1. Welcome to Interlaken Switzerland!! Introduction to the European UnionProf. Brian Butler

2. Prof. Brian David Butler About: Brian Butler is a professor of International Finance and European Studies with Forum-Nexus Study Abroad, an academic program which is co-sponsored by the IQS Business School of the Ramon Llull University in Barcelona, and the Catholic University of Milan. Brian was previously a teacher at the Thunderbird School of Global Management, MBA program in Miami, and was a researcher at the Columbia Business School in New York. In Brazil, Brian has taught at FBV in Recife. He previously worked for Honda of America Manufacturing in Ohio, and was involved in international trade. briandbutler@gmail.com LinkedIn.com/in/briandbutler www.globotrends.com

3. my slides: www.slideshare.net/briandbutler

5. Exam questions may come from any of these sources

7. Course RULES + Expectations: Attend ALL classes, professional visits Turn in assignments before class Be prepared for class discussions – lots of small group assignments during class Contribute to group assignment (team grading / peer review)

8. Rules / Expectations: Request Closed book, open mind, Please turn off everything except your minds…I want your full attention – this is a “participatory” class No sleeping (if you feel tired, please stand up, go get some water, come back) no laptops (sorry)  No blackberries, no iPhones, no iPads, etc, etc…

9. Group projects Turn in list of team members in Italy on Monday

10. Team Project Teams will be made up of 3-4 students each. DUE: BEFORE the last day of class, students must submit group project (1 paper for group with all students names, individual sections indentified by student name) by email to brian.butler@forum-nexus.com (or print, hand in) Undergrad teams: The project report should be between 6 and 8 pages long Graduate teams: The project report should be between 8 and 10 pages long Font: Arial, Size:12, Line Spacing: 1.5 Peer review at end of project to affect 50% of grade (adjustment of individual grade is based on peer review of contribution to group project)

11. Organizing Teams Team members should have same end date (city) Do NOT mix GRAD / UNDERGRAD Ideally: Teams should be made up of one BUS, one POL, and one SOC (EUR can substitute / select any) Teams may have 2, 3 or 4 members (as long as above rules followed). 4 members only as last resort, and must be pre-approved.

12. Team Project There are two parts to the project: Part ONE is required by everyone and submitted as team. Students must try to answer all (OR AS MANY AS POSSIBLE) of the suggested questions listed below.

13. Team Project – PART 1 ALL GROUPS MUST ANSWER THIS SECTION Euro-zone Debt / Fiscal Crisis: Questions to consider: Euro – will it break up? Stay together? Will Greece be kicked out? Leave voluntarily? Can “competitiveness” (of countries exports) be restored without currency devaluation? How? Should EU leaders listen to the protestors? Or, follow through on tough reforms? Can the EU afford its (expensive) “social welfare” model?

14. Team Project – PART 2 Part TWO MUST be submitted INDIVIDUALLY (turn in with group paper, but LABEL as individual component. Don’t make me guess!) Each student answer ONE of these sections Students taking POL, must answer the POL section. Within that section, answer as many questions as possible. Likewise for the BUS, and SOC sections. Students of EUR may choose any section

15. Team Project – PART 2 – section 01 POL section 01: Answer as many questions as possible: Should EU consider enlarging in the next 5 years (considering the current fiscal crisis, Euro crisis, etc)? Why? Why not? (NOT CONSIDERING CROATIA) Should the enlargement include Turkey? What are the reasons for including/ excluding Turkey from EU membership? If not Turkey, then who? (NOT CONSIDERING CROATIA)

16. Team Project – PART 2 POL continued: Answer as many questions as possible: Will we see war again in Europe within your lifetime? Is there a threat of Germany/ France hostility? What if the Euro breaks up (do you think this adds to the potential threat of war in Europe)? On the world stage (with respect to “Security and foreign relations”) – does it make sense for the EU to speak with one voice (or should individual countries continue speaking for their self-interests)? How does the rise of new powers such as China change your argument?

17. Team Project – PART 2 POL continued: Answer as many questions as possible: What do you think the EU should be in the future? Should it become a "United States of Europe", totally unified and a super-state, or should it be a looser union (not any deeper than now)? Ideally, should the EU become a global rival to the USA, a second superpower to balance the US internationally? With respect to security, defense, taxation and other sensitive issues, do you think countries of Europe should cede more power to the EU? What does the term “euro-skeptic” mean? Which countries does this term normally refer to? Why are they more “euro-skeptic” than others? Does the euro-zone crisis of 2010-2011 have any impact on the “euro-skeptic” parties of various EU countries? Does the crisis make “integration” more, or less likely in the near future?

