GLOBSEC MAGAZINE
EUROPE´S ECONOMIC MOOD ⊲⊲ WHAT IS NEXT FOR THE EUROZONE AND THE REST OF THE EUROPEAN UNION by Vladislava Gubalova
⊲⊲ BUILDING AN ENTREPRENEURIAL EUROPE by Terence Tse, Mark Esposito and Danny Goh
⊲⊲ MULTISPEED EUROPEAN ENERGY TRANSITION: WILL CENTRAL EUROPE SHIFT GEARS? by Nolan Theisen
⊲⊲ A SOCIAL MODEL FOR EUROPE? by Alena Kudzko
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HEADLINES
A man holds an independence flag outside the Palau Generalitat in Barcelona, Spain.
IN THIS ISSUE 4
JJ AP Photo/Manu Fernandez
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IN DEPTH
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HEADLINES
IN DEPTH
⊲⊲ What is next for the Eurozone and the rest of the European Union by Vladislava Gubalova ⊲⊲ Building an Entrepreneurial Europe by Terence Tse, Mark Esposito and Danny Goh
President of the European Central Bank, ECB, Mario Draghi attends a news conference at the ECB headquarters in Frankfurt, Germany. JJ Arne Dedert/dpa via AP
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OP-ED
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OP-ED
⊲⊲ A Social Model for Europe? by Alena Kudzko ⊲⊲ Multispeed European energy transition: Will Central Europe shift gears? by Nolan Theisen
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HISTORY CHAPTER
In this Sept. 19, 2017 file photo the morning sky is colorful illuminated behind wind turbines near Jacobsdorf, Germany.
⊲⊲ The path of the EU from its foundation to the withdrawal of the first Member State/UK by Vladimír Müller
JJ Patrick Pleul/dpa via AP, file
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HISTORY CHAPTER
22 VISEGRAD NEWS
24 European Commission President Jean-Claude Juncker addresses the members of the European Parliament in Strasbourg, eastern France, to outline his reform plans for the European Union in the so-called State of the Union debate. JJ AP Photo/Jean-Francois Badias
POLICY PAPERS GYLF 2017
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QUIZ
EDITORIAL SOŇA TROJANOVÁ Editor-in-Chief
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The European Union is going through changes which will reflect in its future funding. The process will weaken the United Kingdom’s exit, but will also diminish the need to increase taxes for border protection and security. The European Commission has set clear priorities for the European Union’s development in areas such as digitization, energy, and infrastructure. One of the main aims is thus to invest in these areas.
This time we focus primarily on the European Union. Facing the reality, we can say that the economic situation in Europe has improved. Unemployment in Eurozone is at its lowest since 2009. Across the continent, citizens’ support for the EU is rising according to Eurobarometer surveys. Explorations show that Europeans increasingly prioritize the “multiple
speed” or “flexible” EU, in which ad hoc groups of member states would forge ahead with new projects. Even in these difficult times, the EU feels more certain, seeking to develop its capacity to act internationally on its own political scene as well as beyond its borders. Considering the recent events, we can claim that the mood in the Eurozone economy and across the European Union has greatly improved. Indices of economic confidence had continued to grow since autumn of the last year. Within the zone, prospects notably improved in September in the areas of industry, retail and construction. In the largest economies of the area, the economic confidence index has strengthened. Despite the economic growth, today’s European leaders are still confronted with a particularly unfavourable set of circumstances: global issues such as terrorism, unprecedented migration flows, increase in populism and, of course, Brexit. Nevertheless, the EU will seek to strengthen its structures from the inside in the near future. In this issue of our magazine, we bring you insights not only into EU’s internal affairs, but also a prognosis for its further direction on the global level. We are honoured to present you not only the opinions and new projects of our Globsec Policy Institute experts, but also the activity of our young leaders. Dear readers, allow me to welcome you on the pages of this special edition of the Globsec magazine which closely resembles the list of topics of this year’s Tatra summit conference. This time, we thematically revolve around the notion of a “Europe´s economic mood”. I am thus honoured, on behalf of our entire editorial board, to present you the work of some of the most esteemed experts in the field. Remember to keep up with Globsec magazine on Facebook! ■
GLOBSEC MAGAZINE ⊲ 3
HEADLINES ⊲ CATALONIAN REFERENDUM
Thousents protesters wave Catalownia independence flags as they take part at a rally against the National Court’s decision to imprison civil society leaders, in Barcelona, Spain. JJ AP Photo/Emilio Morenatti
CATALONIAN REFERENDUM In the recent weeks, Spain has experienced a turbulent series of intrastate political events. Politicians of one of its autonomous communities, Catalonia, have once again called for an independence. At the beginning of September this year, Catalan administrative bodies approved an independence referendum. Even though it was thereafter declared illegal and suspended by the Constitutional Court of Spain, the Catalan politicians decided to hold it on 1 October. The referendum question was „Do you want Catalonia to become an independent state in the form of a republic?“with approximately 92% of participants opting for „Yes“.However, the turnover was only about 43%
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of all the registered voters in Catalonia. There were multiple clashes reported during the day between riot police and the people participating in the referendum resulting in hundreds of injuries. This tense situation sparkled protests condemning the actions taken by the police. Ultimately, according to international observers,the referendum failed to meet the minimum international standards for elections due to many irregularities. The situation became even more complicated after the Catalan president CarlesPuigdemont and other regional leaders signed a declaration of independence, saying that it would not be implemented for some time to allow talks with the government in Madrid. The Spanish government immediately dismissed the move and threatened to suspend the autonomy of Catalonia. The tensions between Spain and Catalonia go back centuries and it remains to be seen how the situation resolves this time around. ■
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AUSTRIA’S 2017 A ELECTIONS KURZ – AUSTRIA’S NEW LEADER? ⊲ HEADLINES
AUSTRIA’S 2017 A ELECTIONS KURZ – AUSTRIA’S NEW LEADER? The parliamentary elections took place almost a year earlier than scheduled due to the collapse of the previous government coalition. Composed of the ruling Social Democratic Party (SPÖ) of Chancellor Christian Kern and the Austrian Conservative party ÖVP, the coalition collapsed in May, as the new leader of ÖVP was being voted for. Sebastian Kurz, elected at 98.7 percent (the second-best result in the young party’s history) become the party’s new leader at the height of a government crisis. Elected in Linz, the 30-year-old Sebastian Kurz served as country’s foreign minister.
With almost all the votes counted, the People’s Party took nearly 32 percent of the vote while the far-right anti-immigrant Freedom Party won 27 percent. It was barely ahead of the ruling Social Democrats, who finished with a little less than 27 percent. After the parliamentary election in Austria Sebastian Kurz at the age of only 31 became the new chancellor. Kurz campaigned on a platform that combined hard line on immigration similar to that of the far-right Freedom Party (FPO) with traditional conservative principles like slimming down the state and cutting taxes.
The elections were held on 15 October 2017. Key elements of the electoral campaign included matters of rising far right tendencies, immigration, EU reforms and the role of Islam in society.
Kurz’s party considers ruling together with the legal-populist party FPÖ. He was designated the Austrian Chancellor by State President Alexander van der Bellen on 20 October 2017. ■
Foreign Minister Sebastian Kurz, head of Austrian People’s Party, is applauded by supporters during a brief campaign rally in Vienna, Austria. JJ AP Photo/Ronald Zak
GLOBSEC MAGAZINE ⊲ 5
HEADLINES ⊲ RUSSIA-BELARUSIAN EXERCISE “WEST 2017”
Belarusian and Russian troops take part in the Zapad (West) 2017 Russia-Belarus military exercises at the Borisovsky range in Borisov, Belarus. JJ AP Photo/Sergei Grits
RUSSIA-BELARUSIAN EXERCISE
“WEST 2017” Exercise West 2017 (Запад 2017 in Russian) was a vast military exercise held by Russian Federation and Republic of Belarus between 14 and 20 September 2017 in Kaliningradregion of Belarus and Russian north-western regions. According to western military analysts, the total number of Russian troops and otherwise involved persons amounted up to 100,000, which makes this Russian exercise the largest since the Cold War and disintegration of Soviet Union. The real numbersare, however, still unconfirmed. Russian Federation undertakes military exercises periodically every four years, involving itsland, sea and air units. According to Kremlin spokesman Dmitry Peskov“It is a normal practice for any country to hold such exercises. Everything is being held in line with international law”. This Russian-Belarusian undertaking as well as their broader military cooperation rests on sharedmembership in the Collective Security Treaty Organization, a military alliance in Eurasian region formed by some of the former Soviet republics.
