Governance and Ownership of Significant Euro Area Banks. Peterson Institute for International Economics. Policy Brief, 17-18. Nicolas Véron. May 2017
European policymakers and analysts often appear to assume that most euro area banks are publicly listed companies with ownership scattered among many institutional investors, a structure in which no single shareholder has controlling influence and that allows for considerable flexibility to raise capital when needed. Such an ownership structure is indeed prevalent among banks in advanced countries such as Australia, Canada, the United Kingdom, and the United States. Veron shows, however, that listed banks with dispersed ownership are the exception rather than the rule among the euro area’s significant banks, especially if one looks beyond the very largest banking groups. The bulk of these significant banks are government-owned or cooperatives, or uniquely influenced by one or several large shareholders, or otherwise prone to direct political influence. As a result, the public transparency of many banks is low, with correspondingly low market discipline; they have weak incentives to prioritize profitability; their ability to shore up their balance sheets through either retained earnings or external capital raising is limited, resulting in insufficient capital flexibility; they take unnecessary risks due to political interference; and their links with governments perpetuate the vicious circle between banks and sovereigns, which has been a key driver of the euro area crisis. [Note: contains copyrighted material].
[PDF format, 18 pages, 271.48 KB].
The Futures of NATO. YaleGlobal. Jolyon Howorth. May 3, 2017
The North Atlantic Treaty Organization began in 1949, with 12 members, to curtail possible aggression against Europe. NATO now has 28 members, and Jolyon Howorth, an expert on European security and visiting professor at Yale University, analyzes the alliance’s transformations since the fall of the Soviet Union. “In the 1990s, realists predicted NATO’s imminent demise, pointing out that no alliance in history had outlived the disappearance of the threat against which it was formed,” he writes. The alliance survived that transition as a high-level political agency for managing transatlantic relations and later as a regional crisis management agency, opening to former members of the Warsaw Pact and taking on more global responsibilities for security assistance after the 9/11 attacks. NATO’s members have been divided over new missions, from Kosovo to Libya. Likewise, the United States under Barack Obama and especially under Donald Trump has expressed concerns about burden-sharing with Europe. Paradoxically, increased NATO activity near Russia’s borders may have spurred Russian intervention in Ukraine, reviving NATO’s original role. As Europe explores strategic autonomy, Howorth concludes by recommending that Europe become more self-reliant, taking control of NATO, while the United States gradually steps back. [Note: contains copyrighted material].
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European Relations with Russia: Threat Perceptions, Responses, and Strategies in the Wake of the Ukrainian Crisis. RAND Corporation. Stephanie Pezard et al. April 13, 2017.
Russia’s illegal annexation and occupation of Crimea in March 2014 has challenged the integrity of Europe’s territorial borders and confirmed after the Georgia war in 2008 that Russia could react violently to perceived challenges to what it regards as its sphere of influence. This report first examines how European states perceive Russia’s behavior in eastern and northern Europe, and whether they regard Russian policy and behavior in these regions as an important security priority. The authors identify a number of fault lines within Europe with regard to threat perceptions and further analyze whether these divides extend to perceptions of NATO and the United States. NATO members closer geographically to Russia appear to be most concerned by Russia’s aggressive behavior, and are concerned that the Alliance is ill equipped to respond to the current crisis. Second, the report analyzes how European states have responded to Russian behavior. While European states generally agree that a firm response is required, they are also eager to maintain open channels of communication with Russia. Finally, the report examines how European states intend to shape their relationship with Russia in the future; what existing measures they intend to keep in place; what new measures they might implement; and prospects for NATO and EU expansion. This future relationship is based on a general understanding that relations with Russia have changed irremediably; tensions are unlikely to recede anytime soon; and future actions toward Russia will depend on Russian behavior. [Note: contains copyrighted material].
[PDF format, 121 pages, 2.98 MB].
Strengthening Local Education Systems for Newly Arrived Adults and Children: Empowering Cities through Better Use of EU Instruments. Migration Policy Institute. Brian Salant and Meghan Benton. March 2017.
