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Category: English Writing Euroscepticism: an Analysis of The Euroscepticism: An Analysis of the European Union and 2014 Agitation Category: English Writing Euroscepticism: An Analysis of the European Union and 2014 Agitation Wei-An Lai Class: 303. Taipei Chenggong High School Instructor Zong-Rong, Li 0 Euroscepticism: An Analysis of the European Union and 2014 Agitation Introduction In 2014, a drastic change, which French president Francois Hollande called ‘an earthquake in Europe’, occurred in European politics. That is to say, the revival of anti-establishment separatism, so called ‘Euroscepticism.’ This foremost event is likely to shift the future development of the European Union radically in many aspects such as politics, economy, society, and regional development. The essay puts the mentioned event and several sides of Europe developments in comparison and verifies the relationships between those and the possible evolution of the EU in detail. The EU plays an important role in global markets as well as political spheres. Its internal reconstruction will certainly reform the geo-political landscapes on a far-reaching scale. With the analysis, the dissertation conducts the occurring background, causes, and following impacts on file and also compares those with the core values of the EU with a view to forthcoming prospect of the union. This paper is written for policy reference cause by analysing the whole influences of the event on the European Union. Main Body A. Background In September, 2008, the collapse of Lehman Brothers, which directly caused a tremendous slump in US housing market, inevitably triggered a series of financial crises throughout both sides of Atlantic and set off ripples worldwide. Even though Europe didn’t incur the dramatic fall in housing price as it was in America, the euro zone indeed endured the greatest depression since 1929. In response to the crisis, European governments emergently put loads of money into the market to prevent a complete collapse of the banking system. According to the European Commission, it is estimated that 1.6 trillion euros, the equivalent of 13 % of the EU’s annual GDP were committed between 2008 and 2011.1 As their initial conditions and associated vulnerabilities differ, member states in the EU have different difficulties to address. With reference to István P. Székely and Paul van den Noord from VOX, CEPR (The Centre for Economic Policy Research)’s Policy Portal, the member states are divided into two main groups:2, 3 1. States with a housing bubble and a large net foreign liability position as well as the dependency on external financing. 2. States that had been running large current account surpluses with a higher 1 Euroscepticism: An Analysis of the European Union and 2014 Agitation possibility of encountering toxic financial assets. Based on the IMF (International Monetary Fund) data, countries in the first group within the EU are Ireland, Britain, Spain, Portugal, Italy, Greece and several Eastern European countries while Germany, Sweden, Finland, the Netherlands, Belgium and Austria are in the second one. While some EU member states suffer structural financial risks to some degree, a continuation of the financial crisis by other means broke out as the euro crisis. In fact, the vulnerabilities were exposed to the public by previous incident－2008～2011 Icelandic financial crisis, from which the bankruptcy of all three of the country’s major privately owned commercial banks ensued. Apart from the preliminary Icelandic problem, here comes the euro danger. In 19th October, 2009, George Papandreou, the new predecessor of Greek government, revealed a black hole in his country’s account. He admitted that the budget deficit would hit 12% of the country’s GDP, announcing the unveiling of the calamity. In 8th December, Fitch Ratings downgraded Greece’s credit rating from A- to BBB+ followed by rival agencies S&P and Moody’s moves that soon categorised Greek debt as junk. Meanwhile, the fear of markets cast a cloud over other parts of Europe such as Spain, Portugal, France, and Switzerland. As in March, 2010, the euro bounced back from a 10-month low against the dollar just after eurozone leaders agreed on a rescue package for struggling Greece. No sooner had Germany and France announced a 70 billion-euro plan to protect euro than the European governments approved a 500 billion-euro deal to avoid the disaster.4 Just before the bailout package was settled, Germany insisted that the rescued countries should follow strict austerity measures in order to rebuild their economic conditions. The austerity, subject to public expenditure curtailing, had led to the unemployment of thousands of civil servants in Greece. From public sectors to private enterprises, the country faced a severe challenge throughout every commercial activity and it had affected millions of Greeks. Due to the austerity, social security system is in an ailing state with millions of people having no access to healthcare and social welfare. For