European Business Review (EBR)

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ISSUE 3/2021 / YEAR 24th - PRICE 5,00 € / $6,00






INDEX Founder

Konstantinos C. Trikoukis Chairman

Athanase Papandropoulos Publisher & Editor-in-Chief

Christos K. Trikoukis



Angela Merkel’s last Summit

Schengen has become a symbol of what Europe stands for today



Western Balkans: EU membership provides a massive boost to the socio-economic development

How Angela Merkel has dominated the EU time and again



The pandemic effect: New Thinking, New Policies

Green diversification in central Asia and its global implications



EU & International Correspondent

N. Peter Kramer Editorial Consultant

Anthi Louka Trikouki Issue Contributors

Margaritis Schinas, Nick Clegg, Allison Carragher, Alexandra Papaisidorou, Dr. Jan Werts, Andres Ortega, Joe Litobarski, Lone Engbo Christiansen, Ashique Habib, Margaux MacDonald, Davide Malacrino, Shih-chung Chen, Anne-Solène Rolland, Radu Magdin, Emma Charlton, Joan Marc Simon, Bradley Handler, Morgan Bazilian, Michael Hayes Correspondents

Brussels, London, New York, Paris, Berlin, Istanbul, Athens, Helsinki, Rome, Prague Communications Director Alexandra Papaisidorou Published by:

EMG STRATEGIC CONSULTING LTD. 45 Pont Street, London, SW1X 0BD United Kingdom ISSUE 3/2021 / JULY-SEPTEMBER 2021, YEAR 24th Published quarterly under the license of Christos K. Trikoukis. European Business Review trademark is a property of Christos K. Trikoukis. European Business Review is strictly copyrighted and all rights are reserved. Reproduction without official permission of the publisher is strictly forbidden. Every case is taken in compiling the contents of that magazine, but we assume no responsibility for the affects arising therefrom. The views expressed are not necessarily those of the publisher nor of the European Business Review magazine.

The gig economy: what is it, why is it in the headlines and what does the future hold?

Will the circular economy fly us to the moon?

For previous editions archive and up-to-date information on major topics and events you may visit our website EUROPEAN BUSINESS REVIEW | 3






by N. Peter Kramer, EU & International Correspondent

Angela Merkel’s last Summit


hancellor Angela Merkel showed a rare flash of frustration, when she said that fellow EU leaders’ decision to scupper her idea to hold a summit with Vladimir Putin showed that ‘we don’t trust each other much’. And indeed, the dispute over an EU- Russia summit casted a pall over the last EU summit of one of the EU’s longest-serving leaders. But the heated discussions during this summit were not her smooth send-off everyone expected. Angela Merkel, due to step down this year after 16 years as German chancellor, has in her long experience of EU summits shown mastery at reading the room and ensuring arguments went her way. But this time, her last summit, that approach failed completely. After the summit, a disappointed chancellor spelt out what had driven her to push the idea of an EU- Russia


summit. One of her reasons for it was the spectacle of Joe Biden meeting directly with Putin in Geneva after his visit to Brussels. It was absolutely not, Merkel insisted, a question of a ‘new start’ in EU-Russian relations, but a way to figuring out how to resolve current conflicts with Russia. ‘Even in the cold war we always had channels of communication’, she said. While individual countries like Germany and France continue to talk to the Kremlin, it would make more sense to speak to Moscow with one EU voice, according to Merkel. The incident showed once more that in politics, saying you are going to leave means that you are ‘out’ at the same moment even when you are still present. However it also showed the weakness of an EU, that wants to be seen as a geopolitical superpower alongside the US. But that will take some time, certainly without Angela Merkel.



Schengen has become a symbol of what Europe stands for today Schengen has become a symbol of what Europe stands for today. It’s part of our model of society, of our European way of life. It’s in a way the jewel in our crown. It has not always been like that. by Margaritis Schinas* 10 | EUROPEAN BUSINESS REVIEW



chengen has become a symbol of what Europe stands for today. It’s part of our model of society, of our European way of life. It’s in a way the jewel in our crown. It has not always been like that. I still remember when I was 15 and travelled for the first time abroad from Greece, I was body searched at the airport of Thessaloniki by very aggressive customs officers who were trying to establish whether I was carrying with me extra foreign currency, and I was seen as a potential criminal, not as a free citizen exercising my right to mobility. Lots of time has passed since these traumatic experiences. Now Europeans move freely across the board. Schengen is the largest free travel area in the world. It allows more than 400 million EU citizens and visitors to move freely. It’s also as President von der Leyen said in her State of the Union speech last September the linchpin of the single market and its four freedoms. Schengen isn’t only about borders, it’s also about the economy. It is clear that no system despite its success can bear the test of time without renewal. And we saw that Schengen has suffered two sets of very severe acute pressure in the last years. First during the migratory crisis in 2016. But also recently with the pandemic. This led to uncoordinated, sometimes blanket closures, restrictions to free movement and reintroduction of internal border controls that I don’t think helped a lot, and on the contrary harmed our way of life and our understanding of society and rights. What we are presenting today is a new Schengen Strategy, which will reinforce Schengen. We have to save Schengen by reinforcing and reforming it. The Strategy takes a comprehensive look at the three pillars that underpin Schengen. The first is external borders. Contrary to what many people believe, Schengen does not do away with borders altogether but relies on the premise that to have free internal borders, we have to displace our border management capacity to our external borders. A lot has been done in that respect: a significant reinforcement of Frontex, which is now becoming a fully-fledged the European Border and Coast Guard, the introduction and digitalisation of interoperable interconnected databases, including the Entry/Exit System (EES) and the European Travel Information and Authorisation System (ETIAS). The second pillar is the idea of alternatives. Schengen must

be supported by a vast set of measures that compensate for the absence of internal controls. There is an array of tools and initiatives that can help us. Schengen is about more than just borders. We can reinforce police cooperation. We have a common European visa policy. We have a common European system of returns. We have a common Security Union. And down the road, we hope we will have the New Pact for Migration and Asylum that will help us with alternatives in border management, and reducing the potential risks of secondary movements and absconding within our borders. Finally, the third pillar is the governance pillar. Schengen requires a robust governance system. The whole logic of Schengen relies on a spirit of mutual trust, joint accountability and ownership of results. We have a system in place, the Schengen Evaluation Mechanism, which is a peer-to-peer system that allows us to test continuously the resilience and efficiency of our Schengen controls and mechanisms. This system over time has become a bit cumbersome and bureaucratic. We now want to lighten it up a bit, reform it, modernise it. We also want to bring up these Schengen evaluations more to the political level. It often becomes a discussion among like-minded officials. We want politicians, Ministers in the Council, and Members of the European Parliament to have the opportunity to discuss these issues Later this year we will come with a separate proposal on the Schengen Borders Code. The revision of this Code would introduce targeted amendments to the rules that govern potential measures at our internal borders. Our objective there is to introduce into the Borders Code the lessons learned from the pandemic. And one of the lessons learned from the pandemic is that unilateral, blanket-type measures of closing borders do not help. We are envisaging more proportional, more logical initiatives, more coordination between neighbouring countries, greater use of the Green Lanes that helped during the pandemic. So in the future proposal on the Schengen Borders Code you should expect to see a different approach. When we talk about Schengen, we are talking about something which is big, which matters to all in Europe. It works to the benefit of our citizens, our internal market and our economies, and we are determined to protect it and make sure that nothing can threaten all Schengen represents. *Margaritis Schinas Vice-President of the European Commission, Commissioner for Promoting the European Way of Life



Together with the US, the EU can keep the internet 'open' Big Tech New internet legislation puts the EU at risk of falling behind the US and China. But together, the US and the EU can reach an international consensus.A by Nick Clegg*


uropean policymakers have proposed the most comprehensive internet legislation ever . That legislation is not only about the frameworks within which companies like Facebook can operate in the future, but also about the competitive position of European companies and the user experience that Europeans have when they use their phone or laptop. Europe's new 'Digital Services Act' (DSA), Digital Markets Act (DMA) and the recently proposed AI regulation are a big deal for European companies and all companies operating here. Legislators think it could take a few years for the new sets of rules to be finalized. What happens in the next two years will determine the next twenty years. And the EU is not the only region where new legislation


is being worked on. Governments around the world are coming up with proposals on all kinds of topics – from privacy and content , to how data can be stored, shared and used. That is a positive development. Many of these topics are too important to be left to companies. As policymakers come forward with bills, it is becoming increasingly clear that there are conflicting opinions about what the internet should look like. The EU is in favor of an open, universally accessible internet, in which security and respect for human rights are central. US President Biden has also called for a global alliance of "tech democracies" to protect those values. Together, the US and the EU can lay the groundwork for a broader international consensus. But we cannot take the open internet for granted


The Chinese model – separated from the rest of the internet and under strict supervision – poses a risk to the open internet as we know it. Other countries, including Vietnam, Russia and Turkey, already have moved towards the Chinese model. The pressure for greater transparency and accountability that underlies many of the European legislative proposals is fundamentally a positive and welcome development. It makes sense to want to hold platforms more accountable for data reporting and auditing systems, rather than micromanaging individual content . It is also good that breaking certain rules can have consequences. Nor is it unreasonable to impose different, stricter obligations on larger platforms than on small start-ups. When discussing and drafting legislation and regulations, policymakers must avoid two unintended consequences: unnecessarily hindering European innovation and further fragmentation of the worldwide internet. Some of the fine print from the DMA suggests that policymakers could become deeply involved in product design. For example, there are detailed conditions about how users must log in to different apps. This can lead to the way products function becoming completely fixed, hindering technological progress. And proposals designed to prevent large companies from favoring themselves by using their own services to foreclose markets may be well-intentioned, but would benefit from a 'consumer benefit' test to ensure that new entrants with better and cheaper services are not excluded. Now that policymakers around the world are simultaneously looking for solutions, I hope they learn from each other and prevent them from building islands with their own legislation, especially islands that make that data transfer impossible across the border. The simple and seamless transfer of data from one side of the world to the other is the heart of the internet. But recent EU court rulings have already cast doubt on that data transfer between the EU and the US. And conditions in the proposed legislation allow for local legislation in member states; legislation that undermines the value of harmonising rules in the EU. Protecting our economies, by allowing a free flow of data between the EU and the US, should be a priority on both sides of the Atlantic.

