#3 The Economic Issue
72nd International Session of the European Youth Parliament — Munich 2013
The Source #3
Editorial Gentle reader, “Economics is extremely useful as a form of employment for economists.” So spoke John Kenneth Galbraith, one of the most prolific and influential economists of th 20th Century. What else is economics useful for? In times of crisis, experts rush to point out that they had predicted it: like the cursed Cassandra of Greek mythology they saw disaster but no-one believed them. But when unemployment skyrockets and banks are foreclosed and people in the most developed continent in the world are left to food handouts from charities, it’s not hard to understand why people have a lack of faith in the experts supposedly leading in economics; politicians, economists, business leaders and the like. Economics, especially in the political arena, is somewhat paradoxical: on the one hand, you don’t have to be a Marxist to admit that it affects everyone, but on the other it is one of the most technical and least understood areas of politics.
So what’s to be done in a time when many have lost faith in the experts supposedly leading them? It boils down to a fundamental principle of democracy: informed citizens are an absolute necessity. How can we participate if we don’t understand? At this session, three committees have taken time to engage with and understand three economic issues. That’s 45 more informed citizens. We would like to open the door for another 220 with a little introduction. Enjoy.
■ Sophie
Editor: Sophie Hall (CH) Editorial assistants: Oona Kiiskinen (FI) Harm van Leeuwen (NL) Timm Brünjes (DE) Lara Lindlahr Lidiia Zhgyr Erasmus Häggblom Fredrik Hultman Daniels Grinevics Annmarie Kiiskinen Antonia Kerridge Stan van Wingerden
Journalists: (DE) Arriana Yiallourides (CY) (UA) Johanna Fürst (AT) (FI) Mike Whyard (UK) (SE) Amantia Muhedini (AL) (LV) David Meijers (NL) (FI) Christine-Bianca Hanganu (RO) (UK) Love Lyssarides (SE) (NL)
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72nd International Session
The Economic Issue
Contents Economic issue Foreword: Economic resourcing in Europe
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The Cypriot bailout: Tough love
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The crisis for dummies
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Europe in numbers: An economic map of Europe
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The economic dimension of Munich 2013: Economic resourcing in Europe
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The results are in! A look at some of your responses to our introductory survey
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Raising money for the 72nd IS: All the things I could do, if I had a little money
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Introvert or extrovert? How personality types influence society and EYP
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Academic preparation in the eyes of delegates and chairpersons: Positions or papers? 18
Munich 2013
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The Source #3
Spread the love
one hug at a time 4
72nd International Session
The Economic Issue
Foreword to the Economic issue
Munich 2013
Economic resourcing in Europe
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esolutions by committees such as Economic Affairs, Budget or Industry II usually do not pass easily in General Assembly, because fellow delegates do not understand the complexity of those topics. To avoid this rejection based on lacking knowledge, we put together this information package to help you to grasp the economic dimension of the session theme. In this special economic edition of The Source, you will first of all find an introduction to economic resources and the explanation of different relations between the committee topics related to this. It is also crucial to fully understand economic expressions that will be used during debates. For this purpose we have provided you with an extensive list of words that will help you to tackle the complexity of these committee topics. This lexicon covers almost everything from austerity to the Single Resolution Mechanism. You should feel better than prepared. Except the lexicon The Source provides you with additional input on economic history. Our time line covers the Euro crisis starting in 2009 with the Greeks revealing the black holes in their accounts. The history lesson will be finished by taking a closer look at the current Cyprus conflict. In addition to these articles, you will find many quotes from well-known politicians to gain even more input for your discussions. Now read through The Source and inform yourself about the session’s economic dimension and beyond. We are looking forward to interesting points to be raised during the General Assembly! ■LLd
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The Source #3
Is Cyprus a guinea pig?
