European Union

When China joined the World Trade Organisation (WTO) at the end of 2001, its Accession Protocol stated, though ambiguously, that China would be removed from the list of non-market-economy countries by the end of 2016. During those 15 years, China and other WTO members have been free to reach bilateral agreements so that market economy status (MES) could be granted early.

China has always been especially eager to get MES treatment from the EU, its largest trading partner. From 2002 to 2012, Wen Jiabao as the Chinese Premier pushed the EU with all available means to recognise China as a market economy, but failed. Facing heavy pressure from China in this period, the EU created five market-economy criteria and inspected the Chinese situation carefully, but the conclusion in 2008 was that China only met one of the five criteria. Nevertheless, the EU was still prepared to recognise China’s MES after the 15-year transitional period came to an end. The EU’s then trade commissioner Karel De Gucht said in a speech to the European Parliament in November 2013 that ‘in 2016, China will receive market economy status’.

A turning point has come in the last three years. Inspired by the US position, some of the EU’s lawyers started to pay more attention to the wording under Article 15 in China’s WTO Accession Protocol, and challenged the EU’s original automatic recognition at the end of 2016. In the meantime, fearing that MES treatment for China would make the EU’s trade tools less effective when dealing with anti-dumping cases targeted at Chinese imports, European manufacturers – steel producers in particular – launched powerful lobbying campaigns in Brussels as well as in member states. As a result, the current trade commissioner Cecilia Malmström has stated that there is ‘no automaticity’ in granting China MES this year.

“The whole debacle demonstrates that the mutually-beneficial nature of Chinese trade relations is in doubt”

The Chinese side has dropped its request for MES from the EU, but insists that the EU follow the WTO provisions and treat China as a normal country after 15 years of its accession. Its argument is that reform has been carried out for more than 35 years in China to great success. China is no longer, as some Europeans have accused, a planned economy; the market now plays an important role in stimulating Chinese economic growth. China also argues that when the European Commission calculates dumping margins against some of its trade to the EU, the analogue country is often the United States, which is unfair because China and the US are not at the same economic level and there is a big difference between the two countries’ production costs.

When dealing with China’s MES, the EU needs to take into consideration at least three pivotal questions. First, how should the EU revise its own legislation to avoid violating the provisions of the WTO? Of the four points under Article 15, point one’s second sub-section will definitely expire on 11th December. This will require adjustments to EU law, in particular Council Regulation No. 1225/2009, or Europe may risk conflicting with the WTO rule. But the problem is the difficulty of achieving a common position in the Council and the Parliament. As a matter of fact, it is not impossible to maintain trade defence measures against Chinese imports, including anti-subsidy and countervailing measures. Even if in anti-dumping investigations, where China is selected as the analogue country, the EU has the possibility of introducing higher import tax against those Chinese enterprises that dump in the European market by removing the ‘lesser duty rule’, but of course, this may need the approval of the legislative bodies first.

The EU must secondly consider how to balance different interest groups within Europe. In other words, not only the voices of stakeholders in the steel industry, but also those who benefit from free trade should be taken into account. It is of course not an easy task to deal with the different positions of member states, so it will be a big challenge for the EU to align the interests of transnational industrial sectors with those of the 28 member states.

“A ‘no’ to China’s MES will most probably initiate a series of steps taken by Beijing to punish Brussels”

Last but not least, how should the EU take care of its overall relationship with China? The decision taken by the EU will have a direct impact on EU-China relations at least in the short term. Although China has not specified its plan of revenge yet, a ‘no’ to China’s MES will most probably initiate a series of steps taken by Beijing to punish Brussels by, for example, withdrawing Chinese investment from the Juncker Plan, suspending the purchase agreement with Airbus, slowing down negotiations on the Bilateral Investment Agreement, dividing the EU by exploring bilateral cooperation projects with some member states that are more favourable to granting China MES.

No matter what decision the EU takes, and especially if no decision is reached by the time limit, the whole debacle demonstrates that the mutually-beneficial nature of Chinese trade relations is in doubt. Unfortunately for China, some economic problems have appeared with poor timing – signs of stagnation and its huge overcapacity for steel production have seriously lowered international optimism over the Chinese economy, which have worried Europeans about the possibility of increased trade disputes with China in the coming years. The common understanding of the EU-China relationship now tends to lean towards the view of a zero-sum game.

The EU needs to hurry up and form a policy as soon as possible, otherwise the WTO dispute mechanism may interfere when the deadline expires. But who knows, maybe a final WTO ruling is the best solution. In this way, the EU does not need to face what is probably ‘mission impossible’ for its institutions.