continues to be discussed in the G7, in the Organisation for Economic Co-operation and Development (OECD) on digital taxation, in a newly proposed Transatlantic Trade Council and with other international authorities. The best the EU can do to make its tech sector more competitive is still to create a single digital market. The great thing about this European project has always been that the whole is better than the sum of the individual parts. A report from last year found that the EU has spawned more than a third of the world's start-ups in the past decade, but only 14 percent of them are so-called "unicorns" worth $1 billion or more. Removing existing barriers within the EU would be better for the European economy than creating new barriers. Europe has long been a pioneer in internet law, but lags behind China and the US when it comes to building global tech companies. As the EU drafts its most ambitious digital legislation yet, it faces a choice: it could fall behind the US and China for good, or it could create conditions that allow European tech companies to grow massively in the coming years. *Nick Clegg

To protect one global internet, the more rules have been drawn up to complement each other at an international level, the better. It is essential that this topic

Nick Clegg a former UK Vice Prime Minister is Vice President Global Affairs and Communication of Facebook Article was first published in NRC Handelsblad, Amsterdam



The EU’s Green Agenda for the Western Balkans Packs a Risky Geopolitical Agenda by Allison Carragher*


t a recent Clingendael Institute event, Directorate-General for Climate Action (DG CLIMA) Policy Officer Stine Rasmussen stated she was “not very worried when it comes to China” as a threat to the European Commission’s Green Agenda for the Western Balkans. She should be. Given the concentration of both Chinese and Russian economic activity in energy, industry, and other pollution and energy-intensive sectors in the region, the Green Agenda directly threatens China and Russia’s interests. It is foolhardy to expect these countries to sit idly by as their investments and strategic priorities are undermined. It is equally imprudent to simply urge Western Balkan governments to bolster their “political will,” which Rasmussen identified as the top challenge to the Green Agenda. This comment overlooks the fact that the political will of two global powers is likely to be channeled toward conflicting objectives. To analyze how China and Russia’s objectives with respect to the planned green transformation might solidify, we need to examine their current interests. In the Western Balkans, China equals coal. Today, coal provides some 70 percent of the region’s electricity. Given that these economies are between two and five



times more energy-intensive than the EU average, the outcome is a region half the size of Germany producing more coal emissions than the entire European Union.

billion) in contracts with the China Road and Bridge Corporation for municipal wastewater treatment and landfill projects.

As a result, all Western Balkan states minus Albania topped IQAir’s list for worst air quality in Europe— with Bosnia and Herzegovina (BiH) even making it into the global top ten. Coal is also the single biggest contributor to anthropogenic climate change.

Russian investment is more subtle in most Western Balkans countries, but it is likewise environmentally damaging. In much of the region, Russian oil and gas are king. The Kremlin leverages these countries’ energy reliance to resist energy diversification and market liberalization. Inflexible long-term contracts and planned pipeline projects suggest this trend will continue.

Beyond coal, China has targeted other strategic sectors relevant to its Belt and Road Initiative, including mining, industry, and transport infrastructure. These sectors are also big polluters. Furthermore, Chinese projects have repeatedly been criticized for skipped environmental impact assessments and lax environmental standards. Serbia’s Kostolac B coal plant provides a particularly egregious example. It unilaterally emits more sulfur dioxide than the Energy Community Treaty—which Serbia and other Western Balkan states have ratified— allocates to Serbia, Kosovo, BiH, and North Macedonia combined. Ironically, Kostolac B is also the only plant in the region recently fitted with desulfurization equipment— built by the China Machinery Engineering Corporation and financed by the Exim Bank of China. Despite all evidence to the contrary, the Chinese Communist Party prefers to be viewed as a constructive global actor on climate issues. A strategic Chinese response to the Green Agenda could see a greening, or at least “greenwashing,” of Chinese projects and investments into strategic infrastructure. Better still for China, absent an international procurement instrument or foreign subsidies instrument applied to all EU funds, its state-owned companies can compete for EU and domestically funded green contracts. In fact, this is already happening. A consortium including China’s Shanghai Electric Power Company constructed Montenegro’s second-largest wind farm—using Chinese turbines. A Chinese firm runs the FeitianSuye plastic recycling plant in northern Serbia—though its work was recently halted by the local environmental inspectorate. And earlier this year, Serbia signed €3.2 billion ($3.8

Russian ownership and operation of oil refineries is also problematic. In BiH, where Russia controls the country’s only two refineries, promised investments in facility modernization have fallen short. The Bosanski Brod refinery pumped air pollution into Bosnia and neighboring Croatia for over a decade until the plant was finally shut down in 2019 for upgrades. Russian investment is also substantial in the mining, banking, and real estate sectors. Russia is often content to play the spoiler, and in response to the Green Agenda should be expected to leverage its network in the banking and energy industries to do just that. Moscow’s stronger ties to kleptocrats and local officials may also facilitate Russian involvement in what is quickly becoming a regional trend of graft and corruption in renewable energy projects. In sum, public and private funding mobilized by the EU for the Western Balkans’ green transformation could ultimately be transferred right into the pockets of Russian and Chinese state-owned enterprises. Such an outcome may improve environmental conditions, but hardly satisfies the EU’s larger strategic imperatives for the region—including enlargement and securing its supply chains. As the strategy fundamentally aimed at slowing global warming turns up the heat on the West’s two main geopolitical rivals, the European Commission would be remiss to turn a blind eye to the geopolitical implications of its Green Agenda for the Western Balkans.

*Allison Carragher Allison Carragher is a visiting scholar at Carnegie Europe, where she specializes in economic engagement in the Western Balkans and countries of the former Yugoslavia.





Western Balkans: EU membership provides a massive boost to the socioeconomic development of the region European Business Review had an exclusive interview with Lilyana Pavlova, VicePresident of the European Investment Bank and responsible for the Western Balkans. by Alexandra Papaisidorou* WHAT IS EIB'S ROLE IN BOOSTING WESTERN BALKANS COMPETITIVENESS? WHAT ARE THE MAIN AREAS YOU ARE FOCUSING ON?

for achieving this balance in a structured and strategic way, foster recovery and induce economic and social growth and development over the long-term.

The EIB, as the EU Bank, wants to see economies of Western Balkans economically empowered and competitive on the European and global level, capable of creating jobs, incomes and fuelling long-term, sustainable development.

At the same time, EU accession is the only option available to the Western Balkans that comes with multi-billion financial support mechanisms designed to empower, speed up growth and development in a way that benefits the region in the long-term.

There are several factors important for the competitiveness of the region of which cohesion and covid-19 recovery are the priority. Cohesion of the regional economies and creation of a common market, as defined in the Economic and Investment Plan launched by the European Commission in 2020 will bring well-connected market and offer modern transportation, energy and digital network and facilitate regional trade and economic relations.

As a major actor in Team Europe initiative, the EIB is ready to work with Western Balkans partners and increase mobilisation of these resources to support the region on the road to the EU. We stand ready to provide loans, attract EU grants and provide technical assistance in project preparation to ensure the region can grow and develop in a way that’s sustainable in long-term.

The recovery of local economies from COVID-19 pandemic is urgent for mitigating short-term economic calamities but also for unlocking transformation towards more sustainable, greener, circular and digital economic model. In addition, the region will need to continue pursuing reforms for EU accession to create better condition for attracting foreign investments and long-term sustainable growth.

This is particularly relevant for large-scale projects such as modernisation of existing and development of new infrastructure, especially introduction of renewable energy, sustainable transport and digital technologies. As a part of Team Europe initiative, the EIB is scaling up its efforts to help the region recover faster from the devastating impact of the pandemic and continue its integration into EU market.

As longstanding partner and one of the largest financiers in the region with over €12 billion invested, the EIB is ready to provide financial and technical assistance to accelerate these processes that require substantial funds and technical expertise.

Important blueprint for the prosperity of the region is the European Commission’s Economic and Investment plan that entails €9 billion for investments that support regional cohesion, inclusive growth, sustainable mobility, the green and digital transition and the creation of common market. In addition, new Guarantee Facility that will be created for the Western Balkans is expected to potentially leverage up to €20 billion of new investments, particularly in the private sector.

Finding a balance between sustainable economic development, COVID recovery, environment protection and climate action, as well as structural and legal reforms will be the key for long-term resilience of Western Balkans. Today, the EU accession process offers the most effective framework

These funds should help develop modern, sustainable infrastructure, more favourable investment climate and connected



regional market with inclusive job opportunities and conditions for smart, digitally based growth. The EIB has already started supporting these initiatives in the Western Balkans. To improve digitalisation infrastructure, we have signed €65 million loan for digitalisation of over 1500 Serbian schools and €60 worth guarantee scheme to help companies extend their digital capacities. Regarding sustainable mobility, the EIB is financing the modernisation of key railway routes across the region, as well as waterway navigation along rivers Sava and Danube. In 2021, we have allocated €40 million for improving urban transport network in the Canton of Sarajevo in Bosnia and Herzegovina. To help the region switch to more energy efficient resources, the EIB provided €25 million for the construction of gas interconnector between Serbia and Bulgaria that is to increase diversification and security of energy supply. We will also continue providing the most affordable and favourable financing for the SME sector, that are available at the commercial banks and national development institutions. In 2020 alone, the EIB Group allocated €320 million for the private sector in the Western Balkans to help small businesses retain jobs, continuity and recover faster from COVID-19 pandemic. WHERE DO YOU SEE ΕΙΒ STAND IN THE POSTCOVID ERA? DO YOU THINK THAT STATE (EU) FUNDING COULD BE AN OPPORTUNITY OR A CHALLENGE FOR THE REVIVAL OF THE ECONOMY FOR EUROPE'S MEMBER STATES? With the Next Generation EU recovery package, reinforcements to the EU budget, and the EIB by its side, European recovery is also backed by an unprecedented public financial firepower. The EIB Group welcomes the NextGenerationEU (NGEU) programme and in particular its main pillar, the new Recovery and Resilience Facility (RRF) aiming at supporting investment and structural reforms in Member States. Given the EIB Group’s expertise, we are a natural partner for Member States in supporting them for its implementation of all instruments, for instance through providing advisory services and/or developing financial instruments to be funded by RRF, including through contributions to the InvestEU Member State-Compartment. The EIB will also play a key role in all three pillars of the Just Transition Mechanism. We are the main implementing partner for InvestEU including the Advisory Hub under it. Yet volume is not the only important requirement. We must focus on the quality of each investment and on its impact. There are important questions which need careful analysis before the Member States decide on the implementation of specific projects and plans.


