically so – at least not yet. In the 1990s, the German public was sceptical towards the euro. But since the introduction of euro bank notes and coins, a clear majority of citizens supports the euro –despite the financial and sovereign debt crisis. Moreover, on average, support for the euro isat a similar level in Germany as it is elsewhere in the euro area. This salient finding, however, appears to contradict the results of a survey conducted by the Allensbach Institute, an influential public opinion polling centre in Germany, which concludes that an overwhelming majority of Germans do not trust the euro any more. We suggest that this striking difference in findings could be due to three factors: a) the fact that the Allensbach Institute and Eurobarometer were measuring different concepts: trust in the euro and support for the euro, respectively; b) the Allensbach Institute’s results might be biased, given the scaling of their trust question and c) the fact that Eurobarometer frames its survey questions explicitly in a European context, where as the Allensbach surveys have a purely national context.

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Land Markets in the EU Candidate Countries of Croatia, Former Yugoslav Republic of Macedonia and Turkey

Land Markets in the EU Candidate Countries of Croatia, Former Yugoslav Republic of Macedonia and Turkey

Author(s): Štefan Bojnec / Language(s): English

Keywords: Land markets; land structures; land productivity; candidate countries, European Union;

The paper provides an overview and a comparison of land markets covering the three candidate countries for European Union membership: Croatia, the Former Yugoslav Republic (FYR) of Macedonia and Turkey. We analyse and compare agricultural land structures and factors driving land markets. The analyses are based on the available cros-ssection and time-series evidence on agricultural land structures and land productivity (yields). The land productivity measured by production per hectare of agricultural land varies between the three countries. Agricultural land structures are the result of historical evolutionin land markets and land-leasing developments with additional different institutional environments and agrarian and land reforms.

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The Penetration of Financial Instability in Agricultural Credit and Leveraging

The Penetration of Financial Instability in Agricultural Credit and Leveraging

Author(s): Anna-Maija Heikkilä,Sami Myyrä,Kyösti Pietola / Language(s): English

Keywords: Financial Instability; Agricultural credit; Leveraging; rural capital markets; EU; Interest rates for agricultural credits;

This paper describes the aggregate rural capital markets of the EU and the main differences between the markets of its member countries. The results of our study suggest that the agricultural credit markets are still quite segmented and the segments are country- rather than currency- or regionspecific. Financial instability in Europe is also penetrating the agricultural sector and the variation of interest rates for agricultural credit is increasing across countries. Perhaps the most dramatic signal of growing financial instability is that the financial leverage (gearing rate) of European farms rose in 2008 by almost 4 percentage points, from 14 to 18%. The 4 percentage-point annual rise was twice the 2 percentage-point rise observed during the economic recession in the late 1980s and early 1990s. The distribution of the financial leverage of agriculture across countries does not, however, reflect the distribution of country-specific risk premiums in the manner that they are observed in government bond yields. Therefore, in those countries that have the weakest financial situation in the public sector and in which the bond markets are encumbered with high country-specific risk premiums, the agricultural sector is not directly exposed to a very large risk of increasing interest rates, since it is not so highly leveraged. For example in Greek and Spanish agriculture, the financial leverage (gearing) rate is only 0.6% and 2.2% respectively, while the highest gearing rates are found elsewhere (in Denmark), reaching 50%.

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Productivity and Credit Constraints. Firm-Level Evidence from Propensity Score Matching

Productivity and Credit Constraints. Firm-Level Evidence from Propensity Score Matching

Author(s): Pavel Ciaian,Jan Falkowski,D’Artis Kancs,Ján Pokrivčák / Language(s): English

Keywords: Productivity; Credit constraints; farm access to credit; farm efficiency; capital investments;

Drawing on a unique, farm-level, panel dataset with 37,409 observations and employing a matching, estimator, this paper analyses how farm access to credit affects farm input allocation and farm efficiency in the Central and Eastern European transition countries.