The huge influx of refugees and migrants arriving in Europe over the past two years has placed considerable pressure on local services and infrastructure in many cities, including in education. Cities only have competence over limited areas of education policy, leaving many unable to respond quickly to rapid population changes or make structural changes, such as to teacher recruitment and training, to adapt to the needs of diverse populations. Many cities are facing significant capacity and infrastructure challenges associated with large-scale arrivals; others are struggling to stretch budgets that were established on the basis of outdated population figures.
This MPI Europe report examines the hurdles that cities face when helping new arrivals access education and training. It also highlights innovative ways municipalities support newly arrived migrants as they enter the education system and local labor force, including two-generation and co-located services through which parents and children can access child care, health and social services, and language training in one location. Others have developed “whole-place” approaches that work across all local services to address the whole education-to-work pathway. The authors outline ways in which the European level could help mitigate multilevel governance challenges and scale what works, as well as strategies the Partnership on Inclusion of Migrants and Refugees could consider to better support cities in their immediate response to large migrant influxes. [Note: contains copyrighted material].
[PDF format, 32 pages, 1.1 MB].
The Concert of Europe and Great-Power Governance Today. RAND Corporation. Kyle Lascurettes. February 13, 2017.
This report describes the key principles of the Concert of Europe, analyzes its effects, and draws implications for future U.S. policy toward the international order. The Concert was a system of informal rules that were both recognized and practiced between the great powers of Europe beginning in 1814, after the French Revolution and Napoleonic Wars. In the Concert’s early years, regular consultation among these actors and a norm against unilateral attempts at aggrandizement on the continent fostered great-power peace and territorial stability in Europe. U.S. policymakers can learn from the strengths of the Concert system, which included accepting the realities of unequal power between its members and developing flexible processes for resolving disputes. The Concert’s stabilizing influence on great-power relations diminished by the outbreak of the Crimean War in 1853, partly because of disagreements about how to respond to revolutionary movements within states throughout Europe. As the United States considers future policies toward the post-World War II, liberal international order, it should develop agreed upon processes for resolving deep disagreements before they become insurmountable. [Note: contains copyrighted material].
[PDF format, 36 pages, 570.28 KB].
Towards a Whole-of-Society Approach to Receiving and Settling Newcomers in Europe. Migration Policy Institute. Demetrios G. Papademetriou, Meghan Benton. November 2016.
The fever appears to have broken in Europe, as the seemingly endless flows of migrants and asylum seekers have abated. But this is a fragile, and possibly illusory, calm. As public services and communities grapple with the scale, pace, and evolving nature of migration flows, several countries feel that they are doing far more than their fair share.
Despite the sense that too many crises are unfolding at once, some countries and sectors of society remain optimistic that newcomers will inject vital human capital into aging workforces. But despite the fact that some groups have performed remarkably well, the general story across the continent is one of persistent socioeconomic gaps between natives and migrants, adding to a vicious cycle that makes it harder for newcomers and their offspring to thrive.
This report considers how integration challenges in Europe differ from, and complicate, existing challenges of fragmentation and social unrest in European countries. It assesses where integration has worked—and where it hasn’t—and analyzes the prognosis for the most recent cohort of newcomers. [Note: contains copyrighted material].
[PDF format, 43 pages, 2.65 MB].
Management and Resolution of Banking Crises: Lessons from Recent European Experience. Peterson Institute for International Economics. Patrick Honohan. January 2017
Several European countries endured severe and costly banking collapses in the past decade. Central banks (both within the euro area and outside) provided extensive liquidity to keep the payments system running smoothly in most—but not all—of these countries. The policy approaches to resolve the banking crises across European countries were remarkably different, reflecting the lack of administrative and legislative preparation for bank resolution. As banking systems that had been allowed to enlarge suffered in the face of the global downturn, the scale of bank failures that swept Europe overwhelmed existing policy structures. Not all the policy choices made seem wise in retrospect; a new policy approach was clearly needed. Along with new institutional arrangements for early warning of systemic instability and a single bank supervisor in the euro area, the European Union has adopted a new policy framework for managing and resolving banking crises in euro area countries. Honohan examines the new regime, which has been in operation since the beginning of 2016, and concludes that despite improvements, more needs to be done to ensure the safety of European financial institutions and prevent future banking crises. [Note: contains copyrighted material].
[PDF format, 11 pages, 135.93 KB].