As the EU Climate Bank, the EIB intends to set a path to carbon-neutrality that Europe needs to achieve by 2050. With our Climate Bank Roadmap adopted in 2020, the EIB plans to mobilise up to €1 trillion of investments into sustainability and climate action, to align all financing activities with the goals of the Paris Agreement from the end of 2020 and dedicate over 50% of annual financing dedicated to green investment and climate action by 2025. The EIB is today one of the main financiers of the climate action and energy projects in the world. The bank has over €197 billion of finance and over €670 billion of investment globally supported in projects that protect the environment, reduce emissions and help countries adapt to the impacts of climate change. For the EIB climate action is much more than a set of ambitious environmental, energy and policy goals. It is the race to preserve life on this planet, protect environment from destruction, a race to prevent major global conflicts, and ensure the sustainable progress of humanity is possible in centuries to come. This gives climate action the importance perhaps unparalleled in the history of humankind. The ambition of the European Union is to lead the climate action by example and to be the force of global green empowerment including empowerment of Western Balkans. The ambition of the European Investment Bank as the EU Climate Bank is to support and finance this action. Team Europe-led Initiatives, such as the Green Agenda for Western Balkans, and the Initiative for Coal Regions in the Western Balkans and Ukraine contribute help forge these global partnerships for climate action. These initiatives offer valuable institutional bridges between the EU and our partners, create new financing opportunities, build and expand economic cooperation, allow us to listen and understand our needs and concerns, exchange ideas and avoid mistakes, align policies and coordinate steps towards the common goal. In this context, we will also provide strong impetus for development of digitalization infrastructure and innovations. The EIB is participating in the NextGenerationEU programme, especially in new Recovery and Resilience Facility (RRF), aiming at supporting investment and structural reforms in Member States. As its natural partner, we particularly support climate action and digital transition in line with EU 2025 objectives. Our contribution can also be reflected through providing advisory services and development of financial instruments. I would also like to mention InvestEU that will play an important role in post-covid recovery. It is financial programme assisting the EU to modernise their economies and set them on the path to sustainable growth, while tackling twin challenges – green and digital transition. When it comes to innovation, Horizon Europe, a key financial programme of EU for research and innovation with 95.5 bil-


lion budget will be a driving force and incubator of new ideas for encouraging innovations, especially green and digital. It can strongly support UN’s Sustainable Development Goals and increase competitiveness of its economy on a global level. Key enablers of these processes will also be partnerships, cooperation on different levels with all key stakeholders. It will be important to develop investments that have longer-term impact on several agendas at the same time – to tackle climate change, environment and local communities when it comes to inclusive growth. This will be possible only by encouraging transboundary, cross-sectoral and public-private partnerships and the EIB will have a pivotal role in these initiatives through its advisory services provided by the team of experts in different areas. For a true recovery, the resources available must be spent wisely, with a long-term vision in mind. This will allow us to introduce the deep structural shifts in our economies that are necessary. DO YOU THINK THAT A FURTHER ENLARGEMENT OF THE EU WOULD BE A STEP FORWARD FOR EUROPE’S INTEGRATION? WHAT ARE THE “LESSONS” LEARNED SO FAR? There is no doubt about the European future of the Western Balkans. The region is an integral part of Europe and improving its economic and investment climate will benefit both the region and EU. Providing better legislative framework for investments and business in line with EU standards and accession processes will facilitate greater scope of economic exchange between EU and the region. EU membership provides a massive boost to the socio-economic development of the region. It can be underlined that reforms undertaken to align the counties with the EU are important for building strong institutions based on the rule of law and fundamental rights. At the same time, they facilitate the growth and implementation of standards necessary to withstand the competitiveness in the EU. In addition, the EU enables the candidate countries to participate in EU programmes and initiatives even before their full membership, which increases their connectivity, innovation, competencies and private sector capacities. IS, NOWADAYS, THE INFLUENCE OF ECONOMIC DIPLOMACY STRONGER THAN “TRADITIONAL” FOREIGN POLICY? For the EIB the economic aspect is essential for long-term sustainable development of the region. The region needs massive investment to recover from devastating effect of COVID-19 pandemic and will need even investment to fuel climate action and digitalisation. Regional infrastructure is also in need

of billions of investments for upgrade and expansion, especially in the transportation, healthcare and wastewater sector. All these investments will be key for the region to stay relevant on the EU and global markets in post-pandemic period. These processes require substantial funding and we are aware that financing from non-European investors in increasing in the region. The key will be to make sure these investments empower the region and do not bring additional calamities down the road that could impede development in any way. If we ensure all investment introduce higher standards in project management, fuel social and economic growth, promote community participation, and strengthen environment protection – the origin of investments will be of lesser importance. As the EU Bank, the EIB has in place a mechanism that also prepare countries to act as the block member including introduction of rules from EU Directives on procurement. This includes open international competition, non-discrimination of tenderers, fairness and transparency of the process, and selection of the most economically advantageous offer. These are all processes that benefit a country and its economy. At the same time, we invest a special attention to long-term financial sustainability of the specific country in regard to new loans, when it comes to level of public debt and ability to meet its contract obligations without jeopardising its financial stability. On top of that, EIB loans bring additional benefit as our loans can be blended with EU grants and technical assistance for the project preparation and implementation, which makes the EIB financial arrangements one of the most favourable on the market. For example, for the construction of gas interconnector, the EIB €25 million loan has been complemented with €49.5 million EU grant. The project also received JASPERS technical assistance during the preparation phase, which included the review of the EU grant application. Another example is 100 million EIB loan provided for the construction of the new highway linking Niš and Merdare that is combined with €40.6 million EU grant. The EIB is a non-profit financial institution. We do not make money on our lending operations. Our goal is not to gain profit for the bank but to empower and support – though good lending conditions, introduction of modern standards and practices, and benefits that span over a long term. *Alexandra Papaisidorou Editor-at-large/ PhD cand. University of Piraeus, Cultural Diplomacy & international Relations





How Angela Merkel has dominated the EU time and again by Dr Jan Werts*


n Thursday June 21, 2007, the meeting of the EU leaders, the Council, started at 17:54 am with ringing of the bell by Chancellor Angela Merkel. During the following 36-hour marathon, she opened her bag of tricks. In the atrium of the same building, 2,000 journalists from around the world waited impatiently for news. On the morning of June 23, while the sun was already rising over Brussels, a proud chancellor presented the press her ' Midsummer Night's Treaty ', the frame for the Lisbon Treaty on which the EU is still based today. Although in 2005 the ' European Constitution ' was rejected by French and Dutch voters, Merkel fully preserved with ‘her’ treaty the core of that constitution.


Like in 2007, the chancellor managed to pull the EU out of crises many times since then. But the Council meeting in June of this year was probably, after 16 years, the last one where Chancellor Angela Merkel represented Germany. She announced to step down after the German elections in September.

But see, last year during the corona crisis, she suddenly gave up her resistance and made a complete U-turn on Eurobonds!

Her most important feat of arms! 1 - THE ' ONE TRILLION DOLLAR ' DEAL In 2010, as the crisis caused by the Greek bankruptcy erupted, two-thirds of the Germans were against any financial aid for that country. Yet, Merkel opened, albeit after months hesitating, together with French President Nicolas Sarkozy that option. As the very existence of the euro was in danger! 'If the euro falls apart, Europe will fall apart,' Merkel warned. The European Council then concluded the famous ' one trillion dollar ' deal (as the Americans called it). An unprecedented defense wall of 750 billion euros to keep the weak euro countries going. A government that could no longer serve its creditors could draw on it, provided it made significant austerity measures and necessary reforms of their economy. Germany alone took on roughly a quarter of the total burden.

From 2010 on, Merkel had blocked the arrival of the so-called Eurobonds. These were advocated by the European Commission, the European Parliament and of course the leaders of debt-laden southern EU countries. Eurobonds would shift the repayment ultimately to the taxpayers in other EU countries. "As long as I live there will be no Eurobonds" , said Merkel on June 26, 2012, to a disappointed Italian Prime Minister Mario Monti, 'I don't believe in economic growth based on joint debt'.

3. A ‘SIXPACK’ OF NEW LAWS In spring 2011, Germany enforced six new EU laws (the so-called Sixpack ) to keep the euro on track. From that moment on there was a European Stability Mechanism (ESM). Merkel with support from the northern EU countries tightened the supervision of the governments that spent too much. The EU finance ministers lost their supervisory role. The so-called independent European Commission took over that role. 4. DOING BUSINESS WITH PUTIN In the beginning of 2015, Merkel played the leading role in the negotiations with President Vladimir Putin about the war in eastern Ukraine. The Minsk II Agreement brought a ceasefire after sixteen hours of negotiations in the Belarusian capital. This approach was a response to US suggestions to provide additional weapons to by Russia beleaguered Ukraine. But according to Merkel, who grew up in the DDR, that would actually make the crisis worse.



Remarkable detail: only after the signing in Minsk the EU came in the picture. Merkel, French President Francois Hollande and Ukrainian President Petro Poroshenko informed after the signing the other EU leaders. Merkel kept the official EU representatives Herman Van Rompuy and Federica Mogherini Merkel out of the negotiations in Minsk. 5. NO GREXIT AFTER ALL In 2015, a Grexit threatened, a eurozone without the economically and financially fragile Greece. New heavy cuts and reforms were the starting point of the nightly deliberation on July 12. While elsewhere in Brussels the other EU leaders were twiddling their thumbs, Merkel closed after seventeen hours haggling with the Greek Prime Minister Alexis Tsipras a four-hundred-page agreement. In exchange for new mega-support, Athens had to make huge cutbacks once again and also to downsize its enormous civil service. The evil Grexit dream, which would tarnish the image of the EU worldwide, was suddenly over. A nervous President Barack Obama had warned already Merkel and Tsipras for a global economic crisis. 6. CONTROVERSIAL EU-TURKEY DEAL In March 2016, Merkel surprised her colleague EU leaders with a German-Turkish plan to contain the tsunami of migrants and refugees from Syria, Iraq, Afghanistan and North Africa. She got her way again. After a year of muddling through no fewer than twelve fruitless meetings, the European Council finally took the plunge. On Merkel's proposal, the flow of migrants that has become unsustainable, would be stopped at the Turkish border. The EU paid Ankara €6 billion for hosting about four million migrants and refugees. Although often criticised because of violation of human rights, the recent intention of the Council is to extend the 'Merkel deal'. 7. TO A TRANSFER UNION On July 21, 2020, EU leaders reached, after a marathon session of ninety hours, an agreement on the financing of the EU until 2027. Surprisingly, Chancellor Angela Merkel welcomed the French proposal to borrow 750 billion euro, on top of the normal spending, for a ‘COVID-19 Recovery Fund’.


