Social Sciences Test April 2014

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What does the European Council do?

  • Establishes guidelines for future EU cooperation
  • Does not take part in the day to day decision making process
  • Meets at least 4 times a year for EU summits, held in Brusells
  • If necessary, the President can convene extra summits
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What does the European Commission do?

  • Initiates new laws
  • Implements common legislation
  • Manages the EU budget
  • Ensures that member states follow the legislation
  • Represents the common interests of the EU
  • May not accept the instructions of any government
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What are the 7 institutions of the EU?

  • The European Commission
  • The European Council
  • The Council of Ministers
  • The European Parliament
  • EU Court of Justice
  • The European Central Bank
  • The Court of Auditors
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What does the Council of Ministers do?

  • Takes decisions on new laws in the EU, often needing to reach agreement with the European Parliament first.
  • Enters into international agreements on the EU's behalf
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What does the European Parliament do?

  • Takes part in decisions on new laws with the Council of Ministers
  • They have to jointly approve or reject the EU budget every year
  • Electing the President of the Commission
  • Approving the Commission as a whole before it can start working
  • Monitors the work of the Commission
  • It has the power to remove the Commission by a vote of no confidence
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What does the Court of Justice do?

  • They interpret EU legislation
  • Provide rulings in disputes between EU institutions and member states
  • Also includes the General Court
  • The Gen. Court judges in disputes between the EU institutions and individual people and companies
  • Also includes the Civil Service Tribunal Court
  • They deal with cases concerning employees in the EU institutions
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What does the European Central Bank do?

  • Managing the monetary policy of the euro countries
  • The ECB also supports the general economic policy of the EU
  • It's also the only instution that can give issue the euro
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What does the Court of Auditors do?

  • Monitoring the correct use of EU funds, both in the EU institutions, and in the member states
  • Examines whether revenue and expenditure have been legally managed
  • Ensures that financial management has been sound
  • Reports to the European Parliament and the Council of Ministers
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What does it mean for Sweden to be a member of the

  • Sweden decides together with the EU member states on new EU legislation
  • When the EU decides on new legislation, it is then implemented in these member states. Many of Sweden's laws thus originate from EU laws.
  • Sweden has representatives in the various EU institutions and bodies. In some cases, these Swedish representatives represent Sweden, in others they represent the EU.
  • There are institutions in which Swedish voters represent their voters, or special interests
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What does the Swedish government do as part of the

  • Formulates Swedish EU policies
  • Represents Sweden in the EU
  • Negotiates with the other member states on the formulation of EU policies
  • Informs the Riksdag on its EU activities
  • Check up on the Swedish position with the Riksdag prior to decisions in the Council of Ministers
  • The Government prepares the Swedish position on draft EU laws from the EU Commission. 
  • In the case of more important EU proposals, the Government writes an explanatory memorandum
  • When the Riksdag requests it, the Government deliberates with parliamentary committees on current issues
  • When the Council of Ministers needs to discuss an issue, the Government consults the Committee on European Union Affairs, and they then receive a political mandate which they must follow in the council
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What does the Riksdag do as part of the EU?

  • All parliamentary committees monitor the work being carried out by the EU in their particular area
  • The Government deliberates with the committees on current issues, when requested. This way, the Riksdag can represent their views to the Government. 
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How does EU law apply to Sweden?

  • When the EU takes a decision on new rules, the member states must follow them
  • In Sweden, directives are applied in the same way as the ordinary legislative process (the government submits a bill to the Riksdag).
  • If the EU doesn't follow EU law, Sweden can be taken to the Court of Justice, or:
  • Sweden may have to pay a fine
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How are Swedish courts connected to EU law?

  • If a Swedish law is unsure as to how interpret EU law, it can request a preliminary ruling, which the national court then implements
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How does the Swedish government agencies implement

  • The decisions and the regulations of government agencies must also take EU rules into consideration
  • Many government agencies also participate in implementing the decisions that are taken at EU level, taking part in EU working groups and committees.
  • Responsible for monitoring developments in EU policy
  • Responsible for providing up to date information within their particular areas
  • In some cases, agencies receive and assess applications for EU support
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How do Swedish local authorities relate to the EU?

  • Approx 70% of EU legislation is implemented at local and regional level 
  • The municipalities are also affected more indirectly, for example, if they participate in projects financed by the EU
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Why can't Sweden join the euro?

  • In 2003 a majority of voters in Sweden voted against introducing the euro in Sweden
  • Because it is not believed to fulfil the set of requirements, including a stable exchange rate
  • This is beause Sweden decided to not participate in the European Exchange Rate Mechanism
  • Sweden does not currently intend to introduce the euro, therefore the Riksbank continues to decide Sweden's monetary policy, and keep the SEK
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What are the convergence criteria?