IMAGE CREDIT: FLICKR/CC – European External Action Service

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The NATO Summit in Warsaw will be a key meeting to decide on next steps in ensuring the Alliance’s collective defence. Strengthening and modernizing NATO’s defence and deterrence posture will be at the core business of the Summit. To successfully adapt NATO to a rapidly changing security environment, the Warsaw Summit will need to consider in its deliberations several relevant and highly important issues.
Further information
Draft agenda and meeting documents
Source : © European Union, 2016 - EP

General : The UK referendum and its consequences are discussed during an extradition plenary session in Brussels on Tuesday 27 June. In addition the financial repercussions of the refugee and migrant crisis are discussed at a joint committee meeting, while political groups are also preparing for next week's full plenary session in Strasbourg.

Source : © European Union, 2016 - EP

General : The UK referendum and its consequences are discussed during an extradition plenary session in Brussels on Tuesday 27 June. In addition the financial repercussions of the refugee and migrant crisis are discussed at a joint committee meeting, while political groups are also preparing for next week's full plenary session in Strasbourg.

Source : © European Union, 2016 - EP

In the end, it was the Little Englanders who determined the outcome – believing in Brexit as a route to ‘take back their country’. Yet if they were worried about the UK’s lack of influence in the EU and the wider world, the impact within three short days on global stock markets, currencies and risk indicators should already tell them they were wrong.

UK politics is in turmoil. The only political leader prepared for a Brexit outcome appeared to be Nicola Sturgeon in Scotland, who, on Friday morning, made a well-prepared, sharp speech, moving rapidly to take the advantage, arguing for a potential second independence referendum.

As the Tories and Labour descend into desperate in-fighting and recrimination, the UK public – or rather the English and Welsh public – is split like never before.

There are many stories to tell on which social group voted which way – the most pro-EU, but with the lowest turn-out by far, being the 18-25 year olds. Yet despite the valid recriminations against Jeremy Corbyn for his half-hearted and almost invisible presence in the campaign, in the end it was the Tories that determined the outcome.

“The UK has voted to put its own existence as a state at risk”

Tory voters, according to a post-referendum poll carried out by Lord Ashcroft, split 58% to 42% for Brexit. Apart from UKIP, all the other parties – Labour, the Liberal-Democrats, Greens and Scottish National Party – had close to two-thirds to three-quarter majorities for remaining in the EU.

David Cameron, a Tory Prime Minister, called a referendum he didn’t have to call, and failed to persuade his own Tory voters to back him. His resignation was a foregone conclusion.

What comes next is unclear. The UK has voted to put its own existence as a state at risk. It has chosen to undermine its economy, its domestic politics and its influence in Europe and the world. It has also damaged the EU, and impacted negatively on the wider world. It is historic folly on an unimaginable level.

The economic impacts will unfold in the days, weeks and months ahead – the immediate falls in the pound, the euro and other currencies, and in stock markets, were predictable. Already, reports are coming in of financial players – banks, hedge funds and others – looking to move staff and operations out of the UK. Foreign direct investment into the UK is bound to fall.

The political outcomes will reverberate in unpredictable ways in the months and years ahead. Much attention now is on Scotland – a poll on Sunday suggested a big shift to 59% support for independence. Also on Sunday, Nicola Sturgeon said the Scottish Parliament might block any legislative consent needed as part of the UK’s Brexit process.

This is just the beginning of a major political, constitutional and economic crisis in the UK. Within hours of the result, in the early hours of Friday morning, Sinn Fein had called for a vote on reunifying Ireland, Spain called for joint control of Gibraltar – while, predictably, far-right leaders in France and the Netherlands called for their own referendums on leaving the EU.

The Tory Brexit side – Boris Johnson and Michael Gove are in disarray. While Johnson could be the UK’s Prime Minister by early autumn, unless stopped by an alternative candidate such as Theresa May, the Brexit leaders never had a clear story as to what voters would get instead of the EU.

With the scaremongering over immigration pushing Brexit over the finishing line in the referendum, it is hard to see any deal that keeps full access to the Single Market – the EEA option always looked like a hard sell after a ‘Leave’ vote. Yet Westminster has a majority of MPs who support staying in the EU – what sort of deal they might vote for is quite unclear.

“Scotland – a poll on Sunday suggested a big shift to 59% support for independence”

The EU now has to deal with the Brexit mess, along with its other huge challenges – both in the eurozone and the refugee crisis. The EU’s leaders are right to push for a rapid move on Article 50, allowing at least some sense of control and attempts at reducing uncertainty to begin. But the political disarray in the UK means that this may take a few months rather than days.