Three classic ‘German’ taboos suddenly disappeared: making joint large debts (the Eurobonds!); levying European taxes (to partially repay those debts) and shifting the financial burden from the EU to the next generations. The EU is tackling the corona pandemic with mega-large subsidies (gifts, according to the critics). Germany has been adamantly against such support since decades, fearing the creation of a 'transfer union', where the money goes to countries with unsustainable deficits and often ends up in the wrong pockets. 8. BREXIT In 2016, Merkel did literally nothing to keep the UK in the EU. During the decisive session of the Council, she was not even present. The story goes, that the chancellor walked out and went demonstratively to a Brussels chip shop to satisfy her hunger for €3.70. Did Merkel (and President Emmanuel Macron) think that the UK would not leave? Here we see the lack of a longer-term vision of the Franco-German duo. The result of the British referendum has the EU deprived of its image of a united Europe. A disaster with historical consequences. 9. THE FRANCO-GERMAN TANDEM Merkel has saved the EU from many a crisis. Why was she able to score again and again in the usually divided European Council? According to insiders, Merkel often knows her files better than many other EU leaders. That gives her an edge. But a successful performance always required the approval of Paris. The chancellor has well cooperated with four French presidents: Chirac, Sarkozy, Hollande and now Macron. France and Germany together represent half of the economy of the nineteen eurozone countries. That counts! The Franco-German couple also represents both the frugal European north and the more lavish 'garlic countries' in the south. Thus, a German-French proposal reflects what is maximally feasible between the EU-27. That is the deeper reason why Merkel has triumphed time and again with Paris. During Sarkozy's presidency, people even spoke of 'Merkozy'. 'The German chancellor often pushes her decisions across the council. After that, at a press conference, the




French president can explain exactly what has been decided’, characterised former Commission President Romano Prodi it once. 10. GERMAN SUPER THREE-SOME With Angela Merkel, Germany sent its third top scorer to Brussels. Through the impatient co-founder of the European Council, chancellor Helmut Schmidt (1974-1982) and the far-sighted chancellor Helmut Kohl (1982-1998), the EU took shape: from 9 to 27 countries and from more than 20 national coins to one euro. And… over the past half century, this trio sealed the 'eternal peace' with former nemesis France.

*Jan Werts © Jan Werts


Jan Werts is a journalist and publicist and obtained his doctorate in 1991 with a dissertation on the European Council. He is the correspondent in Brussels for the Montesquieu Institute




The pandemic effect: New Thinking, New Policies COVID-19 has turned the world upside down in an often tragical way. But the ‘new reality’ developed by the pandemic, generated - in several different areas - a new way of thinking and also the need for new policies. The “European Business Review” collected for its readers five examples of it. To mention just two of them: an article about re-globalisation and one by IMF officials about the change of the way we work and spend. We hope you can appreciate our choice! EBR Editorial Board



Re- Globalisation with hic-cups For those who believe that the era of globalisation is over, think again. In economic terms at least, we are seeing a re-globalisation of sorts, with cross-border flows of goods and capital on the up by Andres Ortega*


he COVID-19 pandemic certainly led to some setbacks. In fact, cross-border trade declined more during March and April 2020 than it did during the Great Depression of 1929. However, the recovery has been faster than expected.

But in the new, post-pandemic phase, the winning formula is closer to a “just-in-case” model. This will therefore be a different type of globalisation. And whoever fails to engage with it will be condemned to watching from the sidelines.

This is particularly the case with trade and capital movements between developed economies. China is included in this latter category.

We are witnessing a process that involves the abrupt and intermittent expulsion of air. This is the definition of a “hic-cup.” The ongoing re-globalisation we are witnessing is accompanied by hiccups.

Travel trauma As far as human travel is concerned – whether for business or pleasure – the recovery is slower. According to the DHL’s Global Connectedness Index 2020, travel has suffered an unprecedented drop resulting from the restrictions of the pandemic. And the reopening of borders is taking considerable time. Thus, the re-globalisation we are seeing is fragile and the cracks in it are not easy to repair. Time is needed for this process. From just-in-time to just-in-case Moreover, it may involve profound changes in the workings of some supply chains. In the era of globalisation 101, the dominant model was the one of “justin-time” manufacturing.

Hampering hiccups To begin with, there is an ongoing scarcity of containers even as their cost is increasing. The problems this is causing to global trade recovery were highlighted by the Suez Canal incident. For several days in March, the canal was blocked by a ship, halting billions of dollars in maritime commerce. Moreover, some key raw materials are running short and are therefore becoming more expensive, if available. There is a shortage of wood as well as of some petroleum-based products like plastics, PVC resins and colorings. At the same time, there has been a rise in oil prices and other raw materials such as copper. The bottlenecks



slowing down re-globalisation are being laid bare. New pandemic-related shortages In the first phase of the pandemic, the main shortages faced by countries had to do with medical equipment like masks, gloves, respirators and so on. These were ironed out relatively quickly, although there is still a high degree of dependence on Asia, especially China and India, for supply. But now, other shortages have arisen involving, for example, the lipids used in the COVID-19 vaccines based on messenger RNA. Plastic tubes and bags are also in short supply. According to the International Federation of Pharmaceutical Manufacturers, the U.S. Defense Production Act, designed to protect U.S. supplies, has aggravated the situation. Digital realm Shortages are also plaguing the digital realm. A lack of semiconductors has slowed down the assembly lines of various vehicle manufacturers worldwide. This matters greatly, not least because cars today are computers on wheels. The pandemic has further highlighted the excessive dependence – one that China shares – on Taiwanese chip manufacturers. TSMC (Taiwan Semiconductor Manufacturing Company) is particularly dominant. This is a geopolitically sensitive dependency. Trying to diversify away from it will require major investments. Difficulties of diversification An advanced chip-making plant, known as a foundry, costs around $20 billion. The new globalisation will in-

volve shortening strategic supply chains, including for semiconductors. But this process will take years to materialise. China, which imports more microchips than oil in value, has made establishing foundries a top priority. The greatest challenge is for Europe. Once a serious player in the field of advanced chips, it has let its lead slip. Human talent needed Another crucial bottleneck is related to the severe shortages of talent, in terms of human skills. According to Deloitte, 40% of businesses in Europe struggle to fill their vacancies due to the lack of people with the necessary training or experience. Meanwhile, 30% of graduates are working in jobs and roles where the skills they acquired at university are not relevant. At the global level, there is a large mismatch between demand and the supply of talent. Re-globalisation thus urgently requires national public-private investment in cultivating these in-demand talents. Conclusion We are heading towards a more protectionist, more nationalist and more regionalised form of re-globalisation. While the exact contours of this new globalisation remain unclear, what is certain is that it will not be a simple return to the status quo. Rather, it will involve transformations requiring new ways of thinking and new policies to better soothe the hic-cups. *Andres Ortega senior research fellow at the Elcano Royal Institute, a major Spanish foreign affairs think tank



COVID-19 revived the social contract. Pandemic debt could destroy it Before the pandemic, there was already a debate taking place on the weakening of the “social contract” in the developed world, i.e. the set of norms and expectations governing relations between individuals and social institutions such as the family, the state, and private corporations. by Joe Litobarski*


n February 2020, McKinsey published a report on The social contract in the 21st century, arguing that years of wage stagnation (or persistently high unemployment in countries with higher wages) coupled with rising prices in healthcare, education, and housing have squeezed people in the middle and lower income range. As a result, frustration and hopelessness have filtered into politics, with either high abstention rates (as in recent French regional elections) or growing support for populist demagogues promising to tear down a system that is not working for many voters.. The idea of a social contract binding individuals into a community goes back to Plato’s Republic, though the concept is more often associated with Enlightenment philosophers such as John Locke, Thomas Hobbes, and especially Jean-Jacques Rousseau (who first coined the term in a 1762 book by that name). No fixed definition of the social contract exists, but it is broadly understood to mean an

implicit agreement between individuals to follow rules governing their behaviour in order to manage risk and to live together peacefully in collective security. For example, during the post-war period, the implied social contract was: so long as individuals (assumed to be cisgender, heterosexual, white, and male) study hard, work hard, stay married and support their families, pay their taxes, obey the law, and vote for mainstream political parties, then industry will provide a job for life and increase wages in lockstep with GDP growth, while government will provide cradle-to-grave healthcare and a social safety net should they fall on hard times; furthermore, they will be able to retire comfortably, they will have access to a variety of affordable consumer goods, they will eventually own their own house, and they will generally have a higher standard of living than their parents’ generation.



This post-war social contract has been steadily eroded since at least the 1970s by a combination of globalisation and global competition, automation and new technologies, social change (including higher female participation rates in the labour market), economic and labour market reforms, an ageing population living longer lives, falling participation rates in political parties and trade unions, and most recently the pressure to transition to more sustainable consumption patterns in order to prevent catastrophic climate change. Not all of these trends are necessarily negative, nor are they all avoidable. Nevertheless, the old social contract was breaking down even before the pandemic. An individual growing up in the 2020s (no longer assumed to be a straight, white, cis man) is unlikely to have a job for life (and, indeed, may change their entire career path during their lifetimes); they may find themselves working in the “gig economy” with greater flexibility but uncertain labour rights. Their wages are unlikely to rise significantly over the course of their working lives. Healthcare systems struggling to provide care to ageing populations may be unable to meet expectations in terms of quality and speed of care. Rather than following the post-war lifepath of education → work → retirement, they are likely to require a lifelong learning approach, constantly upskilling and retraining to keep abreast of technological developments. They are no longer guaranteed a comfortable retirement, and they may never be able to afford their own house. They are constantly reminded their consumption of cheap consumer goods is killing the planet. They no longer assume they will have a higher quality of life than their parents’ generation. Then the pandemic hit. The COVID-19 pandemic has only accelerated trends that had been breaking down the old social contract. It also necessitated an unprecedented level of peacetime state intervention in the economy, transforming the relationship between individual, private sector and state overnight. The sheer scale of the intervention raises uncomfortable questions, not least: how will such enormous levels of public debt be paid for? In 2018, Friends of Europe published its #EuropeMatters report, arguing that Europe needs a renewed social contract in place by the year 2030. The next year, Friends of Europe published its Vision for Europe report, setting out a policy toolbox to help establish this new European social contract.


