Annual Report 2015

CENTRE FOR EUROPEAN REFORM

12074 CER annual report cover for Web Solid blue and White 2015 GB.indd 2 08/02/2016 15:19 THE CER IN DECEMBER 2015 About the CER FROM LEFT TO RIGHT, TOP TO BOTTOM: Daniel Crewes, The Centre for European Reform is a think-tank devoted to making the European Union work Ian Bond, better and strengthening its role in the world. The CER is pro-European but not uncritical. Christian Odendahl, We regard European integration as largely benefi cial but recognise that in many respects Rem Korteweg, the Union does not work well. We also think that the EU should take on more responsibilities Simon Tilford, globally, on issues ranging from climate change to security. The CER aims to promote an open, Agata Gostyńska- outward-looking and eff ective European Union. Jakubowska, Sophia Besch, Through our meetings, seminars and conferences, we bring together people from the worlds Anna Yorke, of politics and business, as well as other opinion-formers. Most of our events are by invitation Kate Mullineux, only and off -the-record, to ensure a high level of debate. Jordan Orsler, Camino Mortera- The conclusions of our research and seminars are refl ected in our publications, as well as Martinez , in the private papers and briefi ngs that senior offi cials, ministers and commissioners ask us John Springford, to provide. Charles Grant, Sophie Horsford. The CER is an independent, private, not-for-profi t organisation. We are not affi liated to any government, political party or European institution. Our work is funded mainly by donations from the private sector.

The CER’s work programme is centred on eight themes:

 Britain and the EU  Foreign policy and defence  Macroeconomics and the euro  The single market and trade  Energy and climate  China and Russia  EU institutions and treaties  Justice and home aff airs

12074 CER annual_report2015 TEXT GB.indd 1 11/02/2016 13:06 The geopolitical signifi cance of the EU by Charles Grant

ABOVE: When the Centre for European Reform was conceived, 20 years ago, Lord Hill the EU was an almost unremitting success story – about enlarging the Annual dinner, club, building a single currency and attempting to forge greater political London unity, including in the fi eld of foreign policy. Not only Europe but also the world as a whole was moving forwards, towards greater prosperity, more democracy and human rights, and increased inter-dependency.

The optimism continued into the middle dominated by former imperial states that are of the last decade. When in 2003 the EU reluctant to see emerging powers shape the drew up its fi rst ever ‘security strategy’, the global agenda. Narrowly interpreted, it could opening sentences proclaimed: “Europe has be taken to exclude democracies far from the never been so prosperous, so secure nor so North Atlantic, such as Australia or Japan. But the free. The violence of the fi rst half of the 20th concept remains valuable. The Western countries century has given way to a period of peace and and their allies are committed to democracy, stability unprecedented in European history. liberal values and the rule of law, at home and in The creation of the European Union has been the wider world. The fact that parts of the West central to this development.” At that time from time to time fail to uphold these ideals countries around the EU were fairly stable and (for example, by invading Iraq in 2003) does not the euro seemed to be a successful venture. make them less important. When the European Union, an important pillar of the West, is fragile, But over the past ten years the optimism has so is the rules-based global order. dissipated. The problem is not just that the EU is in diffi culties, but the West as a whole. ‘The West’ The world looks a lot uglier than it did when the is an unfashionable term and may be seen as a EU drew up that security strategy. The West has Cold War concept: to some, it implies a world suff ered several reverses since then. The messy

12074 CER annual_report2015 TEXT GB.indd 2 11/02/2016 13:06 ANNUAL REPORT 2015 February 2016 3 [email protected] | WWW.CER.ORG.UK consequences of the invasions of Afghanistan support the liberal order has strengthened and Iraq tarnished the reputations of the US the hand of those who argue that the current and its close allies. So did the fi nancial crisis of Western model of development, involving 2008, which encouraged hostility to American- pluralism and human rights, is outmoded. led globalisation. Then the failure of the Arab Spring from 2011 onwards led many to conclude that the Middle East was not ready for Western “Moscow, like Beijing, thinks that large countries political values. are entitled to establish spheres of infl uence in Meanwhile China’s growth as an economic their vicinity.” and military power has appeared inexorable (notwithstanding the recent economic downturn). It has become more politically The presidency of Barack Obama, elected in repressive at home and more assertive in its 2008, has not done a great deal to help the West. neighbourhood. China deploys its economic For understandable reasons, he reacted against muscle to ensure that governments like Britain’s the failed interventions of his predecessor by temper their criticism of its domestic politics and making clear that he wanted minimal military refuse to meet the Dalai Lama. entanglements overseas. He has done little to promote democracy and human rights through Russia’s economy boomed when the oil price US foreign policy or military intervention. was high (peaking at $140 a barrel in 2009) His patient pragmatism has delivered real and has slumped since the price fell in 2014 (at achievements, such as détente with Cuba and the the end of 2015 it was below $40). But Russia’s deal with Iran to limit its nuclear programme. But military modernisation continues apace. Since his failure to support the moderate opposition 2008 Russia has sent armies into Georgia and in the early years of the Syrian civil war – and his Ukraine. Some of its top military strategists talk refusal to punish President Bashar al-Assad for in a relaxed way about using tactical nuclear crossing the red line of using chemical weapons weapons and appear to regard them as merely – reinforced the perception in Moscow, Beijing large conventional weapons. and many Arab capitals that Obama was a weak president who could be pushed around. The government in Moscow, like that in Beijing, thinks that large countries are entitled to So the last ten years have not been good for establish spheres of infl uence in their vicinity, the West. The problems of the EU have only meaning that neighbours should neither criticise accentuated its diffi culties. The fi nancial crisis them nor have independent foreign policies. To revealed major fl aws in the construction of many Russians it is obvious that the annexation the euro. Since then the eurozone’s leaders of Crimea is justifi ed by their country’s size, have taken important steps forwards, such as power and historical ties with the peninsula, creating a bail-out fund and parts of a banking whatever international law says. Similarly, many union; but they have erred in over-emphasising Chinese view their assertion of sovereignty over austerity, thereby damaging growth and islets in the South China Sea as superior to any increasing the burden – in some countries – of ruling by international courts. Several of Russia’s debt. Eurozone economic output remains below and China’s neighbours are, unsurprisingly, the level of 2008. scared of them. The recent refugee crisis, like the euro’s A number of key emerging powers, such as diffi culties, has made the EU look reactive, Brazil, India and South Africa, though democratic poorly-led and acrimonious. Over a million at home, make a point of not supporting refugees and illegal migrants entered the democratic causes internationally. They have Schengen area of passport-free travel last year. tended to follow strongly ‘realist’ foreign policies Several governments have imposed temporary – for example by not backing Aung San Suu Kyi border controls, in an eff ort to stem fl ows of when she was imprisoned in Burma. They have refugees. By the end of 2015 it was clear that avoided criticising Russia’s annexation of Crimea Schengen would not endure without drastic, or its military adventures in the Donbass. Their sovereignty-eroding reforms. Most important, unwillingness to line up alongside Western its external border needs strengthening, and powers that not long ago ruled or exploited not only with more eff ective physical barriers. them is perhaps understandable, while the anti- The several EU databases that cover criminal American feelings that infl uence some of these records, fi nger prints of asylum-seekers and visa countries’ elites are just as evident in certain information are not currently connected. Border European social-democratic parties. Nevertheless offi cials and police forces cannot easily access the reluctance of many emerging powers to either these databases or alerts on suspected