Scotland will want some clear answers from the EU as to the basis on which, if it became an independent state, it could remain in the EU, negotiating its status as a new member state. Unlike the scaremongering at the time of the 2014 independence referendum, the EU owes Scotland some clear answers – without taking a position on the desirability of Scottish independence or not.

In the end, Cameron was hoist by his own petard. He called the Brexit side ‘Little Englanders’ but he had presided for six years over a eurosceptic government that had seen the UK’s influence in the EU slide, and that had led the UK’s wider foreign policy to be almost invisible. That, and the UK’s failure to play a major, constructive role in any of the EU’s current challenges during his premiership, meant Cameron could not make a strategic and broad case for EU membership, arguing the benefits of solidarity, stability, rights and values.

As the EU struggles to find its own way forward now, it should heed this lesson. The EU’s ‘Fortress Europe’ approach to the refugee crisis, its abandoning of the values underpinning its enlargement process in its EU-Turkey deal, and its lack of urgency or weight in dealing with the levels of youth unemployment across the EU, point to an EU that has lost its sense of solidarity, and has no idea how to tackle the disaffection of much of the EU public.

The EU in its own way is also at risk of becoming a ‘Little Europe’. The UK currently lacks – outside of Scotland – any strategic, high-level political leadership. The EU has to show it can provide strategic, high-level and creative leadership at this critical time. Business as usual will not do.

IMAGE CREDIT: CC / FLICKR – frankieleon

The post Brexit – a spiralling crisis begins appeared first on Europe’s World.

It’s telling that almost all the British public debate since Friday’s announcement of the result of the EU referendum has been about British politics: who’s succeeding David Cameron? What’s happening to Jeremy Corbyn? Or Scotland?

Almost nothing has been discussed about how this decision will play out with the rest of the European Union.

At one level, this reflects the speedy resignation of Cameron, which would appear to make him now head of a caretaker administration, able to claim that constitutionally he is unable to make any decisions beyond the mundane, including notifying the EU of the UK’s intention to withdraw and invoke Article 50 proceedings.

With the European Council seeming to accept that it has to receive a formal notification to start Article 50 – either a letter or a minuted statement at a summit – there does not appear to be any politically-viable means of forcing the UK to start that process without their express consent.

However, this does expose a basic tension for other EU leaders. On the one hand, they don’t want the UK to leave, for a wide variety of reasons. On the other, if the UK is going, they would like it to be dealt with as quickly as possible. With all the other problems that the EU is facing, a drawn-out Brexit process is most unwelcome.

With talk in London now of an October notification, to be made by a new Tory leader, the key imperative for the EU27 is to make the most of the time to plan, since they control Article 50 once it begins.

This planning will take in two basic elements: the how and the what of the process.

The how is simply a function of never having to have done this before. While the Greenland exit in 1985 offers the nearest model of proceedings, the EU has moved far beyond its then competences and there is no parallel framework of the Danish government involvement on non-exit matters. In short, this is a white page exercise.

Such procedural questions – who speaks for the EU27? How are positions coordinated? How are decisions reached? – overlap to some extent with the content aspect, the what.
In essence, there are two models the EU can work from.

The first starts from the UK as a member state and takes things away. Most obviously, that means voting rights and representation in institutions, but after that, the UK could be offered everything it has now.

The attraction of this is that the UK is obviously already compliant with EU requirements, as a current member state, so there’s no transition into compliance. A framework agreement could be put together quite easily, whereby the EU27 and the UK agree a process for the latter to notify the former of its intention to withdraw from a given area of policy, with the EU27 then indicating any knock-on effects (legal, financial, etc.) and some relatively simple approval process. If financing kept pace with such an arrangement, then that needn’t be an issue: more complex would be linking different legal elements together.

The big problem with this model is that is clearly clashes with the likely British intention to limit free movement of workers, which is a fundament of the internal market: would it make any sense to use this maximalist model without the core of the activity?

This leads then to the second model, which starts from a position of no relationship at all and adds elements in. This addresses the free movement issue more easily and also allows each member state to decide quite what it’ll bar to the UK.

This approach is also more future-proofed, as it rests on the structure that would apply if there was no agreement after two years, at which point the UK could leave, with no residual rights beyond those present elsewhere in other international agreements.

However, this minimalist strategy has the problem that it would increase the economic costs of Brexit to all involved, since more barriers would emerge. This would take much longer to negotiate and a framework arrangement of the kind outlined above would probably not be possible. Also, if the EU27 did hold out any hope of the UK rejoining in the future, this would make that harder.

Moreover, there are some challenges of the EU27, whatever approach is taken.

