The Euro and Refugee crisis

Question 1

EMU’s influence on the start of the Euro crisis

Answer 1

1. EMU had an unsolid structure. Monetary policy was made by the ECB (European Central Bank) and the same for all member states, but the economic policies were different between member states (intergovernmental). Governments also couldn’t be punished by the EU for spending too much.
2. Economies were diverging because of this (growing in a different pace, all different problems) and in order to converge them different monetary policies were needed. This was not possible.
3. There was a no bail-out clause which meant that all debts and deficits were a problem of the state and not other states as well.

Question 2

External shock that caused the Euro crisis

Answer 2

2008 American Financial Crisis which was caused by mismanagement and lack of control and supervision in the housing sector. This blew over to Europe due to the interconnectedness of the American and European economies.

Question 3

Consequences of the Euro crisis

Answer 3

GDP growth stagnated, which meant that governments had a lower income. Borrowing money was expensive, so the only choice was austerity (spending cuts/tax increases). This caused high unemployment rates in southern countries, which in turn made them not be able to not spend money on for example unemployment benefits. Northern countries weren’t hit as hard by this. Southern states wanted bail-outs for the Stability and Growth Pact rules, the northern countries did not want to allow this.

Question 4

Measures to help improve the financial/conjunctural situation

Answer 4

Made the EMU more supranational
1. ECB-president Mario Draghi said: “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.” This caused people who were speculating against the Euro, to suddenly have faith in the currency, making them speculate in favour of it.
2. Banks were bailed countries, because they were seen as too important for their financial sector.
3. Steps were made for a banking union, so there would be more banking regulations
on a supranational level.
4. The intergovernmental European Stability Mechanism (ESM) was created in order to
loan money from rich to poor member states.
5. Loans from the ESM with conditionality (meaning the borrowing states had to
reorganise their economies) for Cyprus, Hungary, Ireland, Latvia, Portugal, Romania,
Spain and most of all for Greece.
6. There were also some fiscal and economic measures, such as the strengthening of
the SGP.
7. European Semester to give recommendations to countries’ economic policy to make economies move together

Question 5

The diabolic triangle after Euro crisis measures

Answer 5

1. More EU capacity due to more power/competences towards ECB, and better reputation due to being saving actor
2. National control increased because everything European Commission does must be approved by Council of Ministers
3. EU legitimacy decreases because EP is on the sidelines

Question 6

Case of Greece in Euro crisis

Answer 6

Euro crisis hit the hardest here. There was very high unemployment and very high debt. Greece had been lying about the debts and deficits it had had over the previous years. The northern countries wanted to loan money to Greece only if Greece made some structural changes to its economy management. The Greek government accepted this, because it otherwise would have gone bankrupt, and it especially cut expenses on social policy. This led to dissatisfaction among the Greek people, causing them to elect a left wing populist government. They held a referendum on acting out the agreements. With a 61,3% no-vote they re-entered negotiations and they still had some conditions, but they were a little bit less strict than in the previous agreement.

Question 7

Cause of Refugee crisis

Answer 7

Arab spring, civil wars caused millions of Arabians to flee towards Europe

Question 8

European sentiment towards Refugee crisis

Answer 8

Terrorist attacks in Europe which led to more anti-migration sentiments

Question 9

Two sides in Europe towards Refugee crisis

Answer 9

1. Help refugees and treat them as humanely as possible. Led by Merkel; ‘Wir schaffen das’.
2. No refugees and push them back. They were seen by this side as people seeking to profit from western prosperity, rather than refugees. Led by right-wing populists.

Question 10

Reaction towards Refugee crisis

Answer 10

The bordering states where most refugees would first enter Europe were in distress and asked for help. The other states refused and pointed towards the Dublin Treaty, which said that migrants should seek asylum in the first country they enter in the Schengen-area. This came from a time where most refugees came by plane, however. Bordering states threatened to send migrants wherever they wanted to go, which caused the north-western states to agree to proportionally reallocate migrants across Europe. Central and eastern Europe did not agree and rejected the proposal for a Common European Asylum System.

Question 11

Measures for Refugee crisis

Answer 11

1. After rejection of the CEAS by central and eastern Europe, the system was set up on voluntary basis.
2. Frontex was empowered as EU border and coast guard agency
3. EU-Turkey deal to control refugee flow

Question 12

EU-Turkey Deal

Answer 12

1. EU return all illegal migrants entering through Greece via Turkey
2. EU pays Turkey for doing so,
3. EU regularly accepts Syrian migrants from Turkey
4. Turkey combats illegal migration
5. EU and Tyrkey reopen EU-citizenship talks
6. EU and Turkey discuss liberalization of visa requirements for Turkish citizens

Question 13

Diabolic triangle during Refugee crisis

Answer 13

1. National control is okay/increasing as the member states don’t give any power away
2. EU capacity a bit of increase, only towards fortress Europe idea, but no common asylum system so bad for EU capacity.
3. No democratic oversight on how this works so EU legitimacy goes down