12074 CER annual_report2015 TEXT GB.indd 3 11/02/2016 13:06 terrorists – which is why some of those involved its ability to infl uence countries there. The in the Paris attacks on November 13th (who were slowing of the EU’s geographical expansion all EU citizens) could travel from Syria into the has reduced its leverage in Eastern Europe Schengen area without being detained. and the Balkans. Given that membership had risen from 15 to 28 countries between 2004 The EU needs to speed up the creation of and 2013, and the unappealing character of reception centres near the Schengen frontier, potential members such as Serbia, Albania, where asylum applications can be processed. Kosovo, Macedonia, Moldova and Ukraine, Those rejected need to be sent home swiftly, this slow-down was inevitable. And the EU's to deter others from making the journey. A fi tful engagement and ambiguous goals in the scheme for sharing out bona fi de asylum-seekers, southern neighbourhood have contributed to though unpopular in some capitals, is essential; the instability affl icting the Arab world. otherwise most of them will end up in Sweden and Germany. Given all these problems, it is not surprising that defending the EU has become an unfashionable The Union is a beacon of Western values – cause, nor that celebrated historians have started “ to draw on historical analogies to predict the democratic government, the rule of law and market Union’s demise. Brendan Simms and Timothy economics. Less wrote in the New Statesman in November ” 2015 that, just as Austria-Hungary, the USSR and Yugoslavia had disintegrated, so the EU, “another However, EU leaders must also do what they attempt to create a supranational entity” was can to tackle the root causes of the refugee likely to go the same way. Niall Ferguson wrote fl ows. Peace in Libya would help; reconciliation in the Sunday Times in the same month that, “like between the country’s two governments the Roman Empire, Europe has let its defences seemed possible by the end of 2015. Even more crumble….As Gibbon saw, convinced monotheists important would be a cease-fi re in Syria, which pose a grave threat to a secular empire.” despite a modest US-Russian rapprochement in late 2015 remains a distant prospect. Chancellor Although the EU is not on the brink of Angela Merkel has been right to push the EU disintegration, its weakness and unpopularity into seeking a bargain of realpolitik with Turkey, matter for all those who care about the West, though it could easily unravel: President Recep its values and its contribution to global order. Tayyip Erdoğan has promised to clamp down on An eff ective EU is an essential component of migrant fl ows in return for the EU giving money a strong West. The Union has brought peace and visa-free access, as well as taking refugees and stability to its own members and much from Turkish camps and resuming accession talks. of the European continent. It is a beacon of Western values – democratic government, the By late 2015 and early 2016, EU leaders were rule of law and market economics – and does moving ahead with several of the measures and its best to make its neighbours respect those policies required to save Schengen. For example, values, sometimes successfully, sometimes not. they agreed to create a new border force and As Robert Cooper, a former adviser to High coast guard, to strengthen Schengen’s external Representatives Javier Solana and Catherine border. The European Parliament, which had been Ashton, has said: “The EU is a muddled blocking links between databases on grounds of and messy organisation but is in essence a privacy, became more co-operative. community of law, and its key mission is to spread the rule of law.” The EU may rise to the challenge and demonstrate that it is fl exible enough to The EU can act alone or alongside the US, often act swiftly in response to the refugee crisis. tempering the unilateralist instincts of the But there is a real risk that, as with the euro’s Americans. Indeed, without the EU, the West travails, EU leaders will do just enough to stop would be a much more American concept – with Schengen falling apart, but not enough to make key satellites like Britain, France, Germany and it successful and confi dence-inspiring. It is also Japan following in the Americans’ wake – than it possible that Schengen will not endure in its is today. current form, and that the Schengen area may shrink. Both the euro and refugee crises have The Europeans are strong believers in global already done much to nourish anti-EU populism governance, another unfashionable but across large parts of Europe. important concept. They understand that without eff ective international institutions and The EU’s failure to put suffi cient energy and rules, strong countries can bully weak ones. resources into its neighbourhood has weakened Given the strength of the US, it is not surprising

12074 CER annual_report2015 TEXT GB.indd 4 11/02/2016 13:06 ANNUAL REPORT 2015 February 2016 5 [email protected] | WWW.CER.ORG.UK

ABOVE: that the Americans are often lukewarm in their and institutions? Strong, emerging powers are (L to R) Charles commitment to global governance; they do not less likely to frighten their neighbours if they are Grant, Douglas like to be constrained. constrained by institutions of the sort that did not Alexander and exist in Europe in 1914. The EU gets this, and the Steven Erlanger It is the Europeans who play a pre-eminent role US sometimes does – for example both agree that in the United Nations, the international fi nancial the lack of eff ective regional institutions in East Breakfast institutions and the World Trade Organisation. Asia is worrying. So long as the EU exists, it will on ’Britain It is the US that is sometimes slack in paying its beat the drum for global governance and implore and Europe’, UN dues, and unwilling to ratify key international the Americans to be more respectful of it. London conventions; and that delayed for fi ve years – until December 2015 – an IMF reform that will The EU is also important for many traditional fi nally allow China’s voting power to surpass that foreign policy issues. In this domain the EU works of Belgium. through unanimity so can act only when all its members agree. But sometimes it does act, Ever since the 1990s, the EU has pioneered and with success. Probably its best-ever foreign global eff orts to limit carbon emissions, and it policy was to welcome the former Communist played a key role in crafting the Paris accord in countries of Central and Eastern Europe. Eleven December 2015; the US, China and India have of these countries have now joined the EU, often dragged their feet on eff orts to tackle having to jump through a whole series of hoops climate change. The EU and its member-states – on media freedom, independent judiciaries, have taken the lead in forging a host of arms market economics and so on – before being control agreements, but the US (like Russia allowed in. Even hard-line British eurosceptics and China) has boycotted those on land mines like Michael Gove and Liam Fox have admitted and cluster munitions. The US continues to that the EU has played a positive role in fostering spurn the International Criminal Court (like democracy in Central Europe. Russia and China) and has not ratifi ed either the Comprehensive Test Ban Treaty or the UN Of course, there is sometimes backsliding. Convention on the Law of the Sea. The performance of Viktor Orbán’s Fidesz government in Hungary has been problematic. Cynics may see global governance as high- But pressure from the European Commission minded hot air, with little connection to the forced him to back-pedal on measures that forces shaping the real world. But it matters. A endangered the independence of the media lawless world is inherently dangerous, especially regulator, the central bank and the judiciary when, as is currently the case, so much is in fl ux. (though the Commission should have been How can governments manage international much tougher). By the end of 2015 the election fi nancial markets, global trade, climate change or of the Law and Justice government had raised the threat of terrorism without international rules similar questions in Poland.

12074 CER annual_report2015 TEXT GB.indd 5 11/02/2016 13:06 One should not pretend that the EU is always a requires years of Congressional deliberation). useful or eff ective diplomatic actor. For example, The generals took the bargain. The EU has it has consistently failed to contribute much of subsequently funded peace talks between value to the Middle East peace process, partly the government and ethnic rebel groups, as because its own members disagree on how well as election monitors, and trained the to deal with Israel and Palestine. Nevertheless Burmese police. many people are unaware of the crucial and positive role that the EU has played in resolving Ukraine off ers a fi nal example. Given the horrifi c some major diplomatic conundrums in recent fi ghting in the Donbass over the past two years, years. Take fi ve examples. it is easy to forget that the uprising in Kyiv’s Maidan was triggered by then President Viktor Yanukovych rejecting an EU trade agreement. “The EU's anti-piracy naval mission off the coast The EU responded to Russia’s actions in Crimea of Somalia has helped to bring about a sharp fall in and the Donbass with sanctions, some of attacks on shipping. which make it hard for Russian fi rms to raise ” capital in Western markets. Chancellor Angela Merkel cajoled several reluctant EU partners First, the Balkans. In 2013 the then EU High to back sanctions because Germany – despite Representative, Catherine Ashton, brokered a having friendly ties with Russia and important deal between Serbia and Kosovo that settled economic interests there – was outraged by their worst disagreements and allowed both its violation of international law. The falling oil to move closer to the EU. The EU’s ‘rule of price hurt Russia even more than the sanctions, law’ mission in Kosovo, though not without but President Vladimir Putin appears keen to problems, has improved its judicial system, get them lifted, which may explain why the police force and customs service. Meanwhile Donbass became quieter in the autumn of 2015. EU police trainers and peacekeepers have been making life safer for Bosnians. The EU matters for internal security, too. Most Britons are scarcely aware of the EU’s work in A second example is Somalia. The EU’s anti- ‘justice and home aff airs’. The refugee crisis and piracy naval mission off the coast, run by British the Paris attacks are spurring greater headquarters, has helped to bring about a sharp co-operation on policing and counter-terrorism. fall in attacks on shipping. The EU has also paid In this area Britain has a special position, for the African Union peacekeeping force that since it may opt in to only those EU measures has restored stability to Mogadishu; trained that it likes. 5,000 local troops and police; and boosted the capacity of Somalia’s and its neighbours’ naval Nobody would call Britain’s Home Secretary, forces and courts (so that pirates can be tried). Theresa May, an EU-enthusiast. But in 2014 she decided, to her credit, to maintain Iran’s nuclear programme provides a third case. Britain’s involvement in the most important In 2003, the British, French and German foreign parts of justice and home aff airs, when many ministers, plus Solana, started a diplomatic Conservatives had urged her to pull out of eff ort to limit the programme. Eventually the everything. Thus Britain is still part of Europol, Americans, Russians and Chinese joined the the police co-operation offi ce, which has an negotiations. After 12 years of on-and-off talks, impressive track record of breaking up pan- Iran fi nally decided to go for a deal because of European criminal networks, including those UN, US and EU sanctions – and in particular, that abuse children, but until now has played those of the Europeans that excluded it from the little role in counter-terrorism. Britain will SWIFT bank clearing system and hurt the Iranian remain involved in several of the EU’s criminal oil industry. Iran’s leaders trusted Solana and his databases. It will also stay in the European Arrest successor, Catherine Ashton, allowing them to Warrant, which allows suspected terrorists and play a pivotal role. criminals to be extradited speedily from other EU countries, as happened in the case of Hussain A fourth example is Burma, where EU sanctions Osman, who fl ed to Italy just after the July 2005 discouraged foreign companies from investing. London tube attacks. In 2012, when the generals showed signs of wanting to reform, the EU told them that So although most Britons view the EU as a if Aung San Suu Kyi’s National League for mainly economic enterprise, they should not Democracy were allowed to contest elections, forget its role in making the European continent and political prisoners were freed, the sanctions more peaceful and secure. would be lifted (the US could not make a comparable off er since removing its sanctions

12074 CER annual_report2015 TEXT GB.indd 6 11/02/2016 13:06 ANNUAL REPORT 2015 February 2016 7 [email protected] | WWW.CER.ORG.UK

