EUROPEAN THINK-TANK REVIEW – XXXIX. (December 2014)

Written by | Tuesday, December 9th, 2014
European Values

The Future of EU-US Relations: Political and Economic Reflections on the Transatlantic Trade and Investment Partnership (TTIP) Agreement
Pierre Defraigne (Foundation for European Progressive Studies)

The proposed agreement on free trade between the European Union and the United States of America, known as Transatlantic Trade and Investment Partnership (TTIP), is one of the most important bilateral initiatives pursued by the EU. Through this step, the EU hopes to boost its future economic growth. The U.S. aims for fostering stronger economic ties with Europe and by that to create of a kind of counterweight to its bilateral trade relations with China. Both parts started their negotiations last year and it is even possible that the agreement will be concluded by the end of 2014.

According to the author, “the economic NATO” – as the former US Secretary of State Hillary Clinton referred to the TTIP – does not necessarily have to be a mutually beneficial step for the two world’s biggest economies. On the contrary, in the case of the U.S., there is a danger that it will become alienated to Chinese interests, which play a significant role in U.S. foreign policy; in the case of the EU, it may possibly become distracted from the pungent domestic issues such as financial stability of individual Member States.

There is a certain asymmetry between the two potential partners that manifests itself in several aspects: 1) The U.S. is, from a political perspective, a truly consolidated superpower that acts as a united federation, whereas the EU is a grouping of sovereign states, where each of the states participates in the Union’s decision-making processes (with a unanimous vote required for any final decision). 2) The U.S. has one common currency, whereas in the EU Member States use 12 different currencies, the most significant one being euro. 3) While the U.S. has long been an important international economic actor and has been actively trading with Asia, the EU is still a new player in the field of international trade and its Asian connections are far behind the U.S. ones.

Last but not least, there is criticism of the predicted benefits of the pact. A study by the Center for Economic and Policy Research (CEPR) shows that following the twelve-year transitional phase after the signing of the agreement, if the conditions are ideal, the EU’s economic growth will add an extra 0.5 percent of GDP. Such a result is definitely not satisfactory and taking into account all the aforementioned disadvantages and possible obstacles, the TTIP can be a very questionable strategy for both the U.S. and the EU.
(The study can be downloaded here: http://www.feps-europe.eu/assets/b0b70ad7-6aca-4ed0-9a4b-a89b4e490280/ttip-contributions-oct2014-pdefraignepdf.pdf)


The Cyprus Question in the Contemporary Regional-Security Environment
Pavlos Koktsidis (Hellenic Foundation for European and Foreign Policy)

Over the last few months, the question of political future for Cyprus has been reopened. As it is well known, the island is inhabited by two main entities: Turkish Cypriots and Greek Cypriots. Contemporary debates concerning the future of the island take two main courses: The first aims towards the reintegration of the separated territory back to a homogeneous state structure, although in the form of a ‘bizonia’ with the prospect for a strong autonomous government with a strong federal centre. The second kind of debate aims at the creation of a new federal state, which would include a merger of the two entities and the loss of a strong federal centre. To find a compromise between the preservation of rights of both entities in the context of a federal arrangement is by no means easy. The Turkish Cypriots are mainly interested in the international acknowledgement of Northern Cyprus whereas the Greek Cypriots aim for territorial changes, security, return of property and human rights.

However, it is not solely about politics, because economy also plays an important role here. The economy of Cyprus has long been in crisis; harsh austerity measures and high indebt start taking their toll in terms of huge unemployment. In this regard, Cyprus could be aided by the deposits of hydrocarbons recently discovered in Cyprian exclusive economic zone, or by the construction of an oil pipeline connecting Israel and Turkey across the Cyprian economic territory. Potential profits from these prospective energy projects would surely help boost Cyprian economy and would definitely facilitate paying off the country’s debt to the EU.

However, a potentially united Cyprus with adopted European legislation needs to have its real sovereignty ensured real and its security and territorial integrity guaranteed. All this can only be achieved with the help of Turkey, whose current political situation is not very instrumental for such negotiations. And since Israel is another state with a significant influence in the region, whose relations with Turkey are not quite cordial at this moment, finding a real long-term solution to the whole issue remains to be rather problematic. Last but not the least, Greek Prime Minister Samaras, who also declared his interest in solving the Cyprian issue, claims that he would appreciate greater involvement of the European Commission, namely of its President.
(The study can be downloaded here: http://www.eliamep.gr/wp-content/uploads/2014/09/53_2014_-WORKING-PAPER-_Pavlos-Koktsidis.pdf)

Building a Lifeline for Freedom? Eastern Partnership 2.0
Salome Samadashvili (Wilfried Martens Centre for European Studies)

Is the Eastern Partnership a bankrupted or a successful project of the Union’s international policy? Five years have passed since the foundation of the Eastern Partnership project at the Prague Summit – therefore, it is high time to come up with its first assessments and to consider its potential reconceptualization.

The purpose of the Eastern Partnership is to deepen mutual economic and political cooperation with the states east of the EU border and thus to contribute to the stability of this region. Achieving this goal requires economic and political transformation of the states included in the Eastern Partnership policy. If we evaluate the results with regard to the stated objectives, we will certainly face scepticism concerning the appropriateness of continuing the Eastern Partnership policy. Ukraine is going through an armed conflict, Belarus and Armenia officially refused further deepening of their relations with the EU, rather preferring to pursue a membership in the Eurasian Union. Azerbaijan, on its part, has so far failed to democratize its political system, and there is no significant progress in Moldavia and Georgia, despite their recent signing of the Association Agreements.

On the other hand, if we look at the opinion polls in the given states, it shows that the majority of their populations see their countries’ future in further deepening of the economic and political relations with the EU. In particular, citizens in Georgia are most in favour of further strengthening of the EU’s role in the fields of economic development, trade, cooperation between regions, development of democracy and human rights: the numbers range between 85 and 90 percent. On the contrary, the most divided population is in Azerbaijan where the supporters and the opponents of the relations with the EU form two groups of approximately the same size.

What are the recommendations? Generally speaking, the EU should adjust the European Partnership policy so that it affects more the ordinary citizens of the given states, respect the specific features of individual countries and create mechanisms which would allow it to react to potential problems and unexpected changes in a more flexible way. Among numerous proposals put forward in the study, the following feature prominently: The EU should act as a go-between, as a facilitator between Russia and the states of the Eastern Europe and the Caucasian region; Brussels should also change the way it distributes financial support among different NGOs active in the region; it should simplify visa obligations for the citizens of these states and also strive to increase the frequency of high level official visits from the EU institutions to the Eastern Partnership countries.
(The study can be downloaded here:http://martenscentre.eu/sites/default/files/publication-files/eastern_partnership_for_website.pdf)

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