Martens Centre

The current COVID-19 pandemic will change the world, like the fall of the Berlin Wall and the 9/11 terror attacks. For the foreseeable future, EU governments will be preoccupied with dealing with the pandemic’ immediate socio-economic consequences. However, other policy areas will be affected as well. With regard to the EU’s security and defence policy, COVID-19 is likely to extinguish the unprecedented dynamism that has characterised its development since 2016. Its most immediate impact is likely to be decreased funding for several new initiatives such as the European Defence Fund. The pandemic is also likely to reduce the EU’s readiness to address crises in its neighbourhood and may hasten the Union’s relative decline as a global power if its recovery is slow and wrought by prolonged disputes between the member states over the appropriate economic response to the crisis. Yet, the EU should not completely abandon its pre-COVID-19 security and defence agenda. Both during and after the pandemic, the Union will continue to face familiar challenges such as cyber-attacks, disinformation campaigns and instability in its neighbourhood.

The pandemic has created an unprecedented level of uncertainty, mainly because we do not know how long it will last. This affects the economic implications. Two facts are clear: there will be a recession and budget deficits will have to soar. This note draws some implications beyond the immediate health concerns. In many ways, they challenge the architecture of the Eurozone. Either the architecture will change or the Eurozone as we know it will cease to exist. During the sovereign debt crisis from 2010 to 2015, the architecture was changed just as the Eurozone was on the verge of losing one or more members, with unmeasurable consequences. Will history repeat itself?

A decade after the crisis that came close to destroying it, the Eurozone remains fragile. Fiscal indiscipline, a key cause of the crisis, remains a relevant issue. Progress has been made to make the banking system safer, but much more is required to contain risk. Eurozone governance remains weak. This paper argues that six key steps are required to refashion the Eurozone into a robust monetary union capable of dealing with unexpected shocks in the future. These steps are: 1. Subsidiarity should be rigorously applied to straighten the existing muddled governance structures. 2. Banking Union needs to be completed to break the doom loop between banks and governments. 3. Pan-European banks and fully integrated financial mar-kets offer the best solution to absorb national disturbances. Implicit protectionism – through regulations and support for national champions – should not be accepted. 4. The responsibility for fiscal discipline must lie where the budget authority is exercised: at the national level. 5. The no-bailout clause is the best protection against fiscal indiscipline. It should be formally restored. 6. Some countries with large public debts remain vulnerable market sentiment fluctuations. However, there are ways to reduce these debts without any transfer or mutual guarantees.

Under a monetary union, fiscal and monetary discipline have to go hand in hand if macroeconomic stability is to be maintained. The question is how to set up the right institutions to achieve this stability in a credible manner. This policy brief proposes a new institutional arrangement for the euro area to restore fiscal discipline. It places the responsibility for compliance entirely on the shoulders of the member states. It also provides for the mutualisation of 30% of the member states’ debt-to-GDP ratio.
This would help to maintain a stable currency and to limit the risk of contagion should another crisis occur in the future. However, this comes at a cost. Under the fiscal scheme proposed, member states, which would be fully fiscally sovereign, would need to run long-term sound fiscal policies to benefit from euro membership.
In addition, this brief proposes a reform of Target2 under which overspending economies would have to pay the financial cost of accessing extra euros, which would deter the accumulation of internal imbalances within the euro area. All this is expected to change the current fragility of the architecture of the euro, provide member states with the right incentives to abide by sounder economic principles and make them fully responsible for the policies they adopt.

This paper critically reflects on the development and implications of the Spitzenkandidaten system. It makes three claims. First, it argues that, despite the assertions of many commentators, this system did not appear out of the blue in 2014 but has a much longer history. Since the Maastricht Treaty, a series of steps have been taken that have clearly led the way to this outcome and, in fact, may even lead beyond it. These steps, including the role of the European People’s Party, are explained here as they cast a different light on the whole process, without which the success of the Spitzenkandidaten system cannot be properly understood.
Second, the paper claims that, from a political–institutional point of view, the system implicitly promotes the parliamentarisation of the EU architecture and might eventually lead to a stronger EU executive and a weaker European Parliament, as is the case in most national parliamentary systems. This would be the opposite of what many of its supporters would like to see. Third, the paper concludes that, in order to avoid this unintended consequence and fulfil the democratic potential of the Spitzenkandidaten system, the current procedure must be understood as an intermediate step on the road to the direct election of the president of the EU. This, however, requires its success and consolidation in 2019. The paper thus ends with some recommendations that will help to make this happen.

