The December issue of the Romanian Journal of European Affairs proposes to its readers topics such as: the eventuality of a fiduciary digital currency, the role of the European Green Deal in achieving climate neutrality, foreign direct investments in Central and Eastern European countries, the EU Competition Policy, the implementation of the European Pillar of Social Rights in the context of the crisis generated by the pandemic, the transition to a hydrogen-based economy in the European economies, the EU’s position as a global actor in relation to the China-Russia partnership.
Guest article: Towards a Fiduciary Digital Currency
Shortly after the first financial crisis of globalization (2008-2009), a number of changes started to dominate the financial and banking world. Households and companies were confronted with a series of new rules and procedures aimed at protecting both the banks and the public. In most cases they led to an increase of the lending cost, and new requirements for money laundering avoidance and prevention of terrorist financing made access to money onerous and hungry for paper. Technology and AI brought an alternative to the market, which proved to be faster, cheaper and with less hurdles. They are all private initiatives, spun up by startups and the wisdom of putting IT knowledge to the service of young entrepreneurs. The crypto assets, blockchain, fintech, digital payments and digital currencies are all part of the new developments. The emergence of technology as the new layout for banking led major financial powers and the international financial institutions to look closer at the challenges they face, and decide that the launch of an official digital currency should not be postponed for too long. Currently, more than 70 central banks of the world are engaged in the process of preparing for the near future, among which ECB is a front runner.
Keywords: blockchain, fintech, digital currency, crypto-assets, central banks, artificial intelligence, banking, finance, open banking, startup.
European Climate Law(s): Assessing the Legal Path to Climate Neutrality
Beatriz Pérez de las Heras
The European Green Deal (EGD) is the European Union’s comprehensive policy framework, intended to set the vision for the first climate-neutral economy by 2050, in compliance with the Paris Agreement. Achieving this ambitious goal will require a radical transformation in European production and consumption patterns, and climate action lies at the core of this transition process. As the first legal initiative implementing the EGD, the European Climate Law makes climate neutrality a legally binding objective. It also empowers the European Commission to set the trajectory for achieving this goal by 2050. This legal act will clear the path for a more integrated climate policy. However, the current climate targets, although recently updated by the European Climate Law, are not yet in line with the goals of the Paris Agreement or the EU’s ambition of becoming climate neutral in 2050. This paper looks at recent changes in EU’s climate and energy law brought about by the EGD. Based on this analysis, its main objective is to assess whether the new policies constitute a suitable legal path to achieve climate neutrality by 2050.
Keywords: European Union, European Green Deal, climate neutrality, Paris Agreement, 2030 climate and energy framework, European Climate Law.
JEL classification: Q54, Q58, R11.
Issue of Loyalty and Voting Tendencies in the European Parliament: The Case of Lithuanian MEPs
This article examines the political cohesion and the issue of loyalty in the European Parliament. The study seeks to compare the loyalty to EP political groups and voting tendencies of different terms of MEPs elected in Lithuania and to contribute to the debate on the work of the representatives of the new EU Members in the European Parliament. The research aims to analyse the loyalty of Lithuanian MEPs to their political group in EP and how loyalty trends change during the second term of re-elected MEPs? Quantitative data show that MEPs are sufficiently loyal to their EP political group, with the exception of Eurosceptic MEPs, and qualitative interview data show that national government priorities, when the need arises, are supported more by members of the ruling political parties than opposition parties. The study also shows that, more often, MEPs’ loyalty increases during their second term compared to the first one.
Keywords: European Parliament, political groups, Lithuania, political cohesion, representation, voting.
Shaping Competitiveness for Driving FDI in CEE Countries
Alexandra Horobeț, Oana Cristina Popovici, Lucian Belascu
In the current situation, shaped by the relocation of multinational companies following the disruption of global value chains, the efforts for attracting foreign direct investments (FDI) should be better focused on enhancing the flows that create value in the economy, stimulate the local business environment, and are destined to sectors with high value added. The aim of this paper is to identify the factors shaping competitiveness in Central and Eastern European countries that also matter for the foreign investors’ decision regarding location. We have taken an innovative approach in dealing with the large range of FDI determinants and we have used the machine learning based random forest methodology to identify the most important predictors of FDI in CEE countries from a set of 15 indicators also present in the calculation of the European Regional Competitiveness Index 2019. Our results show that countries’ particularities, market size, digitalization of the economy, labour force characteristics (such as population in tertiary education and employment in knowledge-intensive services and high-tech manufacturing sectors), and economic potential market are the factors with the highest contribution in attracting FDI in the CEE region.
Keywords: foreign direct investment, competitiveness, random forest, Central and Eastern Europe.
Applying Securitisation Theory to EU Competition Policy
Is the competition policy connected and relevant to security? Is a nonjuridical and non-economic theory capable to cover the dynamics of EU competition issues? The answers included in this article will focus on the unconventional dimensions of security as interconnections between social and economic layers of individual, business and public interests. The final outcome would be alternative scenarios and solutions for a better understanding of the overall human security in relationship with the deepening of EU Competition Policy.