Firstly, member states have very different positions on Brexit and what price to impose. To take the most obvious example, Ireland has a very strong economic, political and security imperative to keep the UK very close. Countries that would gain from limiting British access to markets – those with financial centres or car manufacturing, for example – might be much less amenable.

Secondly, member states will be conducting this entire process with at least one eye very firmly on their domestic audiences. There is considerable pressure in countries such as France, the Netherlands and Denmark for similar votes to the British one, so these governments have no incentive to offer the UK a deal that looks even close to being ‘better’ than their current terms of membership. The politics run completely against the economics here.

Finally, the EU27 will have to think to the future on this process. Now that exit is established as possible, there is going to be the possibility that it happens again, not least for the reasons just mentioned. Thus governments might consider what might work in their favour, should their country’s time come. This will be particularly the case for Eurozone members, which face a degree of complexity that will make Brexit look like a walk in the proverbial park.

With meetings of the original founding members and of the EU27 permanent representatives over the weekend, and a European Council this week, expect heated debate across Europe, even as the UK continues to work out its own way forward.

 

The post What’s the EU going to do? appeared first on Ideas on Europe.

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After the shock, the reality. Across Europe, politicians, officials, voters and businesses have asked themselves a simple question following the Brexit result: what now?

In Westminster, a political vacuum has emerged. Britain has lost a prime minister and not yet filled his role. Conservatives are jostling for position as David Cameron’s successor. Labour, meanwhile, has turned inward, with shadow ministers launching a coup against their leader.

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The British vote to leave the European Union on Wednesday 23rd June sent shock waves throughout the Member States and is proving particularly costly for the Eastern countries that joined the EU in the last enlargement rounds (2004, 2007, 2013). The central banks of Poland, Hungary and Romania started the day of the 24th of June trying to calm the markets, the Polish zloty slid against the Euro by 3,8% (Onoszko et al, 2016), while political leaders across the region tried to reassure their respective electorate that the economy will not be significantly affected by the vote and the rights of their citizens working and living in the UK will not change in the short term. But this was also exploited as an opportunity to reflect on specific policies, on their role in an EU without the UK and this is particularly telling for the tensions within the EU and challenges for the future.

At a closer look their views on specific policies do not differ substantially from the concerns raised by David Cameron during the renegotiation deal that took place earlier in the year, in particular on immigration, economic policy and cutting red tape. However, they differ in terms of support for further integration, with the latest entrants Bulgaria, Romania and Croatia being clear about strengthening the EU, while the four Visegrad countries (Poland, Hungary, Czech Republic and Slovakia) are being more concerned with further reform.

The Hungarian Government encouraged the EU to engage in pragmatic politics, not in ‘political correctness’ and to listen to people’s opinions (Peter Szijarto, Minister of Foreign Affairs). Hungary’s main policy concern of curtailing immigration and rejecting compulsory quotas is shared by Slovakia, together with economic governance worries that seem certain to dominate the agenda as the later country is next to take over the EU’s rotating presidency (Robert Fico, Prime Minister of Slovakia, in BBC News, 2016). The Polish Government encouraged further reform in the EU including cutting red tape and increasing democratic legitimacy (MFA statement) and overall the feeling from Warsaw was that an important ally was lost in the fight for EU reform as a result of the UK’s decision to exit.

Seen as a triumph for ‘nationalists and populists’ by Bulgaria’s key politicians, the UK result prompted them to ask for further integration (Sofia Globe), while Romania declared its willingness to become ‘a proactive actor in the evolution of the EU, which will certainly continue after the UK vote’ (Dacian Ciolos, Prime Minister).

While Hungary supports more regional integration within the Visegrad group (Peter Szijarto, Minister of Foreign Affairs) and Polish President Andrzej Duda called for safeguards from further exits to be put in place, it looks like the region is still divided on specific issues, despite an overall declared disappointment with the result of the UK vote. The UK exit vote might have just provided the catalyst for reaching agreement on policies that have divided member states so far. Worry about a further economic downturn adds to the sense of urgency in pulling together despite some differences, which is ultimately what the EU is all about.