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In 2017, NATO also held large scale operations in Romania and Baltic states.The Russian exercise additionally encouraged Sweden to enhance its military readiness and capabilities, resulting in exerciseAurora 17, Sweden’s largest military exercise in 20 years involving 19,000 Swedish as well as 1,435 soldiers from the USA.Other European states also voiced their concerns. Aside from Baltic countries and Sweden,the most worried voices came from Ukraine, Poland and Germany. On the final day of Zapad 2017, Poland began its own exerciseDragon 17 in cooperation with NATO.
Zapad 2017 was a success, demonstrating Russia’s military forces’ability to perform well in modern conventional warfare. Following the exercise, the western worries concerning a potential Russian attack were, at least for some time, mitigated. ■
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US HAND IN HAND WITH ISRAEL WITHDRAW FROM UNESCO ⊲ HEADLINES
The main building of the UNESCO headquarters is seen through the Globe in Paris, France. JJ AP Photo/Michel Euler
US HAND IN HAND WITH ISRAEL WITHDRAW FROM UNESCO The United Nations Educational, Scientific and Cultural Organization popularly known for supporting international peace and universal respect for human rights by promoting collaboration among nations has to face a huge change in the membership base.In October, the Trump administration announced that it would withdraw from UNESCO in protest of anti-Israel bias.“This anti-Israel bias that’s long documented on the part of UNESCOneeds to come to an end.”said Heather Nauert, a spokeswoman for the State Department on Thursday at a news briefing.The withdrawal goes into effect at the end of 2018, but there is a possibility that decision could be revisited. Israel, another member has said it will join the US in pulling out of the UN’s cultural organisation. Israeli Prime Minister Netanyahu tweeted he had instructed his foreign ministry to “prepare Israel’s withdrawal... in parallel with the United States”. Israel argues that the ancient monuments in Hebron recently named as an official world heritage site in a UNESCO statement should be considered Jewish heritage. Analysts said that withdrawing from the organization was a significant escalation on part of the United States in its criticism of United Nations bodies. ■
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IN DEPTH ⊲ BUILDING AN ENTREPRENEURIAL EUROPE
In this file photo, a man browses his phone near a billboard with U.S. currency displayed outside a bank in Beijing. JJ AP Photo/Andy Wong, File
BUILDING AN ENTREPRENEURIAL EUROPE KK Terence Tse, Mark Esposito and Danny Goh Co-founders of Nexus Frontier Tech, an AI studio
A very important question that only few people want to ask is “what kind of future will the next generations face?” According to a recent study, for the first time in human history, young people are now enjoying a lower standard of living than their parents in advanced economies.1
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On top of that, their job prospects are changing dramatically. With the introduction of computers and the Internet, there are already fewer and fewer positions around, in particular, the knowledge-based white-collar jobs. 2 If information technologies have been unforgiving in eliminating jobs, the rise of robots and artificial intelligence will also likely be merciless to whole job markets. Fundamentally, there are two ways in which we can lift living standards. One of them is to raise productivity, something that new technologies habitually prove to be very good at. Another is to create more job opportunities. The single best way to do so is to support creation of lots of new companies which need to hire in order to grow. It is therefore more important than ever to build an Entrepreneurial Europe. One may argue that this is where the general trend is taking us anyway – suffice it to observe that more and more start-ups are coming to the scene, for example in the US and China, and it would seem Europe cannot be that far behind. But this may not be the case. To start with, business dynamism in the US is actually decreasing as entrepreneurship in the country has been on a steady decline in recent years. Haltiwanger,Johnm,
Mckinsey Global Institute (2016) Poorer than their Parents? A New Perspective on Income Inequality, July Goos, Maarten, Manning, Alan and Salomons, Anna (2014) “Explaining Job Polarization: Routine-Biased Technological Change and Offshoring,” American Economic Review, 104(8): 2509-26
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BUILDING AN ENTREPRENEURIAL EUROPE ⊲ IN DEPTH Hathaway, Ian, and Miranda, Javier (2014) Declining Business Dynamism in the U.S. High-Technology Sector, Ewing Marion Kauffman Foundation, February3 In China, a lot of the latest technologies are developed by large corporations with close ties to government.
JUST HIRING, NO FIRING Europe has its own challenges, so much so they are suffocating the creation of new businesses. Observe the rigidity of labour law in some of the countries: it is very difficult to lay off employees in Spain. France’s labour code contains some 3,500 pages. Complex labour law and favouritism not only make it expensive to hire new workers, they also discourage the creation of new businesses.
MONEY, MONEY, MONEY Access to capital is another issue. At first glance, there is more money made available to the small and medium sized enterprises (SMEs) in Europe than in the US: in 2013, Europe is estimated to have provided €926 billion to SMEs, almost double that of US’s €571 billion.4 Yet, despite a larger amount of money available, these businesses in Europe are still struggling to gain access to capital. The reason: Europe mostly relies on debt-financing whereas venture capital funding is far more common in the US. In our recent book written together with Xavier Rolet, CEO of the London Stock Exchange, we argue that such shortage of risk capital and diversity of funding sources will continue to hamper the creation of innovative young firms.5 Very often, entrepreneurs lack the right assets that could be used as collaterals, making it prohibitively expensive, if at all possible, to borrow. In fact, the reliance on debt-financing can affect the “mood” in capital provision: while shareholders of a new business would care more about the upside gains from its success, lenders, by contrast, focus mostly on the downside risk. The latter often concern themselves far more about a borrower’s ability to service the interest and to survive long enough to repay the loan, rather than considering whether the borrower could turn out to be a runaway business success.
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European Commission President Jean-Claude Juncker addresses the members of the European Parliament in Strasbourg, eastern France, to outline his reform plans for the European Union in the so-called State of the Union debate. JJ AP Photo/Jean-Francois Badias
of risk capital “ Shortage and diversity of funding sources will continue to hamper the creation of innovative young firms.
Haltiwanger,Johnm, Hathaway, Ian, and Miranda, Javier (2014) Declining Business Dynamism in the U.S. High-Technology Sector, Ewing Marion Kauffman Foundation, February Association for Financial Markets in Europe and BCG (2015) Bridging the Gap: Investor Views on Europe and US Capital Markets and How They Drive Investment and Economic Growth, February Tse, Terence and Esposito, Mark (2017) Understanding How the Future Unfolds: Using DRIVE to Harness the Power of Today’s Megatrends, Lioncrest Publishing
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IN DEPTH ⊲ BUILDING AN ENTREPRENEURIAL EUROPE
Cognitive skills such “ as empathy, comunication
and the ability to connect people as well as emotional intelligence are set to play an ever more critical role.
REVAMPING EDUCATION Building an entrepreneurial Europe also requires us to rethink our education systems. Every year the learning speed of AI goes up by a hundredfold. Yet, we have schools that are still based on the format founded 250 years ago, which follows a factory line model. It is designed to train an army of administrators, not a nation of innovators. Higher education that is based on examinations by subjects organised in silos do not necessarily get young people to be more entrepreneurial. What is increasingly needed in a world that is becoming more and more automated is to be able to work in a collaborative manner, solve complex problems and manage both people and robots. Cognitive skills such as empathy, communication and the ability to connect people as well as emotional intelligence are set to play an ever more critical role. In a business environment in which large corporations are trimming down in size and the so-called “gig economy” is expanding. Promoting these skills can encourage the entrepreneurship that our societies need.
ENTREPRENEURSHIP: AN EQUALISER Making Europe more entrepreneurial has another benefit: it can likely help reduce inequality and improve inclusion. At the moment, many good jobs often go to the more privileged. In Britain, for instance, a recent study shows that top employers recruit from only about 20 – effectively the top 20 – out of more than 115 universities in the country. The report further points out that 65 per cent of the respondents surveyed think “who you know” is more important than “what you know”.6 Despite its epic motto, “liberté, égalité, fraternité”, Corporate France is ran by graduates of the “Grandes Écoles” and “Polytechniques”.7 Strong emphasis on previous work experience and schooling tend to favour those people who have strong ties with prestigious employers and who can afford private education. Good job opportunities rarely cascade down to the lower echelon of our societies. Given the right conditions, people from all backgrounds – natives and immigrants alike – can start their own businesses, hence enabling themselves to ascend on the economic and social ladders.