example, Greece’s public hospital budget was cut by 25% between 2009 and 2011 and public spending on pharmaceuticals has more than halved, leading to some medicine becoming unobtainable, experts from Oxford, Cambridge and the London School of Hygiene and Tropical Medicine (LSHTM) said. (Charlie Cooper, 2014) As the price of the twin bailout packages, totalling 240 billion euros, offered by the European Commission, the European Central Bank and the International Monetary Fund, known as the Troika, Greece was forced to make massive cutbacks to meet the terms of them. And thus health spending was capped at 6% of GDP. Government disease prevention schemes cutbacks had also led to the 2 Euroscepticism: An Analysis of the European Union and 2014 Agitation resurgence and revival of once rare infectious diseases – including malaria, which has returned to Greece for the first time in 40 years.5 Harsh conditions had forced Greeks to go on the streets to fight for their lives and dignity; the same situation can be found not only in Greece, but also in Spain, Portugal, Italy, Ireland, and even France. The Organisation for Economic Co-operation and Development reported that in Greece, Ireland, Italy and Spain people aged 15-29 and not in education, employment or training accounted for about 20% of the age range, and the latest EU data indicate that it became worse in the three southern countries in 2012. What’s worse is that youth unemployment in Europe was shortly around 25%, already a huge number, while in Greece and Spain it has reached extraordinary figures, in the vicinity of 60%, which was staggering in the point of economics.6 With such a high unemployment rate, societies in southern Europe were reaching their limits and reforms were just a matter of time. B. Causes of Euroscepticism There are sorts of causes of Euroscepticism itself; it is neither the GBS (global financial crisis) that formed the ideology, nor the euro crisis. Actually it can date back all the way to the time when Charles de Gaulle held the presidency of France. It will be well explained in the politics paragraphs. B1. Economy The revival of Euroscpeticism in 2014 in particular largely boils down to economic reasons. As I mentioned before, the economic situation has not been expected in Europe; the economic issues can be classified as jobs, commodity prices (including energy) or migrants. As for the unemployment, Greece and Spain are the first and second respectively on the top.7 Chart1. (Unemployment) 3 Euroscepticism: An Analysis of the European Union and 2014 Agitation Chart2. (Youth Unemployment) For commodity prices, they are mainly influenced by oil, gas, and food prices. The following information is from the IMF and Thomas P.M. Barnett: 8, 9 Chart3. (Crude Oil Prices 2007～2012) Chart4. (Natural Gas Prices 2008～2012) Chart5. (Major Crops Prices 2007～2012) Chart6. (Commodity Prices and Economic Activity Trend) As you can see, prices were sharply uprising from 2008 to 2009; given the upwards of primary material prices, the commodity prices were supposed to soar up consequently. While the European countries suffered the biggest recession since WWII, the commodity prices kept rising resulting from some developing economies in Asia, not to mention the potential risk of gas supply from Russia due to Ukraine event. It was an understandably predicament that forced Europeans to resort to the political reforms as they found the governments couldn’t offer them appropriate protection from the economic damage. It’s of the economic basis for Euroscepticism in 2014. Furthermore, many countries that had been bailed out were also asked to follow the regulations implemented by the EU, which was well known as the austerity. For most of the countries, it led to severe cuts in public services and tax hikes; take Greece for 4 Euroscepticism: An Analysis of the European Union and 2014 Agitation example, this helped push one-third of the country into poverty. The following tables can help examine the wholesale conditions of the economies.10, 11 Pic1. (Signs of Weakening EU Economy in 2012) Chart7. (Trade Deficits & Labour Costs) B2. Politics First, the issue of migrants is the most debated and controversial political problem in Europe. Conventionally, it can be divided into two types of migration across the EU: one is the exterior migration, and the other is the interior. Second, the disposal of political power between the EU and national governments is listed as the priority on the agenda in Brussels, which has remained the core issue since the EU was established. These two points will be discussed in the following paragraphs. People from North Africa, Western Asia (mostly Syria and Afghanistan), Kosovo, and recent-increasingly Eastern Europe (Ukraine), where regional conflicts had been heated, fled to Europe due to civil wars in their original countries and seeking of jobs.12 Debates are raised for the impacts of the migrants such as border security, the labours’ job opportunities, social order, and social security policies.
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