THINK TANK REVIEW APRIL 2021 Council Library ISSUE 88
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Council of the European Union General Secretariat THINK TANK REVIEW APRIL 2021 Council Library ISSUE 88 This Think Tank Review* covers articles and reports published in March relating to different political and policy topics. (twitter link) The reports comment on the substantial impact Covid-19 has had on the EU27 and the global economy, triggering unprecedented policy responses across Europe. They look at the pandemic's effects across various economic sectors, at EU industry, at strategic value chains, and at the recovery measures to restore calm on the financial markets and help businesses with capital flows. They discuss for instance: the main risks to the success of the recovery programmes, such as a lack of focus and mistargeting, maintaining unsustainable sectors, delays in implementation, and the lack of both a European dimension and the capacity to implement such a complex programme over and above the normal EU budget; the monetary policy and how ECB measures have had real effects on euro area unemployment rates, and the financial effects on banking stability; the fact that during the Covid-19 pandemic, Europe has benefitted strongly from being an open economy that can access goods and services from other parts of the world; self- sufficiency or less economic openness would make Europe less capable of responding to a future emergency; what further measures should be considered in order to reinforce the resilience of the EU's internal market in the face of future crises; the Covid vaccines as instruments of soft power and a tool for competition between powers, as they symbolise scientific and technological supremacy; and how the pandemic represents a civil emergency and public health crisis for a large portion of the Euro-Atlantic community, and will have profound and long-lasting political and economic effects on the international order and stability. EU POLICY AREAS The papers present different scenarios for the outcome of the Conference on the Future of Europe, which is expected to give new impulses for structural reform in the EU; they also examine the constitutional and institutional challenges faced by the EU faced during the Brexit negotiations, analysing the way the current wording of article 50 of the EU Treaty was applied. The articles reflect on the ambition of strengthening the EU's role in the world by strengthening the euro's international position and thereby reducing its dependence on the US dollar; note that the debt management question must be treated separately from the issue of the recovery plan; and investigate the potential of a European net wealth tax as a way of raising substantial revenues to address the Covid-19 and climate change crises, so that Europe can become the first climate-neutral continent by 2050. The reports assess the coherence of the EU's climate policy and action, as well as the climate policies of the major economies. * This collection of abstracts and links was compiled by the Council Library of the General Secretariat of the EU Council for information purposes only. The content links are the sole responsibility of their authors. Publications linked from this review do not represent the positions, policies or opinions of the Council of the EU or the European Council. On foreign affairs, the reports advocate that the EU should embrace all available tools that go beyond the Common Foreign and Security Policy in the narrow sense of the term. EU foreign policy, be it on climate, peace-building and development aid, energy, democracy, trade or migration, should be seen as part and parcel of “Global Europe”. A policy of “normative realism” could serve as a constructive approach, enabling the EU to, for example, pursue its interests through free trade agreements. 2021 provides the final geopolitical opportunity for Europeans to clarify what kind of relationship they want with key global players, including China and Russia, and with our neighbourhood. The articles argue that the EU should protect itself from the effects of extraterritorial sanctions by creating a joined-up arsenal of measures to counter these sanctions; such an attempt may be the first real operational test of the concept of “strategic autonomy”. The TTR can be downloaded from Council's Library blog. TTR articles are available via Eureka, the resource discovery service of the Council Libraries. The Council Library is open to staff of the EU institutions and Permanent Representations of the member states. The general public may use the Library for research purposes. It is located in the Justus Lipsius building, at JL 02 GH, Rue de la Loi 175, 1048 Brussels. Contact: [email protected] TABLE OF CONTENTS SPECIAL FOCUS 5 COVID -19 5 SECTION 1 - EU POLITICS AND INSTITUTIONS 12 SECTION 2 - EU POLICIES 14 Agriculture and Fisheries 14 Competitiveness (Internal Market, Industry, Research and Space) 14 Economic and Financial Affairs 15 Employment / Social Policy / Health and Consumer Affairs 