Germany’s Guide to Perfecting the Euro

Recent Background of the Issue

 The state of Europe’s current economic recession taints all promise for its future, its excellence, and its international prestige, as manufacturing in the EU has hit its lowest point since the previous eurozone crisis in October 2012 and is expected to stay this way for the rest of 2019.[1] Although the euro, a common currency shaping the eurozone as a monetary union in which 19 of the 28 countries in the EU recognize the euro as its sole legal tender, was enacted as a means of promoting integration in both real and financial sectors, fundamental policy gaps between the “northern core” and the Baltics negate the prospect of integration as a notion that solely promotes growth and progress but rather as an obstacle forcing European nations to formulate common, cooperative solutions that promote homogeneity.[2] As a means of mitigating the crippling nature of the crisis on European welfare, the US Federal Reserve, the ECB, and other international banks funneled US dollars into European financial systems, which helped bolster economic activity within the continent by making American dollars more accessible outside of US stocks.[3] Due to the volatile nature of increasing liquidity as a move that will potentially force the EU into back into another 2007-2008 financial crisis, policy experts question as to whether or not this investment should be recognized as a viable long-term solution under the belief that a solution of this caliber will only present a temporary fix to the underlying issue at hand.[4] Currently, the European Central Bank (ECB) based in Frankfurt, Germany and the national banks of eurozone member states constitute the Eurosystem in which the monetary policies of these countries are managed under an independent body. Homogeneity is achieved through the use of key mechanisms, such as the Stability and Growth Pact (SGP) and the Financial Services Action Plan (FSAP), outlining a number of rules and procedures member states are expected to adopt internally with the intent of facilitating the growth of the financial sector under the common currency regime.[5]

Previous Un Action

 The prospect of a common European currency was a central tenet of the 1992 Maastricht Treaty, which explicates certain criteria countries must follow to join the euro and laid the foundation for the creation of a “European” institutional structure which acts to ensure the stability of the common currency in the international market.[6] Shortly after things turned sour with the euro’s implementation, the EU proposed the ratification of the Fiscal Compact which promotes the concept of a “structural budget” where its effects are not observable with calculations subject to consistent revision over time.[7] In 2007 when the eurozone crisis was first emerging, 17 eurozone summit leaders met to agree on a second bailout for Greece in the hopes of preventing the debt crisis from consuming the whole of Europe’s economy.[8] Three years later, the EU implemented the European Stability Mechanism with the intent issuing provisions to alleviate strenuous amounts of debt within debtor countries.[9] The GA has also been involved in helping Europe mitigate the effects of the crisis in A/71/216, which enhances cooperation between the EU and the IMF, as well as transparency measures concerning economic reform.[10] Even though we’ve come a long way since the euro was first introduced, there is still much to do to prevent the euro from plunging the EU into a prolonged economic recession.

Country Policy and Actions

 Germany is a leader in reforming labor markets and keeping unit labor costs in check, which is why we are at the forefront of efforts to mitigate the eurozone crisis. Germany is adamant about maintaining fiscal responsibility under the SGP, as the SGP provides a clear-cut framework for optimal integration of the euro and will thus enable us to minimize the number of crises that occur within the EU, such as the one that occurred in 2010 with Greece.[11] In Germany, federal revenues and expenDitures are controlled by federal laws, which accompany an extensive bailout system keeping our economy in check and minimizing the severity of shocks when they occur.[12] Our nation has also adopted a universal banking system in which the Federal Financial Supervisory Authority (BaFin) acts as the main institution of financial regulation concerning the private sector and economic risk.[13] Keeping this in mind, Germany proposes the implementation of the 2020 Eurozone Plan of Public Investment, a political union, a European debt reduction fund, and means by which we will be able to recapitalize banks through private and state injections.

 Firstly, Germany proposes the implementation of the 2020 Eurozone Plan of Public Investment, which will make the countries themselves accountable for how they choose to invest their capital. Doing so will make much more sense than simply relying on the ECB to impose “stronger” mechanisms that regulate this facet of the economy while still allowing for full transparency on sovereign debt exposures.[14] In our framework, the ECB will first tabulate who owes what to whom, which will require each country in the eurozone to submit an account of their current income and expenDitures. Our choice in making the ECB regulate these finances as opposed to formulating legislation is fitting in the sense that the purpose of the ECB was always to manage monetary protocols as an independent body.[15] This will also require a neutral, non-member state, preferably the Swiss, to further assess each country’s situation as to confirm the assessments made by the ECB from an objective standpoint. Upon retrieving the final draft of these assessments, we will then issue means, such as the removal of public investment in national budgets (and therefore measured deficits), to keep expenses at bay. If we were to follow this route, in particular, we will give the European Investment Bank (EIB) a central role in public investment financing in which struggling nations will be able to lease new infrastructure investments and gradually reimburse the EIB through a user fee that covers interest rates over time.[16] Doing so will improve governance in their respective economies by minimizing austerity measures in the cutting of investments, thus improving the collective state of the eurozone in the long run.