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Relaxing labour laws, diversifying funding, use of risk capital and overhauling education systems to provide the right skills are all the necessary steps forward.
TO US AND TO OUR NEXT GENERATIONS New thinking and policies are both needed to clear out major obstacles that keep Europe from becoming more entrepreneurial. Relaxing labour laws, diversifying funding, use of risk capital and overhauling education systems to provide the right skills are all the necessary steps forward. As an increasing number of activities are automated, making our societies more entrepreneurial is likely to be one of the most effective ways to prepare next generations – and ourselves – for the brave new world. ■
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Social Mobility and Child Poverty Commission and Social Mobility Commission (2014) Elitist Britain? Gumbel, Peter (2013) Élite Academy: Enquête sur la France Malade de ses Grandes Écoles, Denoël Impact WWW.GLOBSEC.ORG
WHAT IS NEXT FOR THE EUROZONE AND THE REST OF THE EUROPEAN UNION ⊲ IN DEPTH
Eurogroup finance ministers sign an EU flag during a round table meeting of eurogroup finance ministers in Luxembourg JJ AP Photo/Virginia Mayo
The future of the Eurozone is turning to be the most discussed topic as the new European Union is being shaped. Only a year ago, there were still doubts about the future of the euro currency. Fast forward to 2017 and Europe finds itself with a new wind in its sails, with the average unemployment rate at its lowest (7.6%) since 2008 and a steady European GDP growth at 0.6% (Eurostat 2017). The obvious elephant in the room, however, is what comes next for the Eurozone, and by extension the rest of the European Union. The Eurozone currently comprises of 19 EU countries with only 5 of them located in Central Europe. Once UK leaves the Union, the Eurozone’s economy will cover 85% of the Union’s entire economy. It will become a centre within the EU, bolstering strong integrational mechanisms. Some changes will come sooner, others will follow a long process. This disparity in development speeds will undoubtedly influence both the countries that are part of the Eurozone as well as those on the outside. In March 2017, the President of the European Commission presented his “White Paper” with 5 scenarios for the future of Europe. Its aim was to start a discussion, and discuss we did. It became clear that Europe will go through changes and that the divisions that were already observed may broaden with new policy processes, while further new divisions emerge. It used to be politically incorrect to speak of “Multispeed Europe” when the talk occurred. Traditionally, the NorthSouth and East-West developmental inequalities were fought,
WHAT IS NEXT FOR THE EUROZONE AND THE REST OF THE EUROPEAN UNION KK Vladislava Gubalova, Research fellow, GLOBSEC Policy Institute, Future of Europe Programme
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IN DEPTH ⊲ BUILDING AN ENTREPRENEURIAL EUROPE
German Finance Minister Wolfgang Schaeuble, left, speaks with, from right, European Commissioner for Economic and Financial Affairs Pierre Moscovici, Italian Finance Minister Pier Carlo Padoan, Spanish Economy Minister Luis de Guindos and Dutch Finance Minister Jeroen Dijsselbloem during a round table meeting of eurogroup finance ministers in Luxembourg JJ AP Photo/Virginia Mayo
As the UK — currently the largest financial centre — is leaving the Union, a window of opportunity opens for the EU to diversify its financial capital and release some of the pressure from the national banks. with partial success, using structural and cohesion funds. Today, however, the proposed multispeed scenario implies consequences with different dimensions. The Economic and Monetary Union (EMU) — the mechanisms that govern and safeguard the euro —is not complete. This means that the structural problems exposed during the economic crisis and the following stagnation are only partially patched up. A European semester was introduced to “check” how sound the member states’ budgets are. After heated negotiations in 2012 a stability mechanism was introduced to support Eurozone economies in trouble. Nevertheless, more needs to occur for the euro to avoid another plummeting fiasco and for the Eurozone to become a desirable destination, especially for those EU countries that are openly sceptical. Ideally, as envisioned by some of European Union’s leaders, the Eurozone members should ensure further convergence toward Bank Union, Capital
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market Union, Fiscal Union, Economic Union and a Political Union of a kind (5 Presidents Report 2015). Additionally, an initial partial convergence may also strengthen the euro. Bearing in mind that reforming the Eurozone will certainly have to be a long-term effort, it is desirable to sketch out some further sensible steps: First, the crisis in Greece and other Southern European members uncovered the lack of macro-economic safeguards. Eventually, these need to be agreed upon, but in short-term we can expect mixed results. Two proposals for Eurozone are currently floating on the EU level: vital investments protection and unemployment alleviation fund. Lessons were learned in the past years that if investments that are essential for the economy of a country (and often influence other EU members) are not assured, the negative consequences are long-lasting and widely spread (e.g. infrastructure projects crucial for employment, transportation, and sustainability of economy). This proposal is more likely to receive broader support. Unemployment that turns into long- term tendency, as we have seen in Greece, has deep social and economic consequences. The numbers show that unemployment in Greece in 2008 was at 7.8%. It peaked at 27.5% in 2013 and currently stands at 21.2% (Eurostat 2017). The ambitious idea to set up a fund to ease the unemployment pressure may run into serious contention from those Eurozone members that are less likely to experience profound unemployment crises.
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WHAT IS NEXT FOR THE EUROZONE AND THE REST OF THE EUROPEAN UNION ⊲ IN DEPTH Second, deeper financial integration is an important ingredient for stronger euro currency. Both Bank Union and Capital market Union are worthy proposals. Some difficulties are to be expected from national governments in their willingness to share or even fully release their National Bank sovereignty to a centralized European authority. One important new mechanism that is to be negotiated sooner rather than later is the bank deposits guarantee mechanism. Bank failures, like the one we saw in Ireland, had overwhelming social and economic effects. A solution would be to have EU-centralized guarantees. However, for this to occur, much convergence and bank discipline would have to come into effect on national levels. Although plausible, it will not be a quick process, and it is sure to be tainted by political debate. On the other hand, the proposal to create a Capital market Union is an interesting idea that may give all EU members some independency from pure bank capital (venture capital and equity financing). The catch is the willingness to centralise supervision, hence EU rules on the financial sector. As the UK — currently the largest financial centre — is leaving the Union, a window of opportunity opens for the EU to diversify its financial capital and release some of the pressure from the national banks.
Membership in the Eurozone club will likely yield better financial stability, economic opportunities and political clout.
A deeper financial integration is an important ingredient for stronger euro currency.
President of the European Central Bank, ECB, Mario Draghi attends a news conference at the ECB headquarters in Frankfurt, Germany.
Third, the most contentious decisions will be connected to the deepening of the fiscal union. This relates to the idea of European Monetary Fund and a separate Eurozone budget. We can expect that the proposed transformation of the European Stability Mechanism (created in 2012 in order to support Eurozone members in crisis and prevent instability of the euro currency) into a European Monetary Fund will divide the Eurozone members. The Franco-German “grand bargain” may be tripped when it comes to the principal setup of the Fund. The French President Macron has outlined his vision for Europe and the Eurozone in detail. It follows the ideology of burden- sharing, even if not explicitly expressed (Reuters 2017).1 This is not very compatible with the German understanding of fiscal discipline and strict rules. The German Finance Minister Schaeuble has openly expressed his discontent concerning burden-sharing and any plausibility of free riding (DW 2017).2 Already the call for Eurobonds by France and Spain, for example, has been shrugged away. The second proposal about separate Eurozone budget touches a national sovereignty nerve. Budgeting the public spending is one of the main and most important jobs/identifiers as seen
by the national authorities. It is therefore hard to imagine a real sovereignty released.
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Reuters, “Macron urges greater euro zone convergence, presses Germany to act,” 13.07.2017, https://www.reuters.com/article/usfrance-macron/macron-urges-greater-euro-zone-convergencepresses-germany-to-act-idUSKBN19Y04S DW, “Wolfgang Schäuble urges caution over eurozone expansion,” 14.09.2017, http://www.dw.com/en/wolfgangschäuble-urges-caution-over-eurozone-expansion/a-40500803
JJ Arne Dedert/dpa via AP
Fourth, the vision of a deeper Political Union within the Eurozone is driven by the current lack of democratic legitimacy of the supervisory bodies: Eurogroup, made up of the finance ministers of the Eurozone members and the European Central Bank executive board, also made by non-directly elected individuals. If the Eurozone becomes much more integrated and with more direct and indirect influence on the whole EU (which is the most likely scenario to occur), then some form of citizen supervision will be the next logical step. French President Macron has voiced his ideas to establish separate parliament and an office of minister for the Eurozone as well as its own separate budget. A parliament would be the expression of the citizens’ democratic participation. President Juncker, however, sees the danger of disunity for the whole EU if the Eurozone becomes an autonomous centre with its own democratic legitimacy and economic might. Much is to be decided in the matters of Eurozone, and informal negotiations have already begun. While the overall process towards deeper integration of the EMU will take time, membership in the Eurozone club will more likely yield better financial stability, economic opportunities and political clout. Slovakia has taken its seat at the table. For the countries that are not prepared to join the divide soon might become too deep. ■
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OP-ED ⊲ A SOCIAL MODEL FOR EUROPE?