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Do agricultural subsidies crowd out or stimulate rural credit institutions? The Case of CAP Payments

Do agricultural subsidies crowd out or stimulate rural credit institutions? The Case of CAP Payments

Author(s): Pavel Ciaian,Ján Pokrivčák,Katarina Szegenyova / Language(s): English

Keywords: Agricultural subsidies crowd; rural credit institutions; agricultural policy; farm bank loans;

In this paper we estimate the impact of subsidies from the EU’s common agricultural policy on farm bank loans. According to the theoretical results, if subsidies are paid at the beginning of the growing season they may reduce bank loans, where as if they are paid at the end of the season they increase bank loans, but these results are conditional on whether farms are credit constrained and on the relative cost of internal and external financing. In the empirical analysis, we use farm-level panel data from the Farm Accountancy Data Network to test the theoretical predictions for the period 1995–2007. We employ fixed-effects and generalised method of moment models to estimate the impact of subsidies on farm loans. The results suggest that subsidies influence farm loans and the effects tend tobe non-linear and indirect. The results also indicate that both coupled and decoupled subsidies stimulate long-term loans, but the long-term loans of large farms increase more than those of small farms, owing to decoupled subsidies. Furthermore, the results imply that short-term loans are affected only by decoupled subsidies, and they are altered by decoupled subsidies more for small farms than for large farms; however, when controlling for endogeneity, only the decoupled payments affect loans and the relationship is non-linear.

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Rural Labour Market Developments in the Former Yugoslav Republic of Macedonia

Rural Labour Market Developments in the Former Yugoslav Republic of Macedonia

Author(s): Štefan Bojnec,Verica Janeska / Language(s): English

Keywords: Rural Labour market development; FYR of Macedonia; human resources in Macedonia; emigration from villaegs to urban areas;

The significant changes in the quantitative and qualitative characteristics of human resources in rural Macedonia can be explained by the continued trend of emigration from villages tourban areas and abroad. The intensity of emigration has altered the demographic structure and reproductive base of the rural population, along with the income of rural households. The rural and agricultural labour market faces a mismatch with respect to the unfavourable age, education and spatial distribution of the total labour force. A reduction in the participation of women in the agricultural labour force is a new feature. The overall transformation is apparent in the income structure of rural households. An increase in the share of households with mixed income sources notably stems from households that receivere mittances and foreign currency funds from family members abroad.

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Agricultural and Rural Labour Markets in the EU Candidate Countries of Croatia, Former Yugoslav Republic of Macedonia and Turkey

Agricultural and Rural Labour Markets in the EU Candidate Countries of Croatia, Former Yugoslav Republic of Macedonia and Turkey

Author(s): Štefan Bojnec / Language(s): English

Keywords: Agricultural and Rural labour markets; EU candidate countries; Croatia; FYR of Macedonia; Turkey;

This paper provides an overview and comparison of labour markets in agricultural and rural areas inthe three candidate countries for the EU membership: Croatia, the Former Yugoslav Republic of Macedonia and Turkey. We analyse and compare the labour market structures and the factors drivingthem. The analyses are based on the available cross-section and time-series data on agricultural labour structures and living conditions in rural areas. Considerable differences are found among the candidate countries in the importance of the agricultural labour force, between rural and urban labour, and in poverty and living conditions in rural areas. Agricultural and rural labour market structures are the result of demographic and education processes, in addition to labour flows between agricultural and non-agricultural activities, from rural areas to urban ones and migration flows abroad. Declines in the agricultural labour force and rural population are fore seen for each of the candidate countries, but with significant variations between them.

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Farm-level Capital: Capital positions, structures, the dynamics of farm-level investments, capital accumulation and leverage positions

Farm-level Capital: Capital positions, structures, the dynamics of farm-level investments, capital accumulation and leverage positions

Author(s): Anna-Maija Heikkilä,Kyösti Pietola,Sami Myyrä / Language(s): English

Keywords: Farm-Level capital; capital positions; farm-level investments; capital structures; agricultural market;

This paper aims to describe and highlight the key issues of farm capital structures, the dynamics of investments and accumulation of farm capital, and the financial leverage and borrowing rates on farms in selected European countries. Data collected from the Farm Account Data Network (FADN) suggest that the European farming sector uses quite different farm business strategies, capabilities to generate capital revenues, and segmented agricultural loan market regimes. Such diverse business strategies have substantial, and perhaps more substantial than expected, implications for the financial leverage and performance of farms. As an illustration, the financial risks clearly increased in the Danish agricultural sector with loan rates following an upward sloping trend in 2006; the first sign of the forth coming financial crisis that may also severely hit highly leveraged agricultural firms.

