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April 12, 2018

The ineffective European Globalisation Adjustment Fund

Grégory Claeys and André Sapir have an interesting analysis of one of those programmes that the EU introduced to much fanfare but which ended up not being really effective: the European Globalisation Adjustment Fund (EGF). The conclusion one draws from their article is that the fund is macroeconomically irrelevant, inequitable, and designed to maximise its political visibility. Moreover, there isn't sufficient data to even answer the question whether EGF assistance makes workers more likely to find another job.

First, there are good reason why the EGF is a sensible fund to have. Trade is an exclusive competence of the EU, but opening sectors to international trade has a potential for loss of employment, which it is a national competence to address. Therefore the logic suggests that the EU would recognise its political responsibility for assisting workers affected by its trade policy, and thus co-finance social assistance to them. However, the size of the programme is so small to be ridiculous or offensive: 0.1% of the EU budget which itself is 1% of EU GDP. We're talking about a one-hundred-thousandth of EU GDP. Mindful that its actual economic impact would be accordingly small, the EU decided that the fund should be targeted to be both economically sensible and politically visible.

The EGF has a high threshold for the companies that can call on the fund, as at least 500 workers - originally 1000 - need to be affected. This means that smaller firms are excluded unless they are geographically concentrated, which raises issues of equity. The EGF ends up helping employees of large firms whose cases are visible in the media. Claeys and Sapir propose that the programme should lower its threshold, which would require its size to be increased by an order of magnitude. The scope of the programme should also be expanded from globalisation to other policy-induced losses of employment. And finally, better data needs to be available, to be able to evaluate whether the EGF is actually effective in meeting its goals. It's a bit shocking to read that data is not being collected on an individual basis, but only on the case by case level. 

For these kinds of EU programmes (the Youth Guarantee is another example) to actually have a macroeconomic effect they should not only be at least 100 times larger, but also not be funded ultimately by member states' budgets (which is what the EU budget is). But, as we note in our parallel story, even Macron's modest ambitions in this direction are likely to be frustrated.

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April 12, 2018

Davis wants concrete language on future trading relationship

We have a lull in the Brexit process - the time between agreement on the transition period and on the two big outstanding issues: the Northern Irish border modalities, and the future trade relationship. The latter will be codified in a political declaration to accompany the withdrawal agreement. 

Peter Foster tells us that there are, as ever, differences inside the UK government on how to proceed. David Davis, the Brexit secretary, wants the outlines of a broader trade deal agreed in some level of detail, in order to fend off accusations by eurosceptics that the future trade relationship is going to be the same after Brexit than before. The Telegraph is talking about a political declaration that runs to 20 pages, which is longer than what we would have anticipated.

Davis’ demand would imply a delay in the negotiations timetable, with an end point of December rather than October. Michel Barnier insisted on October to give time for ratification but we, too, believe that this time frame contains some wiggle room. This is especially so in view of the possibility of a short extension, for as long as the UK ratifies the Article 50 withdrawal agreement before March. The Telegraph writes that Davis seems to have won the internal power battle for now: a letter he had proposed has now been sent to government departments, asking them to outline their Brexit goals and how they indeed to meet them. 

The Telegraph also outlines a partial list of areas for political co-operation agreements: they include aviation, data-sharing, security, and foreign policy. 

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April 12, 2018

The name dispute of Alexander the Great's descendants

Expectations are high for progress on finding a common ground at a meeting between the Greek foreign minister Nikos Koutsias and his Macedonian counterpart Nikola Dimitrov today, in the symbolic setting of Ohrid. So far there has been agreement on low-politics issues, and that the new official name shall be a composite name, writes Macropolis. They still have to agree on one from the list. They also need to agree on whether or not this new name shall also be used domestically, which means that every document and name reference inside the country would have to change.  The other issue the Greeks aim for is changes to Article 49 of their neighbour's constitution which refers to the country's diaspora, that is to Macedonians living abroad. There are many references to Macedonia in the constitution, raising the question of its identity. Greece accepted this language decades ago, and also implicitly a Macedonian identity, as Alexis Tsipras put it last year:  

"You are also Macedonians, you are also descendants of Alexander the Great, but you are not the only Macedonians, there are others as well."

The settlement of the name dispute is a priority for the Greek government, as it wants a clear back to face Turkey in the ongoing diplomatic stand-off. There are many obstacles to get to a final solution, though. The Greek side does acknowledge that the government in Skopje does not have the necessary number of MPs to get a revision of the constitution through parliament. This is why both sides are also considering the option of signing an international treaty that will oblige Macedonia to abide by a series of commitments in the future. 

There are domestic tensions, too, that could derail the process. The Macedonian parliament is debating a no-confidence motion against the government of Zoran Zaev, accusing it of failing to stop corruption or Skopje’s economic downturn according to Greek Reporters. And, even if there is an agreement, the Greek government might not get a majority of 180 deputies in its parliament to ratify the agreement. Its junior coalition partner, the Independent Greeks, will most likely either not be present, or vote against it.

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