Transcript Financial Crisis

The European Union today.
Possibilities of a future?
The European Constitution
Constitution Introduction
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Treaty establishing a Constitution for Europe (TCE)
Pursose:
Replace existing Treaties
 Give legal force to the Charter of Fundamental
Rights
 Qualified majority voting
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First Draft of the Constitution
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At Laeken European Council
New debate on the future of the European
Union.
TCE signed in Rome 29 October 2004
All Member States must ratify the Treaty:
Referendum
 Parliamentary vote
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Results
- Many countries promised to hold
referendums: Denmark, France, Ireland,
Luxembourg, Netherlands, Spain and
Portugal.
- 29th May 2005 – Spain is the first
country to hold a referendum. The
Constitution approved.
-The French and Dutch public rejected
the Consitution.
-- 10th July, Luxembourg approved the
Constitution. Last referendum to be held.
-- All of the other Member States
cancelled their referendums due to the
French and Dutch rejection of the
Constitution.
-- It was decided to hold a “period of
reflexion”.
A new Treaty
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In the 2007 European Summit it was decided to
abandon the Constitution, and establish a new
International Governmental conference which
would amend the existing Treaties (Rome and
Maastritch).
The new Treaty, referred to as Reform Treaty,
became the Lisbon Treaty, signed in Lisbon on
the 13th December 2007, entered in force the
1st December 2009.
Reasons for the European
Constitution
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The TCE would have reiterated key principles
such as:
Principle of conferral
 Principle of subsidiary
 Principle of proportionality.
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Human principles
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Provisions codified for the first time in the TCE:
Human dignity, freedom, democracy, equality, the
rule of law, respect for human rights, minority rights,
free market, pluralism, non-discrimination, tolerance,
justice, solidarity and equality of the sexes.
Aims of the EU according to TCE:
- Promotion of peace, security and justice, internal
market where competition is free, economic growth
and price stability, respect for linguistics and cultural
diversity, eradication of poverty, free and fair trade
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Legal personality
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Under the TCE, the European Union would
have legal personality, that is to say, it would be
presented as a single body under international
law.
Criminal justice proceedings
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7 new areas of cooperation would have been
added:
Child abuse
 Corruption
 Fraud
 Human trafficking
 Drug trafficking
 Terrorism
 Trafficking of arms
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Solidarity clause
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“Any member state which falls victim to a
terrorist attack or other disaster will receive
assistance from other Member States, if it
requests it”.
Charter of Fundamental Rights of
the European Union
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In the TCE it is included a copy of the Charter
of Fundamental Rights, agreed by all members
Qualified majority voting
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Unanimity voting would be eradicated and,
instead, 55% majority of members representing
65% of the population would only be required.
The unanimous agreement will only be required
for decisions on more sensitive issues.
Treaty revisions
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Any amendments to the Constitutional Treaty
will involve the convening of a new Convention.
It must be agreed unanimously.
Withdrawal clause
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The TCE allows for the withdrawal of any
Member State without renegotiation of the TCE
or violation of Treaty commitments.
If negotiations are not agreed, the country leaves
anyway.
The entry of Turkey in the
European Union
Reasons for Turkey joining the
European Union
Geopolitical Reasons
Turkey represents a defense
against instability in both
parts: Middle East and
Central Asia.
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It is a potential bridge
between Christian Europe
and the Islamic World
Reasons for Turkey joining the
European Union
Economic Reasons:
1)Turkey has experimented
the doubling of per capita
income since 2003.
2)It has a youthful
population.
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3)It attracts large amounts of
foreign direct investment.
Reasons for Turkey joining the
European Union
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Energy:
1)Turkey could be an
alternative route for
Russian energy to transit
into the EU.
2) Nabucco pipeline:
from Turkey to Austria.
3) Objective: to reduce
European dependence on
Russian energy.
Reasons for Turkey joining the
European Union
Defence:
1) Turkey is a defender of
European interest since the
Cold War.
2)Turkish troops have served
alongside the EU troops on
various missions.
3)Inclusion of Turkey into the
EU, cooperation in defense
and security are strengthened.
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Reasons for Turkey joining the
European Union
Reforms:
1)Turkey applied formally to
join the Union in 1987.
2) The abolition of Capital
Punishment.
3) Objective: to move closer
towards a European style
democracy.