Increasingly, the need to renew the social contract is being championed by policymakers and academics. Baroness Minouche Shafik, Director of the LSE, recently published a new book on the topic: What We Owe Each Other: A New Social Contract for a Better Society. In July 2020, the UN Secretary-General, António Guterres, called for a “New Social Contract between governments, peoples, civil society, businesses and more” that would address tax and inequality, education, development, sustainability, empowerment of women and civil society, etc. In May 2021, the Portuguese Prime Minister (speaking at the Porto Social Summit organised by the Portuguese Presidency of the Council of the EU) added his voice to the growing call for the development of a new European social contract, arguing that the twin climate and digital transitions will only be successful if they are fair and inclusive: “We are here today to renew the European social contract, making a commitment, each one at their own level, to develop innovative and inclusive responses”. Overnight, the COVID-19 pandemic has redefined the relationship between individuals and society. The decisions Europe makes over the next two years, in terms of when we withdraw state support from the economy, when (and how) we start paying off public debt, will either make or break Europe’s new social contract. We would do well to make such decisions as part of a broader debate on what Europe’s new social contract should look like.

*Joe Litobarski Editor at Debating Europe


IMF: Post-pandemic growth relies on these two things Producing and consuming more goods and services for the same amount of work sounds too good to be true. In fact, it’s entirely possible. Higher productivity is one of the key ingredients to higher economic growth and incomes. It’s all about how workers become more productive. by Lone Engbo Christiansen, Ashique Habib, Margaux MacDonald and Davide Malacrino*


or many of us, the COVID-19 pandemic has changed the way we work and spend. The question is how these changes will affect our productivity, both now and into the future. While it’s difficult to forecast long-run productivity, particularly in the current environment, there are two key channels through which the pandemic might influence productivity: accelerated digitalization and a reallocation of workers and capital (e.g. machines and digital technologies) between different firms and industries. Our recent note examines how all this works. Productivity boost The pandemic accelerated the shift toward digitalisation and automation, including through e-commerce and remote-work—and these trends seem unlikely to reverse.

These changes are likely to impact productivity. Recent investments in digital tools—ranging from video conferencing and file sharing applications to drones and data-mining technologies—can make us more efficient at our work. As shown in the chart below, for a sample of 15 countries over 1995–2016, a ten percent rise in intangible capital investment (which is where assets like digital technologies are captured in the national statistics) is associated with about a 4½ percent rise in labour productivity—likely reflecting the role of intangible capital in improving efficiency and competencies. In comparison, a boost in tangible capital (such as buildings and machinery) is associated with a slightly smaller rise in productivity. As COVID-19 recedes, the firms which invested in intangible assets, such as digital technologies and patents may see higher productivity as a result.



However, the benefits will likely not accrue evenly to everyone. Because investment in intangibles is sensitive to credit conditions, intangible investment may decelerate if financial conditions tighten or firms’ balance sheets worsen as a result of the crisis. Such developments, along with the fact that many large, dominant firms (especially in digital services sectors) performed better than peers during the crisis, could contribute to a rise in market power, which could stifle innovation over time. Additionally, some jobs vulnerable to automation may never come back, which could mean job losses, prolonged unemployment, and workers having to search for work in different sectors where their existing skills may not be well-suited. This would be the other, darker side of the coin of productivity gains through further digitalization.


Reallocation during the pandemic With sectors impacted very differently by the pandemic, some degree of ‘resource reallocation’ is likely occurring—for example, shifts in workers across firms as they are laid off or hired. This is occurring for at least two (possibly related) reasons: (i) the churn of businesses entering and exiting the market and (ii) changes in consumer demand. First, the flow of labour and capital toward more productive firms normally lifts productivity and can help cushion the blow of a recession (for example, if laidoff workers are re-hired by more productive firms). As shown in the chart below, an analysis based on firm-level data from 19 countries over 20 years shows that sectors with greater resource reallocation tend to experience a significantly smaller decline in total factor productivity during recessions and recover faster.


Policy actions may influence how much reallocation there is between firms, and thus productivity growth, but the direction is uncertain. For instance, broad-based fiscal support during a crisis could support productivity if it helps firms with the most potential to survive. However, it may also keep resources locked in less productive firms, which could hold back overall productivity growth. The degree to which these forces offset one another is not yet known and depends on how much labour and capital flow to firms that are most productive. Second, the shift in demand away from in-person services where output per worker tends to be relatively low (e.g. restaurants, tourism, brick-and-mortar retail) toward digital solutions and sectors where output per worker is higher (e.g. e-commerce, remote work) suggests that resource reallocation across sectors may have lifted overall productivity. Yet, the lasting effects of all the shifts that have taken place during the pandemic are highly uncertain, with some sectors likely to rebound (e.g. tourism) and others likely to see more permanent changes (e.g. retail). Policies that can help Ensuring an efficient reallocation of resources while protecting vulnerable groups can support a strong recovery. This can be achieved in multiple ways, including by: • Ensuring that capital in failed firms is quickly put to more efficient use, through policies such as improved insolvency and restructuring procedures. • Promoting competition to enable the exit and entry of firms to help curb market power. • Supporting displaced workers, by gradually refocusing policy support from retention to reallocation, to facilitate adjustment to the new normal as the recovery gains speed. Efforts to reskill workers, including through on-the-job training, will also help support inclusiveness as well as boost human capital and strengthen potential growth. Finally, to reap the benefits for productivity of investment in intangibles, ensuring adequate access to financing for viable firms is essential. Despite the economic damage caused by the COVID-19 pandemic, investments in technology and know-how could help lift productivity. However, for this to materialise and be broadly shared, policies have a key role to play. *Lone Engbo Christiansen, Ashique Habib, Margaux MacDonald and Davide Malacrino Deputy Division Chief , Multilateral Surveillance Division, IMF Research Department and Economist, Research Department, IMF and Economist in the Research Department of the IMF and Economist, Research Department, IMF



Building a resilient and inclusive global health system together— Taiwan can help The threat that emerging infectious diseases pose to global health and the economy, trade, and tourism never ceases by Shih-chung Chen*


he threat that emerging infectious diseases pose to global health and the economy, trade, and tourism never ceases. Pandemics can spread rapidly around the world due to international aviation and transport. As of March 2021, a novel form of pneumonia that first emerged in Wuhan, China, at the end of 2019 and has since been classified as coronavirus disease 2019 (COVID-19) has caused more than 126 million cases and more than 2.7 million deaths worldwide. The disease has had an enormous medical, economic, and social impact around the world, and significantly threatened global efforts to achieve the United Nations Sustainable Development Goals. Due to its proximity to China, Taiwan had been expected to be one of the countries most severely affected by the epidemic. But given its experience of fighting the 2003 SARS outbreak, Taiwan did not ignore the alarms, piecing together evolving official and unofficial accounts to form a


picture of the emerging disease that implied a scope and severity worse than the global public perception suggested. Authorities used this information to launch enhanced monitoring on December 31, 2019, and have tirelessly implemented public health containment measures since Taiwan’s first case was detected on January 21, 2020. As of April 22, 2021, there had been 1,086 confirmed cases, including 11 deaths, in Taiwan. Life and work have continued much as normal for the majority of the population. Taiwan has contained COVID-19 ever since the beginning of the pandemic, including a record 253 days without any cases of domestic transmission between April and December 2020. After dealing with SARS, Taiwan established a nationwide infectious disease healthcare network that is led and overseen by infectious disease experts across six regions.


ing the principle of fairness at the same time as prioritizing the protection of disadvantaged groups, including migrant workers. Throughout this pandemic, Taiwan has demonstrated an emphasis on the right to health and associated protections and strong opposition to human rights abuses. Indeed, at no point has Taiwan restricted people’s right to free expression, assembly, or participation in public life. Although COVID-19 has hit all countries hard, its impact has been harshest among already vulnerable and highrisk communities, as well as those lacking quality health care services and those unable to handle the adverse consequences of antipandemic containment measures. As a responsible member of the international community, Taiwan will do its utmost to work with the World Health Organisation and global health leaders to ensure that all people enjoy living and working conditions that are conducive to good health. We will also monitor health inequities to advocate more effectively for universal access to quality health services. More than 100 secondary response hospitals are included in the network and all twenty-two special municipalities, counties and cities have designated their primary response hospitals. The network also provides the legal authority for transferring patients with highly contagious diseases to designated facilities based on public health and clinical need. This has proven instrumental in protecting health systems and health professionals from being overwhelmed, and allowed most non-COVID-19 health services to continue to operate without disruption during the pandemic. To date, there have been only two hospital-associated COVID-19 outbreaks in Taiwan. Both were well managed resulting a total of 11 cases and zero death of health professionals. By introducing public health control measures early and effectively, Taiwan has also mitigated the economic impact of COVID-19. To maintain essential international, social, economic, and trade activities, Taiwan implemented flexible adjustments for related quarantine measures for vessels and aircraft so that fisheries, offshore wind farms, and air transport industries could continue operations. In stark contrast with the global economic contraction, Taiwan’s GDP growth for 2020 was approximately 3.11 percent, with even higher growth of 4.94 percent in the fourth quarter. Furthermore, public trust and cooperation with the government’s response have been key to successfully containing COVID-19. In formulating disease control regulations, the government has adhered to the principles of reasonable response, minimum damage, and gradual adoption. It has worked hard to maintain the balance between people’s right to know and personal privacy and freedom, actively responding to people’s wishes by uphold-

Thanks to its robust health system, rigorous testing strategies, information transparency, and public-private partnerships, Taiwan’s response to COVID-19 has been one of the world’s success stories. This pandemic has proven yet again that Taiwan cannot remain outside of the global health network. Taiwan plays an indispensable role in the global monitoring and early warning systems that detect the threat of emerging infectious diseases, and the Taiwan Model has proven consistently capable of containing COVID-19. The pandemic has also highlighted Taiwan’s capacity to research, develop, produce, and supply therapies and associated tools quickly (including two COVID-19 vaccines that are presently in Phase 2 trials). Being able to comprehensively participate in and contribute to international COVID-19 supply chain systems, as well as global diagnostics, vaccine, and therapeutics platforms, would allow Taiwan to work with the rest of the world. We urge WHO and related parties to acknowledge Taiwan’s longstanding contributions to the international community in the areas of public health, disease prevention, and the human right to health, and to include Taiwan in WHO and its meetings, mechanisms, and activities. Taiwan will continue to work with the rest of the world to ensure that all enjoy the fundamental human right to health as stipulated in the WHO Constitution. Echoing the mantra of the United Nations’ 2030 Sustainable Development Goals, no one should be left behind. Shih-chung Chen* Minister of Health and Welfare, Republic of China (Taiwan)



Why arts and culture must be the cornerstone of European recovery plans The COVID-19 pandemic sent shockwaves that have rippled across the globe. The arts and culture sector has been among the hardest hit since lockdowns began. by Anne-Solène Rolland*


or artists, cultural institutions and industries, this has been one of the worst crises in decades. By suddenly cutting the link between art and its audiences – for months or maybe even years in some countries – this pandemic has threatened the very existence of arts and culture. As with everyone working in the cultural sector, I have witnessed this hardship – first-hand – for months.