The EU has an important role to play in the management of the threat posed by North Korea. Indeed, Brussels already has a policy of ‘critical engagement’ towards Pyongyang which combines diplomatic and economic carrots with a number of sticks. This policy, however, is in need of an update to attend to two recent developments on the Korean Peninsula: North Korea’s status as a de facto nuclear power and the flurry of engagement and diplomacy involving North Korea—including top-level meetings with the US, South Korea and China.
In this context, the EU should support its partners, South Korea and the US, as they launch a process that could lead to sustainable engagement with North Korea, denuclearisation, and, as a result, a more stable Korean Peninsula. Working with its partners, Europe should creatively use its power of engagement and cooperation to change behaviour. This will enhance the position of the EU as a constructive actor in Asian affairs, support efforts by the US and South Korea to engage North Korea and, ultimately, offer a better opportunity for the EU to achieve its goals.

Seven consecutive enlargements, spanning over half a century, have provided geopolitical stability in Europe and facilitated trade and economic growth. Currently, the EU is considering further expansion towards the Western Balkans and Turkey. In this process, the EU is weighing fundamental values against security concerns, public scepticism in some member states and past experience of letting in countries that were not prepared.In addition the economic, security and refugee crises are making the EU more cautious about enlarging further. The present paper considers options for further EU enlargement, including ending enlargement altogether, offering a reduced membership status (‘membership minus’) and keeping enlargement alive under strict conditions.It argues for the third option, under which the EU institutions must make sure that candidate countries not only align their legislation with that of the community but also respect fundamental EU values in the economic, political and legal spheres. Giving a viable prospect for membership is vital to enabling the candidates to maintain reform momentum and their attachment to the West. It is also in the interests of the EU and its member states.

This paper briefly describes how international trade has been transformed in recent years and what has determined its increasing politicisation. It argues that the two main pillars of the global trading system—international trade regulation and the dispute settlement mechanism—are being put under strain due to various developments.

The whole system is being challenged by opposing tendencies: on the one hand, the multiplication of global risks and opportunities demands common action and multilateral rule-making; on the other, we are witnessing increasing fragmentation and regionalisation. The realistic objective that can now be set for the future development of world trade is the preservation of as much as possible of the present system and its improvement in specific areas.

This paper sets out ways to reform European education systems to ensure that they equip Europeans with a forward-looking set of key competences that prepares them for the workplace, but also helps to create a European identity. It argues that education and training—enhanced through mobility, transnational cooperation and structural reforms—are critical to boosting individual, economic and societal resilience; providing both basic and high-level skills and competences; reducing inequalities; promoting entrepreneurial mindsets; fostering inclusive, stable and democratic societies; and making a success of migration and globalisation. Furthermore, education should help to empower young people to engage with and shape the future of a Europe of democracy, solidarity and inclusion. The ultimate goal is to build a true European Education Area by 2025, which would, inter alia, improve students’ mobility, prepare the ground for the mutual recognition of diplomas and boost language learning.

The rapid technological progress in automation, robotisation and artificial intelligence is raising fears, but also hopes, that in the future the nature of work will change significantly. There will be changes in what we do, how we form workplace relations, how we find work and the role of work in a society. Some believe that these changes will be for the better: we will need to work less and thus will have more free time. Others think that the changes will be for the worse: there will be fewer ways to earn a living. The central question of this paper is this: will adages such as ‘By the sweat of your brow you will eat your food’ and ‘No bees, no honey, no work, no money’ become obsolete? Will work disappear and with it the societal relations and inequalities that result from differing success in work? If this is going to happen, what policy options do we have to address the issue?