A SOCIAL MODEL FOR EUROPE?
KK Alena Kudzko, Deputy Research Director at the GLOBSEC Policy Institute
Too many people are turningaway from Europe towards nationalism for the Union to continue with its business as usual. The promise of prosperity for all- supported among other measures by the freedom of movement across the continent - has always been one of the main “selling points” of the European project with regard to its own citizens. Many people though are finding it increasingly difficult to “buy” this promise, instead feeling that they are being left behind. To win back its discontents, the EU needs to reinvent itself and offer its citizen an upgraded social contract. 14 ⊲ GLOBSEC MAGAZINE
Going against the “take back the control” sentiment, the European Commission has devised asocial vision for a potential new social contract. The suggested European Pillar of Social Rights and other proposals are designed to shape a Social Europewith an intensified emphasis on social rights and increased social standards across the continent. It’s a bold move for at least two reasons. First, social policy is officially a national competence. Second, there are too many divisions between Member States to hope for a quick fix. If designed wisely, the social card can, nonetheless, restore faith in the European Union. Despite the many contentious issues, the political tide and sheer operational necessity is on its side.
CONTENTIOUS ISSUES AND DILEMMAS To shape a more Social Europe, the EU must navigate itself around several dilemmas and contentious issues. First, while searching for a sound balance between social standards and competitiveness, the countries will have to consider whether they want to deal with it at the national or EU level and how, if at all, they want to combine the two. Although prosperity and social security have always been at the centre of the European promise, there has been scarce support for shifting the competencies in social policy to the European level. For decades, the prevailing axiom was thatan overall economic growth would translate into prosperity for everyone. Conceived as an economic project, the EU has long treated social rights primarily as a by-product of cumulative economic growth. With too many dividing lines and seemingly irreconcilable domestic social and welfare models, the competencies for the social dimension consequently remained largely in the hands of national governments.
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A SOCIAL MODEL FOR EUROPE? ⊲ OP-ED
In this photo, a staff member checks a bitcoin mining computer at the bitcoin mining company Landminers in southwestern China’s Chongqing Municipality. JJ Chinatopix via AP
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Different countries and regions in the EU have their own specific concerns, butmany social standards are closely linked to the issues of competitiveness and domestic employment.
Globalization and increased worldwide competition gave the upper hand to those arguing in favour of keeping social arrangements flexible and decentralized. Free trade and free movement were for a long time a source of prosperity. Smaller and decentralized bureaucracy, relaxed standards, and a lower welfare burden wereunderstood by many to be necessary to ensure the competitiveness of the European economy. Paradoxically, it is globalization – or the backlash against it – that has also changed the momentum of the political debate and triggered increased support for the development of a social model for Europe. The premise that economic growth benefits everyone is being increasingly questioned. The common perception that its effects are, in fact, unequal has rather turned the tide towards introducing additional measures to balance the impact. Populist movements across Europe have argued that it is the anti-establishment governments working on national level that can provide more social safety and stability for its citizens. But there is also a growing understanding that EUlevel coordination and policy is vital at least as a supplement – and as a framework -to national policies. Working closer with Brussels, however, might require an uncomfortable political reversal of the current “taking back the control” approach in some of the CEE capitals. Second, both national and European-wide measures would require addressing the increasing closedness of communities.
The feeling of abandonment by many, dissatisfaction with the distribution of economic benefits, and the perception of the EU as a remote technocratic entity that aggravates local problems with imposed austerity measures have all triggered backlash against the notion of free movement and further inspired populism, nationalism, xenophobia, and Euroscepticism. The free movement of people is more and more seen as unwelcome element of European policies that undercuts the prosperity of locals. An increasing number of citizens in many countries in Europe would prefer to keep out not only those coming from outside the EU, but those coming from other EU countries. The desire for insulation is exacerbated by the fear of losing one’s job to a foreigner, of losing security guarantees, and of losing one’s identity and way of life. But the guaranteeing of a social safetynet for all while maintaining economic growth across the EU may require nothing less than the coordination and implementation of shared frameworks. Transferable social rights can turn freedom of movement from being a problem into being a solution. Third, different countries and regions in the EU have their own specific concerns, butmany social standards are closely linked to the issues of competitiveness and domestic employment. The competitiveness of the continent as a whole is linked to the cost of labour: can Europe maintain high social welfare standards and remain competitive globally?There is, furthermore, also a “competition in competitiveness” within Europe: with jobs not distributed evenly across Europe, the cheaper labour force and its mobility might determine the economic prospects of regions and countries. The calls to take back the control and put one’s nation first by curbing migration and job loss have led to Brexit. The supposedly Europhilic new French President Emmanuelle Macron is being forced to respond to the concerns of the domestic labour force, and to address the issue of
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OP-ED ⊲ A SOCIAL MODEL FOR EUROPE?
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The imperfections of cross-border labour arrangements that lead to dissent among citizens can be addressed through the enhanced efficiency of transferable and functional social benefit systems like those focused on pensions or healthcare.
foreignlabour in the country, which is often cheaper. To eliminate “social dumping”, Western countries have been advocating for “equal pay for equal work” provisions in the EU under whicha worker, for example, from Poland should earn as much as a worker from France. If they are paid equally, it is presumed that French workers in France will keep their jobs that they are currently losing to cheaper Polish workers. But although the principle sounds appealing on the surface, for Central Europe, on the other hand, the competitiveness of the region is still often derived from its cheap labour force. The increase in social standards might eliminate this competitive advantage. Although convergence in the standard of living is a highly desired outcome of European integration, many fear that the rapid acceleration of the process would lead to the collapse of the Central European region instead.
SOCIAL EUROPE: A FUNCTIONAL NECESSITY The challenges are many. But so are the issues that make it not only pressing but also feasible to find a joint solution throughcombination of EU-level coordination and national policies. First, social policy can serve as a stabilization mechanism. Particularly relevant for the Eurozone, the lack of fiscal and monetary flexibility can be compensated with, for example, unemployment aid during times of recession. It can also serve to address the adverse effects of globalization. The EU is currently attempting to achieve these aims with the proposed European Unemployment Benefit Scheme, the European Globalization Adjustment Fund, the Youth Employment Initiative, and the Fund for European Aid to the Most Deprived. The potential of social schemes to serve ascounter-cyclical mechanisms – ones that are also perceived as apolitical – is what makes them a functional necessity. Second, although distrust towards foreigners – who also take local jobs – is growing in many communities, crossborder employment remains an important driver of national economies and a factor enhancing the competitiveness of Europe. The imperfections of cross-border labour arrangements that lead to dissent among citizens can be addressed through the enhanced efficiency of transferable and functional social benefit systems like those focused on pensions or healthcare.
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President of the European Central Bank, ECB, Mario Draghi attends a news conference at the ECB headquarters in Frankfurt, Germany. JJ Arne Dedert/dpa via AP
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The digital economy defies borders. Without coordinating the rights and obligations of persons involved in it, member states risk hampering the growth of their own economies.