Throughout the lockdowns, cultural institutions have lived up to their social responsibility, finding new ways to keep in touch with their communities. The pandemic has created an array of new digital offers, providing an alternative link between institutions, artists and their audiences. But is that enough? Can it be a new paradigm for arts and culture in the future?

What is a museum without its visitors? What is the meaning of performing arts without its audience? What is a movie if no one sees it?

Some might say that the arts are only reserved for a small elite, but that’s not true. For instance, museums offer the unique experience of real contact with creation, and it is



our duty to help as many people experience this as possible. The arts, from performing or visual arts to literature and everything in between, are essential – even more so during and after the crisis. Whether its live music and dance, visiting exhibitions and libraries, or going to the movies, we simply cannot live without real contact with art. Culture is a cornerstone of togetherness and social life. Enjoying the arts is both an individual and collective experience. Culture is also an important tool for improving inclusion because it can open doors to new worlds and different ways of life. Arts and culture can rebuild communities, reignite a spirit of inclusion and togetherness, combat social withdrawal and offer hope after crisis. For these reasons, arts and culture is key to recovery, and support for the sector must be a priority in recovery plans throughout Europe. So, how can arts and culture be supported? Firstly, increased efforts in building bridges between culture and education is fundamental. Access to arts in schools, at all levels and in all educational centres, must be prioritised as a means to positively influence the lives and well-being of individuals and build a more inclusive society. Special funds should be allocated to innovative initiatives, such as the long-term presence of artists in schools, in-depth programmes that introduce pupils to the arts, or long-term partnerships between schools and cultural institutions that facilitate students’ sense of belonging in a museum, library or theatre. Many of these initiatives already exist on smaller scales, but they require time and money to grow and develop. Linking the arts and education has to be part of a large scale and long-term ambition within Europe. Secondly, on a wider scale, helping artists and cultural institutions come closer to their audience or even their ‘non-audience’ can support access to the arts. Throughout lockdowns, museums and theatres have found new places to perform or show works, instead of waiting for their own doors to reopen. What if such projects were a funding priority at the European level? Cultural projects, or tiers-lieux as they are called in France, encourage institutions to go beyond their own walls and meet new audiences in public spaces that are easily accessible to citizens. Such projects should be more widely

supported across Europe not only to bring people together through the arts, but also to revitalise public spaces. Additionally, introducing the arts to a wider audience can be instrumental in fostering transnational cooperation and building a common, European identity. So, finally, supporting cultural mobility and transnational projects is another avenue for supporting inclusivity and solidarity. This could be done by bringing artists from different countries together to build common projects that would tour schools, institutions and public places throughout Europe, encouraging public institutions to invite and host EU artists, or even, very simply, reinforcing travel fellowships for artists, who require support to start new projects again. To paraphrase Jean Vilar, the great French theatre artist who fought for wider access to the arts, “[culture] is a food as necessary as bread and wine”. Arts and culture for all must be a top priority in securing a more inclusive and creative society. Anne-Solène Rolland* Head of the Museum Department at the French Ministry of Culture and 2020-2021 European Young Leader (EYL40) The views expressed in this article are solely those of the author and do not necessarily represent the position of the organisation she represents.





Green diversification in central Asia and its global implications by Radu Magdin*


entral Asia is a place of open skies and wild beauty. As far as one can see, the tallest things are trees and mountains. Far are the windmills of Europe and the millimeter-precise agricultural land used to full capacity. Places that were once depleted by Soviet over-exploitation have been allowed to rest, while others could use a jump to more sustainable use. It is a situation that enough people know about, but few have any ideas how to go about improving the situation. Welcome to Kazakhstan. The inheritor of the largest part of the Soviet exploitation of resources in Central Asia, for 30 years it walked a sinuous path between a post-Cold War society and economy and the sparks of modernisation. Its first president prioritized above all the internal security and control of the country, as Kazakhstan first had to get its house in order, with an ethnically and culturally diverse society and a divided economy, but with common aspirations for modernisation. And for a few years, Kazakhstan’s second president has started acting out measures and reforms that are bringing the country closer to and in line with economies around the world, prioritising the development of its people and strategic economic development over past concerns. The Covid pandemic was a rude awakening. Whereas previous governmental plans for modernization and reform had laid out a patient and slow road ahead, Covid, with its implications in terms of global governance, trade flows, and requirements for self-sufficiency, combined with the accelerated pace towards sustainable economies, pushed Kazakhstan towards the line-up to a greening and development marathon, one in which it needs its international partners as well as the cooperation of all its citizens. On June 10th, at the Foreign Investors’ Council, meeting with 37 large transnational companies and international organizations as well as heads of key ministries, president Kassim-Jomart Tokayev’s message was clear and straightforward: the country needs to rely less on exporting commodities, and it needs to start

greening its economy. “Kazakhstan, as an economic system, cannot rely only on domestic investment, domestic demand and export of raw materials”, he added, which betrays an intense preoccupation with integrating Kazakhstan in the global value chains and drawing on a diversity of investment capital sources. Among encouragement for the digitalisation of various sectors, an interesting position stood out: the boosting agricultural exports (and their digitalisation) could serve as a driver of economic growth. This perspective immediately triggered a reflexive assessment related to hydric stress and the tensions in the region. Clearly there must be better ways to increase Kazakhstan’s participation in the world economy than by pushing a traditional sector beyond a risky point. After all, the sustainable use of the land is part of the green transition. These kinds of perspectives and decisions are starting to become a challenge all too common for many parts of the world. Not least due to the path-dependent recommendations that many decision-makers receive, while in reality they need to look into the future and back-cast to what they need to do today. For Kazakhstan, the diversification of the economy remains a challenge. Copying models and ideas of greening will open a completely virgin field for Kazakhs, and probably it would serve them better to kickstart the sustainable revolution like this, rather than continue adopting path-dependent solutions. Then, as the innovation capabilities of the economy grow, Kazakhs could start developing forms of their own. The agribusiness sector in Kazakhstan is probably one of the easiest examples to use. Though previously state subsidies supported the Kazakh agricultural sector, the modest growth in productivity describes a sector that is yet to start on its learning curve. Consequently, in spite of the opening up to international markets and financing options, Kazakhs should be conservative on crediting options until more knowledge and expertise



of the economy where they are trying to leverage existing capabilities or natural advantages to out-compete others in the world. Thus, we can say that, with a state apparatus geared towards expanding international trade and exchanges, and with specific competitive strategies that leverage autonomous capabilities, Kazakhstan may succeed carving for itself a new (or several) niche(s) in the global marketplace, along with increasing its share in some others.

is diffused into the system, as to ensure the avoidance of potential defaults, overburdening of private entrepreneurs, or the requirement in a few years for the government to intervene and cover the costs of credit. Rather, as Kazakhstan embarks on the journey to digitalisation across all its sectors, what would make sense would be for the use of automation and aero-space-based capabilities to increase yield while decreasing resource consumption (like water), while also using capital to acquire repeat-use capabilities such as the latest agricultural machinery, rather than financing operations. These kinds of decisions and strategy need to be made for every single sector of the Kazakh economy, as the overall strategy is to prioritise exports, rather than attain self-sufficiency. This automatically denotes yield and the effectiveness of invested capital as the drivers of the economy, rather than considerations such as full employment, for example. This being said, it is probably inaccurate to think Kazakhstan fully adopting a model of exports-based economics. If in other parts of the world external and hard security are the counterweight to economic development, for Kazakhstan it is the care for internal cohesion and the rising of education and wellbeing levels across the territory that moderate an excessive focus on economic growth. We know, at the same time, from government decisions at the beginning of 2021, when they looked at Covid’s 2020 P&L, that the leadership has a plan for self-sufficiency as well. Or rather, that there are key sectors


The medium-term challenge of this model is that Kazakhstan will need to find the financing to bridge the time-ROI gap as they taper-off raw materials exports while pulling a double shift to both invest in and acquire new technologies and capabilities, and also to increase the knowhow and expertise across strata of society and territorial distribution, so that a new economic engine kicks in before the green wave hits. This is bound to happen as Kazakhstan, just like the rest of the world, will need to upgrade its economy to non-fossil fuel based or low CO2 footprint. In the US, Europe, and APAC region, corporations, credit rating agencies, governments and academia are working feverishly at building models, estimating impacts, anticipating exposure and risks for when the capital tap will run dry on projects that are not compliant with new ESG standards. Add to this the public pressure on corporations to no longer do business with countries or in sectors that can harm the environment or are not sustainable, and entire rentier model economies will be wiped out, as well as those that do not move from raw materials to higher added value. This is probably the greatest risk built into Kazakhstan’s economy, as it is still in the process of moving away from the Soviet bases of its economic activity, while its biggest investors and partners come from the most militant geographies of the planet. In spite of its passed geopolitical positioning, Kazakhstan actually has the most significant economic exchanges (in value, not volume) with the European Union. To that, since the ascent of the new president, Jomart Tokayev, a few years back, the country has been actively working on identifying new cooperation opportunities as well as diversification of its economic activity, access to technologies and capital, and trade. On the one hand, this came as a balancing tactic for its ‘portfolio of prime partners’ – namely the EU, Russia, and China, who looked like they were about to become strategic competitors; and on the other, it came as an expression of the ambitions to come into its role as emergent middle power. In the context of the undoing