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The Single Currency: the Euro
Benefits of the Euro
1) Lower transaction
costs.
No costs in changing
currencies.
2) Price transparency.
“law of one price”.
Benefits of the Euro
3)Removal of exchange rate risks.
No additional risk of exchange rate.
4) Increase in trade and investment.
Euro as a vital instrument to the success in the
Single Market.
Benefits of the Euro
5) Effects on interest rates.
Decrease of the interest rate.
6)Improvement on Inflation.
ECB Low inflation.
7) Benefits in the financial sector.
Financial Crisis
Introduction
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A liquidity shortfall in the United States
banking system.
Collapse of:
- Financial institutions.
- Bailout of banks by national governments.
- Downturn in stock markets.
Financial Crisis
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The worst financial crisis since the Great
Depression of the 1930s.
- Failure of key businesses.
- Decline in consumer wealth estimated in the
hundreds of billions of U.S. dollars.
- Substantial financial commitments incurred by
governments.
- Decline in economic activity.
Financial Crisis
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The economic impacts:
• Weaker export revenues;
• Further pressures on current accounts and
balance of payment;
• Lower investment and growth rates;
• Lost employment.
Financial Crisis
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Social impacts:
• Lower growth translating into higher poverty;
• More crime.
• Weaker health systems.
• Difficulties meeting the Millennium
Development Goals.
Financial Crisis
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Regulatory solutions have been implemented or
are under consideration.
• Risks remain for the World Economy over
the 2010-2011 periods.
Financial Crisis
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2010 European sovereign debt crisis.
• This crisis impacted five countries:
- Greece, Ireland, Portugal, Italy, and Spain.
• Other countries:
- France, Belgium, The Netherlands, Luxembourg,
Germany, Finland, and Austria.
Financial Crisis
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Some countries were not affected by crisis:
• China:
- Maintains capital controls that limit foreign
investment by individuals and businesses.
- Chinese investors had little exposure to troubled parts
of the US and European financial systems.
- Banks in China had invested heavily in US securities.
Financial Crisis
• India:
- Has increased imports and pushed up the demand
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for copper, oil and other natural resources.
Greater exports and higher prices.
Australia:
Suffered relatively little from the crisis.
Did not enter into a recession.
Brazil:
Did not sustain major damage from the crisis.
Financial Crisis
European Union
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EU governments, coordinated by the European
Commission, stabilised the banks after US investment
bank Lehman Brothers failed.
• Protect people, their savings and their jobs.
• 5.5 % of GDP is being pumped into the economy
from national and European budgets.
• Jobs, infrastructure and energy efficiency.
Financial Crisis
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The European Globalisation Adjustment
Fund:
• New opportunities to workers who have lost their
jobs.
• 16 000 workers, in sectors such as the car industry,
textiles and construction, have benefited from it.
• The Commission has approved applications worth
€60 million.
Financial Crisis
Interest rates were cut to record levels in the
euro area. The Commission:
• Radical reforms to financial markets:
- Cut out reckless behaviour.
- Ensure financial institutions are properly
supervised.
- Get lending flowing to families and small
businesses.
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Financial Crisis
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EU countries outside the euro area:
Hungary, Latvia and Romania.
• The EU stepped in with loans of €15 billion.
Financial Crisis
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EU tackles social dimension of economic
crisis:
• Mobilising EU funding.
• Promoting employment.
• Cooperation with the social partners.
• Cooperation with international partners.
Financial Crisis
• Mobilising EU funding:
- European Global Adjustment Fund (EGF).
- New European Progress Microfinance
Facility.
Financial Crisis
• Promoting employment:
- The EURES jobs portal:
- Work in another European country.
- The “new skills for new jobs” initiative:
- Analyse and predict future skills
requirements for economic advancement.
- The European Employment Strategy:
- Promote employment in the context of the crisis.
Financial Crisis
• Cooperation with the social partners and
international partners:
- Constructive dialogue between employers and
trade unions.
- An international action.
Financial Crisis
Europe 2020
• Five ambitious objectives:
- Employment.
- Innovation.
- Education.
- Social inclusion.
- Climate/energy.
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Financial Crisis
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Each Member State will adopt its own national
targets in each of these areas.
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Concrete actions at EU and national levels will
underpin the strategy.
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Smart, sustainable and inclusive economy.