T The Cypriot bailout
he GDP of Cyprus is a mere 17 billion and consists of 0.2% of the EU’s total gross domestic product. As a result of the financial crisis which has been rampaging European countries in the past years, Cyprus is the latest to be hit by the economic plague. The country heavily relies on its banking and financial sectors, as well as on tourism and other services. It is now in desperate need of 10 billion euros (57% of its GDP) to save its banks from bankruptcy. Compared to the EU’s combined GDP of almost €13,000 trillion, the 7 billion euros which Cyprus needs to salvage its economy is in fact the EU’s change. The national economy has been severely wounded during the eurozone crisis, especially when the crisis hit Greece. The two major banks of Cyprus made bad investments and were left vulnerable after being exposed in the Greek economic breakdown. A few weeks ago, on the brink of disaster, the newly elected president Nicos Anastasiades met with the euro group and the ‘troika’ (European Commission, European
Central Bank and International Monetary Fund) to find ways to handle the Cypriot crisis. It is important to note the share of responsibility of the previous Cypriot government which left office earlier this year. The mishandling of the economy during times of crisis led the accumulation of immense debt which could easily be avoided. The lack of effective economic strategy undeniably played a determining factor in the downfall of the once prospering economy.
The Eurogroup’s proposals
Under the initial deal between the Cypriot government, the EU and the IMF, a levy was agreed of 6.75% on deposits below €100,000 and about 12.5% on deposits over €100, 000. The Cypriot parliament rejected the bailout on principle, since deposits up to €100,000 are officially insured and should remain intact in the eurozone. The Cypriot government attempted to find an alter-
Greek prime minister unveils radical reforms to salvage public finances
EU ministers agree on €500bn fund to safe Euro 11 Apr 2010
19 Oct 2009 14 Dec 2009 Greece’s government reveals black hole in accounts 6
10 May 2010 EU finance ministers agree on Greek bailout terms 72nd International Session
The Economic Issue
Tough love Cyprus has been raising eyebrows in the streets of Europe for the past few weeks. The country is walking the tight rope struggling to escape the economic abyss. native way of collecting its €7 billion contribution to the bailout, as the Eurogroup was unwilling to pick up the bill. The Eurogroup and the Cypriot government agreed to restructure its two biggest banks, in which big savers who have more than €100,000 in the bank may lose up to 60% of deposits
What did the headlines say?
The immediate effect of the international media craze created an economic stigma, which affects Cyprus both in the short and the long term. It creates a vicious circle as it discourages foreign investors to put their money into Cyprus. Amid the chaos, the media took advantage of the situation to benefit from the Cypriots’ concern about the future in their coverage of the subject. However, the EU proposal was well represented by the media in terms of the factors affecting the Eurogroup actions. While considering them, time was one of the factors that let to proposals that lacked the bigger picture. There was a lot of miscommunication between the Cypriot representatives and the members of the Eurogroup. This led to decisions which were not beneficial to Cyprus.
Repercussions for Cypriots
The actions taken by Eurogroup have led to a vicious circle of unemployment and major losses in people’s life saving. This severe blow will continue to affect the Cypriot economy for a long time.
Is Cyprus an EU paradigm or a guinea pig?
On the one hand, Cyprus has become the guinea pig of Europe for economic experiments on handling bankruptcy. Choosing to test a measure as drastic as cutting as much as 40 to 60% for uninsured deposits is already proving to be catastrophic. This initiative to force a premature adaptation of Cyprus to the European economic model might not work. The EU’s idea of tough love might too strong a medicine for the patient. People are more important than numbers. The European family needs to be more considerate about its members and put the European citizens first in terms of its economic policies. As a union based on the principle of being equal but different, let us make sure that preserving our differences does not sacrifice the value of equality. ■ AY, AKs
Greece is granted a €120bn bailout
Angela Merkel pleads to create a “fiscal union” across the euro zone 8 Aug 2011 24 Jun 2011
2 Dec 2011
ECB starts buying bonds Munich 2013
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The Source #3
The crisis for dummies Austerity: the method of decreasing the budget deficit in order to lower debt. Under austerity, governments decrease spending on e.g. healthcare, defence and social security. The effectiveness of austerity is heavily debated.
The European Regional Development Fund (ERDF) is aimed at promoting regional development and increasing competitiveness throughout the EU. Its funds are used for modernising the economy, research and stimulating growth.
Budget surplus and budget deficit: When a government takes in more money than it spends, it is in surplus. When a government spends more than it takes in, it is in deficit. EU members must issue debt when in deficit to pay for their spending.
