Regionalism Case Studies

Question 1

The EU: what happened after WW2? what is European integration?

Answer 1

after WW2, Europe became the first region to undergo the transition towards co-operation through a regional organisation

the horrors of the war, particularly the Holocaust, led the leaders of Europe to agree that Europe should never go to war again and that they should work together to ensure that the most war-torn continent on the planet should be peaceful

European integration is the process of industrial, political, legal, economic, social and cultural integration of states in Europe

Question 2

The EU: what did politicians in Europe hope?

Answer 2

in line with liberal theory, politicians in Europe hoped that they could design war out of the international system

the likes of Jean Monnet and Robert Schuman of France believed that the construction of a federal or United States of Europe would make war in Europe impossible

these Euro-federalists believed that European institutions and integration, along with trade between European countries, would make war in Europe a thing of the past

Question 3

The EU: the role of economics in European integration

Answer 3

economics played a central role in the plan to integrate the countries of Europe and make war impossible

an early attempt at European integration was the creation of the European Coal and Steel Community (ECSC) in 1951 by the Treaty of Paris

the aim of the ECSC was to make it impossible for the signatory states to go to war as their ability to produce coal and steel, necessary for rearming, was no longer in the hands of the states

a common market was created as well as supranational (a large amount of power given to an authority, which in theory, is placed higher than the state) decision-making on coal and steel production

Question 4

The EU: the success of the EU

Answer 4

the EU won the Nobel Peace Prize in 2012 for contributing to ‘the advancement of peace, reconciliation, democracy and human rights in Europe’

Question 5

GREECE: what is the situation in Greece? what has the state been having to do?

Answer 5

Greece has been in deep recession and the state is having to make savings and increase taxation to help reduce the huge debt it owes to international bodies, states and private lenders

due to this debt, the state has had to make major cuts to public services, youth unemployment is very high and the economy is being squeezed

Question 6

GREECE: what is Greece’s debt estimated to be?

Answer 6

this debt was estimated by the BBC in 2015 to be 177% of Greece’s GDP

essentially, Greece owes more than 1.5x its entire annual income and paying off this debt is going to be an enormous challenge

Question 7

GREECE: when did Greece’s problems start? why was Greece allowed to join the euro?

Answer 7

Greece’s problems started before it joined the euro – public spending was already too high and the 2004 Athens Olympics had to be paid for

Greece did not meet the strict economic criteria needed to join the euro in 2002, but it was felt that Greece should join the single currency for political reasons of solidarity

Question 8

GREECE: how are Greece’s problems linked to its membership of the euro? what did the introduction of the euro mean for Greece?

Answer 8

both the causes and solutions to the Greek debt crisis are linked to the politics and economics of the EU and the euro

the introduction of the euro meant that Greece could borrow at cheaper interest rates than before, as stronger economies like Germany and the Netherlands were in the euro

however, with the international financial crisis of 2008, recession hit and the cost of borrowing went up for Greece

their debt soon became unsustainable and the country was at risk of defaulting, so they had to rely on loans from the European Union and its member states, as well as the IMF and private lenders

Question 9

GREECE: what has been the impact of the single currency on the financial situation for ordinary Greek people?

Answer 9

many argue that the Greek situation was brought on and exacerbated by the euro

the deepening of the EU by introducing the single currency has made the financial situation for ordinary Greek people close to catastrophic

youth unemployment hit 60% during the crisis, with young Greeks leaving the country for jobs abroad, whole families were living off the dwindling income from grandparents’ pensions and the economy had been squeezed so much that it is struggling to get any growth at all

Question 10

GREECE: why is the euro blamed for Greece’s problems?

Answer 10

the euro is blamed because it relies on a single interest rate for the entire euro area

this area includes strong manufacturing and exporting economies like Germany and the Netherlands, known for their economic prudence, but it also includes weaker southern European economies like Greece and Spain

the cheap interest rates encouraged Greece to borrow too much

Question 11

GREECE: what is argued about Germany?

Answer 11

it is also argued that the Germans have been the biggest beneficiaries of the euro as German exporters have benefited from a weaker (compared to the German mark) euro and debt-laden countries like Greece purchasing the German exports

Question 12

GREECE: what is the traditional way of getting out of a debt crisis? why isn’t this an option for Greece?