ABOVE: The impact of Brexit on the EU Joschka Fischer Many words have been devoted to the impact strength of the German economy; the skills and Keynote of Brexit on the UK, but little has been written experience of Angela Merkel, which have given speaker at about its impact on the EU itself, or indeed on her great sway with other EU governments; the CER’s 17th the wider world. The departure of the UK would the relative weakness of France; the waning birthday party, undoubtedly weaken the EU, its global standing infl uence of the European Commission; and the London would suff er. Brexit would energise eurosceptics unwillingness of the British government to play across the continent. a leading role in Europe. This situation is good for neither Germany nor the rest of EU. A British When it comes to economic policy, the British departure would accentuate the problem of are the biggest champions of extending the German hegemony, creating all sorts of tensions single market, negotiating trade agreements and insecurities in Berlin and other capitals. and cutting red tape. Without the British, these causes would suff er. So would co-operation In Europe, not many political leaders appear on justice and home aff airs, where, despite to have given much thought to the strategic their opt-outs, the British have been extremely consequences of Brexit. One former leader who infl uential – for example in leading co-operation does think strategically is Joschka Fischer, who on counter-terrorism, and in providing the spent seven years as German foreign minister. current head of Europol. Speaking at our 17th birthday party – hosted by the Polish ambassador in June – he argued that The EU’s defence policy has been unspectacular a British departure would destabilise the EU, but useful since Tony Blair and Jacques Chirac leaving it weaker and more inward-looking. invented it in 1998: it has run 32 peacekeeping, rule of law and humanitarian missions on three In the US, senior offi cials and strategists tend to continents. The EU would lack credibility in understand these issues more clearly than do defence without the participation of one of the many Europeans. They see the EU’s crucial role in EU’s two serious military powers (France being strengthening the West against those who would the other). EU foreign policy would also carry undermine it. They also worry a lot about the much less weight, since Britain has contributed prospect of Brexit. It is true that in recent years a global perspective and real expertise on some Germany has become the US’s chief interlocutor key issues, including the fi ve mentioned above. on economic issues, and France on many security problems. But US offi cials know that the British And then there is the German question. For the help continental Europeans and Americans to fi rst time in the history of the EU, one country understand each other better; and that an EU is preponderant. Germany’s power has grown minus Britain would be economically weaker as over the past fi ve years, because of the relative well as less infl uential strategically. They see that

12074 CER annual_report2015 TEXT GB.indd 7 11/02/2016 13:06 the world is an increasingly dangerous place, and tackle the many challenges to Western interests they want a strong EU – with Britain in it – to help and values.

The CER’s work on Brexit The election of a majority Conservative Immediately after the general election we government on May 7th made it certain that analysed the results at a roundtable with the Britain would hold an in-or-out referendum on Financial Times’ Philip Stephens and the Wall Street EU membership before the end of 2017. Opinion Journal’s Simon Nixon. Henceforth there were two pollsters had failed to predict that election main strands to our work on Britain and the EU: result; before the election, it seemed plausible to fi rst, the Conservatives’ internal debate on Europe, imagine that there would not be a referendum and how it would infl uence government policy; during the 2015-20 Parliament. and second, the particular demands that David Cameron’s government was preparing to make, Inevitably, the election changed the character of and the responses of Britain’s partners. our work on the UK’s relationship with Europe. Beforehand, we focused on possible reforms In October, at the Conservative Party Conference that a future British government – Labour or in Manchester, we organised a fringe event Conservative – might wish to achieve. Thus at a with the eurosceptic Business for Britain (BfB) public panel that we organised with University and the pro-EU Business for New Europe College London in January, Labour MEP Richard (BNE) on ‘In or Out: What does Britain want Corbett, several academics and CER researchers from the EU?’ Conservatives of all views were discussed possible reforms. The following month, represented on the panel: David Lidington MP, then shadow foreign secretary Douglas Alexander the Europe minister; Gerald Howarth MP, an arch- outlined Labour’s priorities at a breakfast in eurosceptic and former defence minister; and London. In April we launched a series of events Matthew Elliott, the chief executive of Business with King's College London and the Financial for Britain. Goldman Sachs’ Michelle Pingera Times with a panel on EU reform that included and BNE’s Roland Rudd also spoke. Such was Andrew Bagnall from the Confederation of the interest in this lively event that we had to British Industry and the FT’s George Parker. In turn away several hundred people at the door. the same month Jonathan Hill, the new British We ran a similar panel at Labour’s conference commissioner, came to the CER’s fi rst ever annual in Brighton in September, with the pro-EU Pat dinner, hosted by NM Rothschild, and spoke about McFadden MP and Chuka Umunna MP alongside the planned capital markets union as well as the eurosceptic John Mills. broader questions on EU-UK relations. In December, a few days before the pivotal European Council which discussed the UK’s “The US wants a strong EU – with Britain in it – to demands for reform, we organised a panel on help tackle the many challenges to Western interests ‘What EU reforms should Cameron achieve, and values. in order for the Conservatives to support EU ” membership?’ At the eurosceptic end of the panel we had Liam Fox, the former defence In this pre-election period we published secretary; Jesse Norman, chair of the culture, two policy briefs on the economics of Brexit. media and sport select committee, sat on the One was by Philip Whyte, our former chief fence; Dominic Grieve was critical of the EU economist, who lost his battle with cancer in but on balance in favour of membership; and April. We revised and updated his 2012 ‘Do Flick Drummond was an unabashed europhile. the UK’s European ties damage its prosperity?’ Radosław Sikorski, the former Polish foreign This argues convincingly that main constraints minister responded to the MPs. The debate on Britain’s economic growth, such as over- strayed beyond the usual economic arguments stringent planning laws, inadequate skills and towards national security: while Fox argued that poor infrastructure, have nothing to do with the the EU was undermining NATO and transatlantic EU. Also in April we published John Springford’s relations, Sikorski countered that most serious ‘Disunited Kingdom: Why Brexit endangers Americans wanted the EU to be more cohesive Britain’s poorer regions’. He demonstrated that on defence. He also argued that Brexit would the regions which would suff er most from negate 500 years of history, during which Britain leaving the EU are the poorest ones (notably had engaged on the continent in order to the North East and the Midlands), because they prevent one power dominating it. are particularly dependent on manufacturing exports. Ironically, these regions are also among Soon after the general election, speaking at a the most eurosceptic. roundtable on Germany's role in Europe, Joschka

12074 CER annual_report2015 TEXT GB.indd 8 11/02/2016 13:06 ANNUAL REPORT 2015 February 2016 9 [email protected] | WWW.CER.ORG.UK

Fischer warned that "Germany wants to keep the to explain, while those for Out are simple, easy ABOVE: UK, but not at the price of our relationship with to explain and emotional. (L to R) Flick France or the EU's fundamental principles." Drummond, We spent the summer and autumn researching Dominic Grieve, As the negotiations between Cameron’s what the other 27 governments thought about Charles Grant, government and its partners evolved – often Cameron’s reform demands and published Jesse Norman without much of an apparent sense of direction the results in December, in a policy brief by and Radek – we analysed them through writing op-eds Agata Gostyńska-Jakubowska, together with Sikorski in newspapers such as the Financial Times, the some interactive maps on our website. Agata Discussion Guardian, the Observer, Project Syndicate, Die reported that Britain’s partners were willing on 'What Zeit, Bild, Süddeutsche Zeitung and the Wall Street to compromise on most of the UK’s demands, reforms does Journal; and through shorter CER publications such as the competitiveness agenda, a bigger Cameron need, such as the bulletin, which appears every two role for national parliaments, an opt-out from so that the months, and insights, which appear weekly. the treaties’ commitment to ‘ever closer union’, Conservatives and safeguards for the single market against campaign to We picked on particular themes of the the risk of eurozone caucusing. The problem stay in the EU?', renegotiation for longer publications. In was that Cameron had made a priority of London October we published my policy brief, banning EU migrants from claiming in-work ‘Cameron’s EU gamble: Five reforms he can win, benefi ts unless they had lived in the UK for four and ten pitfalls he must avoid’. This analysed years. This demand would breach fundamental Britain’s main demands and also described ten EU principles of non-discrimination and free things that could go wrong for the In campaign: movement, and the 27 were not willing to the refugee and euro crises could run out of change the treaties to accommodate Cameron. control; the Tory party could push Cameron to ask for the impossible, with the result that The British desire to enhance the role of national he would return from Brussels with a deal that parliaments in EU decision-making, though disappointed; other member-states could prove somewhat less contentious, has nevertheless reluctant to help Cameron, partly because the provoked opposition in capitals such as Berlin. British brand has been tarnished by some inept One problem the British have had in promoting diplomacy and anti-immigrant rhetoric; the this reform is that their own parliamentary Out campaigns seemed likely to have more procedures for overseeing EU business are often energy and resources than those defending ineff ective. In May we published Agata’s ‘A ten the EU; the Labour Party has descended into point plan to strengthen Westminster’s oversight near-irrelevance and internal strife; many British of EU policy’, which explained the fl aws in the business leaders are proving unwilling to speak current system of parliamentary oversight; she out for In; and, fi nally, the arguments for In are made ten recommendations on how the British complicated, largely economic and quite hard Parliament could better hold the government

12074 CER annual_report2015 TEXT GB.indd 9 11/02/2016 13:06 to account on EU aff airs. We launched the policy Sylvie Goulard MEP and the LSE’s Lucrezia brief in London in July at a roundtable with John Reichlin. Ivan Rogers, the UK’s permanent Kerr, the former secretary of the Convention on representative to the EU, spoke on the state of the Future of Europe, and Chris Heaton-Harris the negotiations at a Brussels breakfast in July. MP, a leading eurosceptic; and in Stockholm in Jonathan Faull, the head of the Commission task October, with Swedish MPs Carl Schlyter and force on Brexit, did the same from his perspective Hans Hegeland. Interestingly, eurosceptics and at a dinner in London in December, just before europhiles can agree on the need to improve the crucial European Council that discussed parliamentary oversight of EU policy. Cameron’s demands.