18. Team Project – PART 2 BUS section 02: Answer as many questions as possible: Regarding the Single Market and Euro-zone; Can the European “single market” survive if the euro were to break up? Is it possible to have “one market” without having “one currency”? How does the single market help European businesses to compete with global competitors (US, Japan, China, etc)? How does the single currency help / hurt? How has expansion into Eastern Europe helped / hurt this goal (of helping European businesses compete with global competitors?

19. Team Project – PART 2 BUS continued Answer as many questions as possible: How important has the euro currency been to helping European companies compete globally? What are the key issues of the single market in the future? Will the single market still exist in 10-20 years? What needs to be done to make the single market function even better? (think “services”, etc)

20. Team Project – PART 2 BUS continued Answer as many questions as possible: If you were a Chinese or Korean appliance manufacturer looking to produce products for the European market, and if you wanted a mixture of cheap labor, no import barriers, and good logistics... In which country would you place your factory? Why?

21. Team Project – PART 2 SOC section 03: Questions to consider: Is the “Social Welfare” model of many Western European countries (such as France) collapsing? Why? What is the impact on the middle class? Can “culture” be used for economic development? How? Give examples of countries, regions, cities using "culture" to enhance economic development?

22. Team Project – PART 2 SOC continued: Questions to consider: Regional identity and immigration; Is it possible to talk about a "European" identity / citizenship? Why? How? If jobs were available in Germany, and unemployment high in Spain, do you expect to see Spaniard immigrating to Germany? If not, why not? What does this say about the potential for the future of the single market and currency union?

23. Team Project – PART 2 SOC continued: Questions to consider: Immigration: Why is the rise of anti- immigrant parties and sentiment (since the fiscal crisis began) in Europe a worrying trend? What is it about Europe's past that makes this trend all the more worrying?

24. Team Project – PART 2 SOC continued: Questions to consider: Do you agree with the statement that "war is the natural state in Europe", and that the EU is the tool created to maintain the peace? What if the EU were to fail as a political project? Do you predict that war would return to the continent?

25. Team Project Content suggestions: No “bullet-point”-style answers. This is an academic paper. Each section should include an introduction, body and conclusion, and should be well-written (use spell and grammar checking). Someone in the group should be responsible for overall project editing to make sure the thoughts flow together in a meaningful way, and that points made do not conflict with one another. Each student must turn in individually the PART 2 of the project. No copying, NO plagiarism, no working together. You must properly reference all your work. Plagiarism will result in an “Failed” (F) grade for the course

26. Team Project Grading Comparative – one team vs. other Suggestion – spend time making sure paper “flows” well… one argument to next, and is NOT repetitive. Try to answer all questions, giving equal weight to each section Spell and grammar check!

27. Switzerland

28. Switzerland – landscapes Go up for sunshine (hope ;-)

35. EU– why is Switzerland not a member?

36. Neutrality Modern reasons: Banking industry (two large Swiss banks, UBS and Credit Suisse + many other private Swiss banks) Question: if forced to open up (loose “secrecy” advantage)…. Would Switzerland no longer have justification for remaining OUTSIDE the EU?

37. Challenges for Switzerland Bank secrecy under pressure: “international pressure on banking secrecy could yet bring further changes to financial services. Leading OECD countries seem determined to crack down on tax havens, and Switzerland will find this difficult to resist. The changes could lead to disputes with international partners and domestically.” EIU, special report on Switzerland, May 2011

38. Challenges for Switzerland Banks & new regulations: “The financial sector is stable, but Swiss authorities with an earlier unpopular bailout of UBS, Switzerland’s largest bank, in mind are adopting a tough capital regime for Swiss banks (dubbed the"Swiss finish"), especially the two large ones, UBS and Credit Suisse” EIU, special report on Switzerland, May 2011

39. Neutrality Modern reasons: Banking industry (two large Swiss banks, UBS and Credit Suisse + many other private Swiss banks) Immigration Cultural preference – independence, like CONTROL (of everything) euro skepticism Tax policy (some cantons very low taxes to attract foreign direct investment)… multinationals use Switzerland as HQ Historical reasons for “neutrality”: ….. See next slides….

