Hedging by default: the limits of EU "strategic autonomy" in a binary world order

For some time, international relations has trended in the direction of an American and Chinese dominated binary world order. While the Trump administration has been an accelerator not a cause of this trend between 2016 and 2020, not coincidentally the post 2016 era has also seen key EU figures move to develop a strategy of greater "strategic autonomy". This interest in strategic autonomy was, in no small part, a reflection of growing European distrust in the reliability of both China and, increasingly, the USA. The paper shows, in contrast to the Cold War era during which the EU was unambiguously aligned, how the EU now appears to have embarked on a hedging strategy, albeit implemented more by default than design. In its desire to defend its core interests the EU appears to lean to one side or the other on an issue by issue basis in at least seven key policy domains identified in the paper. This approach is seen to be the outcome of its dual desire to articulate the values of its much touted “Geopolitical Commission" at the same time as it tries to continue its traditional institutional commitment to multilateralism. The paper concludes that the ambiguity present in this endeavour to straddle the realist-liberal fence only serves to expose the limitations of the strategy

Kurinpidollinen uusliberalismi Euroopan talous- ja rahaliitossa 2015-2020

Tämä pro gradu-tutkielma arvioi missä määrin Stephen Gillin uusperustuslaillisuus-käsite kuvastaa Euroopan raha- ja talousliiton toimintaa vuosina 2015– 2020. Uusperustuslaillisuus määritellään sääntöperustaiseksi markkinakuriksi, joka on lukittu laillisin toimenpitein. Tutkielman kaksi tutkimuskysymystä ovat: 1) Missä määrin uusperustuslaillisuuden käsite kuvastaa EMU-jäsenvaltioiden talouspoliittista liikkumavaraa? Missä määrin EMU sääntöineen ja kriteereineen rajoittaa jäsenvaltioidensa talouspolitiikkaa? 2) Missä määrin uusperustuslailliset periaatteet ovat lukittu EMU:un? Missä määrin uusperustuslaillisuus on todella perustuslaillista EMU:ssa? Ensimmäinen luku tiivistää Gillin tuotokset uusperustuslaillisuudesta EMU:ssa, määrittelee keskeiset käsitteet ja esittelee tutkimusproblematiikan. Toinen luku arvioi EMU-jäsenyyden vaikutusta talouspoliittiseen liikkumavaraan. Tässä luvussa käydään perusteellisesti läpi EMU-maiden ja muiden kehittyneiden talouksien alijäämiä ja valtionvelan tasoja sekä koronaan liittyviä elvytyspaketteja. Näin osoitetaan, että vaikka keskimääräinen valtionvelan taso on ollut alhaisempi EMU-jäsenmaissa kuin kehittyneissä talouksissa yleisesti, yksikään suuremmista jäsenvaltioista ei ole pysynyt EMU:n säätämän rajan puitteissa tällä ajanjaksolla. Täten uusperustuslaillisuus-käsitteen soveltuvuus tälle ajanjaksolle on kyseenalainen. EU-insituutioiden aiheuttama paine ei myöskään selitä sitä, että EMU-jäsenvaltiot elvyttivät talouksiaan vähemmän kuin muut kehittyneet taloudet, toisin kuin Gillin argumentti antaisi ymmärtää. Kolmas luku käsittelee poliittista sidonnaisuutta ja epäjohdonmukaisuutta sääntöperustaisen markkinakurin toimeenpanossa EMU:ssa. Eritoten 2015 Kreikan tapausta lukuun ottamatta Euroopan komission on ollut vastahakoinen kurittamaan jäsenvaltioita taloussääntöjen rikkomisesta. Tämän luvun viimeiset osiot käsittelevät yhtäältä Euroopan keskuspankin toimia jotka ovat heikentäneet markkinakuria EMU:ssa ja toisaalta ajankohtaista kysymystä siitä, onko koronapandemia aiheuttanut perustuvanlaatuisen muutoksen talouspoliittisessa ajattelussa EU:ssa. Tämän analyysin perusteella uusperustuslaillisuuden käsite kuvasti parhaiten Kreikan tilannetta vuonna 2015, mutta sen soveltuvuus on sittemmin vähentynyt. Erityisesti uusperustuslaillisuuden käsite ei kuvasta poliittista sidonnaisuutta ja joustavuutta taloussääntöjen tai markkinakurin soveltamisessa EMU:ssa. Neljäs luku keskittyy tutkielman toiseen tutkimuskysymykseen eli siihen missä määrin uusperustuslailliset periaatteet ovat perustuslaillistettu EMU:ssa. Vaikka tässä luvussa analysoidaan mahdollisuuksia uudistaa EMU:a, tällä osa-alueella Gillin väite uusperustuslaillisuuden ”lukittamisesta” on kaikista vahvimmillaan, sillä EMU:n perustavanlaatuinen muutos vaatisi yksiäänisyyden jäsenmaiden kesken Työn pääteesi on, että Maastricht-sopimuksen alkuperäinen visio EMU:sta ei ole tullut toteen. Sen sijaan EMU:n historia osoittaa, että yrityksillä asettaa tiukkoja visioita järjestyksestä yhteiskunnallisiin järjestelmiin on tapana tuottaa epäjärjestystä. Eurokriisi johtui EMU-järjestelmän taipumuksesta epätasapainoihin, ja se on sittemimin selvinnyt ainoastaan kiertämällä omia sääntöjään.This thesis evaluates the utility of Stephen Gill’s concept of new constitutionalism in understanding the functioning of the European Economic and Monetary union (EMU) in 2015– 2020. New constitutionalism is defined as legally locked in rules-based market discipline. The thesis has two research questions: 1) To what extent does the concept of new constitutionalism aptly describe the economic policy space of EMU member states? That is, to what extent the EMU, with its associated rules and criteria, constrains the economic policies of its member states? 2) To what extent are new constitutionalist principles “locked in” in the EMU? That is, to what extent is new constitutionalism really constitutional in the EMU? Chapter 1 outlines Gill’s contributions on new constitutionalism in the EMU, defines the key terms and introduces the research problematic. Chapter 2 evaluates the effects of EMU membership on economic policy space. This chapter draws extensively on data on fiscal deficits and levels of public debt well as the fiscal stimulus packages implemented in the context of the corona pandemic in EMU states and other advanced economies. It is shown that although average levels of debt have been lower in EMU states than in advanced economies overall, none of the major member states have remained within the required limits for public debt in this period. This renders the applicability of the concept of new constitutionalism dubious. Similarly, although EMU states stimulated their economies less than other advanced economies in response to the corona pandemic, this was not due to pressure from EU institutions as Gill’s argument would suggest. Chapter 3 addresses the political contingency in the application of rules-based market discipline in the EMU. Most notably, beyond the extreme case of Greece in 2015, there has been a reluctance by the European Commission to discipline member states for breaking the fiscal rules. The last two sections of this chapter consider the extent to which the actions of the European Central Bank have undermined market discipline in the EMU, and the pertinent question of whether the corona pandemic has ushered in a fundamental change in economic thinking in the EU. Drawing on this analysis, it is argued that the concept of new constitutionalism most aptly described the situation faced by Greece in 2015, but its applicability has subsequently waned. Specifically, the concept of new constitutionalism fails to capture the political contingency and flexibility in the application of both fiscal rules and market discipline in the EMU. Chapter 4 is dedicated to the second research question – that is, to what extent new constitutionalist principles are constitutionalised in the EMU. This chapter analyses the practical possibilities for EMU reform. However, given the unanimity requirement between member states for fundamental reform of the EMU, it is here that Gill’s argument about new constitutionalism being “locked in” is found to have the most applicability. The overall argument of this thesis is that the original Maastricht vision of the EMU has not come to fruition. In fact, the EMU experience illustrates that attempts to impose fixed visions of order onto social systems tend to produce disorder. While the eurozone crisis itself was generated by unbalancing tendencies inherent in the EMU, it has subsequently survived only through circumvention of its rules