Answer 12

furthermore, the traditional and orthodox way of getting out of a debt crisis such as Greece’s would be to devalue their currency to kick-start their economy, making exports cheaper

however, this is not an option for Greece as they are a member of the euro, making such a drastic move impossible

overall, it seems to be clear that Greece has had fewer options available to them because they are in the euro, they are essentially in an economic straight jacket

Question 13

GREECE: what is one option for Greece?

Answer 13

one option would be for the countries that have lent money to Greece to write off the debt

meaning that Germany and other countries would state that Greece does not have to pay back the money it has been lent

Question 14

GREECE: what are problems with writing off Greek debt?

Answer 14

there are numerous problems with this approach

firstly, it is politically very difficult to achieve such an agreement within the EU given how it is currently set up

for example, the German government is accountable to the German people through elections, and so any decision by the German government to effectively give the Greek people ‘free money’ from the hard-working German taxpayers is politically impossible

Question 15

GREECE: what is the second problem with writing off Greek debt?

Answer 15

secondly, writing off the Greek debt would make it seem that the Greeks were getting away with being profligate and adopting spendthrift behaviour, and then not having to pay back their debts – a moral hazard

this would seem very unfair to taxpayers in other countries that have not overspent, who are having to give money to the Greeks, who have overspent but then have had their debts written off

all of this seems to make a mockery of the idea of European solidarity and the European project

Question 16

GREECE: why do critics believe the economic and political deepening of the EU caused the Greek debt crisis?

Answer 16

for critics, the economic and political deepening of the EU has caused the Greek crisis

they believe that the euro was ill-conceived, an accident waiting to happen and will inevitably fail, arguing that you cannot just have one currency that works for 19 or more economies as these economies are vastly different and out of sync with each other

arguably, the euro is an integration too far and has been a major factor behind one the most notable debt crises in Europe

Question 17

GREECE: what is the argument suggesting that the Greek crisis is actually a result of not ENOUGH integration rather than too much?

Answer 17

on the other hand, some argue that the euro is an example of the lack of deepening within the European project and an example of how not enough integration led to the debt crisis

when the euro was introduced there was not enough integration – the leaders of the EU member states did not pool the fiscal policies of the Eurozone countries, despite pooling the monetary polices

Question 18

GREECE: how were the EU member states not pooled or integrated in terms of fiscal policy?

Answer 18

they created a monetary union where the euro countries shared a currency but left the collecting and spending of money in the hands of individual countries

so, despite sharing the currency, each country was left to its own devices when it came to public spending, tax rates, collecting and borrowing

Question 19

GREECE: if the EU was more fiscally integrated, how would this have prevented the Greek crisis?

Answer 19

fiscal policy, as the Greek debt crisis has shown, can lead to shocks on the whole Eurozone economy

arguably, if the EU was more fiscally integrated and shared fiscal policy, the Greek debt crisis would not have happened on the scale that it did

this has led many to argue that the solution to the Greek debt crisis is not less Europe, but more Europe

Question 20

GREECE: what is a lesson learned from the Greek debt crisis?

Answer 20

a lesson learned from the Greek debt crisis is that perhaps there should be a more supranational or pooled approach to fiscal policy across the EU

the Greek debt crisis has stifled growth across the Eurozone and arguably, Greece brought their troubles on themselves by borrowing too much, hiding their debts and expecting others to bail them out

but if all the countries could inspect each other’s budgets, they would not be able to spend or borrow too much, reducing the likelihood of economic shocks across the EU

Question 21

GREECE: what would further fiscal integration impact?

Answer 21

this would impact sovereignty and the democratic deficit

but it would also protect the euro and provide more economic stability, perhaps preventing future debt crises like the one seen in Greece

Question 22

GREECE: what is the current situation in regards to banking in EU member states?

Answer 22

currently each country is responsible for the regulation and solvency of its own banks

however, some countries banks’, like Ireland’s, are so large compared to the size of their economy that failing banks can cause a shock to the whole economy and the finances of the state, with a knock on effect for the whole Euro area

Question 23

GREECE: what would a banking union do?

Answer 23

a banking union in the Eurozone would also impact state sovereignty but could also protect the euro and provide economic stability

it would create a level playing field for the banking industry, with all banks subject to the same rules and regulations wherever they are based, rather than encouraging banks to shop around for states that have lax regulations to attract banks to their countries