Dr Simona Davidescu is Associate Lecturer
at the University of York
and Research Associate at the EU-Asia Institute
(ESSCA School of Management)

BBC News ‘Brexit: World reaction as UK votes to leave EU’, 24 June 2016,  http://www.bbc.com/news/uk-politics-eu-referendum-36614643

Ciolos, Dacian ‘Declarații susținute de premierul Dacian Ciolos în contextul referendumului din Marea Britanie’, Romanian Government, 24 June 2016, http://gov.ro/ro/stiri/declaratii-sustinute-de-premierul-dacian-ciolos-in-contextul-referendumului-din-marea-britanie

Onoszko, M.;  Levitov, M. and Chamonikolas, K. ‘Brexit Jolts EU’s Eastern Members as Polish Zloty Leads Plunge’, Bloomberg, June 24, 2016, 4:20 pm, www.bloomberg.com

Polish Government ‘MFA Statement after the announcement of results of the UK referendum on EU membership’, 24 June 2016, www.msz.gov.pl

Sofia Globe ‘Bulgaria on Brexit: A bad day for Europe, a triumph for nationalists and populists’, 24 June 2016, http://sofiaglobe.com/2016/06/24/bulgaria-on-brexit-a-bad-day-for-europe-a-triumph-for-nationalists-and-populists/

Szijarto, Peter ‘Europe must learn from Brexit, says Hungarian Foreign Minister, Jne 24, 2016, 3:19 pm, www.kormany.hu/en/hungary

 

 

The post Brexit: reactions in Central and Eastern Europe appeared first on Ideas on Europe.

Shared Vision, Common Action: A Stronger Europe
A Global Strategy for the European Union’s Foreign And Security Policy

Tag: CSDP

Wondering why there is such a fuss over Article 50, the so-called EU exit clause? We’ve annotated the Article 50 text to explain the issues in full. (If you’re using Next FT and can’t see the embedded document, please follow this link.) You can read more about the Brexit divorce talks here and here.

 

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Just five weeks ago, UKIP leader Nigel Farage, anticipating a close-finish in the EU referendum, told The Mirror, “In a 52-48 referendum this would be unfinished business by a long way.”

In those circumstances, said Mr Farage, pressure would grow for a re-run of the 23 June ballot, and he would fight for a second referendum.

Well, the result yesterday was exactly 52%-48%. But of course, Mr Farage isn’t fighting for a second referendum, because it was his side that narrowly won.

But as the nation is so evenly split in two, there are now many calling for a second referendum, just as Mr Farage said he would with the same split.

Although the country as a whole voted 52-48 in favour of Leave, there are regional and national differences in that vote.

For example, Scotland, Northern Ireland and the UK’s capital, London, voted strongly in favour of remaining in the EU.

In Scotland a large majority of 62% voted for Remain, in Northern Ireland 55% and in London 60%, with some London boroughs as high as 70%.

It is now possible that Scotland will seek another referendum on their independence from the UK, no doubt so they can reapply to join the EU. That might be something Northern Ireland could also consider.

In many cities of Britain, the referendum result was practically a tie. Such as in Britain’s second largest city, Birmingham, where the voters were evenly divided 50% – 50%.

But some other towns were strongly in favour of Leave, with for example 70% of the voters in Hartlepool opting for Leave.

A split of 52-48 in favour of Leave across the country as a whole has caused deep despair and frustration for many Remain voters, just as it would have done for Leave voters if the situation had been reversed (as clearly Mr Farage thought it might be).

A more decisive referendum result, with a much larger margin, would have seemed more convincing, and possibly less bruising for almost half of the country.

In other nations, changes to a constitution – which could be considered to be akin to leaving the EU – require somewhat more than a simple majority.

In Australia, for example, a referendum is only passed if it is approved by a majority of voters in a majority of states, and by a majority of voters across the nation. This is known as a ‘double majority’.

Since Brexiteers are now wanting to import an Australian style points-system for all migrants, how would yesterday’s referendum have fared if we had imported Australia’s ‘double majority’ system?

Of course, we cannot back-date the procedure adopted for yesterday’s referendum. And it was a democratic decision of the electorate, even though wafer thin, and so no doubt it has to be accepted in good grace.

However, nothing is set in stone. Unlike most modern states, Britain doesn’t have a codified constitution. It’s up to Parliament to lead the way.

As the country is painfully split right down the middle on this issue, there could be a strong argument to hold a second referendum on whether Britain agrees with the terms of the eventual EU divorce.

There is nothing stopping Parliament offering this option if it is the will of our lawmakers.

Commented EU law expert, Professor Steve Peers of Essex University, “The government could offer people a choice between staying in the EU and accepting the terms of departure, once we know what those are.”

And since Nigel Farage said he would himself call for a second referendum if the result was 52-48, he can hardly have any grounds for complaint if this is actually what happens. We should keep reminding him of this.

• Today’s Metro​ article

Other stories by Jon Danzig:

• EU Referendum result: Disunion
• You won’t get your country back if you vote for a Brexit
• Leave campaign is relying on lying to win
• List of the latest articles by Jon Danzig

To follow my stories please like my Facebook page: Jon Danzig Writes

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I was recently advising a start-up offering job opportunities to individuals willing to relocate across the world. In one case, a Dutch chef working in a hotel in the Caribbean signed a contract with a new hotel chain in Georgia. Mobility is the key word in today’s labour market, but it doesn’t solve all the problems.