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Agricultural and Rural Capital Markets in the EU Candidate Countries: Croatia, the Former Yugoslav Republic of Macedonia and Turkey

Agricultural and Rural Capital Markets in the EU Candidate Countries: Croatia, the Former Yugoslav Republic of Macedonia and Turkey

Author(s): Štefan Bojnec / Language(s): English

Keywords: Agricultural and Rural Capital Markets; Credit constraints; credit market imperfections; small-scale individual farms;

This paper analyses agricultural and rural capital factor markets in the three European Union candidate countries: Croatia, the Former Yugoslav Republic (FYR) of Macedonia and Turkey. Aggregate capital market indicators and their dynamics, and factors driving agricultural and rural capital markets are analysed and compared in these countries. In general, agricultural and rural capital markets show similarities with general capital market developments, but agricultural and rural capital markets are facing specific credit constraints related to agricultural assets and rural fixed asset specificities, which constrain their mortgages and collateral use. Credit market imperfections have limited access to the investment credits necessary for there structuring of small-scale individual farms. Government transfers are used to differing extents in the candidate countries, but generally tend to increase over time. Remittances and donor funds have also played an important role in agricultural and rural economy investments.

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Developments in the Agricultural and Rural Capital Market of the Former Yugoslav Republic of Macedonia

Developments in the Agricultural and Rural Capital Market of the Former Yugoslav Republic of Macedonia

Author(s): Štefan Bojnec,Biljana Angelova / Language(s): English

Keywords: Capital market; farm income, subsidies; loans; agricultural and rural development; Former Yugoslav Republic of Macedonia;

The undeveloped rural capital market in the Former Yugoslav Republic of Macedonia is constrained byan urban–rural development gap, with limited capacities for rural development and imperfections in the rural capital market. Among the most striking hindrances are the illegal status of a large share of agricultural buildings and other real estate in rural areas, particularly on the individual family farms that prevail in the country, and the insufficient knowledge and abilities of individual farmers in applying for credit. National, EU and other donor funds are being used to improve knowledge, skills and other human resources, and to address the illegal status of buildings and facilities. During the most recent years, government support for agricultural, rural and regional development has been introduced to promote good agricultural practices, production and economic activity in rural areas. The elimination of imperfections and improvements to the functioning of the capital market – making access to credit and funds easier, especially for small-scale family farms and for rural development –are seen as measures contributing to agriculture and more balanced rural and regional development.

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The Valuation of Agricultural Land and the Influence of Government Payments

The Valuation of Agricultural Land and the Influence of Government Payments

Author(s): Klaus Salhofer,Paul Feichtinger / Language(s): English

Keywords: Agricultural land; Influence of Government payments; land prices; land type; agri-environmental payments;

This study gives an overview of the theoretical foundations, empirical procedures and derived results of the literature identifying determinants of land prices. Special attention is given to the effects of different government support policies on land prices. Since almost all empirical studies on the determination of land prices refer either to the net present value method or the hedonic pricing approach as a theoretical basis, a short review of these models is provided. While the two approaches have different theoretical bases, their empirical implementation converges. Empirical studies use abroad range of variables to explain land values and we systematise those into six categories. In order to investigate the influence of different measures of government support on land prices, a metaregression analysis is carried out. Our results reveal a significantly higher rate of capitalisation for decoupled direct payments and a significantly lower rate of capitalisation for agri-environmental payments, as compared to the rest of government support. Furthermore, the results show that taking theoretically consistent land rents (returns to land) and including non-agricultural variables like urban pressure in the regression implies lower elasticities of capitalisation. In addition, we find a significant influence of the land type, the data type and estimation techniques on the capitalisation rate.

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№56 The EU’s Paradoxical Efforts at Tracking the Financing of Terrorism: From criticism to imitation of dataveillance

№56 The EU’s Paradoxical Efforts at Tracking the Financing of Terrorism: From criticism to imitation of dataveillance

Author(s): Anthony Amicelle / Language(s): English

Keywords: EU; Tracking the Financing of Terrorism; dataveillance; European terrorist finance tracking system;

In July 2011, the European Commission published a Communication aimed at setting out different options for establishing a European terrorist finance tracking system (TFTS). The Communication followed the adoption of the EU-US agreement on the US Terrorist Finance TrackingProgram (TFTP) in 2010. The agreement concluded various series of national, European and transatlantic negotiations after the disclosure through public media of the US TFTP in 2006. This paper takes stock of the wide range of controversies surrounding this security-focused programme with dataveillance capabilities. After stressing the impact of the US TFTP on international relations, the paper argues that the EU-US agreement primarily has the effect of shifting in formation-sharing practices from the justice/judicial/penal/criminal investigation framework into the security/intelligence/administrative/prevention context as the main rationale. The paper then questions the TFTP-related conception of mass intelligence through large-scale databases and transnational communication of bulk data in the name of targeted surveillance. Following an examination of the project creating an EU system equivalent to the TFTP, the paper emphasises the fundamental paradox of transatlantic security matters, in which European criticisms of American programmes tend to be ultimately translated into EU imitation of US dataveillance practices.

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№69 ‘Wrong number?’ The Use and Misuse of Asylum Data in the European Union

№69 ‘Wrong number?’ The Use and Misuse of Asylum Data in the European Union

Author(s): Minos Mouzourakis / Language(s): English

Keywords: Asylum Data; EU; The Common European Asylum System;

The Common European Asylum System (CEAS) is a policy area particularly evocative of the ‘politics of numbers’. The European Union has at its disposal a wide array of sources providing detailed information about its member states’ asylum systems’ capacities and pressures. This paper discusses thecontent of asylum data and the evolving interaction between its different sources, ranging from the United Nations High Commissioner for Refugees to the European Commission’s EUROSTAT and DGHOME, the European Asylum Support Office (EASO), FRONTEX, the European Migration Network (EMN) and national databases. However, the way in which such data are often misused, or even omitted,in political debate exerts a strong impact on the soundness of policy decisions in the CEAS.

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№74 The End of the Transitional Period for Police and Criminal Justice Measures Adopted before the Lisbon Treaty: Who monitors trust in the European Criminal Justice area?

№74 The End of the Transitional Period for Police and Criminal Justice Measures Adopted before the Lisbon Treaty: Who monitors trust in the European Criminal Justice area?

Author(s): Katharina Eisele,Sergio Carrera,Valsamis Mitsilegas / Language(s): English

Keywords: European Criminal Justice area; Transitional Period for Police and Criminal Justice; Lisbon Treaty;

This study examines the legal and political implications of the recent end of the transitional period for the measures in the fields of police and judicial cooperation in criminal matters, as set out in Protocol 36 to the EU Treaties. This Protocol limits some of the most far-reaching innovations introduced by the Treaty of Lisbon over EU cooperation on Justice and Home Affairs for a period of five years after the entry into force of the Treaty of Lisbon (until 1 December 2014), and provides the UK with special ‘opt out/opt-in’ possibilities. The study focuses on the meaning of the transitional period for the wider European Criminal Justice area. The most far-reaching change emerging from the end of this transition will be the expansion of the powers if scrutiny by the European Commission and Luxembourg Court of Justice over Member States’ implementation of EU criminal justice law. The possibility offered by Protocol 36 for the UK to opt out and opt back in to pre-Lisbon Treaty instruments poses serious challenges to a common EU area of justice by further institutionalising ‘over-flexible’ participation incriminal justice instruments.

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№76 Mapping Statistics on Loss of Nationality in the EU: A New Online Database

№76 Mapping Statistics on Loss of Nationality in the EU: A New Online Database

Author(s): Ngo Chun Luk,Maarten Peter Vink / Language(s): English

Keywords: Loss of Nationality in the EU; EU Member States; data collection and data interpretation;

Statistics can provide a useful perspective when assessing the practical relevance of varying rules and practices on the involuntary loss of nationality across EU Member States. Yet while much progress has been made in the EU in recent years with regard to the collection of comparable and reliable information on the acquisition of nationality, statistics on the loss of nationality are hard to find and, where available, difficult to interpret.In this comparative report, the authors explore the landscape of existing statistical data on loss of nationality in the European Union. The report identifies challenges to the existing methods of data collection and data interpretation and introduces an online statistical database, bringing together all existing statistical data on loss of nationality in the EU.

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