The Varoufakis-Tsipras line was doomed to fail from the worls "go"

This article on Varoufakis's book, Adults in The Room: My Battle with Europe's Deep Establishment (2017) and about what happened in Greece in 2015 is a guide for left-leaning readers who are not happy with the dominant narrative meted out by the mainstream media and the Troika-controlled governments. These readers are also dissatisfied with the former Greek Finance Minister's version. As a counterpoint to Varoufakis’s story, I have highlighted events that he is silent about, and I have expressed different views on what he should have done and what he did instead. My story runs parallel, and not opposite, to his. It is crucial to thoroughly analyse the policy implemented by the Varoufakis-Tsipras government because, for the first time in the 21st century, a radical left-wing government was elected in Europe. If we want to avoid another disaster, it is absolutely vital to identify the flaws and understand what went wrong. This critique of the Greek government’s policy in 2015 is not primarily meant to point out the respective responsibilities of Tsipras or Varoufakis as individuals. It is imperative to analyse the politico-economic orientation that was followed, so that we can ascertain the causes of failure, understand what could have been tried instead, and learn what a radical left-wing government can do in a country in the periphery of the Eurozone

After the European Commission Ordered Apple to Pay Back Taxes to Ireland: Ireland\u27s Future in the New Global Tax Environment

On August 30, 2016, the European Commission ordered Ireland to collect $14.5 billion plus interest in unpaid taxes between 2003 and 2014 from Apple Inc. The European Union suggested that Ireland made sweetheart deals with Apple in exchange for bringing more jobs into the country and concluded that these deals constituted illegal tax benefits, contrary to the European Union\u27s prohibitions against state aid. Profit shifting and transfer pricing manipulation dominate the analysis of the corporate tax structure in Ireland and its position in the context of global tax policy. This note explains the European Commission\u27s Apple decision and analyzes how this decision will affect Ireland\u27s international relations and its law reform, so that Ireland could comply with the European Union and international tax law. The European Commission\u27s Apple decision helped the United States, the European Union, and Ireland start a conversation on how to work together to regulate tax evasion on a global scale. I conclude that tax system reforms on an international scale will happen in the future to combat illegal deals between multinational companies and specific countrie