Third, with the digital economy expanding rapidly, flexible regulations of online employment and “gig” jobs are necessary for ensuring proper taxation and associated social safety benefits. Online freelancers should be as confident in their retirement income as employees with regular contracts. People should feel safe switching between gig jobs. The digital economy defies borders. Without coordinating the rights and obligations of persons involved in it, member states risk hampering the growth of their own economies. Fourth, the increasing political tide is not only related to foreigners taking local jobs. It is also driven by uncertainty about the future and the nature of work. Technology and digitalization are increasingly making certain skills obsolete. Funding and coordinating investment into human capital through education and training would not only bring the EU closer to the needs of people but also help Member States through additional support in re-orienting their economies while avoiding asymmetric shocks. Pushing the Social Europe project forward might require breaking some taboos. But a more social dimension for Europe does not necessarily have to lead to federalism. The EU can serve the greater good by providinga general framework and managing thecompensation and rebalancing schemes necessary to stabilize economies and ensure that benefits of integration are indeed shared by all. And if it does require closer coordination between Member States – why worry if it results in solutions that people demand? ■
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MULTISPEED EUROPEAN ENERGY TRANSITION ⊲ OP-ED
In this file photo giant machines dig for brown coal at the open-cast mining Garzweiler in front of a power plant near the city of Grevenbroich in western Germany. JJ AP Photo/Martin Meissner, File
MULTISPEED EUROPEAN ENERGY TRANSITION: WILL CENTRAL EUROPE SHIFT GEARS? KK Nolan Theisen, head of the Energy Programme at GLOBSEC Policy Institute The notion of‘multispeed Europe’is divisive, a formal acknowledgement of a core and periphery within the European Union, indicative of a growing divide between new and old member states: those racing for more substantive EU integration and those tapping the brake. As a Eurozone prerogative, it is considered the only way to pursue further integration while from the outside it sets an unwelcome precedent with potentiallyfar reaching implications. Inthe context of Europe’scleanenergy transition introduced in last November’s ‘Winter Package,’ ‘multispeed’ is prone to sensitivities but acknowledged; countries and regions pursue climate policy from different starting points at different speedsdue to a variety of underlying and convening factors. The work of the European Commission from the Third Energy Package to the Winter Package is the overwhelming driving force behind national climate policies and action plans of most Central and Eastern Europe (CEE) countries. The energy transition proposed by the European Commission and articulated in last year’s Winter Package of proposed legislation shifts the attention from supply of electricity to
its consumption, focusing on the role of the consumer and sustainable demand: applications such as distributed energy (micro grids), smart grids, and electric vehicles which enable dynamic pricing to elicit more efficient consumption. For CEE,the point is not to measureagainst Western Europe, but to identify realistic and appropriate models and applications befitting national and municipality capacities. Now is a critical juncture for governments in the region turning the corner on 2020 with 2030 national energy strategies under development to articulate a more coherent and ambitious long-term vision, recognize the benefits of this transition, orface the prospect of falling further behind in the decades to come. This presents a greater challenge in post-SovietEurope, where traditionalstructures and attitudes carry over in the energy sector, characterized by the highest levels of energy intensity in the EU-28: low building efficiency and renewable penetration, incumbent state-owned utilities controlling a significant portion of the market, andnational regulatory bodies susceptible to political influence.On one side, national emissions reductions tied to EU level targets are less systemic and easier to address with relatively straightforward business
GLOBSEC MAGAZINE ⊲ 17
OP-ED ⊲ MULTISPEED EUROPEAN ENERGY TRANSITION
French President Emmanuel Macron, left, welcomes Director General of the International Atomic Energy Agency, IAEA, Yukiya Amano for a meeting at the Elysee Palace in Paris, France. JJ AP Photo/Michel Euler
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The work of the European Commission from the Third Energy Package to the Winter Package is the overwhelming driving force behind national climate policies and action plans of most Central and Eastern Europe countries.
models, like efficiency plans for building stock. Theother side envisions a holistic transformation of the energy system itself, changing the very way that we think about energy production, delivery and consumption, from the traditional fossil fuel baseload model to renewable sources of production and smarter, more efficient methods of consumption.
with energy security like the CEEregion, which is still predominately dependent on a single supplier for gas imports. Instead, buoyed with a supportive public, Western European governmentsare pursuing ambitious climate agendas, with massive renewable investments and aggressive carbon price floors leading to the phase-out of coalpower plants. The devotion of national resources to energy security of supplying CEE over the years has come at the expense of climate policy development, whichsimply is not perceived as a matter of expediency. Moreover, the relevant ministries tend to be conservative and protective of the status quo with little interest in overhauling the energysystem and interrupting the existing power structures influencing markets.
For most of the CEE region, two underlying factors have shaped energy policy decisions: apreoccupation with import vulnerabilityand the renewable energy debacle.
CEE countries, particularly the Visegrad group, are not far removed from the damage caused by the rollout ofpoorly devised and at times corrupt renewable subsidy schemes thatwill remain a burden on state budgets for years to come. This has only served to embolden governments that were alreadyin active pursuit of nuclear power expansion as a kind of silver bullet that settles energy security (depending on who provides the fuel rods) and climate obligations with signature.
Energy security is always the foremost national priority, but it isshaped to a large degree by resource endowment, geography and market development. With access to diversified, liquid markets, Western Europe is not preoccupied
While the nuclear power plantsprovide wonderful energy benefits, they are for the most part uneconomical and uncompetitive in today’s energy markets. Someone will have to pay the price in the end(a topic for another article) and by
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MULTISPEED EUROPEAN ENERGY TRANSITION ⊲ OP-ED
European Commission President Jean-Claude Juncker, left, and European Council President Donald Tusk participate in a media conference at an EU summit in Brussels . JJ AP Photo/Virginia Mayo
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Energy security is always the foremost national priority, but it isshaped to a large degree by resource endowment, geography and market development.
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The 2020 and 2030 EU targets help to shape and eventually compel member states to commit to binding national renewable, efficiency and carbon reduction targets.
that time the current political leadership will not be around to explain the bill. Thus planned nuclear power is a defining feature of the region’s energy strategy that will cement the supremacy of a baseload delivery system. It runs counter to the Brussels playbook of decentralization but only at the wholesale level, leaving opportunities in the retail market. While this policy and
other legislation deters investment in large scale renewable generation capacity, opportunities remain in heating and transport. The 2020 and 2030 EU targets help to shape and eventually compel member states to commit to binding national renewable, efficiency and carbon reduction targets. This can largely be achieved in a perfunctory manner within the confines of the existing energy landscape in CEE countries, but to capitalize on technology and innovation long-term strategies and regulatory frameworks must be established to encourage investment. The reality is that low carbon technology and financing are more readily available to CEE actors than ever before. However, even with all of the soft encouragement, the dizzying array of available resources, and climate legislation emanating from Brussels, national governments and local municipalities tend to be overwhelmed and perversely incentivized. It is not only short sighted national policy, but the lack of expertise and local know-how andchallenges with coordination. These operational areas need to be improved to ensure the most cost-effectiveand complimentary projects are selected to improve the lives of citizens; and this starts at the top. ■
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HISTORY CHAPTER ⊲ THE PATH OF THE EU
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Nowadays European Union stands before another unprecedented challenge concerning the withdrawal of one of the most important members which significantly shaped the actual formof the European integration.
British Prime Minister Theresa May Theresa May speaks during a media conference at an EU summit in Brussels. JJ AP Photo/Olivier Matthys
THE PATH OF THE EU FROM ITS FOUNDATION TO THE WITHDRAWAL OF THE FIRST MEMBER STATE/UK KK Vladimír Müller, PhD, candidate at Faculty of political science and international relations, Matej Bel University, Banská Bystrica 20 ⊲ GLOBSEC MAGAZINE
European Union in crisis. This phrase can be found in many headlines of prominent newspapers all over the world in the last few years. Constant repeating of terms like economic crisis, sovereign debt crisis, migrant crisis or Brexit crisis creates an impression that European Union as an institutionis about to collapse. However, many of us have already forgotten that European Union (or then European Communities) overcame significant problems and challenges which were directly proportional to the complexity of the era when they happened. WWW.GLOBSEC.ORG
THE PATH OF THE EU ⊲ HISTORY CHAPTER
One of the first major disputes happened in 1965 when French president Charles de Gaulle came to serious disagreement with the members of European Communities about the future functioning of the EEC. He strongly opposed the proposed new role of European Parliament, the new competences of European Commission and the budget proposals for financing just recently established CAP (Common Agricultural Policy). Eventually, president de Gaulle withdrew French representatives from the Council which led to The Empty Chair Crisis. The crisis lasted for six months and finally was terminated by Luxembourg compromise, which introduced into practice qualified majority voting with the possibility of veto for every member state which could be used in cases that deemed to be very important national interests. Another important aspect was the withdrawal of Greenland from ECs. After gaining its autonomy within Kingdom of Denmark, Greenland people voted in referendum against beingpart of the ECs. Referendum took place in February 1982 and it took two years to negotiate the conditions of Greenland’s leaving which finally took place in 1985. Comparing it with current Brexit issues, it is noteworthy that the process of leaving lasted more than two years even though the Single market, Common Foreign and Security Policy and many other integration aspects did not exist at that time. For European Communities, this was the second loss of territory and population (the first one was French Algeria which was a full-fledged part of France and therefore part of ECs but after gaining its independence in 1962 Algeria left).
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During Delors administration was drawn up an important report on Economic and Monetary Union, the Treaty of Schengen was signed and the projects like Single European Market with the European Economic Area entered into force.
During the 1970s and 1980s the European Communities passed through a long period of stagnation called Eurosclerosis. This period is characteristic for its relatively high unemployment and slow job creation in Europe which occurred even in spite of stable economic growth within ECs. Eurosclerosis was also characteristic for the slow pace of enlargement and stagnation of the deepening of economic integration within EEC. European population had mostly negative and unconcerned attitudes to ECs at that time. The period ended with the start of Delors commission which is often considered as the most successful one in European history. Delors managed to ratify important treaties like the Single European Act and the Treaty of Maastricht. During Delors administration was drawn up an important report on Economic and Monetary Union, the Treaty of Schengen was signed and the projects like Single European Market
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But what helped the most to overcome these crisis is the ability of European nations to negotiate patiently and to reach the compromises peacefully without any authoritarian or imperative tendencies.
with the European Economic Area entered into force. It can be concluded that during Delors administration the ECs/EU managed to catch up the time and opportunity which was missed during the period of Eurosclerosis. One of the major crisis of the European Union occurred in 1999 when the whole Commission under the presidency of Jacques Santer had to resign following serious allegations of fraud, corruption and mismanagement. It was unprecedented because until then not a singlecommissioner has resigned in the 42-year history of the European Commission. This crisis significantly damaged the reputation of the Commission and the reputation of the EU as well. Because of the crisis European Commission was unable to react properly to the war in Kosovo and to the ongoing negotiations about internal reforms. Nowadays European Union stands before another unprecedented challenge concerning the withdrawal of one of the most important members which significantly shaped the actual form of the European integration. United Kingdom has always been a member who strongly opposed any form of stronger federalization of the EU and always counterbalanced the integration efforts which came mainly from Germany and France. In this regard, the withdrawal of the UK will definitely change the form of European integration in the long term. European Union will probably move towards even deeper economic and political integration. As the article tried to demonstrate, EU since its foundation passed through a multitude of serious crisis and there is no reason to believe that it will change in the future. But what helped the most to overcome these crisis is the ability of European nations to negotiate patiently and to reach the compromises peacefully without any authoritarian or imperative tendencies. However, this is the EU’s biggest strength and weakness at the same time. It greatly helps to reinforce the viability of the EU but on the contrary it highly decreases EU’s ability to act quickly. Therefore, we can predict that the Brexit process will last a long time, will change both the EU and UK, and will be concluded with the best possible compromise. ■
GLOBSEC MAGAZINE ⊲ 21
VISEGRAD NEWS ⊲
European Commission President Jean-Claude Juncker, center, poses for a group photo with leaders of the Visegrad group at EU headquarters in Brussels. JJ AP Photo/Virginia Mayo
NATO DEFENCE EXERCISES IN POLAND AP, 21.09.2017
SLOVAKIA TO INCREASE ITS MILITARY BUDGET AFP, 22.09.2017 Slovakia is to increase its military budget to meet the NATO demand for allocation of two percent of state’s gross domestic product to defence by 2024. Slovakia, a NATO and EU member state of 5.4 million people currently allocates 1.16 percent of its GDP to defence. According to a released document, the country “expects to increase the budget of the defence ministry to 1.6 percent of GDP in 2020 and to 2 percent of GDP in 2024”. Defence Minister Peter Gajdos stated to reporters that reaching 2 percent would enable the country to “realise our commitment from the NATO summits.” So far only five NATO members have met the 2 percent benchmark set by the Western defence alliance in 2014: Britain, Estonia, Greece, Poland and the United States. Romania is set to join them this year, and Latvia and Lithuania in 2018, according to NATO chief Jens Stoltenberg. US President Donald Trump has laid on the pressure for other European NATO allies to hike their defence budgets, saying they do not pay enough for their security. ■
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Thousands of Polish and other NATO troops have launched major defensive exercises in Poland’s northern regions amid security concerns raised by war games recently held by neighbouring Russia and Belarus. The Dragon-17 exercise involved some 17,000 land, air force and navy troops and some 3,500 units of equipment and ran through 29 September. For the first time the biannual drill was being joined by Poland’s new Territorial Defence Forces, which train civilian volunteers to support regular troops. Cybersecurity was also tested. The scenario for the exercise saw the troops reacting to “an attempt at taking control of a disputed territory through hybrid actions”. It was inspired by Russia’s 2014 annexation of Crimea. Other participating nations were NATO members Lithuania, Latvia, Germany, Britain, Slovakia, Italy, Bulgaria, Romania, as well as partner nations Georgia and Ukraine. Security experts in Poland and in the region are concerned that Russia may leave some military units in Belarus following the Zapad (“West”) 2017 manoeuvres. ■
CZECH MINISTER OF INTERIOR: ‘NOBODY HAS TO CALL US FOR SOLIDARITY’ EURACTIV.CZ, 14.09.2017
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⊲ VISEGRAD NEWS
In this picture publicly provided by the Polish Armed Forces General Command a tank takes part in the Dragon 17 exercise in Drawsko Pomorskie, Poland. JJ Polish Armed Forces General Command/ via AP)
Hungarian Prime Minister Viktor Orban arrives at the Polish Parliament for talks with the leader of Poland’s ruling party Law and Justice, Jaroslaw Kaczynski, in Warsaw, Poland. JJ AP Photo/Alik Keplicz
HUNGARY REVERSES ITS STANCE ON ROMANIA’S OECD ACCESSION BBJ.HU, 25.09.2017 Hungary reversed its stance on Romania’s accession to the Organisation for Economic Co-operation and Development (OECD) after assurance from the head of the governing Social Democratic Party (PSD) that the status of an ethnic Hungarian school in Târgu Mureș would be resolved. Prospective members may only join the OECD if they have the unanimous support of all members. Two weeks earlier, Hungary declined to support Romania’s application for membership at a meeting of the OECDʼs decisionmaking body because of the suspension of the Hungarian-speaking Catholic secondary school in Târgu Mureș (Marosvásárhely), a city with a large ethnic Hungarian population. PSD leader Liviu Dragnea promised the situation would be resolved in a telephone conversation with Hungarian Prime Minister Viktor Orbán, and Minister of Foreign Affairs and Trade Péter Szijjártó confirmed on 23 September that Hungary would support Romania’s accession to the OECD. ■
Left, then clockwise: Presidents Milos Zeman of the Czech Republic, Andrej Kiska of Slovakia, Andrzej Duda of Poland and Janos Ader of Hungary talk during their meeting in Szekszard, 143 kms south of Budapest, Hungary.
The Czech Republic has not relocated a refugee for more than a year and remains in breach of its legal obligations. The European Commission will likely take legal action against the Czech Republic in a few weeks as well as against Hungary and Poland. Czech Prime Minister Bohuslav Sobotka is, however, convinced that his country is doing enough. Prague and Rome are preparing a joint project on the reintegration of refugees in the Côte d’Ivoire. The Czech government agreed with Italy that strengthening the Libyan Coast Guard is key to stopping the influx of migrants into Europe. That’s also why the Czech Republic contributed €1 million towards the training of Libyan Coast Guards through the EU Trust Fund for Africa. “Nobody has to call us for solidarity. The Czech Republic already showed it. Our help is effective and deals with real problems” wrote Czech Interior Minister Milan Chovanec on Twitter. ■
JJ Tamas Kovacs/MTI via AP
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POLICY PAPERS ⊲ FAKE NEWS: DEFENDING DEMOCRACY IN DIGITAL DOMAIN
FAKE NEWS: DEFENDING DEMOCRACY IN DIGITAL DOMAIN CAN EDUCATION ENSURE MEANINGFUL PARTICIPATION IN A DEMOCRACY DRIVEN BY FACTS?
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FAKE NEWS: DEFENDING DEMOCRACY IN DIGITAL DOMAIN ⊲ POLICY PAPERS
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The concept of fake news constitutes a serious problem for democracy as search engines and social media algorithms personalize content to citizens’ pre-existing views, creating a feedback loop.
