1. EU economy in the context of the world
crisis
Neven Borak

2. Points departure
• Collective loss of memory.
• Cyclicallity of time.
• Negative vs. positive integration.

3. Haulage
French train
Illyrian rovinces
German train
Holly Roman Empire.
Holly Aliance.
Balance of powers.
WWI.
WWII.
Cold War Vzhod-Zahod
Yugoslavia – mini union?
Foundations, identity, debts.
Fall of iron curtain Mitteleuropa , EU, EMU
Mitteleuropa

4. United States of Europe
Richard Coudenhove-Kalergi:
Pan-Europa (1923)
"Europe as a political concept does not
exist. This part of the world includes
nations and states installed in the
chaos, in a barrel of gunpowder of
international conflicts, in a field of
future conflicts. This is the European
Question: the mutual hate of the
Europeans that poisons the
atmosphere. (....) The European
Question will only be solved by means
of the union of Europe's nations. (...)
The biggest obstacle to the
accomplishment of the United States
of Europe is the one thousand years
old rivalry between the two most
populated nations of Pan-Europe:
Germany and France..."
Aristide Briand
League of nations (1929)
"I believe that a sort of federal bond
should exist between the nations
geographically gathered as Europe
countries; these nations should, at any
moment, have the possibility of
establishing contact, of discussing
their interests, of adopting common
resolutions, of creating amongst
themselves a bond of solidarity that
allows them, on suitable occasions, to
face up to serious circumstances, in
case they arise. (...) Evidently, the
association will take place mainly in
the economic domain: this is the most
pressing question..."

5. United States of Europe
Union FederationConfederation
Christian USE
Soviet USE
USE with German leadership

6. Competences
Treaty on the Functioning of the European Union.
Exclusive
(a) customs union;
(b) the establishing of the competition
rules necessary for the functioning of
the internal market;
(c) monetary policy for the Member States
whose currency is the euro;
(d) the conservation of marine biological
resources under the common fisheries
policy;
(e) common commercial policy
Shared
(a) internal market;
(b) social policy, for the aspects defined in
this Treaty;
(c) economic, social and territorial
cohesion;
(d) agriculture and fisheries, excluding the
conservation of marine biological
resources;
(e) environment;
(f) consumer protection;
(g) transport;
(h) trans-European networks;
(i) energy;
(j) area of freedom, security and justice;
(k) common safety concerns in public
health matters, for the aspects defined
in this Treaty

7. Coordination
- The Member States shall coordinate their economic policies within the Union. To this
end, the Council shall adopt measures, in particular broad guidelines for these policies.
Specific provisions shall apply to those Member States whose currency is the euro.
- The Union shall take measures to ensure coordination of the employment policies of the
Member States, in particular by defining guidelines for these policies.
- The Union may take initiatives to ensure coordination of Member States’ social policies.
- The Union shall have competence to carry out actions to support, coordinate or
supplement the actions of the Member States. The areas of such action shall, at European
level, be:
(a) protection and improvement of human health;
(b) industry;
(c) culture;
(d) tourism;
(e) education, vocational training, youth and sport;
(f) civil protection;
(g) administrative cooperation.

8. Economic and monetary policy I
1. For the purposes set out in Article 3 of the Treaty on European Union, the activities of
the Member States and the Union shall include, as provided in the Treaties, the
adoption of an economic policy which is based on the close coordination of Member
States’ economic policies, on the internal market and on the definition of common
objectives, and conducted in accordance with the principle of an open market
economy with free competition.
2. Concurrently with the foregoing, and as provided in the Treaties and in accordance
with the procedures set out therein, these activities shall include a single
currency, the euro, and the definition and conduct of a single monetary policy and
exchange-rate policy the primary objective of both of which shall be to maintain price
stability and, without prejudice to this objective, to support the general economic
policies in the Union, in accordance with the principle of an open market economy
with free competition.
3. These activities of the Member States and the Union shall entail compliance with the
following guiding principles: stable prices, sound public finances and monetary
conditions and a sustainable balance of payments.

9. Economic and monetary policy II
1. Member States shall conduct their economic policies with a view to contributing to
the achievement of the objectives of the Union, as defined in Article 3 of the Treaty on
European Union, and in the context of the broad guidelines.
2. 2. The Council shall, on a recommendation from the Commission, formulate a draft
for the broad guidelines of the economic policies of the Member States and of the
Union, and shall report its findings to the European Council. The European Council
shall, acting on the basis of the report from the Council, discuss a conclusion on the
broad guidelines of the economic policies of the Member States and of the Union.
On the basis of this conclusion, the Council shall adopt a recommendation setting out
these broad guidelines. The Council shall inform the European Parliament of its
recommendation.
3. In order to ensure closer coordination of economic policies and sustained
convergence of the economic performances of the Member States, the Council
shall, on the basis of reports submitted by the Commission, monitor economic
developments in each of the Member States and in the Union as well as the
consistency of economic policies with the broad guidelines referred to in paragraph
2, and regularly carry out an overall assessment.
4. For the purpose of this multilateral surveillance, Member States shall forward
information to the Commission about important measures taken by them in the field
of their economic policy and such other information as they deem necessary.

10. Monetary policy
Overdraft facilities or any other type of credit facility with the European Central Bank or
with the central banks of the Member States (hereinafter referred to as ‘national central
banks’) in favour of Union institutions, bodies, offices or agencies, central governments,
regional, local or other public authorities, other bodies governed by public law, or public
undertakings of Member States shall be prohibited, as shall the purchase directly
from them by the European Central Bank or national central banks of debt instruments.
The primary objective of the European System of Central Banks (hereinafter referred to
as ‘the ESCB’) shall be to maintain price stability. Without prejudice to the objective of
price stability, the ESCB shall support the general economic policies in the Union with a
view to contributing to the achievement of the objectives of the Union as laid down in
Article 3 of the Treaty on European Union. The ESCB shall act in accordance with the
principle of an open market economy with free competition, favouring an efficient
allocation of resources, and in compliance with the principles set out in Article 119.

11. No-bail clause
The Union shall not be liable for or assume the commitments of central governments,
regional, local or other public authorities, other bodies governed by public law, or public
undertakings of any Member State, without prejudice to mutual financial guarantees for
the joint execution of a specific project. A Member State shall not be liable for or assume
the commitments of central governments, regional, local or other public authorities, other
bodies governed by public law, or public undertakings of another Member State, without
prejudice to mutual financial guarantees for the joint execution of a specific project.

12. Fiscal policies
1. Member States shall avoid excessive government deficits.
2. The Commission shall monitor the development of the budgetary situation and of the
stock of government debt in the Member States with a view to identifying gross errors. In
particular it shall examine compliance with budgetary discipline on the basis of the
following two criteria:
(a) whether the ratio of the planned or actual government deficit to gross
domestic product exceeds a reference value, unless:
— either the ratio has declined substantially and continuously and reached a
level that comes close to the reference value,
— or, alternatively, the excess over the reference value is only exceptional and
temporary and the ratio remains close to the reference value;
(b) whether the ratio of government debt to gross domestic product exceeds a
reference value, unless the ratio is sufficiently diminishing and approaching the reference
value at a satisfactory pace.
3. If a Member State does not fulfil the requirements under one or both of these
criteria, the Commission shall prepare a report. The report of the Commission shall also
take into account whether the government deficit exceeds government investment
expenditure and take into account all other relevant factors, including the medium-term
economic and budgetary position of the Member State.

13. Unfinished project
Single monetary policy, several fiscal policies.
(FRG: Stability and growth law 1967)
Stability and Growth Pact 1997 (I)
Stability and Growth Pact 2005 (II)
Stability and Growth Pact 2011 (III, six-pack)
Fiscal compact 2012
Stability and Growth Pact 2013 (IV, two-pack)

14. A Guide to SGP's reforms over the years
Single monetary policy, several fiscal policies.
(FRG: Stability and growth law 1967)
Stability and Growth Pact 1997 (I)
Stability and Growth Pact 2005 (II)
Stability and Growth Pact 2011 (III, six-pack)
Fiscal compact 2012
Stability and Growth Pact 2013 (IV, two-pack)

15. Stability and Growth Pact 1997 (I)

16. Stability and Growth Pact 2005 (II)

17. Stability and Growth Pact 2011 (III)

18. The European semester

19. Stability and Growth Pact 2013 (IV)

20. Rule of man or rule of law or rule of equations?

21. Rule of man or rule of law or rule of equations?

22. Rule of man or rule of law or rule of equations?

23. Rule of man or rule of law or rule of equations?

24. Intermediate solutions
Monetary union, fiscal union, banking union, ? union
European Systemic Risk Board (to identify and monitor systemic
risk, and to issue policy recommendations to mitigate such
risks)
European Stability Mechanism (a permanent crisis resolution
mechanism)
European Financial Stability Facility

25. Speculations on final solution
More exclusive and less shared competences.
From single monetary policy and several fiscal policies
to
single monetary policy and single fiscal policy.
Monetary union + fiscal federalism
Monetary union, fiscal union, banking union, ? union
More exclusive and less shared competences.