40. Neutrality Why? Cross-roads of Europe Between empires Roman (Italy) Holy Roman Empire (Germany) Charlemagne (France / Germany) Napoleon Hitler Hapsburg (Austrian) Success fighting Hapsburg’s, loss vs Napoleon

41. Neutrality Question: Why have traditional empires sought to control Switzerland? What role to the mountains play? (in Swiss security, and others desire to control)?

43. Economically, Switzerland integrated itself into the American-led Western postwar order, but it remained reluctant to enter supranational bodies.

44. Switzerland did not for many decades join the United Nations, even though Geneva became host to the UN's European headquarters and the country played an active role in many of the UN's specialized agencies. http://www.nationsonline.org/oneworld/History/Switzerland-history.htm

45. Neutrality Switzerland also remained aloof in the face of European integration efforts, waiting until 1963 to join the Council of Europe. It still remains outside the European Union. Instead, Switzerland in 1960 helped form the European Free Trade Area, which did not strive for political union. Following the Cold War, Switzerland joined the Bretton Woods institutions in 1992 and finally became a member of the United Nations in 2002. http://www.nationsonline.org/oneworld/History/Switzerland-history.htm

46. Good fighters Swiss mercenaries continued for centuries to serve in other armies; the Swiss Guard of the Pope is a vestige of this tradition.

47. Challenges for Switzerland Small (internal) market size: Question – is Switzerland BIG enough by itself to be attractive for major multinational companies? What is needed? What did Switzerland do? Join the EU? EIU, special report on Switzerland, May 2011

48. Challenges for Switzerland OVERCOMING limitations of - Small (internal) market size: Free trade area with the EU Join Schengen (for open borders, fast access, information database sharing) EIU, special report on Switzerland, May 2011

49. Wider integration Geographic expansion

50. Question: Why was the EU (EEC) originally founded? Why do countries want to join the EU? Are these reasons the same?

51. Question: Peace project after WWII BUT, today… do countries want to join the EU because of this reason? Maybe, but there is more… what else?

52. Question: The “single market” is the main draw What is the single market? And why is it so attractive?

53. Question: size, Economies of scale

55. Eurozone population approx same size as US

56. – on much smaller LAND!

58. Eurozone approx 75% economy of EUhttp://en.wikipedia.org/wiki/Eurozone

59. Economic Superpower With population of 490 million, EU has 63% more consumers than the USA (much bigger internal market). Making the EU the largest capitalist market in the world. Textbook: “Understanding The European Union, A Concise Introduction”, John McCormick, Ch 9

60. Economic Superpower Worlds biggest and richest marketplace Accounting for 30% global GDP (more than the USA) 39% of merchandise trade (more than 2x the USA) 42% of trade in commercial services Textbook: “Understanding The European Union, A Concise Introduction”, John McCormick, Ch 9

61. Economic Superpower Biggest market in the world for corporate M&A (mergers and acquisitions) Biggest global source of FDI (foreign direct investment) EU now source of 2/3 of ALL investment coming out of OECD member states, and more than 3 times as much as the USA (per OECD website, 2007) As result of size (and one-voice): Dominating actor in global trade negotiations (WTO) Currency that competes with Dollar, Yen in terms of global credibility and influence (perhaps reserve currency) Textbook: “Understanding The European Union, A Concise Introduction”, John McCormick, Ch 9

62. Wider integration Geographic expansion – (tips to remember)

63. Who remembers… Review of International IQ lecture by Dr. Hervitz … Questions: How many countries are in the EU today? Who were the founding countries? In which year did the others join?

64. Simple way to remember: Founded- in the 50's 3 rounds - '73, '81 and '86 end of cold war - '89-'91 3 more rounds- '95, '04 and '07 Question: If I give you these dates, can you name the countries that joined?

65. Founder Countries of EEC Question: * what happened in Europe 10 years before? 1958 Slide created by: Jan Fidrmuc, Brunel University

66. Simple way to remember: Founded - in the 50's ‘50 - Treaty of Paris – Coal and Steel community (why these materials?) '57 - Treaty of Rome - 6 founding members of the EEC - European Economic Community - BENELUX + France + W. Germany + Italy

67. 1st enlargement: 1973 Question: * Why did UK wait so long? 1973 1958 Slide created by: Jan Fidrmuc, Brunel University

68. Simple way to remember: 3 rounds - '73, '81 and '86 '73 - UK (finally admitted after 2 failed attempts), Ireland (tied to the UK), and Denmark (also lots of trade with the UK)

69. 2nd Enlargement: 1981 Question: * What happened in Greece just before 1981? 1973 1958 1981 Slide created by: Jan Fidrmuc, Brunel University