In October, our joint panel with UCL on the role Both chambers of the British Parliament are of national parliaments in the EU featured Julie undertaking multiple enquiries into Brexit. My Smith, a Liberal Democrat peer, and Tim Boswell, colleagues and I gave evidence to the House chairman of the House of Lords EU committee, of Commons EU scrutiny committee, for its who were both broadly in favour of national report on Brexit; to the Commons Foreign parliaments having a bigger role; and Klaus Aff airs Committee for its report on the foreign Welle, the secretary-general of the European policy consequences of Brexit; to the Commons Parliament, who argued against. Treasury Select Committee for its report on Brexit; to the Lords’ EU Committee for its report We covered the British demand for safeguards on the British renegotiation and also for its against potential eurozone caucusing at one of report on the euro; and to the Commons Foreign our FT-Kings events in June, with Richard Szostak Aff airs Committee for its report on the Strategic (an adviser to President Jean-Claude Juncker), Defence and Security Review.

The staff , the advisory board and the referendum The CER’s advisory board continued to off er much We have in place the team we need for the good advice. Antonio Vitorino stepped down imminent referendum battle. The CER is not after long service. New recruits were Joaquín a campaigning organisation. It will continue Almunia, the former commissioner for economics to publish facts, ideas and arguments that are and competition policy, and Pierre Vimont, the based on evidence. Some of what we say may fi rst secretary-general of the European External displease those campaigning to avoid Brexit, Action Service. Carl Bildt rejoined, after a stint of but we shall not risk losing our intellectual eight years as Swedish foreign minister. credibility by slanting our research in one particular direction. Our staff remained broadly stable in 2015, though we bid farewell to Stephen Tindale, our Much of the referendum campaign will be very senior associate fellow, whose advocacy of the emotional. Our contribution will be to bring green agenda in general, and policies to tackle sober, serious and rigorous analysis, as well as climate change in particular, had won many an international perspective, to the debate. In plaudits. In March we said goodbye to our fi rst February 2015 we published the hundredth Clara Marina O’Donnell fellow, Yehuda Ben-Hur edition of the CER bulletin, which we have Levy, who returned to Israel. The second Clara produced every two months since we started. Marina O’Donnell fellow, Sophia Besch, a defence One article in that edition was by David Miliband, expert, joined us in October. who helped to found the CER 20 years ago and is currently based in New York. He wrote: “For the In December we relaunched the CER website – American political and economic elite, European now in its fourth incarnation. This modernised co-operation may be a disappointment, and both the look and structure of the site, allowing sometimes a puzzle, but it remains a necessity…. us more fl exibility to promote our large body of across party lines in the US, the idea of a Europe work, and a clearer and more specifi c topic focus. without Britain is not attractive at all; and it must The site gives greater visibility to our ‘insights’, also be said, the idea of a serious Britain outside which are listed alongside opinion pieces that the EU is a non-starter.” we write for the international press. Our website traffi c continued to grow: in 2015 we had about 500,000 hits on our site, 100,000 more than in 2014. We also continued to build up our social media profi le: our followers on Twitter increased from about 7,000 to over 12,000 over the year, while Facebook likes rose from 3,000 to 6,000. Charles Grant

12074 CER annual_report2015 TEXT GB.indd 10 11/02/2016 13:06 ANNUAL REPORT 2015 February 2016 11 [email protected] | WWW.CER.ORG.UK

The CER’s work on economics by Simon Tilford

The fraught political situation in many EU countries left a dark cloud ABOVE: hanging over Europe’s economic prospects. In the summer of 2015 it (L to R) Angus Armstrong, appeared possible that Greece might be forced out of the euro, which Ed Balls we argued would have been the beginning of the end for the currency and Ludger union. Eventually, an agreement was reached between Greece and Schuknecht the rest of the eurozone, but only after the German fi nance minister, Ditchley Wolfgang Schäuble, eff ectively threatened Greece with expulsion from conference the euro unless it accepted the rest of the eurozone’s demands on on 'Has the eurozone been austerity and structural reform. Unfortunately, this agreement failed to a failure?', address many of the underlying problems faced by Greece (in particular, Oxford the country’s unsustainably high level of public debt), as we argued in a series of articles, and by the end of the year its long-term membership of the euro was far from assured.

While economic recovery accelerated in and low growth. The European Central Bank some eurozone member-states, notably (ECB) finally commenced quantitative easing Spain and Ireland, France and Italy remained in March, but, as we argued, this is unlikely weak, and German growth disappointed yet to lift inflation without a co-ordinated fiscal again. The eurozone expanded by just 1.5 expansion and intra-eurozone rebalancing. per cent, far short of the US or UK. Partly as While trade deficits have fallen across the a result, eurozone inflation continued to fall, south of the eurozone, there has been no reinforcing fears that the currency bloc could corresponding narrowing of trade surpluses in become trapped in a cycle of low inflation Germany and the Netherlands.

12074 CER annual_report2015 TEXT GB.indd 11 11/02/2016 13:06 The eurozone faces a raft of economic governor of the Bank of England; and Paul challenges, all of which require member-states De Grauwe, a professor at the London School to work more closely together. But the gap of Economics. While only a few participants between what the eurozone economy needs – thought it possible or advisable to dismantle the more co-operation, integration, risk-sharing and single currency, the majority were pessimistic solidarity – and what eurozone electorates are about the ability of the eurozone political elite prepared to support, continued to widen in 2015. to sell the necessary integrationist steps to their There was little sign of reconciliation between increasingly disillusioned electorates. competing narratives of the crisis, with austerity and reform fatigue on the eurozone periphery We also held smaller events on these themes, (including in Italy, Portugal and Spain) clashing including breakfasts in Brussels with the two with bailout fatigue in the core. Germany key economics vice-presidents in the European remained a key stumbling block: there was little Commission – Valdis Dombrovskis and Jyrki sign of its political class being willing to take Katainen. In March we hosted a launch for Barry the radical steps required to put the eurozone Eichengreen’s latest book, 'Hall of mirrors: The economy on a sound footing. great depression, and the uses – and misuses – of history'; respondents were Professor Nick Crafts of Warwick University and Natasha Valla of the “At the heart of the eurozone's troubles lay Centre de recherche français dans le domaine de a contradiction between its integrationist l'économie internationale (CEPII). economic pressures and the politics of democratic We covered fi nancial market themes at a series of nation-states. events in London: a lunch in July on 'Banks and ” the capital markets union' with Richard Hopkin from the Association for Financial Markets In our biggest report of the year, ‘We don’t need in Europe, Martin Merlin from the European no federation: What a devolved eurozone might Commission and Richard Portes from the London look like’, published in December, Christian Business School; a lunch in September with Julie Odendahl took a forensic look at these issues. Dickson, ECB representative on the board of He argued that at the heart of the eurozone’s the Single Supervisory Mechanism (SSM), and troubles lay a fundamental contradiction Angus Armstrong from the National Institute of between the euro’s integrationist economic Economic and Social Research (NIESR); a dinner pressures and the politics of democratic in October on ‘The banking union, one year on’, nation-states. To resolve this, the eurozone with Danièle Nouy, President of the Supervisory should only integrate where it is economically Council at the European Central Bank, and Simon essential: in banking and fi nancial markets, in Gleeson from Cliff ord Chance; and a breakfast building a lender of last resort, and in ensuring in December on the capital markets union with a suffi cient level of demand. It should leave Commissioner Jonathan Hill, held jointly with the as much as possible to its member-states, Financial Times and King's College London. including structural reforms – where the case for centralisation of decision-making is weak, We produced two policy briefs on the pressing and the political costs are high. In November we issue of intra-eurozone adjustment. In ‘German hosted a joint launch for Christian’s report and a rebalancing: Waiting for Godot?’, published in new book by the Financial Times’ Martin Sandbu, March, I noted that Germany’s current account ‘Europe’s orphan: The future of the euro and the surplus had hit an all-time record of more than 7 politics of debt’, with Reza Moghadam (formerly per cent of GDP, which was bad for both Germany the IMF’s chief in Europe, and now with Morgan and its trading partners. The rising surplus was Stanley) as the third speaker. not, as argued by the German government, the inevitable by-product of an ageing society, but Our annual Ditchley economics conference in rather refl ected structural (and distributional) November brought together a very strong group problems in the German economy, which held of economists to discuss ‘Has the euro been a back investment and hence productivity growth. failure?’ Participants included Marcel Fratzscher, Rebalancing would boost the eurozone economy, president of the DIW think-tank; Jeromin lift infl ation and make it easier for indebted Zettelmeyer, chief economist of the German eurozone countries to service their debts, economics ministry; Hélène Rey, a professor at including those owed to Germany. I argued the London Business School; Jean Pisani-Ferry, that since the German government showed commissioner-general for policy planning in little inclination to take active steps to foster the French government; Ludger Schuknecht, rebalancing, the European Commission should director-general for strategy in the German step up pressure on it to do so. fi nance ministry; Paul Tucker, former deputy