Traditional television, print media, and high-quality online outlets have been challenged as gatekeepers of information by fake news. Fake news defined as deliberately created, factually incorrect stories, which are spread by outlets to promote specific interests, primarily spread on social media. They differ from false news, which are created by error and not on purpose. This distinction is not only symbolic but touches the very strategic objective of fake news, which are created to distract and unsettle trust in traditional media as well as politics. Still, there is a thin line between the two. In 2016, protesters went to the streets when German-Russian minority teenager Lisa claimed she had been raped by refugees or migrants. Russian media seized on the case. Before she admitted having been involved in an incident at her school, Russian foreign minister Sergei Lavrov had publicly accused the German authorities of trying of a “coverup” due to “political correctness”. Only two weeks later, the new tactics was tested on German soldiers in Lithuania with false claims that they had raped a local girl. Lithuanian policy investigators came to the conclusion that there were neither a victim, witnesses nor perpetrators. Education on digital media and its use will be an important mean to combat fake news in the long-term. However, educational efforts will need help in the short-term to mitigate the proliferation and consequences of fake news.
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Companies should help users identify fake news and assist in building their digital resilience.
The concept of fake news constitutes a serious problem for democracy as search engines and social media algorithms personalize content to citizens’ pre-existing views, creating a feedback loop. This challenge has two dimensions: First
citizens form their opinions or even make their decisions on basis of untrue information. In democracies this can have severe consequences as it distorts the public process of opinion-forming. Second, fake news often include false information that is directed to destroy confidence in traditional media as well as politics. By triggering this loss of trust, fake news take effect beyond their actual content and may jeopardize basic democratic processes. Open and democratic societies need to be aware that this presents a weak point of their systems targeted and exploited by different state and non-state actors. Digital resilience is built through digital literacy. The World Economic Forum recently concluded that higher education is not equipping graduates with the right tools to tackle the digital revolution. Education in Science, Technology, Engineering, and Mathematics (STEM) continues to be key in developing young professionals operating in the rapid evolving digital possibilities and ways of doing business. Governments should collaborate with businesses and civil society organizations to create incentives for students to integrate STEM courses with their existing curriculums. For example, Google’s “Made with Code” program has developed a community of youngsters who are now well educated in digital literacy and able to bolster the digital resilience of their own communities. A natural next step would be to further support them in creating agile and targeted information campaigns within their own communities. As fake news target different parts of society, a counter approach has to be holistic. Training in media competence should therefore start as early as possible, as already children are confronted with fake news in social media. It also has to be taken into account that fake news pose an even greater challenge to lower educated parts of the society as these social layers are least equipped to identify fake news. But digital literacy cannot protect citizens against digital terrorism, especially in the short term. Some populist, extremist or malicious government groups abuse algorithms
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POLICY PAPERS ⊲ FUTURE CHALLENGES OF NATO
FUTURE CHALLENGES OF NATO INTRODUCTION
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Digital resilience is built through digital literacy.
to amplify their message, unencumbered by traditional media standards of facts and accuracy. Governments should therefore create national first-response cyber teams. These teams should help identify groups which repeatedly and deliberately spread fake news as well as their aim and target groups. Building on public-private partnerships, one could then delegate the creation of information campaigns to civil society organizations, and publicly discredit the fake news sender and message, if necessary to maintain public order. To support their cyber teams, governments should subsidize the creation of a new fake-news-busting industry, which over time can develop its business model and become financially self-sustaining. Combining journalism with code reading proficiency, this might also help reinvigorate a modern fact-checking journalism as a business trademark, as opposed to the ever-faster cycles of breaking news, and position both as necessary skills for journalism schools to focus more on. Multilateral cooperation will be paramount to defend democracy in the digital domain. Social media giants like Facebook and Twitter are unlikely to respond to the requests and political pressure of unilateral actors. Companies should help users identify fake news and assist in building their digital resilience. To foster a constructive dialogue, the international society will need to adopt innovative policies where these companies are encouraged to invest in efforts to increase global digital literacy. Even though the rapid development in technology introduces several challenges, such as fake news and its consequence for a well-informed democracy, it equally provides numerous opportunities to enhance and improve information-sharing and education globally. Thus, it is crucial that the challenges are addressed now, as the negative effects of fake news will risk amplifying if left unchecked. ■
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Re-emerging of power politics, age of unpredictability, era of instability; whatever you call it, the widely-accepted fact is that the world of international relations is in turmoil. This article discusses few of the most pressing challenges facing NATO in today’s changing threat environment. This article is divided into four separate but intertwined topics: differing threat perceptions between Allied states, maintaining technological edge, protecting Alliance values, and finally the emerging threats. Each of the topics will be presented with several policy suggestions relating to them.
OVERCOMING DIFFERENT THREAT PERCEPTIONS AND COOPERATION WITH OTHER ORGANIZATIONS AND ACTORS Balancing different threat perceptions among NATO Member States is the classic dilemma of any alliance. However, the tremendous challenges facing NATO in the East and the South risk deepening strategic cacophony within the Alliance, both among its European Members and beyond. Taking into account possible future challenges in the (high) North, in the cyber domain or other areas, NATO needs continuous attention for providing credible deterrence, through credible forces, maintaining, and gaining in some domains its technological advantage to keep the Alliance safe. While NATO has recently been quite active in re-assuring the Eastern ‘flank’ of the Alliance, the manifold - and arguably less traditional - challenges from the South require stronger political attention and in-depth policy-planning to shape adequate and timely responses. To this end, cooperating with other involved players, starting with the EU and other international organisations, from the OSCE all the way to the Arab League, is paramount. Also for the European policy makers it is imperative to look at the potential of enhanced NATO-EU cooperation. An impeding Brexit and the evolving domestic situation in Turkey pose two obstacles that could derail cooperation between the two institutions. But given the plethora of challenges Europe is facing, the necessary political momentum has finally materialized to push on with reform and enhanced initiatives. The Warsaw Summit joint declaration and the following concrete proposals seem to move the two actors towards a more effective cooperation and a more strategic partnership.
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FUTURE CHALLENGES OF NATO ⊲ POLICY PAPERS
MAINTAINING THE TECHNOLOGICAL EDGE AND WORKING TOWARDS THE DEFENCE PLEDGES One of the biggest challenges to NATO and its members is maintaining technological advantage and superiority. The volatility of the international security environment takes place in a world with rapid technological advancements where not only investments in hard power in terms of traditional weapon systems is needed. Also investments in developing advantageous technologies in the fields of nontraditional defence systems such as Artificial Intelligence and cybersecurity are needed. Push for the need to invest is caused for example by the emergence of drones, increased reliance on modern communication systems and the difficulty in integrating organisations using different systems when providing cohesive responses. As a part of the 2% defence spending pledge, NATO members have also agreed on an investment pledge of 20% of their defence budgets on major equipment that includes the related R&D. While more efforts in multinational armament cooperation are more necessary than ever, the usual metric used within NATO has both pros and cons, and there are
voices advocating a more nuanced and modern outlook on what a net contributor is. A sort of Allied Contribution Index (ACI) would include a large number of metrics – defence spending, foreign aid spending, crisis management support, willingness to deploy troops in hotspots (i.e. political will) and so on – with the objective to evaluate the extent to which an ally is a big or small contributor to NATO and the security of the transatlantic and global community.
VALUES AND INTERNAL COHESION One challenge facing the transatlantic alliance is not tangible in the way that aggression from Russia or instability in the Middle East are. Instead, this challenge is a more fundamental one, striking at the core identity of the transatlantic community, something which we must admit has not always been the object of much consideration. With doubts sown about the certainty of democracy and rule of law as norms of behaviour and governance within the Alliance, it is time to re-assert one of the core purposes of NATO, which is the defence of the ideas of free institutions.
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POLICY PAPERS ⊲ FUTURE CHALLENGES OF NATO rules, norms and codes of conduct to protect strategic infrastructure such as NATO’s deterrence capabilities, and also to investigate the creation of new safeguards against cyberattacks. Another emerging threat is aggressive information warfare. In a sense, this is not a fundamentally new threat, but one could call it a re-emerging challenge. What has changed since the Cold War is that NATO has forgotten the lessons from the past, while its adversaries have adapted and integrated new technology and other tools, and are now much more effective than before. NATO needs to look at old lessons which could be used and also at what measures could be taken to deter further information warfare against alliance members or lessen its impacts.