The European Social Fund (ESF) is aimed at creating more jobs and decreasing the differences between the rich and the poor. Its funds are used for lifelong learning programmes and supporting poorer EU regions.
The Common Agricultural Policy (CAP) subsidises European farmers and rural farming development. It is aimed at increasing food production, sustainable farming and rural development.
Public debt is all debt that a government has ever issued together. The Euro zone countries have agreed not to let their debt levels rise to 60% of GDP, but many of them currently have debts higher than that
The Cohesion Fund is aimed at decreasing economic weaknesses of poorer regions. Its funds are used in poorer countries for improving infrastructure and protecting the environment.
The Single Supervisory Mechanism (SSM) is a European framework for supervision as part of a banking union. National supervisors of the financial market will transfer their authority to the European Central Bank.
Deposit insurance: protection for your savings, in case your bank goes bankrupt. If a bank fails, deposit insurance funds guarantee its customers’ deposits, at least up to a certain amount. From an account holders’ point of view, this partly safeguards their wealth from bank failures. From a financial stability perspective, this assurance prevents depositors from making panic withdrawals from their bank, which averts severe economic consequences.
European leaders sign fiscal compact
The Single Resolution Mechanism (SRM) is a single mechanism for resolving banks funded by levies. It includes the closing of non-viable banks, and the restructuring of banks in order to ensure the continuity of its essential functions, preserve financial stability and restore the viability of that institution. â– LLd, SW
European Council agrees on creating European banking supervisory mechanism 27 Jun 2012
15 Feb 2012 1 Mar 2012 Eurozone economy shrinks for the first time since 2009 8
29 Jun 2012 Cyprus requests financial support 72nd International Session
The Economic Issue
The Committee on Economic and Monetary Affairs are no dummies when it comes to the crisis
Cyprus rejects bailout deal leaving Euro zone facing fresh crisis
25 Mar 2013
20 Mar 2013
Cypriot banks reopen but stock exchange remains
28 Mar 2013
Agreement on Cyprus bailout Munich 2013
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Europe in numbers
An economic map of Europe It goes without saying that Europe is culturally, socially, historically diverse. But the crisis has highlighted a key point in European economic cooperation: its economic diversity. Take a look, we’ve compiled population, GDP growth (2012), Debt as % of GDP, GDP per capita, Unemployment (March 2012) (followed in brackets by youth unemployment 2011 and the inflation rate (2012). ■SW, SH
Belgium
63 million 1.9 % 86.4 % 30, 600 8.1 (21.1) 2.8
11 million 1.5% 102.5% 29, 900 7.3 (18.7) 2.6
Czech Rep.
Ireland
4.5 million 2.2 % 111.1% 36, 900 15 (29.1) 1.9
Poland
39 million 2.2 % 57 % 8, 300 10 (25.8) 3.7
Hungary
10 million 1.3 % 78.9 % 9,000 11.1 (26.1) 5.7
UK
France
11 million 1.9% 43.5 % 11, 600 6.9 (18.0) 3.5
Lithuania 3 million 3.6 % 40.4 % 7, 700 13.6 (32.2) 3.2
Romania
Germany
82 million 2% 16.5 % 30, 000 5.5 (8.6) 2.1
65 million 1.2 % 91 % 27, 600 10 (22.0) 2.2
Spain
21 million 2.5 % 35.6 % no data 7.3 (23.7) 3.4
61 million 0.8 % 76 % 20, 600 10 (22.0) 2.2
Italy
portugal 11 million 0.8 % 117.4 % 14, 700 15.1 (30.1) 2.8
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46 million 0.8 % 76 % 20, 600 24.2 (46.4) 2.4
Greece
11 million 0.6 % 149.2 % 15, 900 22.2 (44.4) 1
Cyprus
0.9 million -1.3 % 82.8 18, 100 10.7 (22.4) 3.1
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FINLAND
Latvia
Netherlands 17 million 1.1 % 68.2 % 33, 300 5 (7.6) 2.8
2 million 4.1 % 43 % 6, 400 15.4 (31.0) 2.3
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Sweden
9.5 million 2.7 % 37.3 % 35, 500 7.6 (22.8) 0.9
5.4 million 1.2 % 52 31, 300 7.6 (20.1) 3.2
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The Source #3
The economic dimension of Munich 2013
Economic resourcing in Europe
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esourcing Europe is what Munich 2013 is all about. Resources determine economic relations and dominate current political debates. At the session, three committees each are dealing with the topic of resources on five different levels. Let us take a closer look at the committees on Industry II, on Budgets and on Economic Affairs that form the economic dimension of debates. To fully grasp the relationship between those topics and thus their economic dimension, you should understand what economic resources are: goods that are used to produce other things. They are also called the factors of production, and describe what role each resource plays in business services. The four basic types of economic resources are land, capital, labour and entrepreneurship. For one, land as a natural resource is used for industrial purposes and allows countries produce of consumer and other goods. The Committee on Industry, Research and Energy II deals with this topic of increasing industrial competitiveness and the maximisation of output of economic resources. To restore economic growth Europe needs a strong and