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As a stateless central bank within a bloc where national governments retain fiscal sovereignty, however, the ECB has very few tools with which they will be able to use to pressure governments to pursue economic policies that are consistent with its inflation target.[17] The lack of governance of both fiscal and monetary unions, especially with how some, if not most, nations blatantly ignore vital conventions, such as the “no bail-out” clause, enshrined in EU treaties, requires some form of common, more centralized decision-making—a political union, perhaps—noting how the formation of policies concerning taxes, payments, and resource transfers involves excessive political commentary.[18]  Our political union will opt for the creation of a core Union inside the EU as a means of propelling genuine political integration, as well as effective governance of economic infrastructure and foreign affairs, with full democratic accountability and parliamentary control.[19]

European Union

Germany

Terrorism in the EU

Germany’s Approach to Preventing the Spread of Terrorism in the EU

Recent Background of the Issue

 Terrorism has become an inherently dynamic concern for not only the EU but for the entire international community, as terrorists have proven time and time again to be fully capable of habituating to the challenges posed by global initiatives, such as the Global Coalition Against Daesh, and similar counter-terrorism measures propagated by other entities.[20] The recent proliferation of terrorism in the global sphere, primarily by Daesh, has resulted in an influx of refugees entering the EU due to its proximity to the terrorist groups, such as al-Qaeda; in 2017 alone, roughly around 5.5 million refugees were reported to have left Syria as a byproduct of the ongoing conflict in the Syrian Arab Republic.[21] Only a fraction of virtually entire nations fleeing to the EU for asylum successfully enter Europe (noting its very limited policies restricting the ease of arrival and outsourcing of refugees to other nations) but will typically be met with a preeminent stigma upon entry due to the generalizations made between terrorists, who are generally practicing Muslims, to the average refugee.[22] As a result, a large number of potential recruits tend to come from nations of low-income inequality and overall high GDPs, as foreigners often feel isolated in homogenous nations who look down upon or stigmatize their Islamic beliefs.[23] To an extent, many of those fighting on the frontlines are loyal to the hierarchical nature of terrorist organizations as a byproduct of mere fanaticism cultivated primarily through online propaganda, but loyalty alone is not enough to upkeep the presence of these groups internationally as noted by how many members were known to have cut ties with ISIS in the past due to inconsistencies in their paychecks.[24] Furthermore, the Schengen Agreement of 1985 essentially removing all internal borders within EU member states has also augmented the recent proliferation of terrorism within the EU, as the transportation of drugs, weapons, and other illicit materials have been much easier as it was before even with measures in place, such as the Schengen Information System (SIS), to manage the movement of goods and people.[25] Seeing as how the threat of terrorism compromises the safety of the EU, as well as its citizens, we, as a body, must work to eliminate its presence in the Union at all costs.

Previous Un Action

 Seeing as to how the threat of terrorism has become a prevalent issue internationally, the Un is involved in several initiatives primarily with the intent of disarmament. For example, the Un Security Council unanimously adopted Resolution 2253 in 2015 to cut off all sources of revenue by enhancing measures that promote the gathering of economic intelligence, as well as upkeeping ties with the private sector to pinpoint specific financial transactions between ISIS and its allies.[26] This particular resolution, however, has received a quite a bit of backlash in the past with critics comparing it to Resolution 2199passed early 2015, as well as numerous sanctions adopted in mid-2013 under the “Al-Qaida Sanctions List,” as both fail to explicitly mention “radical Islam” in their documentation.[27] Under the EU, in particular, the body has been able to minimize the severity of terror attacks within Europe by framing responses around its 2005 EU Counter-Terrorism Strategy, which promotes measures to combat terrorism, not only in the Union but globally with an emphasis on human rights. To strengthen this mechanism in a more modern setting, Framework Decision 2002/475/JHA was implemented as a means of facilitating internal cooperation between EU member states in the absence of a universal solution.[28] Although the recent implementation of these measures serves as a testament to the Un’s commitment towards the eradication of terrorism at its roots, we still have a long way to go before we can win the war against terrorism.