  • Permanently stable prices
  • Sound finances
  • A stable exchange rate
  • Low interest rates
  • The laws of the country must also conform to the EU's rules on monetary union
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How much do member states pay/get back in contribu

  • Negotiations between member states, but generally:
  • Richer countries pay more, and receive less
  • Poorer countries pay less, and receive more
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What are the 6 categories of EU expenditure?

  • Sustainable growth
  • Preservation and management of natural resources
  • Citizenship, freedom, security, and justice
  • The EU as a global partner
  • Administration
  • Compensations
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'Sustainable growth' as part of EU expenditure

  • To boost competitiveness, the EU gives support to areas like education, and research
  • This support goes to EU policy for economic and social cohesion
  • This includes support to disadvantaged regions and labour market trading schemes
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'Preservation and management of natural resources'

  • Support paid directly to farmers, market support.
  • This is used to even out differences in price in the internal market, or to increase the use of certain agricultural produce
  • Support rural development
  • Support in the environmental, and fisheries sector
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'Citizenship, freedom, security, and justice' as p

  • Support to projects that contribute to common policy on asylum/strengthen cooperation between member states to combat crime
  • Support in the consumer area
  • Promotion of European culture, marketing support for European films/television productions
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'EU as a global partner' as part of the EU budget

  • EU candidate countries receive special support prior to accession to the EU
  • Cooperation with neighbouring countries
  • Common Foreign and Security Policy
  • Development assistance
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'Administration' as part of the EU budget

  • Salary and pension contributions for the employees of EU institutions
  • Costs for premises
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'Compensations' as part of the EU budget

  • Member states can be granted compensations during the first few years of membership
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What makes up the EU's own contributions?

  • Traditional own resources
  • Contribution based on revenues from VAT
  • GNI resource
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'Traditional Own Resources' as part of the EU's re

  • 75% of customs duties that member states levy on imported non-EU goods go to the EU budget
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'VAT' as part of EU revenues

  • Some VAT revenues go to the EU budget
  • The VAT contribution corresponds to 0.3% of the member states' VAT base
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'GNI resource' as part of the EU's revenues

  • GNI: The value of goods and services produced in a country over a year, plus the net revenues of companies, salary, and capital from countries abroad
  • Customs duties and VAT together represent about 33% of revenue
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Where also can the EU gain revenue?

  • Countries that aren't part of the EU, but participate in the EU's activities
  • Eg. Norway, Iceland
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How is the EU budget decided?

  • The European Commission proposes how revenues and expenditure are to be distributed 
  • The Council of Ministers and the European Parliament decide jointly on the budget
  • The budget must be kept within the framework that is determined by the long-term EU budget, which is about a 6 year plan
  • Places a ceiling on EU expenditure, and on member states contribution to the EU
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How are the use of EU funds monitored?

  • The Court of Auditors scrutinises all income & expenditure
  • It submits a report to the European Parliament and the Council of Ministers
  • OLAF is responsible for combating fraud and abuse in the administration of the EU budget
  • OLAF cooperates with the member states in its investigations
  • If any recipient of EU funds is found to have misused them, it is the task of the member state in question to deal with the problem
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What are the main objectives of the Treaty of Nice

  • It opened the way for EU enlargenment
  • Including EU expansion in southern states, and former Soviet satellite states
  • The original countries of the EU would pay much more than they got back, and vice-versa for eastern European nations
  • In theory, it'll help the EU in the future, if everyone's economies are strong
  • The aim was that with more economies, and freer trade, everyone will benefit.
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What are the main objectives of the Treaty of Lisb

  • Controversial: Would give the EU more power, by starting to federalize Europe
  • Created a president, and a higher representive (like an EU foreign minister)
  • This was done to create common foreign policy goals in certain aspects
  • This also means that the EU can punish member states, with sanctions, and temporary embargoes
  • It also means that EU authorities can impose laws upon member states
  • Started the EU Citizen Initiative, which allows people to affect the EU 
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What are the main objectives of the Treaty of Maas

  • Introducing/proposing the euro
  • Founded the European Union (EU)
  • It hence became a political union
  • EU citizens with specific rights & obligations
  • Governments of member states don't have as much power, the EU can have exclusive competence. Eg. defense treaties, justice for EU citizens
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What are the main objectives of the Treaty of Rome

  • Signed by the original 6 countries
  • Established the EEC
  • Proposed the EU Commission (EC, executive branch)
  • Creates a custom union between countries, by erasing internal borders within members, creating a unified border to the outside world.
  • This enabled countries to trade freely, but also meant that all member states get to import at the same customs price, which means that they are susceptible to imported goods.
  • QED: Proposing a common, unified market.
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Why was the euro doomed?