17 Environmental Issues 18 General Affairs 19 Justice and Home Affairs 20 Transport / Telecommunications / Energy 21 SECTION 3 - FOREIGN AFFAIRS 23 Foreign and Security Policy / Defence 23 Development 28 Trade 28 Africa 28 Asia-Oceania 29 Middle East / North Africa (MENA) 30 Western Balkans 31 China 32 Russia 33 United Kingdom / Brexit 34 United States of America 35 SECTION 4 - EU MEMBER STATES 36 Bulgaria 36 Denmark 36 Germany 36 Greece 37 Spain 37 France 37 Italy 38 Lithuania 38 Netherlands 38 Austria 39 MISCELLANEOUS 40 4/40 SPECIAL FOCUS - COVID-19 better management and control systems at EU level. (16 p.) EUROPEAN PARLIAMENT THINK TANK Monetary policy during the pandemic: fit for purpose? by Christophe Blot et al. This contribution reviews the ECB measures since the start of the Covid-19 crisis, i.e. the extension of the asset purchase programme (APP) and the SPECIAL FOCUS introduction of pandemic emergency purchase programme (PEPP). It shows that COVID -19 APP announcements have helped steer inflation expectations upward, and that CENTRE FOR EUROPEAN POLICY PEPP has alleviated fragmentation risk. It STUDIES also shows that since the mid2000s, ECB measures have had real effects on euro Analysis of developments in EU capital area unemployment rates, nominal effects flows in the global context: increasing on inflation rates and financial effects on uncertainty in the wake of the Covid-19 banking stability. (30 p.) pandemic by Cinzia Alcidi et al. AUSTRIAN INSTITUTE OF ECONOMIC RESEARCH This study analyses the main trends and developments in global and EU capital Europäische Wirtschaftspolitik in der Covid- movements up to 2019 and the challenges 19-Krise: zwischen Rettungspaketen und brought about by the Covid-19 pandemic. Maßnahmen zur Konjunkturbelebung While coordination and policy measures in advanced economies have helped to by Atanas Pekanov @atanaspekanov restore calm on financial markets and restart capital flows quickly, the impact of In response to the economic slump in 2020, the pandemic has been sudden and large EU governments initiated aid packages to on flows, especially for emerging market support affected households and economic economies, and the shock continues. (97 p.) sectors. The active role of fiscal policy and monetary policy prevented an even deeper economic slump. At present, government CENTRE FOR EUROPEAN POLICY spending primarily has an insurance STUDIES function to cushion the shock, but it is not providing a stimulus. Such a stimulating Avoiding the main risks in the recovery effect can only occur once the pandemic plans of member states has subsided. In the near future, an by Jorge Núñez Ferrer @jnunez_ferrer expansionary fiscal policy will be necessary for a sustainable upswing of the economy. This report sets out some of the main risks (DE - 11 p.) to the success of the recovery programmes, such as a lack of focus and mistargeting, maintaining unsustainable sectors, delays in implementation, and the lack of both a European dimension and the capacity to implement such a complex programme over and above the normal EU budget. It highlights inter alia the necessity for serious structural reforms in member states (MS), 5/40 SPECIAL FOCUS - COVID-19 ÖSTERREICHISCHE GESELLSCHAFT FÜR dangerous direction of policy. It would make EUROPAPOLITIK (AUSTRIAN SOCIETY Europe less capable of responding to the FOR EUROPEAN POLITICS) next emergency. (8 p.) Die Aufbau- und Resilienzfazilität der EU: ein Tropfen auf den heißen Stein? EUROPEAN CENTRE FOR DEVELOPMENT POLICY MANAGEMENT by Stefan Schaller et al. Towards a global green recovery: the cases This brief deals with the EU recovery and of Denmark, the EU, Germany, the resilience facility which is intended to Netherlands and the UK support the MS most affected by the by Nadia Ashraf et al. pandemic in reshaping their economies in line with green and digital change. For the The paper provides insights into emerging first time, they are also granted non- approaches of DK, the EU, DE, NL and repayable grants, the proper use of which is UK to support a global green recovery justified in national development plans and through their foreign policies. It highlights which must be linked to the country-specific that multilateral organisations are recommendations of the European considered key in supporting global green Semester. (DE - 11 p.) recovery efforts, that partnerships with different actors and at different levels are EUROPEAN PARLIAMENT THINK TANK considered vital to promote a global green recovery, and how to support particular When and how to unwind Covid-support vulnerable groups through green recovery measures to the banking system? measures. (31 p.) by Rainer Haselmann et al. EUROPEAN PARLIAMENT THINK TANK This analysis proposes ways to retract from supervisory Covid-19 support measures The impact of Covid-19 on the Internal without perils for financial stability. It Market simulates the likely impact of the corona by J. Scott Marcus et al. crisis on euro area banks’ capital and predicts a significant capital shortfall.