Country Policy and Solutions

Counter-terrorism measures have been among the principal security concerns in Germany since the 1972 Olympics in Munich in which eight Palestinean terrorists killed two Israeli competitors and took nine hostages and has continued with the reunification of the country in 1990.[29] To maximize the output of these measures, each German state has a ministry of the interior while still working with the Coordinator for Intelligence to unify state efforts under a national policy. The implementation of these counter-terrorism measures, however, is generally the work of the Federal Ministry of the Interior in collaboration with the Federal Criminal Police, one of its many offices, and the German Intelligence to investigate acts of terrorism.[30] Keeping the effects of terrorism on the scope of the EU in mind, Germany wants to keep terrorism at bay within the EU through the implementation of the Terror Threat Finance Cell, eGLYPH, Germany’s 2020 Humanitarian Aid Strategy, the CDRS, and AEBS.

Firstly, Germany proposes the establishment of a multinational finance cell as a means of hindering the economic capabilities of terrorist groups within the EU. This multinational finance cell, named the Terror Threat Finance Cell, will be modeled after the existing Afghan Threat Finance Cell, which has been successful in terminating illicit activity within Kabul in 2010, as well as enhanced American transparency measures in their war against Afghanistan.[31] To maximize the efficiency of collection, as well as analysis, of economic intelligence, the Terror Threat Finance Cell will be based within Turkey due to its proximity to the heart of terrorist organizations and is thus where the majority of future operations will be carried out. Rather than focusing on eliminating numerous sources of funding at once, which will be an overall inefficient allocation of time and resources, the cell will work towards mitigating the economic capabilities of terrorist organizations one source at a time, beginning with oil, which constitutes the vast majority of their current finances. First and foremost, the cell will work to block militants from selling their oil on the black market with the border between Turkey and Jordan, an area where the illicit oil trade is heavily concentrated, acting as the focal point of our preliminary efforts. To accomplish this task, we will collaborate with local allies, as well as utilize existing resources such as the Global Terrorism Database, to pinpoint specific criminal networks associated with terrorist groups such as ISIS that tend to frequent this border, which will eventually allow us to mitigate buyer transactions from as far as Iran to the KRG with what will be an extensive library of economic intelligence.[32] Often, the financial stability of terrorist organizations is not only rooted in the illicit oil trade within Middle Eastern regions but also from selling to overseas traders, other Syrian insurgent groups, as well as the Assad regime. For this reason, the cell will also work to enhance relations with China, as their vast network of trade routes across South and Central Asia may potentially be a geopolitical game-changer in mitigating the illicit oil trade beyond Middle Eastern borders.[33] In a world where the threat of terrorism continues to grow with every passing hour, a more targeted approach is necessary to deprive terrorist groups, such as ISIS and al-Qaeda, of all sources of revenue and to avoid wasting billions of dollars on a strategy that will ultimately do more harm than good, a goal that will not be achieved by simply “following the money” alone.[34]

[1] Khan, Yusuf. “Poor Manufacturing Data May Be Dragging Europe into a Recession.” Plant Services, 2 Oct. 2019, www.plantservices.com/industrynews/2019/poor-manufacturing-data-may-be-dragging-europe-into-a-recession/.

[2] Striz.cz. N. p., 2019. Web. 13 Oct. 2019.

[3] Hauser, Christine. “Markets Surge On Action By Several Central Banks.” Nytimes.com. N. p., 2017. Web. 13 Oct. 2019.

[4] “Weighing Solutions For Euro Zone Crisis | The Takeaway | WNYC Studios.” WNYC Studios. N. p., 2019. Web. 13 Oct. 2019.

[5] “What Is The Euro Area?” European Commission – European Commission. N. p., 2019. Web. 13 Oct. 2019.

[6] Bank, European. “Five Things You Need To Know About The Maastricht Treaty.” European Central Bank. N. p., 2019. Web. 13 Oct. 2019.

[7] “The Case Of The Disappearing Fiscal Compact.” CEPS. N. p., 2015. Web. 13 Oct. 2019.

Ceps.eu. N. p., 2019. Web. 13 Oct. 2019.