  • There hadn't been enough convergence in the economies of several of the 11 founder members
  • The eurozone would become 2 blocks of economies: a core, and periphery. The periphery would constitute a region of low productivity, and growth, which would be unable to compete with the core. 
  • Life in the periphery would be made difficult by the loss of currency devaluation as an instrument of government macro economic policy, because devaluing the currency would make the economies of other countries bad
  • This caused high relative costs of production & declining competitiveness compared to the core. 
  • This implied that competitiveness could only be restored by austerity measures: cutting wages, and reducing government spending. 
  • However, these austerity programmes were not applied in Greece, Italy, Spain, or Portugal during the 1st decade of the Euro.
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How did the EU react to the Greek national debt?

  • Feeding Greece with multi-billion Euro emergency bailouts, given by the troika
  • These emergency bailouts would only be given on the condition that the troika would create fiscal deficit reduction targets for Greece.
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How did the troika austerity measures affect the G

  • Wage cuts
  • Reductions in pensions
  • Tax increases
  • 50 bill Euros worth of privitisation
  • This meant that nobody in Greece had any money to buy anything, meaning that the government wouldn't be able to collect any revenues in the form of taxes, and duties.
  • This has deepened the domestic crisis in Greece, causing a permanent recession, without providing a contribution to the resolution of the instability of the Eurozone as a whole.
  • The Greek public responded with strikes, and violent demonstrations.
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What was the result of the Greek crisis in the res

  • Fear of government debt rapidly spread
  • The crisis spread to Italy, Spain, and Portugal
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In 2011, how did the EU respond to containing the

  • Doubling the size of the EFSF as the main rescue facility, increasing it to 1 trillion euros
  • Previously, its funding had come from governments, not the ECB.
  • The ECB's role in crisis management was in purchasing hundreds of billions of Euros worth of Italian and other contagion governments bonds
  • Introduced bank-catastrophe containment provisions: banks were prevailed upon to write off 50% off half the value of their holdings of Greek Debt.
  • Specific European banks would have to reinforce their balance sheets by 100 billion, in an effort to get through giving 'haircuts' to Greek debt. But would this be enough to get the banks through if other periphery countries defaulted?

RESULT: These measures were ineffective.

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What happened after the 2011 settlement?

  • Bond yields in Italy & Spain soared, and hastened the demise of the Berlusconi, and Zapetero governments.
  • France feared a downgrading of its credit rating
  • The German government failed to sell 40% of six billion Euros worth of bonds. Since even Germany couldn't sell its debt, it seemed to show that the crisis was out of control.
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What did the EU try to do after the 2011 settlemen

  • Introduce an economic government for the Eurozone (making it more federalized). This would mean European fiscal union, and a reinforced central bank.
  • Eurobonds would replace traditional government securities
  • The Eurobond would be issued by all Eurozone governments, and the risk would be shared by all
  • To limit the risk of Eurobonds, the EC would have the power of veto over national budgets
  • The reinvention of the 'Stability Pact' as a fiscal watchdog with teeth, with punishments imposed throught the European court.
  • This would require a revision to the Lisbon treaty
  • An enlargenement of the ECB's role in buying the national government bonds of Greece, ergo becoming a last resort for countries
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Disadvantages to the proposal of an EU economic go

  • It would not sit well with the third of Europe that haven't adopted the euro. Eg. Britain may threaten to veto the proposal.
  • European fiscal union would never work, as long as convergence is lacking. 
  • Only the continuation of an independent fiscal policy implemented at national level enables governments to make up for the short coming on monetary policy
  • Interest rates would be extremely inappropriate for some member states
  • Fiscal policy can be used to curb the rate of inflation if a member state's economy is significantly above the EU average. 
  • Allowing the ECB to print billions of Euros would be dangerously inflationary, and ruin Germany's economy. This would be in opposition to the ECB's need to act as a guarantor of low inflation
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What are Greece's, and other countries 2 options t

  • Leave the Euro, and restore their pre-euro currencies.
  • Becoming part of a more federalized Eurozone.
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Why would leaving the euro be a bad idea?

  • High inflation, a run on banks, bankruptcy of businesses, lack of government access to bond markets.
  • Life post-euro would be worse than while in the euro zone
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Why would a more federalized Europe be another bad

  • It's unlikely that the one currency will survive after 2012: what about a new 2012 credit crunch?
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What has been the result of the 'single currency e

Monetary union in Europe almost certainly cannot survive without an economic government which embraces both fiscal integration and a central bank with a lender of the last resort role.

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