Keywords: EU Competition Policy, Securitisation, Copenhagen School, Cartel Alliance, Balance of Power, Interests and Threats, Human Security.
The Implementation of the European Pillar of Social Rights (EPSR) in the Post-Pandemic Era
Laura Gómez Urquijo
The European Pillar of Social Rights (EPSR) was to be implemented in a growth and stability period, once the financial crisis was overcome. However, an unexpected and bigger social and economic crisis has developed with the COVID-19 pandemic. The lack of employment opportunities, the precarious working conditions and the intensification of vulnerabilities predict that this crisis will be more harmful to European cohesion than its predecessor. In response to these challenges, the EU institutions have proposed extraordinary funding instruments and have transformed the former economic governance rules aiming at improving employment and growth, environment, but also of the resilience of a more inclusive and fairer society. Our research question refers to how this context can affect the implementation of the European Pillar and Social Rights. To answer this question, first, we will review the instruments provided in the EPSR for its implementation. Second, we will consider how this implementation is conditioned by the transformation of the economic governance rules from the 2008 crisis to the current crisis. Third, we will examine the Action Plan for the implementation of the European Pillar of Social Rights launched during the European Council Porto Summit.
Keywords: Social rights, European Union, economic governance, social cohesion.
JEL classification: D630, F590.
The Dawn of a Geopolitics of a Hydrogen-based Economy. The Place of European Union
As the world economy is confronted with the urgency of climate change, the emergence of new technologies and a redefinition of the balance of power, one of the areas that attracts more and more interest is that of the hydrogen-based economy. The paper proposes a classification of participants into 4 categories and analyses their current and announced strategies and actions related to the utilization of hydrogen in economy. At the same time, the paper offers some arguments in relation to the complementary nature of electrical battery and hydrogen-based utilizations in economy. The global distribution of the key players reflects an important asymmetry and supports the idea of the emergence of a new type of balance of power and of international relations which will translate into a new geopolitical map of the world. In this context, the European Union emerges as one of the main participants in the energy transition towards the goal of net zero carbon emissions in 2050 and even if there are great differences in the degree of preparedness among the member states, the conclusion is that all of them should participate at the earliest stage possible.
Keywords: hydrogen economy, hydrogen society, energy transition, geopolitics, net zero carbon emissions.
JEL classification: F23, F64, O33, Q42.
Foreign Policy Specialization of Small States: Latvia’s Engagement in Central Asia
Karlis Bukovskis, Aleksandra Palkova, Arturs Bikovs
The paper seeks to develop and explain the concept of small state foreign policy specialization, using the example of the Republic of Latvia and its engagement with the Central Asian countries. Latvia’s foreign policy development for the past few years demonstrates an increasing self-assertiveness of the small Baltic state. Since leaving the Soviet Union, Latvia has been seeking to consolidate its position in the Western community of countries, demonstrating that it is a trustworthy partner. Most recent developments in Latvia’s foreign policy demonstrate the country’s willingness to share the responsibilities within the international system, support its EU and NATO partners, as well as advance its own diplomatic goals. The analysis demonstrates that the European Union is interested in economic, security and political collaboration with the five Central Asian countries, and Latvia has natural advantages in its expertise, know-how and historical positioning towards the region. Unlike larger EU member states, Latvia can be viewed as more understandable and an equal partner in bilateral relations. Latvia has chosen its engagement and support for the Central Asian countries at the EU level because of both a fair solidarity and the efficient use of the limited financial and diplomatic resources that the small country has in its arsenal.
Keywords: Small states, European Union, Latvia, Central Asia, Uzbekistan.
The Dragonbear and the Grey Rhinos. The European Union Faced with the Rise of the China-Russia Partnership
Liliana Popescu, Răzvan Tudose
China and Russia have been developing a strategic partnership over the last decade or more. This serves them to assert their own perspectives in international relations and cooperation to alter the liberal world order. The article is analysing the dimensions of this partnership, as well as asymmetries between the two partners. Russia does not have too many tools nowadays at its disposal to counter China’s rise and the power gap between the two is widening every day. Unlike Russia, which does not have many foreign policy alternatives as relations with the West have worsened drastically, China is often courted by both Westerners and non-Westerners. In this context, the European Union seems to be unprepared, at a time when the EU-US relations have suffered during the Trump administration, and all circles are demanding a reset of the transatlantic relationship. Biden’s change in tone regarding the transatlantic relations seems insufficient, as little progress is being made on delicate issues like trade, technology, climate, and China. The EU is unprepared to face the ‘grey rhinos’, the serious problems generated by the rise of China and of the China-Russia partnership. The article identifies and discusses the most important ‘grey rhinos’ the EU needs to deal with.
Keywords: Sino-Russian relations, China, Russia, EU decline, new world order, transatlantic relations.