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competitive industry in times of the economic crisis. The implementation of a Single Supervisory Mechanism and a formation of a banking union in Europe can be one contributor to that recovery of economic growth. The Committee on Economic and Monetary Affairs is currently discussing what steps the EU should take to stabilise the European banking system in regard to a common banking union. They are also discussing whether the EU should have a common resolution scheme and if yes, how it should be funded. Setting priorities on what the future EU budget should fund is going to be discussed by the Committee on Budgets. Past negotiations on the EU budget showed that only small changes in budget distribution were possible. Thus, capital as an economic resource and its redistribution of funds are up to debate. Economic resources are needed for solving current financial difficulties in Europe. The proposed solutions will have a great impact on further negotiations. Everybody should stay alert for upcoming decisions by European politicians, as they will greatly influence each topic’s development. ■LLd
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A look at some of your responses to our introductory survey
The results are in!
As the saying goes, there are three types of lies: lies, damned lies and statistics. However, as a press team we were really keen on discovering more details about the delegates that are present at Munich 2013. Some of our wonderful delegates filled in the short introductory survey, the results showing how diverse this session really is. People here are from all corners of Europe with different opinions and varied personalities. Hopefully you will agree that one of the most exciting things about EYP as an organisation is this diversity in the people that you meet and our survey gave some interesting little ‘factoids’ we wanted to share with you.
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eographically, Munich 2013 truly fits its description as an International Session. We have delegates present from an incredible 22 countries from all across Europe, some of whom live over 1,500 miles apart. Different time zones, currencies, languages and cultures are here to meet at this session which enables our discussions to be all the more fruitful. To define a delegate is ultimately an impossible task: some stereotypes could be listed but the individuality of delegates is paramount. I cannot think of anyone here who would give many common definitions to a delegate from Finland and one from Turkey! You can also be assured that our delegates have seen varying amounts of our world from a first hand perspective, with some of them being able to make the envious claim of visiting over twenty countries. Environmental factors are important in defining who you are and how you think, which makes our geographical diversity a huge positive for the session. As a press team we wanted to know what the delegates here in Munich are really like; discover the ‘real you’. To establish this, we went straight to the heart of European politics and asked you ‘do dragons exist?’ Unsurprisingly with such a complex and thought provoking question, opinions were split. With a very
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slight 54% advantage in favour of dragons being real it is clear that the whole of Europe has been hit by the craze surrounding both Game of Thrones and the Lord of the Rings. Just to confirm, the press team is currently unable to answer this question with any conviction, although some of our Nordic journalists are adamant that they have spotted a dragon or two during the dark winter months. Interestingly, whilst a pleasantly reassuring majority believed that their country should be a member of the EU in the long term, there was clearly less confidence in their position within the EU’s monetary union. The fact that 65% of you are not interested in your countries being within the monetary union is possibly to be expected with a global financial crisis making a successful set of economic policies that are extremely difficult to come by. When a simple survey such as the one delivered to you on the first day of the session manages to expose such huge variations between delegates, it offers us explanations as to why an International Session is such a unique experience: different people discussing common issues concerning everyone in Europe. This opportunity is definitely not one to take lightly. ■ MW
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The Source #3
Raising the money for the 72nd IS
All the things I could do, if I had a little money
More than €200,000 was necessary to make the 72nd International Session of EYP possible for its 300 participants. Focusing on fundraising is a necessity if we want to ensure that EYP remains feasible in the future.