Ten Truths about Tax Havens: Inclusion and the Liberia Problem

There has been a decades-long effort to repair an increasingly fragile international tax system. One reason it has foundered has been what we identify as the “Liberia problem.” In 2000, the powerful Organization for Economic Cooperation and Development identified Liberia—but not Switzerland—as a tax haven and targeted it for sanctions. It did not go well. During the two decades since, everything has changed; yet seemingly from this lens of inclusion, nothing has changed at all. Awkwardly similar “blacklists” still target “Black” and “Brown” jurisdictions despite the fact that experts mean something quite different when they speak of the “scourge of tax havens” and secrecy jurisdictions. We think differently in important respects but believe that those real disagreements demonstrate the need for a less insular global tax policymaking apparatus. And we share a conviction that a more inclusive and more level playing field in the international tax arena would benefit all states. To show why, we offer a series of “truths” designed to prompt a long-overdue conversation about perceptions of bias and privilege in international taxation

Essays on the political economy of the Eurozone and Greek

This dissertation is about the Eurozone and Greek crises of the 2010s, comprising of three papers, an introduction and a conclusion. The three papers respectively analyse the political, financial and economic dimensions of the crises. Paper 1 shows that double-sided incomplete information is a necessary condition for explaining the bargaining dynamics and outcome of the third Greek bailout negotiations. Our model also demonstrates that the outcome of the negotiations was not that predictable. Finally, the Greek policy-makers could have been more aggressive to increase their chance of obtaining a better deal. Paper 2 then investigates the effect of political uncertainty on Greek sovereign spreads between October 2009 and July 2012. We thus create a dataset comprising of more than 5800 news items covering most policy debates prevailing at that time and that are manually coded along several dimensions, in particular as expected or unexpected policy developments. The results using an EGARCH(1,1) specification suggest that financial markets reacted strongly to unexpected positive policy developments but remained, on the whole, more sensitive to negative developments in line with existing findings. Finally, paper 3 studies the role played by uncertainty in the protracted slump of investment following the Great Recession and Eurozone crisis. Since existing volatility-based proxies for uncertainty may discount uncertainty shocks coming from the left tail, we create a proxy for disaster risk building on the Growth-at-Risk approach. Using Bayesian VAR models on a panel of 12 advanced economies from 1997Q1 to 2019Q3, we find no conclusive effect of disaster risk shocks on investment

Ten Truths about Tax Havens: Inclusion and the Liberia Problem

There has been a decades-long effort to repair an increasingly fragile international tax system. One reason it has foundered has been what we identify as the Liberia problem. In 2000, the powerful Organization for Economic Cooperation and Development identified Liberia but not Switzerland as a tax haven and targeted it for sanctions. It did not go well. During the two decades since, everything has changed; yet seemingly from this lens of inclusion, nothing has changed at all. Awkwardly similar blacklists still target Black and Brown jurisdictions despite the fact that experts mean something quite different when they speak of the scourge of tax havens and secrecy jurisdictions. We think differently in important respects but believe that those real disagreements demonstrate the need for a less insular global tax policymaking apparatus. And we share a conviction that a more inclusive and more level playing field in the international tax arena would benefit all states. To show why, we offer a series of truths designed to prompt a long-overdue conversation about perceptions of bias and privilege in international taxation

The China Challenge: Excluding Mexican/Chinese EVs From the United States

Part II of this Article summarizes the rules applicable to trade in passenger vehicles under the USMCA and WTO rules. Part III looks at the rationale for BYD and perhaps other Chinese auto producers to build factories in Mexico. Part IV examines the legal and practical options for BYD, and other Chinese autos and SUVs assembled in Mexico to penetrate the U.S. market. It also examines the actions available to the U.S. government to exclude those imports from the United States. Part V examines the implications of the exclusion policies for the United States, China, and Mexico that appear likely to be followed by either Democratic or Republican administrations in the foreseeable future. The article concludes with a brief summary and recommendations

Green Corporate Governance

This chapter explores the rise and future of “green” corporate governance, including how concerns about the changing climate are shaping long-extant debates in corporate law.2 This area is difficult to survey in one short chapter, both because it has exploded in importance, and because it intersects in its own way with many of the topics discussed in the above chapters. Compliance, directors’ duties, corporate purpose, corporate groups, and investor stewardship, are just a few of the issues bound up in the rapid and recent shift toward thinking about climate change and its intersection with corporate governance.3 The rise of Environmental Social and Governance (ESG) investing this past decade has been impossible to miss, especially once the practice became a political target for the conservative right in America.4 This chapter will discuss issues related to climate change and corporate governance, which overlap with “ESG” concerns (particularly, of course, the ‘E’), but are not necessarily synonymous with them.5 Though “greening” corporate governance is an all-encompassing strategy, this chapter will focus on the following three areas of recent development: first, climate-related investing, including shareholder stewardship; second, regulatory changes, and third, board duties in the face of climate risk