In my country, Greece, the CEO of a large multinational corporation will still find it hard to recruit for an entry-level position while at the same time youth unemployment rates are over 50%. Such peculiar observations are traditionally seen as a problem, but are now being taken by some as an opportunity. People often talk about ‘brain drain’ killing Europe’s best, while others, like the founders of the start-up I have been advising, see it as more of an opportunity, describing the phenomenon instead as ‘brain circulation’.

Ever since its establishment in 1997, the European Employment Strategy (EES) has been trying to set common objectives and goals regarding employment policies in order to make life easier for jobseekers. A lot has been achieved, including a fight against the number of administrative barriers within member states that often prevented the free movement of workers in the EU. People today find it much easier to look for a job abroad than before, and are also given indirect opportunities to kick-start their career in a foreign country through study programmes like Erasmus and Leonardo, which guide them into different cities.

All of this is good provided you actually secure a job at the end of the programme; otherwise you’re doomed to the eternal search many are still faced with. Here in Greece, when someone graduates as a chemical engineer, he or she has a couple of years of grace to find decent work. If the graduate doesn’t find work immediately, they will most likely end up supporting their family by working in a completely irrelevant sector – it wouldn’t be unusual for such a person to become a bartender on a Greek island. Even worse, they may have to continue in this job for long enough that when the right opportunity finally arises, there is nothing to boost their candidacy besides a well-framed, and now slightly dusty, degree. That, in practice, is driving people out of the market, making little to no use of the investment that they themselves, their families and their countries put into educating them.

“People often talk about ‘brain drain’ killing Europe’s best, while others see it as more of an opportunity”

But this description of the problem is a picture only in black and white, and is probably unfair and certainly lacks imagination. We need at the very least to add some grey – policies that will bridge the gap between the unemployed and the employed, not just matching the unemployed with whatever jobs are available at any given time.

My answer to the problem is the launch of a massive programme for paid, enterprise-based internships within the EU. I am an advocate of using paid internships, for what should be their primary role, to bring new talent into a company, not as a way of finding cheap labour. Internships can also be used by candidates to explore a number of potential job markets besides those in closest proximity to either their location or field of study. Traditionally, only a few sectors asked for student internships such as medicine, the law and sometimes accounting. All other sectors are more or less left without an established internship culture.

Companies are very selective, and once they pick someone they tend to stick with their investment. A good enough candidate working as an intern has considerably more chance of staying on to work for the company as opposed to an unknown competitor for the permanent position from outside. This is not a theoretical remark but a practical observation. The institution I work for, The Hellenic Initiative, has been one of the main sponsors of such a programme in Greece called ‘Regeneration’.

“An intern has considerably more chance of staying on to work for the company as opposed to an unknown competitor”

The programme, launched a couple of years ago, has so far had an overwhelmingly positive response from the participating companies, and the number of applications received and placements offered has nearly doubled since launch. Even with the dire macroeconomic factors surrounding Greece today, participating companies were asked to pay their interns the minimum wage for six months, and in return we guaranteed after a tough selection and training process to assign them the best fits for their vacancies. This small-scale experiment had a 78% success rate when it came to interns getting their contracts renewed and being hired as full-time employees.

I am sure that many can think of different alternatives to this idea, like for example having students involved in such programmes as part of their course and not waiting until after they graduate to gain work experience. But the main idea remains quite simple and is easy to implement. We need to bridge the gap between what universities offer and what companies need, and a good way of doing so is to spend as much time as possible in both worlds.

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On the 23rd of June, the British people voted to leave the European Union. Against all odds and, above all, against all reason, one of Europe’s most moderate and pragmatic of peoples has decided to disregard overwhelming evidence that such a decision would have negative consequences for the country.

Almost the entirety of the country’s intellectual, economic and political establishment had explicitly opposed Brexit. There had been letters by Nobel laureates detailing the cost to UK research of a ‘Leave’ vote, a public statement by over 250 academics to the same effect, the official opposition of most British businesses as well as an avalanche of expert reports indicating the significant economic cost of leaving the world’s largest single market. In political terms, the ‘Remain’ campaign had the formal support of the country’s four largest political parties, the Tory-led national government and that of a plethora of international leaders, including the President of the United States. But as Michael Gove, a Brexit supporter, recently said: “people in this country have had enough of experts”. He was, of course, right. The fact that Gove is an Oxford-educated politician who recently led the UK’s Department of Education, an institution dedicated precisely to producing experts, seems to have been inconsequential.