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ike it or not, we need money to make things happen. As a non-profit organisation, EYP has to find sponsors in order to make its events feasible and Munich 2013 is no exception. Funding is crucial as an international session only receives the participation fee of the teachers, while the participation fee of the delegates goes to the international office of EYP. EYP Germany started looking for sponsors in January 2012, more than a year ago, and the process was full of challenges. The five people that worked in funding the session managed to raise the money from 15 sponsors with an even split between private and public donors. The session was sponsored by companies such as BMW, but also by the Bavarian government and Youth In Action, and foundations as the Konrad-Adenauer-Stiftung and the Schwarzkopf-Stiftung. There are three ways of funding a session: in the National Committee, at the session or with elements of the session. A good example of an element that could bring funding is the Resource Village, which was entirely funded by the BMW Foundation. Foundations
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are approached for funding based on their core target such as resources management, youth, EU integration or any other topic that could be related to the theme and elements that EYP stands for. Moreover, sponsors can be attracted by offering the possibilities of using their logo, giving them the opportunity to send an expert or a speaker addressing the participants and by handing out flyers and promotional materials. According to Alexandre Narayanin (DE), the national committee’s treasurer, the hardest things about fundraising are the frustration from being rejected and establishing a contact: “Getting a foot in the door is the most difficult part.” It is important to establish a contact not only by sending e-mails, but also by phone calls and constantly aiming at a meeting. The purpose is to make sure that possible sponsors are aware of your project. As a treasurer, Alex has to make periodical finance evaluation, annual financial
Alex Narayanin: “Getting a foot in the door is the most difficult part.”
72nd International Session
The Economic Issue
BMW kindly agreed to fund the Resource Village and host the General Assembly in its BMW Welt reports, recap expenses and incomes and do a follow up of the sponsors. This means sending in the resolution booklet, newspaper and final financial reports of the session in order to show the sponsors that their money was used efficiently and in an appropriate manner. It is equally important to maintain a sponsor for a long time because it is hard to obtain funding. Press departments become as important as funding because it raises awareness and improves the organisation’s image. In order to approach a sponsor successfully you need a statement of need, budget, one or two pages of project description, knowledge of what you want from the sponsor and a concrete financial demand. It is also useful if you add nice looking pictures and short descriptions. The statement of need has to explain your target and a brief explanation of what your session is about, while the budget outlines the necessity of money and how they are going to be used. The project description has to be clear and needs to use appropriate terminology. All of these small details matter as fundraising is trying to get people to share
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their money with a non-profit organisation, which is often exactly as hard as it sounds. “Fundraising is a tricky part of the session and takes a lot of resources, but we couldn’t have a session without it.” ■ CBH
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The Source #3
Introvert or extrovert?
How personality types influence society and EYP
Personality types greatly affect who we are and how we act. It is vital to realise how and why. The effects of those personality types also stretch into EYP, which makes it essential to understand them.