[8] Sparkes, Matthew. “Eurozone Debt Crisis Summit: As It Happened.” Telegraph.co.uk. N. p., 2011. Web. 13 Oct. 2019.

[9] “What Is The European Stability Mechanism?” BBC News. N. p., 2019. Web. 13 Oct. 2019.

[10] “General Assembly Adopts Resolution 71/216 On External Debt Sustainability And Development | Unctad.” Debt-and-finance.unctad.org. N. p., 2019. Web. 13 Oct. 2019.

[11] Frankel, Jeffrey. “Explained: Why It Is Time For German Fiscal Expansion.” The Financial Express. N. p., 2019. Web. 13 Oct. 2019.

[12] “A Model For A Fiscal Union? What Europe Can Learn From The German Experience | Global Policy Journal.” Globalpolicyjournal.com. N. p., 2019. Web. 13 Oct. 2019.

[13] Nfls.com.cn. N. p., 2019. Web. 13 Oct. 2019.

[14] “EU Banks React Positively After Barroso Outlines Solutions For Eurozone Crisis.” MaltaToday.com.mt. N. p., 2011. Web. 13 Oct. 2019.

[15] “The Role Of The European Central Bank.” Council on Foreign Relations. N. p., 2019. Web. 13 Oct. 2019.

[16] Dullien, Sebastian. “Reinventing Europe: Explaining The Fiscal Compact.” ECFR. N. p., 2012. Web. 13 Oct. 2019.

[17] “The Crisis Of Central-Bank Governance.” Jordan Times. N. p., 2019. Web. 13 Oct. 2019.

[18] Striz.cz. N. p., 2019. Web. 13 Oct. 2019.

[19] Epc.eu. N. p., 2019. Web. 13 Oct. 2019.

Waterfield, Bruno. “German Memo Shows Secret Slide Towards A Super-State.” Telegraph.co.uk. N. p., 2011. Web. 13 Oct. 2019.

[20] Limun.org.uk. N. p., 2019. Web. 13 Oct. 2019.

Cat-int.org. N. p., 2019. Web. 13 Oct. 2019.

[21] Iom.int. N. p., 2019. Web. 13 Oct. 2019.

[22] “EU Policies Put Refugees At Risk.” Human Rights Watch. N. p., 2016. Web. 13 Oct. 2019.

[23] Kellogg.northwestern.edu. N. p., 2019. Web. 13 Oct. 2019.

[24] Watt, Alex, and Alex Watt. “Hundreds Of ISIS Members Quit Terrorist Group After Their Wages Are Cut.” UNILAD. N. p., 2015. Web. 13 Oct. 2019.

[25] “Schengen: EU Free Movement Deal Explained.” BBC News. N. p., 2019. Web. 13 Oct. 2019.

“EUR-Lex – L33020 – EN – EUR-Lex.” Eur-lex.europa.eu. N. p., 2019. Web. 13 Oct. 2019.

[26] “Unanimously Adopting Resolution 2253 (2015), Security Council Expands Sanctions Framework To Include Islamic State In Iraq And Levant | Meetings Coverage And Press Releases.” Un.org. N. p., 2019. Web. 13 Oct. 2019.

[27] “Unanimously Adopting Resolution 2199 (2015), Security Council Condemns Trade With Al-Qaeda Associated Groups, Threatens Further Targeted Sanctions | Meetings Coverage And Press Releases.” Un.org. N. p., 2019. Web. 13 Oct. 2019.

[28] “Counter-Terrorism Module 5 Key Issues: European Region.” Unodc.org. N. p., 2019. Web. 13 Oct. 2019.

[29] “1972 Olympics – Munich Summer Games Results & Highlights.” International Olympic Committee. N. p., 2019. Web. 13 Oct. 2019.

[30] “Germany, Counter-Terrorism Policy | Encyclopedia.Com.” Encyclopedia.com. N. p., 2019. Web. 13 Oct. 2019.

[31] Michael Harris, “Corruption as Afghan as poppies.” Ottawa Sun, February 25, 2011, p. 13.

[32] “About The GTD | GTD.” Start.umd.edu. N. p., 2019. Web. 13 Oct. 2019.

[33] “How To Cut Off ISIS Terror Tycoons.” The Daily Beast. N. p., 2014. Web. 13 Oct. 2019.

[34] “Don’t Follow The Money.” Foreign Affairs. N. p., 2018. Web. 13 Oct. 2019.