“If illiberal populism takes hold, the European Union will be a particularly easy victim in large part because it is an elite-driven project”

The British are not alone in their rejection of their elites. Over the past few months, there have been numerous indications that many other Western societies are following a similar path. The presumptive nomination of Donald Trump as Republican candidate for the US Presidency is perhaps the most significant case. Trump’s nomination was not only something very few had predicted but also a significant blow to the Republican Party’s establishment, which opposed it en masse. Bernie Sanders’ almost successful run for the Democratic nomination, and in particular his results in caucuses (i.e. primaries in which party elites had less control over the outcome), points in the same direction. Spain is about to vote in a historic general election that is going to see close to a third of the vote go to Unidos-Podemos, a far-left coalition composed of former communists and a newly-born anti-establishment party. In the case of Austria, it was the far-right that almost won the presidency only a few weeks ago. And in Italy, a party founded only in 2009 by a comedian in protest against the political class recently won the mayoralty of Rome.

Opposing elites is not necessarily a negative development in itself. However, it so happens that the elites being opposed are precisely the ones that support the fundamental values and institutions of the Western liberal-cosmopolitan order. Therefore, this convulsion will see the reconfiguration of the classical left-right political axis into one composed of liberal cosmopolitanism versus anti-liberal populism. If this illiberal populism takes hold, anti-trade, anti-immigration and anti-capitalist policies will proliferate. The European Union will be a particularly easy victim of this new mood, in large part because it is an elite-driven project. The benefits of being a member of the EU are mostly understood by intellectual, business and political elites. If those elites are unable to carry the support of the broader European population, the project will be in dire straits. More pressure will be placed on politicians to detach themselves from European integration or to call for a referendum on membership – results in such elections and plebiscites will be very difficult to predict. Uncertainty will be the name of the game. Marine Le Pen has now called for an EU membership referendum in France, and the latest Ipsos Mori poll in Italy shows that 60% of Italians want the same, with 48% saying they would vote to leave the Union.

Free trade and globalisation more broadly will be other casualties of the upcoming illiberal era. Trade is a technical matter that requires experts to arrive at deals that are not understood by those of us who do not dedicate our lives to such matters. Again, if trust in elites is not there, we are bound to see simplistic messages take hold and suspicion of free trade grow. The prospects of the Transatlantic Trade and Investment Partnership (TTIP) and the Transpacific Partnership (TPP) being signed and ratified look slimmer by the day. Ultimately, anti-capitalist and, perhaps, anti-democratic movements will emerge. We know, for example, that many of Europe’s far-left parties have in the past questioned capitalism as a system, or that far-right parties bring with them strong anti-democratic tendencies. Immigration and multiculturalism in general will also be questioned, and already are in Europe and America. Minorities and others are normally victims of populist movements because they are seen as bearers of problems, as stealing people’s jobs or as security threats.

“From the 1970s to today, we have gained productivity without increasing wages, which means labour income has ceased to function”

Why is this happening? And why now? Some have said it is a consequence of globalisation, free trade and immigration. These factors surely play a role but I would like to suggest that the lion in the grass, or the hidden threat, is rapid technological development and its impact on labour markets and wealth distribution. Middle-class workers are today competing not just with cheap labour in the developing world but also with machines and algorithms that are ever cheaper and ever better. This structural process is producing large amounts of material prosperity, but it is undermining the middle class in the process through the destruction of jobs. We have never been wealthier in terms of total output of goods and services, but the US and Europe have seen a steady rise in inequality over the past two decades. We know that from the 1970s to today, productivity and labour income have decoupled; we have gained productivity without increasing wages, which means that our most important redistribution tool, labour income, has ceased to function. Wealth concentration in the US has now reached dramatic levels. And people are losing faith in a system that produces aggregate wealth but fails to distribute it.

Now, the barbarians are at the gates. Populists come to break the system and in the process destroy a great deal of wealth. Hopefully it is only wealth that is lost in this convulsion. The liberal cosmopolitan elites of the world need to diagnose this problem quickly and effectively, and start thinking about the new equilibrium after the upheaval. How do we build an inclusive economic system in which entrepreneurship, innovation and private enterprise are still driving growth but do not produce politically-unstable levels of inequality? What is to be the future role of governments and corporations in an environment of high productivity but lower employment? These questions will need to be answered in the next decades if we want to arrive at a politically-sustainable arrangement. The current model built by our elites is not. And we shall all pay the price for it.

IMAGE CREDIT: CC / FLICKR – diamond geezer

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Nations have long relied on one another to balance the supply and demand of energy. This is particularly true for Europe. Italy and Malta, for example, rely on imports for over 75% of their energy needs, while Denmark produces enough energy to be a net exporter.

The stable output from fossil fuel and nuclear power stations previously dominated the trade of energy across Europe. This made managing supply relatively straightforward regardless of differences between national energy policies. But the continued growth in renewable generation and move away from fossil fuels is changing this picture. European countries are now becoming more reliant on each other for a more balanced supply of electricity and the need for shared energy policies across Europe is increasing in importance.

Europe has for decades had common policies on a huge range of areas including agriculture, defence and border controls. But the first comprehensive Europe-wide energy strategy – formally called the ‘Energy Union Strategy’ – was only launched early last year, by which time it had become clear that establishing more secure, competitive and cleaner energy across Europe was no longer optional.

“After a decade without progress, member states have realised that resistance to shared policies doesn’t work”

The motivation behind the Energy Union Strategy’s approval was not much of a secret. Europe is highly dependent on Russian energy, importing over a third of its crude oil and nearly 40% of its total gas from the country in 2013. Uncertainty over Russian energy contracts following Russia’s annexation of Crimea in early 2014 and the subsequent risk of disruption to gas supplies from Russia highlighted the fragility of Europe’s energy infrastructure.

Not a lot can change in the short term. Every year until the mid-2020s, Europe is contractually obliged to buy the equivalent of around 75% of the gas it imported from Russia in 2013. Despite this, Europe recognises the need to work together to ensure it has tangible alternatives to Russian imports in the medium to longer term. Renewables aren’t the only option; others include increasing investment for liquefied natural gas (LNG) infrastructure and decreasing demand for energy by improving efficiency measures. With geopolitical events acting as a catalyst, EU member states suddenly found themselves able to put the finishing touches to a common strategy for energy that had been without any real traction for years.

Thankfully, there is also a positive reason why European countries are working together. The EU’s leadership in climate change mitigation means a shared commitment to reduce emissions by 40% by 2030 from a 1990 baseline. This led to a shared target of generating 20% of energy from renewable sources by 2020. Having common targets for both emissions reductions and renewable generation lends much greater force to collaborative efforts.

Agreeing a common energy strategy is one thing, but successfully implementing it is another challenge altogether. Fortunately, European research is already highly collaborative among member states, with much pooling of resources to increase efficiency and to avoid duplication of efforts. Joint work on energy innovation has been happening for decades, and now provides the underpinnings that will enable the common strategy to succeed.

Just one example can be found in collaborative projects on the electricity grid. Interconnectivity of grid systems is of course critical to efficiently balance energy across borders and a headline target of the Energy Union is for all countries to achieve 10% of electricity interconnection by 2020. For some, this is already being achieved. When high winds mean Danish wind turbines alone produce more energy than meets the country’s electricity needs, the excess power can be shared with neighbouring countries for use or, in the case of Norway, stored for later use.

A recent collaborative research project involving 18 member states made significant advances in helping Europe to become more connected by a ‘smart grid’ – a dynamic system in which electricity can flow to meet localised changes in supply and demand. Several months of real-world observations tested the impact of renewables on power quality across different weather conditions and seasonal load changes. The collaboration has provided significant insights into the effect of renewables on power quality and led to the development of cost-effective methods to ensure fair trading of energy between countries.

“Having common targets for both emissions reductions and renewable generation lends much greater force to collaborative efforts”

For others, the target is more challenging. Some states like Cyprus or Malta have little to no interconnectivity capacity, and being an island makes plugging into the European grid much more expensive. Proposals like the ‘EuroAsia Interconnector’ propose linking Greek, Cypriot and Israeli grids, but will cost upwards of €1.5bn and won’t be fully implemented until at least 2022. Clearly, a successful energy union needs to recognise that there is no ‘one-size-fits-all’ solution and consider differing regional challenges.

As well as collaborative research, other joint programmes have built on existing Europe-wide standards to create a level playing field for new innovations. One example is the EU’s Environmental Technology Verification (ETV) scheme, which provides independent testing to verify performance claims so that SMEs can prove their technology to customers and investors. Being able to complete a single verification that is then valid across the whole of Europe reduces the costs to innovative European SMEs and accelerates the commercialisation of their products.

After a decade without progress on a common European energy policy, member states have realised that resistance to shared policies doesn’t work in the new environment. The need to tackle climate change, create a healthy and competitive market and ensure security of supply rely on collaboration beyond the sharing of ideas and occasional peeks over the garden fence.

But as well as adjusting to a shifting geopolitical landscape and climate concerns, energy union provides an opportunity for Europe. Collaborative research has already shown that innovation and efficiency is cultivated by cross-border research. By working together strategically, Europe can ensure that the whole becomes much more than the sum of its parts.

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