To do this, we should look back into history to one of the epochal moments of the transatlantic community. The Atlantic Charter of 1941 was a declaration that set out common principles for the United States and the United Kingdom in the conduct of the Second World War and, more importantly, its aftermath. More than seven decades later, it is time to make a New Atlantic Charter. It would be a declaration fit for the 21st century, outlining our common principles of governance and human rights and how we intend to address the multitude of challenges in the transatlantic area and beyond that are threatening our security and prosperity. It would also look at grasping the great opportunities of this new century both in terms of human and economic development.
EMERGING AND RE-EMERGING THREATS NATO is facing a multitude of complex and varied security threats. Their biggest unifying factor is how they will stretch the ability of NATO’s traditional structures and mechanisms to address them – especially when it comes to Article 5 of the Washington Treaty. The transatlantic alliance will have to innovate so as to stay ahead of the curve and successfully safeguard its security interests while preparing for and anticipating the future challenges. To begin with, the issue of cybersecurity is one of the most pressing threats facing the Alliance. There has been a proliferation of cyber capabilities throughout the world, meaning that both relatively weak states, as well as non-state actors, have significant abilities to threaten NATO member states. Not only does NATO need to consider the potential, and necessity, of state-to-state cooperation in the cyber area, but must also involve private companies in building resilient cyber societies and defence systems. One element could be creating a Cyber Stability Initiative, aimed at establishing
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Additionally, nuclear deterrence and proliferation is a threat which falls in the emerging/re-emerging spectrum of challenges. After the Cold War was over, NATO faced no nuclear capable adversary and there was a robust arms control architecture in place that provided long-term reassurance. Since then, the threat from nuclear terrorism has grown and the Alliance is now facing a revisionist Russia to its east. Moscow has adopted an aggressive posture both in terms of exercising nuclear weapon strikes and heightening its rhetoric on the usage of those weapons. At the same time, existing, treaty-based arms control mechanisms in Europe have been weakened and are not fully adhered to. Investments are needed to make sure that NATO maintains its superior nuclear capabilities, and the Alliance needs to consider new structures and tools for preventing escalation in the event of an incident. In the Middle East and North Africa, turmoil and instability are posing an increasingly direct threat to NATO. Just like 2014 was a turning point in NATO-Russia relations, that year also brought significant worsening of the security situation on the Alliance’s Southern flank. After years of conflict both in Syria and Iraq, the terrorist group ISIL made large inroads in both countries, controlling a vast territory stretching from Mosul in the east to Raqqa in the west. Moreover, severe uncertainties loom large over the future statehood of both Libya and Yemen. Conflicts in the Middle East and North Africa have provided the opportunity for terrorist groups and extremist movements to grow. Terrorists have also recruited followers in Europe and North America, amplifying violent extremism thanks to the Internet’s technological and reach-out capacities. NATO needs to continue developing partnerships with affected countries in the region, while also co-operating more effectively with the European Union to strengthen regional security. ■
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⊲ QUIZ
QUIZ 1. As the fifth round of talks ended in Brussels on October 14, the EU’s chief negotiator, _____________, said there was a “deadlock” over the UK’s Brexit bill, stating there had not been enough progress to move to the next stage of post-Brexit trade talks as the UK had expected, but added that he hoped for “decisive progress” by the time of the December summit of the European Council.
a) Michel Barnier b) David Davis c) Boris Johnson d) Nigel Farage
2. Catalan referendum caused muted response from EU leaders over police crackdown on the day of the election. Jean-Claude Juncker, _____________ has said that Brussels must abide by the decisions of the Spanish government and of Spain’s constitutional court. The commission has said that a vote in favour of Catalan independence would be recognised but only if the referendum that produced it complied with the Spanish constitution and had been ruled legal.
a) the President of the European Commission b) the President of the Council of the EU c) the President of the European Parliament d) the President of the European Central Bank
3. Which of these countries are the top 2 countries of origin that account for the most refugees in general?
a) Syria, Iraq b) Afganistan, Somalia c) Syria, South Sudan d) Syria, Afganistan
4. EU countries have agreed on a new _______ framework for climate and energy, including EU-wide targets and policy objectives. These targets aim to help the EU achieve a more competitive, secure and sustainable energy system and to meet its long-term 2050 greenhouse gas reductions target.
a) 2020 b) 2025 c) 2040 d) 2030
5. Digital Single Market Strategy is based on 3 main pillars: 1. Access (better access for consumers and businesses to digital goods and services across Europe); 2. Environment (creating the right conditions and a level playing field for digital networks and innovative services to flourish); and 3. ___________ a) Culture b) Economy and Society c) Politics d) Science and Technology
1.a, 2.a, 3.d, 4.d, 5.b, 6.c, 7.c, 8.b, 9.b, 10.b
6. ____________has demonstrated a high degree of economic resilience and remains at the first place in the world for most competitive financial and business hub.
a) New Zealand b) Switzerland c) Singapore d) Hong Kong
7. The Treaty of Amsterdam was signed on the 2nd of October 1997 and came into force on the___________. Its main changes focused on the Treaty of European Union, from Maastricht, 1992. It was designed to increase the democratic legitimacy of European institutions by bolstering powers of the European Parliament, and brought Security and Justice Reforms. The treaty reformed the three pillars of the EU and its institutions in order to better prepare them for an upcoming enlargement.
a) 4 May 1999 b) 5 June 1998 c) 1 May 1999 d) 1 March 1999
8. Saudi Arabia announced that it would allow women to drive, ending a long-standing policy that has become a global symbol of oppression of women in the ultraconservative kingdom. The ninth Secretary-General of the United Nations _____________ commented: „I welcome Saudi Arabia’s decision to lift the ban on women drivers. An important step in the right direction.“ This change will take effect in June 2018.
a) Pan Ki Mun b) António Guterres c) Jens Stoltenberg d) Kofi Annan
9. Kurds in ____________ voted in a non-binding referendum in September 2017 on whether to declare independence in a region that has already been autonomous since the aftermath of the 1991 Gulf War. Virtually all countries including the United States and Iran oppose the referendum with the exception of Israel, which sees a possible opening in a hostile region.
a) Turkey b) Iraq c) Syria d) Saudi Arabia
10. T he _______________is the coalition of three different political parties in Germany formed after new govermment election, which represents three colours: The CDU/CSU in black, the FDP in yellow and the Greens. The economy in the whole Eurozone slowed down after elections, and the euro fell back below $1.19 level against USD.
a) „Merkel coalition“ b) „Jamaica coalition“ c) „Stable euro coaliton“ d) „Modern German coalition“
GLOBSEC MAGAZINE ⊲ 29
GLOBSEC MAGAZINE
GLOBSEC MAGAZINE
Issue 3/2017 Publication date: 13 November 2017
3.2017
EUROPE´S ECONOMIC MOOD ⊲⊲ WHAT IS NEXT FOR THE EUROZONE AND THE REST OF THE EUROPEAN UNION by Vladislava Gubalova
⊲⊲ BUILDING AN ENTREPRENEURIAL EUROPE by Terence Tse, Mark Esposito and Danny Goh
⊲⊲ MULTISPEED EUROPEAN ENERGY TRANSITION: WILL CENTRAL EUROPE SHIFT GEARS?
Editor-in-Chief
Project Coordinator Ivana Slobodníková, Martina Šinkovičová
by Nolan Theisen
⊲⊲ A SOCIAL MODEL FOR EUROPE? by Alena Kudzko
Soňa Trojanová
Language Corrections Tomáš Grenzner Graphic Design
Peter Verček
Photography
SITA, TASR
⊲⊲ Editorial
Soňa Trojanová
⊲⊲ Headlines
Ján Čverha, Marcel Jacko, Patrik Štefaňák, Martin Šuba
⊲⊲ In Depth
Lukáš Dravecký
⊲⊲ Op-ed
Viola Martonová
⊲⊲ Visegrad News
Anna Przybyll
⊲⊲ Quiz
Michaela Marečková
⊲⊲ Calendar
Patrik Štefaňák
GLOBSEC Academy Centre Kuzmányho 3, 974 01 Banská Bystrica Mobile: 00421 / 948 120 537 Tel./Fax.: 00421 / 2 544 106 09 www.globsec.org
The responsibility for opinions expressed in signed articles, studies and other contributions rests solely with their authors, and their publication does not constitute an endorsement by the Globsec magazine The editorial board of the Globsec magazine reserves the right to shorten and revise articles when necessary.
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