70. Simple way to remember: 3 rounds - '73, '81 and '86 '73 - UK (finally admitted after 2 failed attempts), Ireland (tied to the UK), and Denmark (also lots of trade with the UK) '81 - Greece (after fall of dictatorship in '70s)

71. 3rd Enlargement: 1986 Question: * What happened in Spain & Portugal just before 1986? 1973 1958 1986 1981 Slide created by: Jan Fidrmuc, Brunel University

72. Simple way to remember: 3 rounds - '73, '81 and '86 '73 - UK (finally admitted after 2 failed attempts), Ireland (tied to the UK), and Denmark (also lots of trade with the UK) '81 - Greece (after fall of dictatorship in '70s) '86 - Spain & Portugal (after fall of Franco's dictatorship in '70s)

73. Notes about Spain… Spain dictatorship ‘36-75 (approx 40 years) Catalonia (Barcelona) – language repressed, culture Nowadays… calls for greater autonomy

74. 4th Enlargement: 1995 1995 Question: * What happened in Europe around 1989 -91? 1973 1958 1986 1981 Slide created by: Jan Fidrmuc, Brunel University

75. Simple way to remember: End of cold war - '89 - Berlin Wall comes down '91 - USSR collapse

76. Simple way to remember: 3 more rounds - '95, '04 and '07 '95 - three "neutral" countries from cold war (neither aligned with West, nor with USSR) Austria Sweden Finland (not Norway!... who says "no way" to the EU in referendum)

78. What about the US in ‘01?1973 2004 1958 Cyprus 1986 Malta 1981 Slide created by: Jan Fidrmuc, Brunel University

79. Simple way to remember: 3 more rounds - '95, '04 and '07 '04 - the BIG one - 10 new countries join -- 8 former communist + 2 islands easy way to remember; 3 big ones, 3 "Twins"- Slovenia & Slovakia (similar sounding names, flags, and sized countries... both of which later joined the Eurozone) "Triplets" - Estonia, Latvia, Lithuania (the three Baltic States countries that used to apart of USSR, just north of Poland, near St. Petersburg Russia) "Big ones" - Poland, Czech Republic, Hungary Small Islands - Cyprus, Malta

81. Simple way to remember: 3 more rounds - '95, '04 and '07 '07 - the two Eastern European countries that didn't get in in '04 Romania Bulgaria (weren't ready in '04, so just in '07)

82. Poorest states (per person) http://en.wikipedia.org/wiki/Economy_of_the_European_Union

83. Ireland… Question – why is it interesting that Ireland might sit at the TOP of this list? Where were they 20 years ago? How did they get there? (talk about cohesion fund, single market, etc) What is going on in Ireland today? (talk about crisis, EURO, fiscal debts, banks, etc) http://en.wikipedia.org/wiki/Economy_of_the_European_Union

85. Barcelona

86. Paris

87. Switzerland

88. Venice

89. Athens

90. Istanbulhttp://epp.eurostat.ec.europa.eu

92. Istanbulhttp://epp.eurostat.ec.europa.eu

94. For example, …the regions of Brussels, Sofia, Praha, Athina, Madrid, Paris and Lisboa as well as Budapest, Bratislava, London, Warszawa and Bucureşti.

95. Class Question – what is the one major country where the Capital city is poorer than much of the rest of the country?http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/GDP_at_regional_level

96. Rich near the capital cities Class Question – what is the one major country where the Capital city is poorer than much of the rest of the country? Answer – Germany – Berlin http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/GDP_at_regional_level

97. Simple way to remember: Founded- in the 50's 3 rounds - '73, '81 and '86 end of cold war - '89-'91 3 more rounds- '95, '04 and '07

98. Question: What are the conditions for a country to join the EU? Can any country (in Europe, wherever that is!) join?

100. Question: Croatia But, then… who’s next? When Turkey? Be prepared for presentations after Milan…

101. Most of Ex-Yugoslavia (still not EU members) http://www.bbc.co.uk/news/world-europe-11283616

102. Croatia http://www.bbc.co.uk/news/world-europe-11283616

103. Croatia http://www.rttnews.com/ArticleView.aspx?Id=1657988 Martonyi told a press conference that EU, Hungary delegations officially concluded the chapters on judiciary and fundamental rights, financial and budgetary provisions, competition policy and other issues, which marked the end of the 35 chapters accession negotiations. He said these chapters were very complex, and their conclusion meant that Croatia had managed to deliver a wide range of performance benchmarks.