POLICY MAKING AND ECONOMIC ISSUES AP Comparative Government

POLICYMAKING POWER  The EU can create and maintain a single internal market  Most tariffs and other barriers to trade have been removed  Most professional certifications are also good in all member states (lawyers not included)  Union of Monetary and Fiscal Policy  The EU has the power to set monetary policy, meaning they control how much money is in supply  The Euro is the main currency of the EU (Britain and Sweden are two exceptions)  The European Monetary Union has also gained the right to set most interest rates and have control over other fiscal policies

POLICYMAKING POWER  Common agricultural policy  This type of policy has been less successful than others  The main goal is to modernize inefficient farms so that they can compete in the common market  Farm subsidies have been implemented in order to meet these goals  They subsides are very expensive and have been shifted into direct payments to farmers

POLICYMAKING POWER  Common defense  The Maastricht Treaty made foreign and defense policy one of the three pillars of the EU  The crisis management tasks are a core concept of this policy and are defined as humanitarian, rescue, and peacemaking tasks  The EU’s goal is that in the event of a major issue they would be able to deploy 60,000 troops within 60 days for up to one year  Justice and Home Affairs  The 1997 Treaty of Amsterdam allowed for free movement of European citizens from non-EU nationals throughout the Union  This deals with visas, asylum, and immigration

EUROPEAN CONSTITUTION/TREATY OF LISBON  On October 29, 2004 the European heads of government signed a treaty establishing a European Constitution  The constitution was not ratified by member states and the Treaty of Lisbon was created in order to implement some provisions of the constitution  Some of the important provisions are:  Strengthening role for the European Parliament  This clause puts the EP on par with the European Council  They gained rights over subsidies, border control, asylum and integration  They also have some say over the budget

EUROPEAN CONSTITUTION/TREATY OF LISBON  Greater involvement of national parliaments  National parliaments can oversee the EP and make sure that laws being passed at that level are only best achieved at that level  Clarification of the relationship between member-states and the EU  Withdrawal from the Union  The idea that a state can leave the union is recognized for the first time  The creation of a permanent EU president  Prior to this, the office changed every 6 months  Introduction of a Charter of Fundamental Rights

ECONOMIC ISSUES  The EU is constantly dealing with a tension that revolves around economic liberalism and the need to protect the economic interests of each member country  More established EU countries favor greater control, while newer member countries favor more economic liberalism  The international banking crisis of 2008 has brought an argument over sovereign debt into focus  Because countries like Greece, Ireland, and Portugal have been dealing with shrinking GNP’s and rising unemployment, issues over how much responsibility other EU countries have for helping them have become contentious

ECONOMIC STRUCTURAL ADJUSTMENT  With this sovereign debt crisis gaining more attention, there has been a push for reform  In 2011 many European leaders met to discuss the possibility of restructuring the economies of Greece, Ireland, and Portugal  Part of this plan called for economic structural adjustment, that would mean at least a partial forgiveness of the debt in these countries  Because of the intense economic ties between countries, these weak countries have the ability to destroy the stability of the euro and the European banking system

ECONOMIC AGREEMENTS  In order to prevent issues, such as the sovereign debt crisis, countries had agreed to a debt target of 60% of their economic output  While some were able to meet this goal, many continued to finance there spending through governmental loans  This largely worked until the world credit market tanked in 2008  In 2012, even the strongest countries in the EU couldn’t meet their 60% debt target  Germany, one the EU’s strongest economies, had a debt to GDP ratio of 79%  Greece, one of the EU’s weakest economies, had a debt to GDP ratio of 153%