of the post-World War II global order, the shifting sands in the CIS countries, and the rise of the Gulf and ASEAN economies, Kazakhstan is trying to fill a gap and to fulfil a role of stabilising middle power at the core of the vast Eurasian space. Working with the likes of the Foreign Investors’ Council, Kazakhstan has the opportunity of extracting the most value of its credit-taking as well as of the investment potential – if it anticipates the green wave that is about to hit all its neighbors and works towards being an early adopter of green technologies. For also succeeding in jumping ahead of the curve, more investment would be required in the human capital at all levels of society. But this gap too can be addressed – in a similar way the Gulf economies have. In a time of plenty, with oil prices high and no consensus regarding the path to take in economics of global governance, Gulf states supplanted their businesses with foreign specialists that helped the countries achieve wealth before they achieved human capital excellence. After years of strategising and investing in universities, research labs, and international scientific exchanges, we now see the same states increasingly being able to cover their economic needs with their own specialists, who have seen various parts the world and have been trained in schools of excellence. Kazakhstan could potentially consider a similar course of action, as it is more pressed for time, now that the Green Wave is coming, while having similar constraints with the Gulf states with regards to the structure of its economy and dependency on commodities exports. With the early June 2021 raising of the target share of renewable energy of the country to 15% by 2030, up

from 10% previously, we can say that the country’s leadership is aware of the ESG requirements that will soon become the norm for participating in global trade. That said, a linear progression would indicate an under 50% share of renewables by mid-century, a time when the EU, China, and the US have committed to being close to full energy sustainability. This will complicate things, as Kazakhstan is hoping to export some of its renewable energy via the Eurasian Energy Market, likely benefitting from some FX effects in the process, and counting on its enormous potential for wind and solar. This strategy can cut both ways, though, risking Kazakhstan’s peaceful relations with its neighbors. On the one hand, other countries from the neighborhood stated that they do not intend to give up gas and oil by mid-century, or until they reach an appreciable level of technological development and economic sophistication. Question being, who will Kazakhstan sell energy to at a premium? The other logic applies too – its neighbors will have difficulties accessing, for example, the Euro-Atlantic market, for either capital or for exporting goods, which would put Kazakhstan in the position of offering them renewables, so that their ESG reporting improves, and they are granted a chance to participate to global trade flows. But then that would also transform Kazakhstan into a country with the leverage over its neighbors – a position as delicate as the complex relationship shared by the five central Asian countries with regard to sharing water resources. The post-Covid world is rushing in fast, and for countries like Kazakhstan, it is likely to be experienced as a “Green Tsunami”, due to the capabilities-targets gap. A previously ambitious modernisation agenda of the Tokayev presidency, with a focus on cohesiveness, human capital, and gradual liberalisation of the country, will be confronted with the harsh realities of having to double the pace of infrastructure and economic modernisation and a burgeoning foreign affairs and trade apparatus – a requirement, given the task of making Kazakhstan the star of Eurasia. Yet, as a geopolitical analyst, I think we should not be worried, but rather interested: Kazakhstan has over the past few years shown that it listens to all advice and picks what it suits it, with a high capacity to shift path on a dime, if need be. And while the challenges are great, we should not forget one thing: Kazakhstan is only beginning to open up. *Radu Magdin CEO Smartlink Communications



The gig economy: what is it, why is it in the headlines and what does the future hold? A global debate is raging about independent workers or the so-called gig economy. But what is it? And how important is what’s happening? by Emma Charlton*




or millions of people, working nine-to-five for a single employer or being on the payroll is no longer a reality. Instead, they balance various income streams and work independently, job-by-job. If you’ve ever used an app to call a freelance taxi driver, book a holiday rental, order food or buy a homemade craft then you’ve probably participated in this segment of the economy. The “gig economy involves the exchange of labour for money between individuals or companies via digital platforms that actively facilitate matching between providers and customers, on a short-term and payment-by-task basis,” according to the UK government. It’s in focus not just because it’s growing, bringing economic benefits in terms of productivity and employment, but also because it raises questions about levels of consumer and worker protection and labour-market policies. While gig-economy workers often eschew the rights offered to employees on the payroll, in February in the UK a court found that drivers for a car ride-hailing app are entitled to benefits including paid holidays, a minimum wage and a pension. Similar themes are found in other countries, with Spain set to approve a new law that categorizes gig-economy riders as wage labourers. In the US, a comment from the labour secretary suggesting that some workers should be classified as employees wiped billions of dollars off the value of some of America’s largest gig-economy companies, according to a report in the Financial Times. The future of work beyond the COVID-19 pandemic will be the focus of the World Economic Forum’s Jobs Reset Summit on 1-2 June 2021, which will look at mobilizing a jobs recovery plan. So far, gig-economy platforms’ share of total employment is modest – ranging between 1% and 3% of total employment, according to the OECD, which also says the share is growing fast. Global gig-economy transactions are forecast to grow by 17% a year to around $455 billion by 2023, according to a report from Mastercard. And as the market grows, and the companies at the top of the chain get larger, the challenge for policy-makers and officials is to balance the innovation that creates jobs against the need to ensure the companies are offer-

ing workers a fair deal. Gig-economy companies present complications for product-market regulation, competition policy, tax and labour-market policies. Independence and flexibility were cited as the main aspect that people working in the gig economy were often satisfied with, according to a UK government survey. Respondents were less satisfied with work-related benefits and the level of income, with one in four saying they were very or fairly dissatisfied with those aspects of their work. For students who want to earn an income while studying, or primary carers who want to fit work around school or daycare hours, these companies can offer flexible working patterns. Flexible working Generating additional income and having work flexibility are the most common motives to work for gig economy platforms, according to the OECD paper. “Overall, most gig workers are satisfied with their job and working for gig economy platforms appears to reflect mainly voluntary choices rather than the lack of other options,” that paper says. “However, a significant minority of platform workers – around 20% – uses platforms because they are not able to find work as dependent employees.” A McKinsey study categorised independent workers into four segments. 1. Free agents, who choose independent work and derive their primary income from it. 2. Casual earners, who use independent work by choice for supplemental income. 3. Reluctants, who make their primary living from independent work but would prefer traditional jobs. 4. Financially strapped, who do supplemental independent work out of necessity. Public policy-makers face the task of keeping all four of these groups happy, which may require adapting policy settings so that they are ready for the digital age. Challenges exist but are not insurmountable, the McKinsey Global Institute report said. “Issues such as benefits, income-security measures, and training and credentials offer room for policy-makers, as well as innovators and new intermediaries, to provide solutions”, the authors wrote. “Independent workers and traditional jobholders alike will have to become more proactive about managing their careers as digital technologies continue to reshape the world of work.” *Emma Charlton Senior Writer, Formative Content



Erie Kyrgia, Artistic Director - National Theatre of Greece

The National Theatre of Greece is ready! An example of how to navigate the stormy waters of Covid and Me Too In 1880 with a gift of 10,000 pounds from Efstratios Rallis, King George I decides to build a National Theatre. And like a fairy-taly, its history began through the world of fantasy and impetus that indeed represents up until now. Then, it operated as the Royal Theatre from 1901 until 1908. Now, in the 21st century the elegant historic neoclassical building, hosted the National Theatre of Greece, becomes a member of the European Theatre Convention, joining theatres from 23 European countries. by Alexandra Papaisidorou*


hile it has a dynamic history battling several changes of names, lineages, war, and even a bankruptcy, it proudly stands today as one of the most famous theatres of the world. Visitors can attend its performances and enjoy a tour around the Theater premises. The Theater doubling as a museum is home to an excellent collection of portraits, sculptures of renowned


artists. It also has a costume collection, along with the bust monuments of different playwrights. The grand red carpet staircase has welcomed many best-known figures as it is a notewithstanding mix of culture, fun, history, and art. EBR magazine was there to meet and discuss with the newly appointed Eri Kyrgia as the Artistic Director of the National Theater.


It’s worth mentioning the National Theatre’s creative response to the COVID-19 pandemic and how they continue to innovate on their engagement with their audience, bringing theatre and Greek artistic temparament closer to the people around the globe.

and health rules in place in the foyers, our theatres remained closed for the whole winter. Yet we continued to present our productions online, live and direct from our stages, earning a heart-warming response from our remote audience.

The National Theatre of Greece has played a leading role in the cultural life of the nation for 90 years. In its long history, it has never closed, not even under the most adverse conditions, with performances continuing during the Occupation and under the Regime of the Colonels.

All this showed the NTG to be possessed of unique reflexes, which confirm its position as the most trusted theatre in the country. With its historic vitality and vital human resources, the support and understanding of its supervisory body, and sound and realistic management, it succeeded, despite its perennially limited financial resources, in outdoing most of the world’s theatres in the pandemic year of 2020, retaining all its jobs, keeping the microeconomy around it going, providing work to hundreds of theatrical artists, and – most importantly – offering them a creative outlet and unstintingly giving meaning and substance to their dreams. Making this choice meant that life was able to stay as normal as possible for everyone at the NTG, and we refused to yield in the face of the real and existential problems that the pandemic presented for our art.

This year, its mettle was tested yet again, now by a dual crisis. On the one hand, the live arts were hard hit by the pandemic, while on the other, revelations in the context of the Greek Me Too movement thrust the NTG into the eye of the storm. From the first moment that Covid knocked at the door of the NTG, the organisation, its management, and all its employees showed exemplary adaptability, realising the historic magnitude of the situation. Thanks, perhaps, to our innate Greek obduracy, our long experience in finding creative solutions in the midst of chaos, and thanks also to the ingenuity that is part and parcel of our craft, the National Theatre of Greece was ready from the start of the pandemic with its digitised archive but also with brand new digital material. While under strict lockdown, we planned our next steps, so that we would be able to implement every possible scenario, from zero to “the sky’s the limit”, at a moment’s notice. So it was that the NTG was ready again, in the summer of 2020, to perform three touring productions at various archaeological sites as part of an initiative by the Ministry of Culture, and two productions of ancient drama at the Festival of Epidaurus and in the Greek regions. One performance, to great acclaim, was live-streamed to a global audience from the Ancient Theatre of Epidaurus. With this bold and innovative move, the NTG added an international dimension to its activities. During the 2020/21 season, at a time when most of the world’s theatres remained closed, the NTG was ready once more, presenting a season of 13 productions without any compromise in terms of their production values, but adhering to all the measures that had been put in place to limit the spread of the coronavirus: distancing when on-stage, wearing face masks during rehearsals, disinfecting the theatre, costumes and props, carrying out weekly tests on all the actors and stage crew, and tracking cases of illness. A clearly defined protocol gave us the freedom to operate as usual – but with one notable absence, of course: our public. With the exception of a few weeks in October, when we had the opportunity to open with reduced capacity

As if this crisis was not enough, the NTG was dealt another blow when its artistic director resigned after allegations were made against him in the wake of the Me Too movement. The NTG was shaken to its foundations. For weeks on end, it was at the centre of a polarised political – and party-political – controversy. Its employees were targeted, while students from its drama school also entered the debate, young people with frustrated dreams already despairing at the yearlong suspension of their live classes. The challenge for the NTG, both internally and externally, was how to manage our communications in a situation which, although not of our making as an organisation, we had to remedy. It was immediately apparent that the long-standing problems brought to the surface by the Me Too movement and the manifold issues that it gave rise to (such as the treatment of women and minorities in the theatre, the establishment of codes of conduct, and political correctness in artistic discourse, to name but a few), would have to be reflected in the NTG’s policies in respect of its repertoire and its educational activities. We are all working day and night to this end, ensuring that the NTG will be ready, as ever, to face the future.