12074 CER annual_report2015 TEXT GB.indd 12 11/02/2016 13:06 ANNUAL REPORT 2015 February 2016 13 [email protected] | WWW.CER.ORG.UK

In ‘Gain or more pain in Spain?’, published in for the digital single market, and at a roundtable ABOVE: October, I highlighted data showing that there that we held on ‘Does EU regulation stifl e (L to R) Angus was little evidence for Spain’s recovery being innovation?’ in November, with David Willetts, a Armstrong, the result of austerity and reforms, and that former Conservative minister, Robert Madelin, a Simon Tilford there were plenty of reasons to be sceptical senior Commission offi cial, Alexander Moscho of and Julie about the country’s growth prospects. Spain Bayer and Nick Johnstone of the OECD. Dickson was likely to enter the next downturn having barely recovered from the previous recession, Lunch on with high levels of public- and private-sector 'Will the debt and unemployment well above pre-crisis eurozone rates. Given the paucity of policy tools available caucus on to boost domestic demand, another deep fi nancial recession was likely. regulation?', Simon Tilford London We did not neglect supply-side issues in the European economy. In July we published ‘Offl ine: how should Europe catch-up with American technology’, a policy brief by John Springford. This argued that accelerating the take-up of digital technology across the EU’s services sector was more important than creating – as the Commission seems keen to do – a 'European Google'. To give itself the best chance of taking advantage of technology’s benefi ts, the EU needed a more expansive plan to promote competition across the single market. It should therefore apply the ‘mutual recognition’ principle in sectors where services were most tradable and had the greatest potential for digitisation. This would allow fi rms to sell services in other member-states but be regulated at home, thereby reducing the regulatory costs of entering markets in the rest of the EU. Many of these issues were covered at two events in Brussels: a breakfast in June, with Juhan Lepassaar, the chef de cabinet of Andrus Ansip, the commissioner

12074 CER annual_report2015 TEXT GB.indd 13 11/02/2016 13:06 ABOVE: (L to R) Abdullah Gül, The CER’s work on foreign Sinan Ülgen and Carl Bildt CER/EDAM and defence policy th 11 Bodrum by Ian Bond roundtable, Bodrum

In 2015, external and internal security challenges combined to put the EU under enormous stress. The threat posed by Russia following its 2014 intervention in Ukraine remained, but for most of the year was contained. Instead, European leaders were preoccupied with state breakdowns in the Middle East and North Africa, the resultant refugee crisis, and terrorist attacks in Europe and elsewhere. The EU struggled to agree on responses that matched up to the scale of the problems on its doorstep. The Middle East and North Africa: War, terror and migration In January 2015 and then again in November, terrorism. Obstacles included the European Islamist terrorists struck Paris, killing a total of Parliament's suspicion of intelligence agencies 147 people. Many of the attackers had spent time and its reluctance to see various EU databases in Syria and had links to Belgium. Inadequate connected. She also suggested extending data sharing among EU governments had helped Europol’s role in intelligence matters, and the terrorists to avoid detection as they travelled making it an interlocutor for the US in around Europe. intelligence sharing.

A policy brief in December from Camino In 2015 there was virtually no progress towards Mortera-Martinez, ‘Big data, big brother? solving the worst confl icts in the Middle East. How to secure Europeans’ safety and privacy’, At a lunch in March with Rory Stewart MP, then recommended ways of overcoming the chairman of the House of Commons defence obstacles to eff ective EU co-operation against committee, current and former senior offi cials

12074 CER annual_report2015 TEXT GB.indd 14 11/02/2016 13:06 ANNUAL REPORT 2015 February 2016 15 [email protected] | WWW.CER.ORG.UK

expressed worries about the ability of terrorist The fl ow of Syrian refugees in the summer was groups like Daesh to fi ll the spaces left by failed or entirely predictable, but still caught the EU failing states; they also fretted about Britain’s own unprepared. Thousands crossed from Turkey to weakening diplomatic and military credibility. the Greek islands every week. The EU’s system A dinner in June with John Sawers, the former for registering refugees in the fi rst member-state chief of the Secret Intelligence Service, explored they reach fell apart: the impoverished Greek among other things whether Western interests in government simply could not process asylum the Middle East were best served by authoritarian claims from hundreds of thousands of Syrians, rulers or those enjoying popular consent; several Iraqis and Afghans, who mostly wanted to go to participants favoured the former. Germany or Sweden.

The Daimler Forum, a group of offi cials and think-tankers that is brought together by the “The decision to admit any number of refugees CER, the Brookings Institution and the Stiftung strained Germany’s resources and its culture of Wissenschaft und Politik (SWP), gathered in welcome, and weakened Merkel politically. Berlin in May. This group has been discussing ” strategic issues regularly since 2000. Speakers in Berlin included Mark Sedwill, the top offi cial in the British Home Offi ce, Emily Haber, his German In a speech at the CER in September, Yvette counterpart, Simon Fraser, the most senior Cooper MP (then a candidate for the leadership offi cial in the British Foreign Offi ce, and Philip of the Labour Party), called for all European Gordon, the senior director for the Middle East countries, including the UK, to take in more in the National Security Council. They wrestled refugees; this speech helped shift the debate with the problems of domestic radicalisation and in the UK in a positive direction, forcing the its overseas drivers. One accurate prediction was government to accept a few thousand Syrians. that the situation in Syria and its impact would However, Britain, like many member-states, worsen signifi cantly. remained reluctant to accept signifi cant numbers. Angela Merkel was the obvious Though the agreement in July between Iran exception, but her decision to admit any and six leading powers to limit its nuclear refugees who wanted to enter Germany programme was welcome, it did not make Tehran contributed to the arrival of more than one a more constructive partner in the region. If million people by the end of 2015. This strained anything, Iran’s involvement in proxy wars in Iraq, Germany’s resources and its culture of welcome, Syria and Yemen – often opposing Saudi Arabia and weakened Merkel politically. and the Gulf States – increased. The confl icts in the Middle East led to huge fl ows of refugees In the longer term, one potentially positive and migrants across the Mediterranean. The spin-off of the refugee crisis could be an infl ux fueled support for anti-immigrant populist improvement in EU-Turkey relations, and the parties in EU member-states, a subject addressed relaunch of accession negotiations. Before by Yehuda Ben-Hur Levy, in his policy brief, ‘The November, when a putative migrant deal was Undiplomats: Right-wing populists and their struck between Brussels and Ankara, experts foreign policies’. were gloomy about the state of EU-Turkey aff airs. Such was clear from a CER roundtable In May we held another of our regular Warsaw in March, which was addressed by the FT’s forums on EU foreign policy. Speakers included Philip Stephens and Bahadir Kaleagasi, the Hugues Mingarelli, managing director for the international co-ordinator for the Turkish Middle East and North Africa at the European employers’ federation TÜSIAD. At our annual External Action Service (EEAS); Rear Admiral Bodrum conference in October, addressed Waldemar Głuszko, deputy director-general of among others by former Turkish president the EU military staff ; Dutch political director Wim Abdullah Gül, former Swedish prime minister Geerts; and Polish under-secretary of state for Carl Bildt and US State Department offi cial Europe Henryka Mościcka-Dendys. The event Siddharth Mohandas, participants echoed these took place as the EU was drafting its policy to worries and said that the governing AK party counter refugee fl ows in the Mediterranean. was turning away from the EU and becoming Speakers raised concerns about the EU’s more authoritarian. But after the migrant deal proposed naval operation, the fi nal phase of was agreed, gloom was replaced by caution. which – not implemented in 2015 – could involve A CER meeting in London in December with attacks on smugglers’ boats. Some argued that Cansen Basaran-Symes, President of TÜSIAD, the naval mission could not succeed without heard arguments that there should be no fast- peace in Libya, which remained elusive. track for EU accession without reforms in Turkey.

12074 CER annual_report2015 TEXT GB.indd 15 11/02/2016 13:06 When the Daimler Forum met again in political director, and Michael Ratney, the US Washington in November, Anne Richard, the State Syria envoy, there was some limited optimism Department’s assistant secretary for migration, that multilateral talks in Vienna involving and Ali Osman Öztürk, an adviser to the Turkish both Saudi Arabia and Iran could engender a prime minister, led a dinner discussion on the peace process for Syria. Since then, however, Syrian refugee crisis. The debate focused on Turkey’s shooting down of a Russian fi ghter jet the risks posed by an embittered generation of on November 24th has exacerbated tensions under-educated youths from the refugee camps between Russia and the West, while the cold war in Syria's neighbours. between Riyadh and Tehran has also worsened. It is hard to see a way forward for Syria in these At the Daimler Forum panel on the Middle East, circumstances, especially since low oil prices introduced by Andreas Michaelis, the German may yet destabilise oil-dependent regimes.

Russia, Ukraine and energy security Early in 2015 the fi ghting in Ukraine worsened, The politics and economics of sanctions against despite the ceasefi re agreed in Minsk in Russia’ that sanctions were the least of Putin’s September 2014 after negotiations among economic worries, however. The policy brief France, Germany, Ukraine and Russia (the analysed the eff ects of sanctions, falling oil prices so-called ‘Normandy format’). At a CER lunch and Russian policy errors, concluding that the in February with Carl Bildt, there was concern last two had made a much larger contribution over whether Russia might become more to Russia’s economic woes. The IMF predicted in involved militarily in Ukraine. But another November that Russia’s economy would contract Normandy format summit in Minsk that month by 3.8 per cent during 2015. brokered a new deal between Moscow and Kyiv, signifi cantly more favourable to Russia. By the Despite the availability of gas and oil from end of the year, the situation in Ukraine had other sources, geography dictates that Russia settled into a more-or-less frozen confl ict, as the will remain a signifi cant supplier of energy prominent Russian analyst Dmitri Trenin had to Europe, at least until the transition to predicted at a CER roundtable in February. This renewables is complete. The CER and the probably suits Russian President Vladimir Putin: Carnegie Endowment for International Peace he knows that although Western sanctions have organised a roundtable on the EU-Russia been extended into 2016, support for them is energy relationship in Brussels in July. This likely to erode over time. featured among other speakers Gunnar Wiegand, the top offi cial dealing with Russia in Putin's military intervention in Syria persuaded the EEAS, and Vladimir Milov, a former Russian “ deputy energy minister. One conclusion was Western leaders that they had to deal with that if the EU enforced its own rules, it would Putin again. be good both for the effi ciency of Russian ” energy producers and the operation of the European market. By the end of 2015, Putin’s external position was stronger than a year earlier. Despite the Dieter Helm's November policy brief for the continued presence of Russian forces in Ukraine, CER, 'The EU Energy Union: More than the sum his military intervention in Syria persuaded of its parts', looked at how Europe could best Western leaders that they had to deal with Putin pursue its three objectives of reducing carbon again: even if he could not solve the civil war emissions, increasing economic competitiveness there, he could certainly make it worse. At the and improving security of supply, including Daimler Forum in November, Celeste Wallander, by reducing dependence on Russian gas. We a senior director in the US National Security launched this at a roundtable in London with Iain Council, Nicolas de Rivière, the French political Conn, the CEO of Centrica. director and Radek Sikorski, the former Polish foreign minister, discussed whether it was The Commission's state aid guidelines are an possible to work with Russia over Syria while important factor in European energy policy. In remaining fi rm on Ukraine, or whether the West February, Stephen Tindale argued in a CER policy would have to accommodate Putin over Ukraine brief that the Commission should use these in some way. Most participants went for the fi rst guidelines to promote decarbonisation. But of those options. energy policy does not stop at the EU’s borders. In his fi nal policy brief for the CER, Stephen Christian Odendahl, Jennifer Rankin and I proposed that the EU should use the Energy showed in our policy brief of March, ‘Frozen: Community to promote clean energy in Eastern

12074 CER annual_report2015 TEXT GB.indd 16 11/02/2016 13:06 ANNUAL REPORT 2015 February 2016 17 [email protected] | WWW.CER.ORG.UK

ABOVE: Europe and Turkey. His ideas were discussed at A CER event in October in Helsinki discussed (L to R) CER roundtables in London and Istanbul in April, the Arctic, including in the context of future Baroness and in Belgrade in May. energy supplies. Speakers included Finnish Neville-Jones, economy minister Olli Rehn, former Finnish Rem Korteweg, The EU warmly embraced November's COP21 prime ministers Paavo Lipponen and Esko Aho, Esko Aho and climate agreement in Paris. Artur Runge-Metzger, respected Russian think-tanker Andrei Kortunov Tomas Grove. one of the EU's central fi gures in the climate and AIG’s chief economist Kathleen Stephansen. talks, claimed in December at While policy-makers and politicians enthused Conference on a breakfast meeting in Brussels that the deal about the Arctic’s economic potential, energy ‘Deep freeze? paved the way for concerted international action experts poured cold water on such prospects. East-West to stop climate change. The focus Nevertheless several speakers worried that unless relations and would henceforth turn to realising national the EU paid more attention to the Arctic, tensions the Arctic’, emissions targets. with Russia could spill over into the region. Helsinki China and trade Thanks to events nearer to home, important approach to China if they were to do a better job developments in Asia often went unnoticed in of protecting their interests in the rules-based Europe. In China, President Xi Jinping pushed international system. forward with his 'One Belt, One Road' (OBOR) initiative, designed to improve land and maritime The panel on China at the Daimler Forum in links with Europe. In March, the UK ignored US November, with speakers including Helga objections and announced that it would join Schmid from the EEAS and Ely Ratner from China's planned Asian Infrastructure Investment the US Vice President’s offi ce, suggested Bank (which will invest inter alia in OBOR-related that Europeans were less worried by China's projects); other EU member-states followed suit. increasingly assertive foreign policy than were many Americans. Rem Korteweg's May insight In May, Presidents Xi and Putin met in Moscow on the EU and the Association of South East and announced plans to integrate the Russian- Asian Nations (ASEAN) suggested practical ways led Eurasian Economic Union and the Silk Road in which Europe could help the countries of the Economic Belt (the land component of OBOR). I region to make progress on maritime disputes, looked at the opportunities and risks that China even if Europeans did not want to be as vocal as off ered both Russia and the EU in two insights, the US in opposing China's territorial claims in 'Chasing the dragon: Russia's courtship of the South China Sea. China' and 'China's European charm off ensive: Silk road or silk rope?' The latter concluded Elsewhere in Asia, the US and its partners (but that European countries needed a more united not China) concluded negotiations on the Trans-

12074 CER annual_report2015 TEXT GB.indd 17 11/02/2016 13:06 Pacifi c Partnership (TPP), an ambitious free-trade TTIP aside, the UK showed little enthusiasm agreement; but negotiations between Brussels for EU foreign policy co-ordination in 2015. and Washington on a Transatlantic Trade and At a number of CER meetings during the year, Investment Partnership (TTIP) stagnated. The various European and US offi cials expressed panel on TTIP at our Bodrum conference showed their worries about the impact that the Brexit that European businesses were starting to lose debate was having on the UK's willingness faith that the EU and US would ever forge a deal. to play its traditional leading role in tackling The CER emphasised the strategic dimension international problems. of TTIP at a series of roundtables that we organised in Warsaw, Vienna, London, The Hague and Berlin. Speakers at these events included former WTO director-general Pascal Lamy, Commissioner Malmström’s head of cabinet Maria Åsenius, British Trade Minister Francis Maude and the prominent Dutch MEP and trade expert, Marietje Schaake. Ian Bond

The Amato Group With a pressing refugee crisis and two major The group’s third meeting, in October 2015, terrorist attacks on European soil, the relevance sought to combine the issues covered in the of our ‘Amato Group’ – established with the fi rst two sessions, namely migration, and privacy Open Society European Policy Institute in 2014 versus security. Speakers included Brian Donald, – increased. Meeting in Brussels and chaired by chief of staff at Europol. Participants looked at former Italian Prime Minister Giuliano Amato, how Schengen’s external borders could be made the group brings together experts and offi cials more secure through the use of databases. The to debate key justice and home aff airs (JHA) group concluded that automated systems to matters in an informal setting. Because the control the length of stay of visa holders and discussions are off -the-record, participants facilitate visa-free entries into Schengen would are free to express controversial views on, for be good tools against irregular migration, but example, what to do with irregular migrants or insuffi cient to deal with the current infl ows of how to stop terrorists; and to cast off the offi cial asylum seekers. The group deplored the meagre positions that they normally have to represent. links between the EU’s array of databases, and This approach helps the group to come up with called for a better use of those containing original and fresh ideas. fi ngerprints of asylum seekers (Eurodac), criminal records (the Schengen Information System) The Amato Group met for the second time in and data on visa holders (the Visa Information March 2015, to discuss privacy and security System). in the face of global terror and migration. Speakers included Gilles de Kerchove, the EU’s Finally, the group suggested some ways of counter-terrorism co-ordinator. Participants dealing with Europe’s refugee crisis: the EU worried that transatlantic co-operation on and its governments needed to work more counter-terrorism would be damaged by closely with countries of origin and destination; diff ering approaches to privacy in the EU and improve the poor track-record of returning the US; they urged the European Parliament failed asylum seekers to their home countries; to be more realistic in its handling of security take more decisive action against criminal matters and called for the Passenger Name gangs to end smuggling; and improve the Recognition and Data Protection Umbrella identifi cation of asylum seekers through better agreements to be concluded. use of fi nger printing.

The group also demanded better information exchanges between member-states and with Europol on potential terrorists and asylum seekers. Some participants thought Europol had great potential to act as a hub for intelligence swapping, both among Europeans and across the Atlantic. Finally, the group called for better co-operation between Europol and Frontex (the EU’s border agency) and for online service Camino Mortera-Martinez providers, like Google and Facebook, to engage more in the fi ght against terrorism.

12074 CER annual_report2015 TEXT GB.indd 18 11/02/2016 13:06 ANNUAL REPORT 2015 February 2016 19 [email protected] | WWW.CER.ORG.UK CER publications 2015

State aid for energy: Climate action is more important than the single market policy brief by Stephen Tindale February 2015

German rebalancing: Waiting for Godot? policy brief by Simon Tilford March 2015 Frozen: The politics and economics of sanctions against Russia policy brief by Christian Odendahl, Ian Bond and Jennifer Rankin March 2015

Disunited Kingdom: Why ‘Brexit’ endangers Britain’s poorer regions policy brief by John Springford April 2015 Cleaning the neighbourhood: How the EU can scrub out bad energy policy policy brief by Stephen Tindale April 2015 Do the UK’s European ties damage its prosperity? essay by Philip Whyte April 2015

A ten-point plan to strengthen Westminster’s oversight of EU policy policy brief by Agata Gostyńska-Jakubowska May 2015 Offl ine? How Europe can catch up with US technology policy brief by John Springford July 2015 The Undiplomats: Right-wing populists and their foreign policies policy brief by Yehuda Ben-Hur Levy August 2015 Gain or more pain in Spain? policy brief by Simon Tilford October 2015

Cameron’s EU gamble: Five reforms he can win, and ten pitfalls he must avoid policy brief by Charles Grant October 2015

The EU Energy Union: More than the sum of its parts? policy brief by Dieter Helm November 2015

We don’t need no federation: What a devolved eurozone should look like report by Christian Odendahl December 2015 Big data, big brother? How to secure Europeans’ safety and privacy policy brief by Camino Mortera-Martinez December 2015

Cameron’s EU reforms: Will Europe buy them? policy brief by Agata Gostyńska-Jakubowska December 2015

12074 CER annual_report2015 TEXT GB.indd 19 11/02/2016 13:06 CER events 2015

16 January 9-10 April CER/Kreab breakfast on Brookings/CER/SWP Daimler ‘Prospects for TTIP’ US-European forum on global issues with Anthony Gardner, Brussels speakers included Ivo Daalder, Simon Fraser, Phil Gordon, Emily Haber and Mark Sedwill, Berlin 20 January CER/Kreab breakfast on ‘How to stimulate European investment’ 16 April with Jyrki Katainen, Brussels (top left) Annual dinner with Lord Hill, London 21 January CER/UCL Britain and Europe series: 27 April ‘Pathways to EU reform’ Launch of ‘Cleaning the neighbourhood: with Wolfgang Blau, Richard Corbett MEP How the EU can scrub out bad energy and Deirdre Curtin, London policy’ with Nick Butler, Dieter Helm (second 28 January from bottom, left) and Ognjen Pribićević, Lunch on ‘Russia, Ukraine and the EU’ London with Carl Bildt, London (second from top, left) 29 April CER/FT/KCL Future of Europe leadership 16 February series: ‘Will the election decide the Lunch on ‘Hall of Mirrors’ future of the UK in Europe?’ with Nicholas Crafts, Barry Eichengreen with Andy Bagnall, Geoff rey Evans and (middle left) and Natacha Valla, London George Parker, London

24 February 29 April Roundtable on ‘How Russia is changing CEP/CER panel on ‘Energy and and the implications for European environment: Serbia on the road security’ towards the EU’ with Dmitri Trenin, London with Jelena Miletić and Filip Radović, Belgrade 25 February Breakfast on ‘Britain and Europe’ 11 May with Douglas Alexander MP, London Breakfast on ‘What the general election means for Britain and its place in the world’ 9 March with Simon Nixon and Philip Stephens, Roundtable on ‘A Turkish balancing act? London Pipelines, polls and relations with the EU’ with Bahadir Kaleagasi and Philip Stephens, London 25 May CER/EDAM panel on ‘Prospects for clean energy and solar in Turkey’ 10 March with Gökşin Bavbek and Stephen Tindale, Lunch on ‘Britain, Europe and global Istanbul security challenges’ with Rory Stewart MP, London 28 May CER/demosEUROPA roundtable on 26 March ‘The geopolitics of trade: Second meeting of the Amato Group Understanding TTIP’s strategic impact’ on ‘Security versus privacy: What is at with Václav Bartuška, Ewa Synowiec stake in the European and transatlantic (bottom left) and Kaja Tael, Warsaw debates?’ with Gilles de Kerchove, Marco Pancini and Kenneth Propp, Brussels

12074 CER annual_report2015 TEXT GB.indd 20 11/02/2016 13:06 ANNUAL REPORT 2015 February 2016 21 [email protected] | WWW.CER.ORG.UK

28-29 May 23 July CER/demosEUROPA forum on CER/Kreab breakfast on ‘Reforming the ‘A dangerous neighbourhood: Europe’s EU’ foreign policy agenda’ with Ivan Rogers, Brussels speakers included Wim Geerts, Waldemar Głuszko, Hugues Mingarelli, Henryka Mościcka-Dendys and Nathalie Tocci, 1 September Warsaw Speech on ‘The European refugee crisis’ with Yvette Cooper MP, London (second from bottom, right) 10 June Dinner on ‘Challenges to the global order: China, Russia and the Middle East’ 1 September with Sir John Sawers, London (top right) Lunch on ‘Will the eurozone caucus on fi nancial regulation?’ with Angus Armstrong and Julie Dickson, 25 June London CER/Kreab breakfast on ‘The future of the EU digital single market’ with Juhan Lepassaar, Brussels 15 September CER/Kreab breakfast on ‘A blueprint for the future of the eurozone’ 29 June with Valdis Dombrovskis, Brussels Roundtable on ‘The future of the EU and Germany’s role in it’ with Joschka Fischer, London 22 September CER/FIW panel on ‘The strategic implications of TTIP’ 29 June with a keynote speech by Lord Maude CER 17th birthday reception (bottom right), speakers included Tom with a keynote speech by Joschka Fischer, Nuttall and Manfred Schekulin, Vienna hosted by HE Witold Sobków, London 28 September 30 June BfB/BNE/CER fringe event at the Labour CER/FT/KCL Future of Europe leadership party conference: ‘In or out: What does series: ‘Two-speed Europe: What does Britain want from the EU?’ eurozone integration mean for the UK?’ with Martin Kettle, Pat McFadden MP, John with Sylvie Goulard, Quentin Peel, Lucrezia Mills and Chuka Umunna MP, Brighton Reichlin and Richard Szostak, London 5 October 3 July BfB/BNE/CER fringe event at the Lunch on ‘Banks and the capital markets Conservative party conference: ‘In or union’ out: What does Britain want from the with Richard Hopkin, Martin Merlin EU?’ (middle right) and Richard Portes, London with Ed Conway, Matthew Elliott, Sir Gerald Howarth MP, David Lidington MP, Michelle Pinggera and Roland Rudd, 7 July Manchester Carnegie Europe/CER roundtable on ‘The EU-Russia energy relationship: From addiction to rehab?’ 9 October speakers included Gunnar Wiegand, CER/UI panel on ‘National parliaments Kristine Berzina, Matthew Bryza, Peter in the EU: Towards greater legitimacy of Mather and Vladimir Milov, Brussels European aff airs’ with Hans Hegeland and Carl Schlyter, Stockholm 16 July Launch of CER policy brief ‘A ten-point plan to strengthen 9-11 October Westminster’s oversight of EU policy’ CER/EDAM 11th Bodrum roundtable with Chris Heaton-Harris MP (second from with a keynote speech by Abdullah Gül, top, right) and Lord Kerr, London speakers included Carl Bildt, Mehmet Fatih Ceylan, Espen Barth Eide, Liam Fox MP and Klaus Welle, Bodrum

12074 CER annual_report2015 TEXT GB.indd 21 11/02/2016 13:06 12 October 20 November CER/UCL Britain and Europe series: Lunch on ‘TTIP, the road ahead’ ‘National parliaments and the EU’ with Maria Åsenius, London with Lord Boswell, Baroness Smith and (second from top, left) Klaus Welle, London 26 November 16 October Launch of ‘Europe’s orphan’ and Conference on ‘Deep freeze? East-West ‘We don’t need no federation’ relations and the Arctic’ with Martin Sandbu and Reza speakers included Esko Aho, Andrei Moghadam, London Kortunov, Paavo Lipponen, Olli Rehn and Kathleen Stephansen, Helsinki 27 November CER/FT/KCL Future of Europe leadership 21 October series: ‘Capital markets union breakfast Dinner on ‘The banking union, briefi ng’ one year on’ with a keynote speech by Lord Hill, with Simon Gleeson and Danièle Nouy speakers included Graham Bishop, (top left), London Lorenzo Codogno and Stephanie Flanders, London 27 October Third meeting of the Amato Group 30 November on ‘Migration, security and law CER/GMF panel on ‘TTIP after the TPP enforcement: What are the advantages, deal’ what should be the limits?’ with Dieter Haller, Pascal Lamy, Joshua with Giuliano Amato, Brian Donald, Rob Meltzer, Petra Pinzler and Paula Wilson, Rozenburg and Martin Scheinin, Brussels Berlin

29 October 1 December Roundtable on the EU energy union Breakfast on ‘Turkey after the elections’ with Nick Butler, Iain Conn and Dieter with Cansen Bașaran-Symes (middle left) Helm, London and Daniel Dombey, London

6-7 November 2 December Ditchley conference on ‘Has the euro Dinner on the EU referendum been a failure?’ with Jonathan Faull, London (second from speakers included Marco Buti, Jean bottom left) Pisani-Ferry, Marcel Fratzscher, Stephen King, Hélène Rey, Ludger Schuknecht and Jeromin Zettelmeyer, Oxfordshire 8 December CER/Clingendael roundtable on ‘The strategic impact of TTIP’ 17 November with Marietje Schaake MEP, The Hague Roundtable on ‘Does EU regulation stifl e innovation?’ with Nick Johnstone, Robert Madelin, 14 December Alexander Moscho and David Willetts, Panel on ‘What reforms does Cameron Brussels need, so that the Conservatives campaign to stay in the EU?’ with Flick Drummond MP, Liam Fox MP, 18-19 November Dominic Grieve MP, Jesse Norman MP and Brookings/CER/SWP Daimler US- Radosław Sikorski (bottom left), London European forum on global issues speakers included Nicolas de Rivière, Andreas Michaelis, Ely Ratner, Michael 15 December Ratney, Anne Richard, Helga Maria CER/Kreab breakfast on ‘Climate Change Schmid and Celeste Wallander, before/after COP 21’ Washington with Artur Runge-Metzger, Brussels

12074 CER annual_report2015 TEXT GB.indd 22 11/02/2016 13:06 ANNUAL REPORT 2015 February 2016 23 [email protected] | WWW.CER.ORG.UK Advisory board 2015

Esko Aho Caio Koch-Weser Senior Fellow, Harvard University, Consultative Vice chairman, Deutsche Bank Group Partner for Nokia and former prime minister of Finland Sir Richard Lambert Chairman of the British Museum, former director- Joaquín Almunia general of the Confederation of British Industry Former vice-president and competition and editor of the Financial Times commissioner, European Commission Pascal Lamy Carl Bildt President emeritus, Jacques Delors Institute and Former prime minister and foreign minister of former director-general, WTO Sweden Philip Lowe Nick Butler Former director-general for energy, European Visiting Fellow and chairman, King’s Policy Institute Commission at King’s College London Dominique Moïsi Tim Clark Senior adviser, Institut français des relations Former senior partner, Slaughter & May internationales Iain Conn Lord Monks Group CEO, Centrica Former general secretary, European Trade Union Sir Robert Cooper Confederation Special adviser to the High Representative and Mario Monti former counsellor, European External Action President, Bocconi University and former prime Service minister of Italy Paul De Grauwe Christine Ockrent John Paulson Chair in European Political Economy, Former CEO, Audiovisuel Extérieur de la France London School of Economics Michel Petite Stephanie Flanders Lawyer of counsel, Cliff ord Chance, Paris Chief market strategist for the UK and Europe, JP Morgan Asset Management Lord Robertson Deputy chairman, TNK-BP and former secretary Timothy Garton Ash general, NATO Professor, European Studies, University of Oxford Roland Rudd Heather Grabbe Chairman, Business for New Europe Director, Open Society European Policy Institute, Brussels Kori Schake Hoover fellow and distinguished professor at John Grant West Point Former executive vice president, policy and corporate aff airs, BG Group plc Sir Nigel Sheinwald Director, Royal Dutch Shell and visiting professor, Lord Hannay King’s College London Former ambassador to the UN and the EU Lord Simon Lord Haskins Director, GDF Suez and former minister for trade Former chairman, Northern Foods and competitiveness in Europe François Heisbourg Lord Turner Senior adviser, Fondation pour la Recherche Chairman, Institute for New Economic Thinking Stratégique Pierre Vimont Simon Henry Former secretary-general, European External Chief fi nancial offi cer, Royal Dutch Shell plc Action Service Susan Hitch António Vitorino Manager, Lord Sainsbury of Turville’s pro bono President, Notre Europe, Jacques Delors Institute projects and former European Commissioner Wolfgang Ischinger Sir Nigel Wicks Chairman, Munich Security Conference Former chairman, British Bankers’ Association Lord Kerr (chair) Igor Yurgens Vice chairman, ScottishPower Chairman, Institute for Contemporary Development, Moscow

12074 CER annual_report2015 TEXT GB.indd 23 11/02/2016 13:06 CER staff 2015

Charles Grant is the director. His interests include European institutions, Britain's relationship with the EU, European foreign and defence policy, Russia and China.

Simon Tilford is the deputy director. He focuses mainly on competitiveness, macroeconomics, economic reform and the euro.

Ian Bond is director of foreign policy. He specialises in Russia and the former Soviet Union, European foreign policy, Europe-Asia relations and US foreign policy.

John Springford is a senior research fellow. He specialises on Britain and the EU, the single market, international trade, and the economics of migration.

Christian Odendahl is chief economist. He focuses on macroeconomics, the eurozone, the ECB and Germany. He also covers trade and fi nancial markets.

Rem Korteweg is a senior research fellow. He works on transatlantic, Europe-Middle East and Europe-Asia relations; the geopolitics of energy and trade; and security and defence policy.

Stephen Tindale was a research fellow. He specialised in climate and energy policy, as well as agricultural policy and the EU budget.

Agata Gostyńska-Jakubowska is a research fellow. She specialises in EU institutions and decision-making, as well as Poland’s European policy.

Camino Mortera-Martinez is a research fellow. She specialises in justice and home aff airs, and in particular migration, internal security, privacy, criminal law and police and judicial co-operation.

Sophia Besch is the Clara Marina O’Donnell fellow (2015-16). The fellowship is aimed at those at the start of their careers who are interested in foreign, defence and security policy.

Yehuda Ben-Hur Levy was the Clara Marina O’Donnell fellow (2014-15).

12074 CER annual_report2015 TEXT GB.indd 24 11/02/2016 13:06 ANNUAL REPORT 2015 February 2016 25 [email protected] | WWW.CER.ORG.UK

Kate Mullineux is publications manager and website editor. She designs all CER publications and organises their production and is reponsible for managing all website content.

Sophie Horsford is fundraising & operations manager. She is responsible for the day to day management of the CER, particularly fi nance and fundraising.

Jordan Orsler is events co-ordinator. She also provides administrative support to the researchers and is PA to Charles Grant.

Anna Yorke is press & communications co-ordinator. She is responsible for the CER’s communications strategy and press enquiries.

Daniel Crewes is administrative assistant. He is the fi rst point of contact for visitors to the CER, and assists with events and general administration.

Lucy Katz was an events intern. She assisted in the co-ordination of events, and provided administrative support to the researchers.

12074 CER annual_report2015 TEXT GB.indd 25 11/02/2016 13:06 Financial support 2015

In addition to our corporate members, numerous other companies have supported specifi c publications, projects and events.

0-10K

Daily Mail and General Trust Nomura

11-20K

Accenture Goldman Sachs AIG Europe Limited JP Morgan Airbus Kingfi sher American Express KPMG BAE Systems Lloyds Banking Group Barclays Bank Macro Advisory Partners BG Group Montrose Associates BT plc NM Rothschild Cliff ord Chance North Asset Management Deutsche Bank AG Prudential Diageo plc Standard Chartered The Economist Tesco Fidelity Vanguard Ford of Europe Vodafone

21-50K

BAT PricewaterhouseCoopers LLP Bayer Rio Tinto BP International Limited Ryanair Ltd Centrica Shell EDF Statoil General Electric Google UK Limited HSBC IBM

12074 CER annual_report2015 TEXT GB.indd 26 11/02/2016 13:06 ANNUAL REPORT 2015 February 2016 27 [email protected] | WWW.CER.ORG.UK Financial information

Audited accounts for year ending 31.12.2014

Income for 2014: Total £1,094,462 Donations Projects & events

Expenditure for 2014: Total £1,231,388 Staff Administration & travel Events Publishing

12074 CER annual_report2015 TEXT GB.indd 27 11/02/2016 13:06 Centre for European Reform Tel: + 44 20 7233 1199 14 Great College Street www.cer.org.uk London [email protected] SW1P 3RX UK © CER 2016

12074 CER annual_report2015 TEXT GB.indd 28 11/02/2016 13:06 CENTRE FOR EUROPEAN REFORM

12074 CER annual report cover for Web Solid blue and White 2015 GB.indd 1 08/02/2016 15:19