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o you feel exhausted by mingling? Or do you feel restless and tired when you are alone? Depending on your personality, your answer to those questions will vary. There are many traits that make up who we are. Extroversion and introversion make quite a difference. If you are extroverted, it means that you get energy from other people, while introversion means that you draw energy from yourself. The fundamental difference between being extroverted and introverted is that extroverted people crave social situations. Introverted, on the other hand, are keen to avoid these. This is not because of shyness,
but an inborn personality trait. Harvard psychologist Jerome Kagan found in his experiments in the late 80s that babies who were more sensitive to impressions grew up to be introverted. Hence it seems that being either introverted or extroverted is inherent, and not caused by upbringing or any other external factors. At first glance, introversion and extroversion might seem like nothing more than traits meant for psychologists to analyse. But they both have great effects on how people act and how they are seen. Society is largely shaped to fit extroverts. People who know how to handle themselves in social situations, and who take a lot of space, gain many advantages simply
Directors of large companies are often introverted 16
72nd International Session
The Economic Issue
Extroverted people are more comfortable in social situations such as teambuilding through their mental presence. This is something that is also true for EYP. Those who are more out-going are more comfortable with taking the initiative in discussions. They are more apt at making points and keen to push their ideas. Those who tend to take initiative also tend to be more respected by others. Groupthink is easily created around such people, which can be hard to break. For others, making oneself heard might prove difficult. Yet introverted people can still benefit from EYP. Teambuilding forces those who are unwittingly dominant to let others participate more actively. Those
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who can contribute, but struggle to make themselves heard, also get the opportunity to speak. Nevertheless, everyone is still expected to be outgoing in playing teambuilding games and energisers. Maybe EYP could be more inclusive in this aspect. Still, teambuilding is meant to break down barriers, so that in subsequent discussions introverted delegates find it easier to be heard. Being introverted also has its advantages. For example, introverts often develop areas of expertise, simply as they prefer to dwell on things by themselves and practice what they like doing. Neither is that their only strong point. Amongst successful CEO’s, introverts are heavily overrepresented. As they tend to be more laid-back and therefore more open to new ideas, creative, driven people thrive working with them. Extroverted businesspeople, on the other hand, tend to take excessive risks, which can have devastating effects. Both personality types obviously have good qualities and balance each other out. Perhaps that is the main quality of EYP: overcoming these and other differences to achieve the best result. ■FH
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The Source #3
The Committee on Foreign Affairs II found it hard to keep their position papers short
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ou may have wondered why you submit a position papers before session. Why check the knowledge of already selected delegates? Kerstin Mathias (DE) explains: “We introduced position papers for the first time in Germany 3–4 years ago at national selection conferences. At a particular moment it became obvious that only a little part of delegates is well prepared, and the majority had not paid much attention to the topic. This is why we have decided to set incentives for the delegates to study the
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topic in advance. Position papers forced them to do research on the topic.� WThe first time that position papers were used on at an International Session was at Tallinn in the summer of 2012. They are also used at many sessions at national and regional level. The chairpersons find this type of preparation very helpful, as a completed position paper helps to understand which direction the discussion is going to take, and to which extent the delegates understand the topic.
72nd International Session
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Academic preparation in the eyes of delegates and chairpersons
Positions or papers?
The first day of committee work has successfully passed. It has revealed some advantages and drawbacks of the delegates’ preparation for the session. As part of their academic preparation to this International Session, delegates were asked to write a position paper, often accompanied by a fact sheet.
Some participants seem to find it tough to research their committee topics thoroughly before the session. Delegates of the Committee on Foreign Affairs II said that it was quite difficult to write their position papers, as the topic was quite general. It is hard to focus on a particular topic and this resulted in rather long position papers. Due to the lack of some specific solutions, the papers were rather critical and not constructive. Moreover, as soon as the paper is completed they usually forget its contents, and they do not significantly influence taking decisions during committee work. Although the delegates in Foreign Affairs II are quite prepared for the session, only 13 out of 15 have submitted their assignments. For some students who are struggling to arrange their absence from school before departure to an International Session, writing the position paper is a bit of a headache. Many people put off the position paper
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to the deadline or do not write it at all. According to chairman Christian Drews (DE), a perfect position paper should look as follows: “First of all, it should state the opinion of the delegate, instead of summarising the topic. Secondly, I expect it to be concise and structured: each paragraph with a problem in one sentence and several lines of explanation of the solutions to this problem. An important moment is in the selection of only the most relevant points.” Probably, the chairpersons’ expectations and the actual position papers do not match and of course there is definitely room for improvement. But there is reason to be confident about the results of committee work in the form of great resolutions. It makes sense to stimulate delegates to do research before the session through position papers, but the idea may have to be adapted to make it more convenient for delegates. ■ LZ
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Bayerische Staatskanzlei
This project has been funded with support from the European Commission. This publication reflects the views only of the author, and the Commission cannot be held responsible for any use which may be made of the information contained therein.
The activities of the European Youth Parliament are under the patronage of the Secretary General of the Council of Europe.
The European Youth Parliament is a programme of the Schwarzkopf Foundation.