*Alexandra Papaisidorou Editor-at-large/ PhD cand. University of Piraeus, Cultural Diplomacy & international Relations



Will the circular economy fly us to the moon? by Joan Marc Simon*


ncreased recycling has come at the expense of greener activities like reuse. The European Union now needs to adopt a multidimensional approach to tackle Europe’s waste problem and move towards circularity. “When a wise man points at the moon, the imbecile examines the finger.” This famous quote from Confucius could be applied to the last 40 years of waste legislation in the EU – and it is interesting to take a closer look at it as the activities of this year’s EU Green Week unfold under the motto ‘Zero Pollution for healthier people and planet’. Waste management in the 80s and 90s was mainly a public health issue, and the purpose of legislation was to reduce the impact of waste disposal operations on the communities nearby. Those were the days of the EU landfill directive and the push for incineration. In the 2000s, the idea of recycling gained traction and, in 2008, the EU approved recycling targets of 50% for 2020 whilst continuing to push for incineration. In 2014, we realised that accelerating the pace in a linear economy was a one-way street; this epiphany was branded the Circular Economy. This stopped the incineration fever and the focus was put on recycling. Then came the time of directives on plastic bags and single-use plastics, which pinpointed that waste pollution was not a waste management issue after all. Looking back, in the last 30 years, Europe has reduced landfilling by around 30% and doubled recycling and



incineration figures. At the same time, reuse/refill has been decimated and we are generating 20% more waste per capita. In other words, the bottom of the waste hierarchy has been getting fatter at the expense of the upper side. This confirms that, when the wise man pointed at the moon, all we could see was the waste accumulating on the finger. But it was just a pointer, a symptom. The good news is that we are finally collectively understanding that the solution lies elsewhere. The motto “The best waste is that which is not generated” needs to be translated into the economic, legal and social drivers necessary to lead the transition. It is common sense that if things can be repaired, washed, refurbished and reused they will last longer. Therefore, the waste generated and the environmental impact will go down. However, we need to replace half a century of legislation and economic incentives favouring disposability with a new paradigm in resource management. This means going well beyond the “closing the loop” approach, based on the assumption that the problem with waste is the underperformance of recycling. Disposability was engineered as a way to increase throughput in times of economic recession: the quicker something becomes waste, the faster we can sell another product. More sales mean more economic growth, more jobs, more salaries which can be spent on buying new things … and the wheel keeps on turning as long as environmental and health externalities remain hidden. Waste seemed like a fair price to pay in exchange for the other benefits that a linear economy was bringing. Today, this model is obsolete: Europe is mainly a consumer of disposable items that are produced on the other side of the world; the quantity and quality of our employment is decreasing; fertility rates have halved in the last 40 years because of our exposure to chemicals; and we generate more waste than ever. Because of the historical context that we find ourselves in, it is clear that waste is only a variable of a complex equation. The new paradigm requires that we leave behind disposability – not only because it is a waste of resources and an ethical crime, but also because it drains our economies and pollutes our lives. We need a socio-economic system that is good and healthy for the people, rebuilds natural capital, and

generates local economic activity rooted in the community. The EU is finally on the right track when addressing the complexity of the challenge. It only makes sense that the existing waste legislation is linked with the newly presented Chemical Strategy, the Sustainable Product Initiative, and the European Green Deal as a whole, since a true circular economy should not only be green and regenerative, it should also be clean and socially responsible. This is why a multidisciplinary approach is key for good policymaking. For instance, when developing policies about packaging, we should not only consider the best way to protect the product and reduce the environmental footprint, but also make sure the packaging is safer from a food contact material perspective, and supports local jobs and local economy through shorter supply chains whilst keeping its value after several uses. The resilience shown by natural ecosystems is partly due to its multidimensionality. In contrast, we produce legislation based on one or two variables and this explains the undesirable externalities of the linear economy. Holistic policy-making is one of the biggest challenges of the circular economy. Transitioning from a linear, socially unfair, and polluting economy to a circular, toxic-free, and fair society is not something that can be done overnight. However, as of today, most of us have our homes filled with toxic chemicals present in packaging, furniture, or floorings. We don’t have access to locally produced seasonal food or are able to make responsible choices when buying clothes, IT equipment, or toys. When shopping, it is impossible to know whether a product is safe, repairable, recyclable, or durable. People are ready to move away from disposability into a more resilient and fulfilling way of living – one that is based on wellbeing instead of throughput. The next three years of EU policy-making are key to change product, chemical, and food policies, and lay the foundations of a healthier and fairer society.

*Joan Marc Simon is the executive director of the NGO, “Zero Waste Europe” First published in:



5 ways to boost clean energy investment in developing economies by Bradley Handler, Morgan Bazilian and Michael Hayes*


or emerging and developing economies to meet their energy development and net-zero climate goals, tens of trillions of dollars in investment will be required. This is significantly more than can be expected to be raised from public funds alone, and thus private capital must provide the difference. Yet there remain many obstacles to the deployment of private capital in clean energy projects in emerging economies, as they can impose additional risk and cost and thus dampen investor interest. A new International Energy Agency report, written in collaboration with the World Bank and the World Economic Forum, puts this point starkly: “The world’s energy and climate future increasingly hinges on whether emerging and developing economies are able to successfully transition to cleaner energy systems, calling for a step change in global efforts to mobilise and channel the massive surge in investment that is required.” WE HAVE IDENTIFIED FIVE BROAD AREAS THAT CAN BE ADDRESSED TO LOWER THESE OBSTACLES, AND THUS HELP STIMULATE INVESTMENT. 1. Regulated, transparent power arrangements. Broadly, policies must establish transparency and predictability, which provides confidence for investors in the ability to recover investments in power generation. Examples of such policy include allowing independent power producers (IPPs); having bankable, standardized power purchase agreement (PPA) templates; holding transparent auctions; and having transparent and fair rate adjustments and public participation. One example is a recent transmission line auction in Brazil, which failed to attract investors when it was first launched in 2016. Revised terms, which included higher maximum tariffs and a transparent tariff revision formula that was based on inflation and long-term interest rates, encouraged BTG Pactual and other investors to participate.


2. Specific clean energy/climate incentives. Having an integrated, multi-year energy strategy with short-term targets for retiring fossil fuel plants, if applicable, and building renewable energy helps lay the foundation for conducive policies. Establishing a carbon market or other carbon-pricing mechanism, as well as governance/legislation around carbon removal, is also of value. Chile offers an example: it passed a binding decommissioning schedule for coal-fired power plants; engaged with private power plant owners to develop coal phase-out schedules; and implemented a tax on carbon for larger coal-fired power plants. 3. General business-friendly measures. There exist several general (that is, not necessarily specific to energy) policies that can facilitate investment. These include tax policy (such as not withholding taxes on profits, and no VAT on clean power sales), allowing foreign direct investment (FDI), improved permitting processes, and foreign currency/ability to repatriate profits. 4. Innovative financing mechanisms. Financing mechanisms of different types can be useful in mitigating risk, offering additional return potential, or creating more investment opportunities. Masala bonds, which are Indian Rupee-denominated bonds issued in foreign countries for investment in India, offer an example of risk mitigation (in this case providing a currency hedge). Separately, the cost of financing, and therefore a project’s financial return, can be conditioned on achieving decarbonization targets. For example, the European Bank for Reconstruction and Development’s €56 million bond investment in a €233 million offering by Tauron Polska Energia includes lower financing costs if Tauron meets its 2030 decarbonization objectives. Other financial innovations being considered seek to create more investment opportunity. Examples include




1) synthetic corporate power purchase agreements (CPPAs), which can offer a hedge against a corporate buyer’s fluctuations in power cost while providing demand for renewable energy; and 2) an energy transition mechanism (ETM), which gives investors the opportunity to buy high carbon-emitting assets, retire them and replace them with renewable energy (financial returns in an ETM investment come from operating the high carbon and renewable-energy assets supplemented by, for example, carbon credits for accelerated retirement). The World Economic Forum’s Taskforce on Mobilising Investment for Clean Energy in Emerging and Developing Economies is working to flesh out operational details on several of these innovations. 5. Early risk assumption. Several successful projects have included an early sponsor that was willing to assume various risks. Once certain risks in the project had been ameliorated, the sponsor was able to attract additional, or less expensive, capital. BTG Pactual in the aforementioned transmission project in Brazil was one such example. The company assumed full equity risk initially, but was able to find debt financing once construction was completed. This role can also be fulfilled, or at least supplemented by, international development organizations. For example, InfraCo Asia’s early-stage equity in a smart solar network in the Philippines supported the initial 4,000 homes of a 200,000 home prepaid mobile-based metering clean energy project and only later found another investor. Much of the responsibility associated with these five areas falls to government. Governments in emerging economies must enact supportive legislation to ameliorate some of the risk and improve financial return prospects on energy projects. They should request mul-

tilateral development banks and other international financial institutions raise their risk instrument offerings and financing capacity. They must also work with the private sector to set the parameters and goals for investment opportunities. And they should be receptive to financial innovations that can increase the flow of private foreign capital for clean energy projects. Meanwhile, governments in developed economies must commit to mobilize more funds to climate finance as well as to provide greater technical advisory assistance. Given the pressing need to invest in the near term to expand low-carbon energy access globally, the key is that governments across both the developed and developing economies must act quickly. Actions taken this decade can threaten to lock in emissions for decades to come — or they can set the stage for fulfilling the world’s sustainable development goals. This agenda blog is part of a series dedicated to mobilising investment for clean energy in emerging and developing economies. Learn more about the related initiative, a project driven by multiple stakeholders associated with the World Economic Forum with the goal to uncover barriers, identify solutions and enable collaborative actions to significantly scale investments for clean energy in emerging and developing markets. *Bradley Handler, Morgan Bazilian and Michael Hayes Senior Fellow, Payne Institute for Public Policy and Director, Professor of Public Policy, Payne Institute for Public Policy and Global Head, Renewables, KPMG First published in: