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European Union
The European Union (EU) is an economic and political federation consisting of twenty-seven member countries that make common policy in several areas. The EU was created in 1993 with the signing of the Treaty on European Union, commonly referred to as the Maastricht Treaty, but it was preceded by various European organizations that contributed to the development of the EU. The EU represents the latest and most successful in a series of efforts to unify Europe , including many attempts to achieve unity through force of arms, such as those seen in the campaigns of Napoleon Bonaparte and World War II .
STEPS TOWARDS THE MAASTRICHT TREATY
In the wake of the Second World War , which devastated the European infrastructure and economies, efforts began to forge political union through increasing economic interdependence. In 1951 the European Coal and Steel Community (ECSC) was formed to coordinate the production and trading of coal and steel within Europe. In 1957 the member states of the ECSC ratified two treaties creating the European Atomic Energy Community (Euratom) for the collaborative development of commercial nuclear power and the European Economic Community (EEC), an international trade body whose role was to gradually eliminate national tariffs and other barriers to international trade involving member countries. Initially the EEC, or, as it was more frequently referred to at the time, the Common Market, called for a twelve- to fifteen-year period for the institution of a common external tariff among its members, but the timetable was accelerated and a common tariff was instituted in 1967.
Despite this initial success, participation in the EEC was limited to Belgium , France , Germany , Italy, Luxembourg, and the Netherlands . Immediately following the creation of the EEC a rival trade confederation known as the European Free Trade Association (EFTA) was created by Austria , Britain , Denmark , Finland , Norway , Portugal , Sweden , and Switzerland . Although its goals were less comprehensive than those of the EEC, the existence of the EFTA delayed European economic and political unity.
By 1961 the United Kingdom indicated its willingness to join the Common Market if allowed to retain certain tariff structures which favored trade between Britain and its Commonwealth. Negotiations between the EEC and the United Kingdom began, but insurmountable differences arose and Britain was denied access to the Common Market in 1963. Following this setback, however, the Common Market countries worked to strengthen the ties between themselves, culminating in the merger of the ECSC, EEC, and Euratom to form the European Community (EC) in 1967. In the interim the importance of the Commonwealth to the British economy waned considerably and by 1973 Britain, Denmark, and the Republic of Ireland had joined the EC. Greece followed suit in 1981, followed by Portugal and Spain in 1986 and Austria, Finland, and Sweden in 1995.
Even as it expanded, the EC worked to strengthen the economic integration of its membership, establishing a European Monetary System (EMS) featuring the European Currency Unit (ECU, later known as the Euro) in 1979. The EC then passed the Single European Act, which strengthened the EC's ability to regulate the economic, social, and foreign policies of its members, in 1987. The EC took its largest step to date toward true economic integration among its members with the 1992 ratification of the Maastricht Treaty, after which the EC changed its name to the European Union (EU). The Maastricht Treaty also created a central banking system for EU members, established the mechanisms and timetable for the adoption of the Euro as the common currency among members, and further strengthened the EU's ability to influence the public and foreign policies of its members.
EXPANSION SINCE 1993
The EU originally had twelve member nations: Belgium, Denmark, France, Germany, Greece, Italy, Luxembourg, the Netherlands, Portugal, the Republic of Ireland, Spain, and the United Kingdom. In 1993, the European Council, meeting in Copenhagen , Denmark, determined the criteria for joining the EU. These requirements, known as the Copenhagen criteria, included: (1) a stable democracy which respects human rights and the rule of law; (2) a functioning market economy capable of competition within the EU; and (3) the acceptance of the obligations of membership, including EU law. The European Council has the responsibility for evaluating a country's fulfillment of these criteria.
The EU has enlarged three times since its creation. In 1995, three new members were added: Austria, Finland, and Sweden. In 2004, ten new members were added, mostly from the former Soviet bloc: Czech Republic , Cyprus , Estonia , Hungary , Latvia , Lithuania , Malta , Poland , Slovakia , and Slovenia . In 2007, Romania and Bulgaria , who were not ready to join in 2004, were admitted. As of 2008, there were three official candidates for membership—Croatia, Macedonia , and Turkey—and five nations officially recognized as potential candidates—Albania, Bosnia and Herzegovina, Kosovo, Montenegro , and Serbia .
THE EURO
One of the goals of the EU is economic integration and a common European currency. EU leaders expect great benefits from the adoption of a single currency. International trade within the single currency area will be greatly facilitated by the establishment of what amounts to a single market, complete with uniform pricing and regulation, in place of separate national markets. The creation of a single market is also expected to spur increased competition and the development of more niche products, and ease the acquisition of corporate financing, particularly in what would formerly have been international trade among members of the single currency area. Finally, in the long term, the establishment of the single currency area should simplify European corporate structures, since in time nearly all regulatory statutes within the single currency area should become uniform.
The Maastricht Treaty established conditions that EU member nations would be expected to meet before they would be allowed to participate in the introduction of the single European currency. These conditions were designed to create a “convergence” among the various national economies of Europe to ease the transition to a single currency and ensure that no single country would benefit or be harmed unduly by its introduction. Such a convergence would also create greater uniformity among the various national economies of the EU, making administration of economic activity within the single-currency area more feasible. The conditions set for participation in the introduction of the Euro and inclusion in the single-currency area included the following:
Maintaining international currency exchange rates within a specified range (called the Exchange Rate Mechanism or ERM) for at least two years prior to the introduction of the Euro.
Maintaining long-term interest rates within 2 percent of the national inflation rate and within 1.5 percent of the three best-performing EU member states in terms of price stability.
Maintaining public debt at no more than 3 percent of the gross domestic product.
Maintaining total government debt at no more than 60 percent of gross domestic product.
Despite difficulties faced by some members in meeting these conditions, implementation of the Euro went ahead on schedule through the three phases set forth at Maastricht. Phase one began in 1998 with an EU summit in Brussels , Belgium, that determined which of the fifteen member states had achieved sufficient convergence to participate in the introduction of the Euro. The selected participants were Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain (exceptions were Demark, Greece, Sweden and the UK). Phase two, which commenced on 1 January 1999, introduced the Euro as legal tender within the eleven selected countries, referred to as the single-currency area, although the new currency would only exist as a “currency of account,” that is, it would exist only on paper or for electronic transactions, as no Euro notes or coins were yet in circulation. Instead, the existing currencies of the participating countries functioned as fixed denominations of the Euro. Phase two also included the subordination of the eleven national banks in the single-currency area to the European Central Bank.
Phase three, which began on 1 January 2002, set the Euro banknotes and coins into circulation and by July 2002, it became the legal tender of the countries, replacing their national currencies. At the time of introduction there were twelve countries in the area using the Euro, known as the Eurozone: Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, and Greece. Denmark, Sweden and the UK chose not to use the Euro. By the beginning of 2008, the Eurozone had expanded to include fifteen member nations, with Cyprus, Malta, and Slovenia having joined the original members. Nine of the new EU member states were still operating with a currency other than the Euro. The Accession Treaties signed by all of
these countries requires them to join the Euro; some have already joined the ERM and others have set themselves the goal of joining the Euro as follows:
Slovakia: January 1, 2009
Estonia: January 1, 2011
Bulgaria, Czech Republic, Hungary, Latvia, Poland, and Romania: January 1, 2012 or later.
The initial introduction of the Euro as a currency of account began with a resounding success, as the new currency rose immediately to an exchange rate of 1.17 U.S. dollars to the Euro. Uncertainties about the further progress of European Union raised by conflicts in the Balkans in 1999 soon dampened investor interest in the Euro, however, and its value fell to 1.04 U.S. dollars per Euro by the summer of that year. The Euro continued to slip, and by late 2000, it had fallen to a record low of $0.83. Since 2003, however, the Euro has steadily risen against the dollar, gaining strength in 2007 as the U.S. economy began slipping towards recession; by mid 2008, the Euro was holding steady in the mid $1.50s.
STRUCTURE
The EU maintains four administrative bodies dealing with specific areas of economic and political activity.
Council of Ministers. The Council of Ministers comprises representatives, usually the foreign ministers, of member states. The presidency of the council rotates between the members on a semiannual basis. When issues of particular concern arise, members may send their heads of state to sit on the council. At such times the council is known as the European Council, and has final authority on all issues not specifically covered in the various treaties creating the EU and its predecessor organizations. The Council of Ministers also maintains the Committee of Permanent Representatives (COREPER), with permanent headquarters in Brussels, Belgium, to sit during the intervals between the council's meetings; and operates an extensive secretariat monitoring economic and political activities within the EU. The Council of Ministers and European Council decide matters involving relations between member states in areas including administration, agriculture and fisheries, internal market and industrial policy, research, energy, transportation, environmental protection, and economic and social affairs. Members of the Council of Ministers or European Council are expected to represent the particular interests of their home country before the EU as a whole.
European Commission. The European Commission serves as the executive organization of the EU. Currently each country has one commissioner except for the five largest countries that have two. The Commission enlarges as more countries join. The European Commission seeks to serve the interests of Europe as a whole in matters including external relations, economic affairs, finance, industrial affairs, and agricultural policies. The European Commission maintains twenty-three directorates general to oversee specific areas of administration and commerce within the EU. It also retains a large staff to translate all EU documents into each of the EU's twenty official languages. Representatives sitting on the European Commission are expected to remain impartial and view the interests of the EU as a whole rather than the particular interests of their home countries.
European Parliament. The European Parliament comprises representatives of the EU member nations who are selected by direct election in their home countries. Although it serves as a forum for the discussion of issues of interest to the individual member states and the EU as a whole, the European Parliament has no power to create or implement legislation. It does, however, have some control over the EU budget, and can pose questions for the consideration of either the Council of Ministers or the European Commission.
Court of Justice. The Court of Justice comprises thirteen judges and six advocates general appointed by EU member governments. Its function is to interpret EU laws and regulations, and its decisions are binding on the EU, its member governments, and firms and individuals in EU member states.
IMPORTANT PROGRAMS
From its creation the EU has maintained the Economic and Social Committee (ESC), an appointed advisory body representing the interests of employers, labor, and consumers before the EU as a whole. Although many of the ESC's responsibilities are now duplicated by the European Parliament, the committee still serves as an advocacy forum for labor unions, industrial and commercial agricultural organizations, and other interest groups.
One ongoing area of contention among the members of the EU is agricultural policy. Each European nation has in place a series of incentives and subsidies designed to benefit its own farmers and ensure a domestically grown food supply. Often these policies are decidedly not beneficial to the EU as a whole, and lead to conflict between rival national organizations representing agricultural and fisheries industries. The degree of contention on agricultural and fisheries issues within the EU can be seen in the
fact that nearly 70 percent of EU expenditures are made to address agricultural issues, even though agriculture employs less than 8 percent of the EU workforce. In an attempt to reduce conflict between national agricultural industries while still supporting European farmers, the EU adopted a Common Agricultural Policy (CAP) as part of the Treaty on European Union.
The CAP seeks to increase agricultural productivity, ensure livable wages for agricultural workers, stabilize agricultural markets, and assure availability of affordable produce throughout the EU. Although the CAP has reduced conflicts within the EU, it has also led to the overproduction of many commodities, including butter, wine, and sugar, and has led to disagreements involving the EU and agricultural exporting nations including the United States and Australia .
The European Social Fund (ESF) and the European Regional Development Fund (ERDF) were established to facilitate the harmonization of social policies within EU member states. The ESF focuses on training and retraining workers to ensure their employability in a changing economic environment, while the ERDF concentrates on building economic infrastructure in the less-developed countries of the EU.
The European Investment Bank (EIB) receives capital contributions from the EU member states, and borrows from international capital markets to fund approved projects. EIB funding may be granted only to those projects of common interest to EU members that are designed to improve the overall international competitiveness of EU industries. EIB loans are also sometimes given to infrastructure development programs operating in less-developed areas of the EU.
OBSTACLES FACING THE EU
Although the EU has accomplished a great deal in its first two decades, many hurdles must still be crossed before true European unity can be achieved. Many EU nations experienced great difficulty in meeting the provisions required by the EU for joining the EMS, although eleven countries met them by the 1 January 1999 deadline. Meeting these provisions forced several EU members, including Italy and Spain, to adopt politically unpopular domestic economic policies. Others, such as the United Kingdom, chose not to take politically unpopular action and thus failed to qualify for participation. Even though the Euro was introduced according to schedule, economic unity has far outstripped political cooperation among EU members to date and real and potential political disagreements within the EU remain a threat to its further development. Although the Eurozone represents a formidable force in international trade, the EU faces several grave challenges as it strives to form an ever closer linkage of its national constituents.
Despite the fact that the Treaty on European Union created a central bank to supercede the national banks of its members, responsibility for the creation of fiscal policies remains in the hands of each national government. As such, there is great potential for the central authority and national economic policy making agencies to adopt conflicting programs. Furthermore, national political institutions within the EU are likely to be more responsive to the desires of their national constituencies than to the well being of the Eurozone as a whole, especially in times of economic instability. It is difficult to see how voters in the nations of the EU will be able to put the good of Europe ahead of their own particular interests.
This difficulty is particularly troublesome as political integration has progressed much more slowly than economic integration, and further political integration has recently suffered several potentially insurmountable setbacks. In 2004, the Treaty establishing a European Constitution (TCE) was signed by the representatives of all twenty-seven member nations, but the treaty failed to be ratified by all of the members. Most members did in fact ratify the TCE by parliamentary measure or popular referendum, but France and the Netherlands both rejected it in referendums. These failures led other members to postpone or call off their ratification procedures. As a result, the European Council called for a “period of reflection,” which subsequently led to negotiations over a new constitutional treaty, known as the Lisbon Treaty. The Treaty of Lisbon, signed on 13 December 2007, was in the process of being ratified by member nations when the Irish electorate rejected the treaty in June 2008, creating uncertainty as to the future ratification of this version of a European constitution.
Another problem also arises out of the composition of the Eurozone. According to the optimal currency theory first posed by American Robert Mundell in 1961, in order for a single currency to succeed in a multinational area several conditions must be met. There should be no barriers to the movement of labor forces across national, cultural, or linguistic borders within the single-currency area; there should be wage stability throughout the single currency area; and an area-wide system should exist to stabilize imbalanced transfers of labor, goods, or capital within the single-currency area. These conditions do not exist in present-day Europe, where labor mobility is small, largely because of language barriers, and wages vary widely among EU member countries, particularly between those in the West and in the East. Furthermore, the present administrative structure of the EU is not powerful enough to redress imbalanced transfers, which are bound to occur periodically. Such imbalances would engage the sort of
political response discussed previously, to the detriment of the EU as a whole.
Optimal currency theory also holds that for a single currency area to be viable it must not be prone to asymmetric shocks, that is, economic events that lead to imbalanced transfers. Ideally, a single-currency area should comprise similar economies that are likely to be on similar cycles, thus minimizing imbalances. Similarly, the need for a freely transferable labor force within the single-currency area is also necessary to minimize imbalances, since each national member of the area must be able to respond flexibly to changes in wage and price structures.
ANALYSIS AND PROSPECTS
The EU has made remarkable progress during its first two decades. Although there are significant obstacles in the way of further strengthening of the EU, especially in political matters, the continued enhancement of economic ties binding members is likely to increase the political unity of EU members over time. That this is feasible is evidenced by the efforts of EU nations to conform to the stipulations of the Maastricht Agreement. Maintaining stable currency exchange rates, reducing public and overall government debt, and controlling long-term interest rates are all areas in which national governments and fiscal agencies had exercised complete autonomy in the past. Before the implementation of the Euro's second phase, many doubted that the EU member states could put aside their own internal interests to meet the Maastricht provisions; however, eleven of the fifteen managed to do so, and currently over half of the EU members belong to the Eurozone. Significantly, many had to experience economic slowdowns and increased unemployment in order to do so. Such resolve bodes well for continued strengthening of European unification in both political and economic areas. In fact, the history of the EU to date has been one of overcoming obstacles similar to those faced during the first two phases of the introduction of the Euro, and a unified Europe is and will remain a fact of international economic life for the foreseeable future.
SEE ALSO Free Trade Agreements and Trading Blocs; International Business; International Management
BIBLIOGRAPHY
Alesian, A., and R. Rerotti. “The European Union: A Politically Incorrect View.” Journal of Economic Perspectives 18, no. 4 (2004): 27–48.
Blair, Alasdair. The European Union Since 1945. New York : Longman, 2005.
“Europe Ten Years from Now.” International Economy 18, no. 3 (2004): 34–39.
“European Union in the U.S.” Available from: http://www.eurunion.org .
McCormick, J. Understanding the European Union: A Concise Introduction. 3rd ed. New York: Palgrave, 2005.
Phinnemore, D., and L. McGowan. A Dictionary of the European Union. 3rd ed. London and Chicago : Europa, 2006.
Pinder, John and Simon Usherwood. The European Union: A Very Short Introduction. 2nd ed. New York: Oxford University Press, 2008.
Reid, T.R. The United States of Europe: The New Superpower and the End of American Supremacy. New York: Penguin Press, 2004.
Vanthoor, W.F.V. A Chronological History of the European Union, 1946–2001. 2nd ed. Northampton, MA: Edward Elgar, 2002.
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The European Union (EU) is a cooperative entity that has qualities of both a federal nation-state and an international organization. It is neither, but falls somewhere in between. The EU is comprised of twenty-five member-states with around 460 million citizens. All member-states are democratic countries, which have agreed to cede some of their sovereignty to the institutions of the EU by participating in the common market, making their domestic laws conform to EU laws, adopting the Euro as a common currency, and allowing free movement of goods, capital, and persons, among other things. Social scientists attempt to explain why the EU came about, the role of its institutions in promoting cooperation, and its future trajectory. Will it continue to become more federal or will it reach policy gridlock? Will it continue to enlarge or will it reach its absorption capacity?
FORMATION OF THE EU
The earliest precursor to the EU was the European Coal and Steel Community (ECSC), formed in the wake of World War II as European countries sought a way to prevent such destruction from happening again. They believed if they became economically interdependent, they would be less likely to repeat the mistakes of the past. In addition, ECSC would make economic recovery and industrial modernization possible. For West Germany in particular, Chancellor Konrad Adenauer saw it as an opportunity for rapprochement with France and new ties with the West.
It was the 1950 Schuman Declaration that unveiled Jean Monnet’s idea of the ECSC. Six member-states (Italy, France, Belgium , Luxembourg, The Netherlands , and West Germany) signed it into being with the 1951 Treaty of Paris . The ECSC was so successful in the early 1950s that it led to the 1957 Treaties of Rome , establishing the European Economic Community (EEC), which was a customs union, and the European Atomic Energy Community (Euratom). The 1967 Merger Treaty merged the executive bodies of the three treaties, thereby creating the institutions that continue to exist in the twenty-first century. In addition, ECSC, EEC (later EC), and Euratom became known together as the European Communities. The 1987 Single European Act replaced the Treaty of Paris and the Treaties of Rome as the EC’s policy domain grew into new areas not encompassed by the original treaties. It remained the European Communities until member-states signed and ratified the 1992 Maastricht Treaty, officially creating the European Union, which established the economic, monetary, and political union.
The basic evolution of these treaties embodies not only structural and institutional changes, but an increasing recognition of Europeans’ common values, goals, and even identity, as well as a willingness to vest more authority in EU institutions. Besides economic integration—the largest area of common jurisdiction—there are common policies on agriculture, culture, energy, the environment, transportation, crime, and defense, among other things. Moreover, the EU has become increasingly political over time. In addition to increasing areas of jurisdiction, the EU has experienced successive enlargements, and the treaties have also attempted to accommodate its growing size. Membership in the EU has been so attractive that many European countries have voluntarily undergone extensive measures to democratize and develop economically so that they meet the criteria to begin accession negotiations.
EU INSTITUTIONS
At the core of the EU are its institutions, which are located in Brussels , Strasbourg , and Luxembourg. The European Parliament is the only representative institution as its members are directly elected, and belong to European political parties of which there are seven. It shares some decision-making authority with the Council of the European Union, which is an intergovernmental institution comprised of ministers and ambassadors from the member-states. The Council presidency, which sets the agenda for the EU, rotates every six months. Through the co-decision procedure, the Parliament and Council together take policy decisions, pass laws, and approve the EU’s € 100 billion annual budget. However, it is only the European Commission that can initiate new laws. The Commission, unlike the Council, represents EU interests as a whole, rather than the interests of individual member-states. Commissioners are required to swear an oath of loyalty to this effect. There is one Commissioner from every member-state, chosen by their national governments, and only the European Parliament has the ability to approve the College of Commissioners or dissolve it. Still, the parliament is rather weak compared to the Council and Commission, and this is problematic given that it is the only directly elected body.
Besides these three major EU institutions, the European Court of Justice (ECJ) has played a significant role in the operations of the EU, and in pushing integration forward. The ECJ is comprised of one judge from each member-state, and its primary role is to ensure that national law is compatible with EU law. In their 1993 article “ Europe before the Court: A Political Theory of Legal Integration” Anne-Marie Burley and Walter Mattli argue that the judicial legitimacy of the ECJ has enabled it to take on more jurisdiction than had been intended, and to create precedents that assert the primacy of EU law over domestic law. Consequently, many individuals and local judges bring cases directly to the ECJ instead of to their national courts. Other important institutions are the European Central Bank, Court of Auditors, the European Economic and Social Committee, and the Committee of the Regions.
HOW IT WORKS
Besides the business of initiating and approving new laws, the EU has undergone major changes to its treaties. Member-states have willingly ceded increasing levels of sovereignty in numerous policy areas, but their control of the treaties is fundamentally intergovernmental. In order to change the jurisdiction of the EU fundamentally, statesmen must negotiate a new treaty at an Intergovernmental Conference (IGC). However, as argued in Mai’a K. Davis Cross’s The European Diplomatic Corps (2007), the process of negotiation is much more complex than just the IGC summit, which is typically a highly publicized two-day event. Personal representatives of the statesmen, who are usually ambassadors based in Brussels, take years to prepare a draft treaty in advance of the IGC. Ultimately, agreement must be unanimous, and member-states can choose their own method of ratification, either through a parliamentary vote or popular referendum.
The last extensive revision to the EU was the 1992 Maastricht Treaty, which created the so-called “pillar system.” All of the policy areas that used to fall under the EC became the first pillar, which is governed by the “community method.” That is, in these policy areas the EU has full control at the supranational level, above the level of national governments. The second two pillars are intergovernmental, with the Common Foreign and Security Policy as the second pillar, and Justice and Home Affairs as the third.
A major part of the first pillar is the Single Market, which removed trade barriers among member-states, as well as establishing free movement of goods and a common tariff for imports from outside of the EU. The Single Market was part of the Treaty of Rome, but it was not fully completed until 1993. The Maastricht Treaty introduced the single currency, the Euro, which went into circulation on January 1, 2002. The benefits of a single currency are that it makes economic transactions easier, encourages investment, and completely eliminates exchange rate fluctuations. All member-states, including the ten new ones, have adopted the Euro, with the exception of the United Kingdom , Denmark , and Sweden . The European Central Bank, established in 1993, is completely independent of member-states and interests groups, and is charged with managing the Euro and Single Market, setting the EU’s external exchange rate policy, and ensuring price stability and low inflation within the EU.
In addition to free movement of goods, the Maastricht Treaty also established free movement of persons, capital, and services, although certain restrictions still apply. Free labor mobility is of particular importance as it clearly distinguishes the EU from other free trade areas like the North American Free Trade Agreement (NAFTA). Europeans actually have citizenship in the EU, and can move, study, travel, and work within an internally borderless EU.
The Treaty Establishing a Constitution for Europe—negotiated between June and October 2004 and signed by all EU governments on October 29—was an attempt to revise the EU Treaty. But the ongoing national ratification process resulted in failure when the French and Dutch referenda in May and June 2005 rejected it. Nevertheless, the ratification process continued in 2006 even as efforts were underway to devise a new version.
THE FUTURE OF THE EU
There are numerous scholarly debates over why the EU has continued to deepen its policies, and what its future holds. Functionalists have argued that the process of EU integration has proceeded based on functional need, and on an ad-hoc basis. Neo-functionalists have argued that once the six member-states founded the ECSC a spillover effect ensued, in which one policy area necessitated integration in other, related policy areas. For example, economic cooperation spilled over into political cooperation.
Since the 1990s the major debate has typically been between rationalists and constructivists. Rationalists argue that integration proceeded based on cost-benefit calculations. At each juncture, leaders only agreed to more integration if it directly benefited their own states’ economic and power interests. Rationalists deny that any significant political integration can ever take place. On the other hand, the constructivist approach argues that the EU is a product of shared norms, which grow over time through deliberation, persuasion, and socialization. There is a certain idea of Europe that many Europeans believe is a worthwhile goal, and they comply with EU rules because they know it is in the long-term benefit of everyone. Depending on the approach, predictions about the future of the EU vary.
The question of how far enlargement can continue is also an area of attention. With the addition of ten new member-states in 2004, many scholars and politicians argue that the EU has reached its absorption capacity in the near term, and will have to wait many years before it is ready to undergo further enlargement. If the EU enlarges too quickly, it may be impossible for Europeans to continue to deepen integration, or deal with problems of democratic accountability at the supranational level.
Finally, scholars and policy practitioners debate the future role of the EU as an international actor. The strength and cohesion of the EU internally has a direct impact on its relations with the United States , its growing global security role, and its ability to be economically competitive. The EU has played a strong role in facilitating the ongoing Middle East peace process. Its policy is to favor the creation of two states to resolve the Israel-Palestinian conflict, and to find a solution to the Palestinian refugee crisis. The EU participates in numerous diplomatic and humanitarian assistance efforts to ensure the success of the roadmap to peace. The EU is the largest trading, scientific, and research partner with Israel, and provides the greatest amount of aid to the Palestinians and United Nations Relief and Works Agency. The EU responded to the 2006 crisis in Lebanon with numerous high-level diplomatic meetings with both Lebanese and Israel governments, the international community, and the United States. It also devised evacuation and humanitarian corridors to assist victims in escaping the violence, or to get supplies into the region.
Besides extensive aid to the Middle East, EU member-states as a whole give about $30 billion per year in development cooperation or aid to the third world more generally. Recipient countries include seventy-seven African, Caribbean, and Pacific countries. The EU seeks to reduce poverty in the third world by slowing the spread of HIV/AIDS, increasing education, providing debt relief, and improving the coherence between development and trade policies. To that end, the EU supports a number of associated territories, giving them preferential treatment and access to the European Development Fund for financing projects.
Overall, the EU leads the world in environmental protection and humanitarian aid, its economy is roughly the same size as that of the United States, and it has a high level of soft power or influence. While there are many areas of controversy and hurdles to cooperation in the foreseeable future, the EU has repeatedly proven itself to be a viable world player with much potential.
SEE ALSO Euro, The
BIBLIOGRAPHY
Burley, Anne-Marie, and Walter Mattli. 1993. Europe before the Court: A Political Theory of Legal Integration. International Organization 47 (1): 41–76.
Cross, Mai’a K. Davis. 2007 The European Diplomatic Corps: Diplomats and International Cooperation from Westphalia to Maastricht. Houndmills: Palgrave.
Dinan, Desmond. 2003. Ever Closer Union: An Introduction to European Integration. Boulder, CO: Lynne Rienner Publishers.
McCormick, John. Understanding the European Union. New York: Palgrave Macmillan.
Moravcsik, Andrew. 1999. A New Statecraft? Supranational Entrepreneurs and International Cooperation. International Organization 53 (2): 267–303.
Nelson, Brent F., and Alexander Stubb. 2003. The European Union: Readings on the Theory and Practice of European Integration. New York: Palgrave Macmillan.
Mai’a K. Davis Cross
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European Union
█ ADRIENNE WILMOTH LERNER
The European Union (EU) is a long-standing political and economic federation of autonomous European nations. With the consent of member states, the EU legislates a variety of issues by treaty, including trade, customs, travel, currency, and defense. Members choose to participate in various EU institutions, delegating sovereignty in order to achieve common goals.
The organization embraces democracy and the rule of law, requiring member states to possess some form of representative government, elected by universal adult suffrage of the adult citizenry. The mission of the EU is to promote economic growth in Europe , create a strong international market, lobby for European interests in the international community, raise standards of living, and promote peace.
History. European integration, the process that eventually yielded the EU, began on May 9, 1950, when France proposed to create a European trade organization. Two years later, France and Germany established the European Coal and Steel Community. Both nations sought to solve disputes over coal mining territories and industry competition unresolved since the end of the Second World War . Belgium later joined France and Germany, uniting most of Western Europe's continental coal and steel industry.
Continued success of the European Coal and Steel Community prompted its president to lobby European governments for the establishment of a large-scale economic and trade union. In 1957, six nations (France, Germany, Belgium, the Netherlands , Luxembourg, and Italy) signed the Treaty of Rome , establishing the European Economic Community (EEC). The EEC standardized some tariffs, opened borders to free trade, promoted industry cooperation, regulated industry standards, and synchronized export practices.
In 1967, the member nations brought the European Coal and Steel Community and the European Atomic Energy Community (Euratom) into the fold of the EEC. The new unified organization was officially named the European Community (EC), though many continued to use to older designation, EEC, to refer to the new union.
Several nations in Europe chose not to join the original EEC, the most prominent of which was Great Britain . In January 1960, Britain formed a more loosely regulated economic union to rival the EC. The European Free Trade Association (EFTA), known colloquially as the "Seven," included Britain, Austria , Denmark , Norway , Portugal , Sweden , and Switzerland . A year later, Britain applied for membership in the EC, but France rejected their proposal to join the organization. The French government subsequently vetoed Britain's second application for membership in 1964.
Britain, along with Ireland , Denmark, and Norway, became members of the EC in 1973. In a series of accessions, six more nations joined the EC before 1995. The organization adopted a more ambitious mandate in the 1990s, establishing government and judiciary organizations in an attempt to closely unite European interests. Adoption of the new mandate by member states established the European Union.
Organization. Today's EU mission encompasses more than economic goals. The principal objectives of the EU are to establish European citizenship, ensure civil rights of European citizens, promote social progress, protect European security, and ensure justice. To these ends, the European Union maintains its own government and supporting agencies. These institutions are granted sovereignty by the member states to legislate European affairs and create international law. Final adoption of EU policy, however, is left to the individual member states.
Five primary institutions comprise the government of the EU. Its overall structure embraces the three-branch democratic model of government, with executive, legislative, and judicial bodies. The European Commission is the primary institution of the executive branch. Members are elected or appointed by the European Parliament. The Council of the Union is composed of representatives from the governments of the member states. The Council governs the EU as a collective, requiring majority support to set or endorse policy.
The European Parliament, the legislative body, is elected by the people of the member states. Committees within the European Parliament address specific concerns, such as health care, preservation of the environment, and trade regulation. The Court of Auditors, the committee responsible for overseeing and managing the EU budget, remains separate from every branch of the EU government, but works closely with the Parliament to appropriately allocate funds and resources.
The EU judiciary is the Court of Justice. The jurisdiction of the European court is somewhat dubious, and member states recognize its authority to varying degrees. The court is similar in structure and function to those of the United Nations, but is permitted to pursue only cases that affect member states.
A myriad of committees and support institutions comprise the rest of the EU government. The EU maintains its own central finance system, including the European Central Bank and the European Investment Bank. These contain funds used by the EU or granted to individual member states for various joint projects. In 1999, nine nations adopted a standard European currency, the Euro.
Membership. Fifteen member states currently comprise the European Union: Austria, Belgium, Denmark, Germany, Greece , Finland , France, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain , Sweden, and the United Kingdom of Great Britain and Northern Ireland . These member nations participate in the EU to varying degrees. For example, Britain participates in EU economic and trade associations, but uses its national currency, the pound, instead of the euro.
In 1998, the EU began negotiations with several eastern and southern European nations regarding EU expansion. Still recovering from decades of Soviet Communist domination, many of these nations possess fledgling free market economies. Introduction of former Eastern Block nations into the EU holds the potential for economic growth and expanded investment opportunities for European industry. However, expansion also poses liabilities to more economically robust EU nations.
The EU granted admission to the following candidate nations in 2002: Czech Republic , Cyprus , Estonia , Hungary , Latvia , Lithuania , Malta , Poland , Slovenia , and Slovakia . These nations officially join the EU on May 1, 2004, assuming that they ratify membership in a national, public referendum. Bulgaria and Romania are scheduled join the EU in 2007. Some negotiations on expansion proved contentious. The EU denied Turkey 's application to join the organization, despite the nation's numerous economic and trade associations with Europe. The EU will review Turkey's application again in 2004, if the nation furnishes evidence that it has met EU demands to improve human rights and maintain a stable democratic government. The nation of Cyprus, divided between Grecian southern Cyprus and nationalist Turkish Cypriots, failed to reunify before the EU accepted the national proposal to join the EU. Therefore, only the independent half of the nation will join the EU in 2004.
Some nations in Western Europe have chosen to remain outside of the European Union. Switzerland, and EFTA members, did not join the union on the grounds that membership in the EU threatened its national policy of declared neutrality. Norway also chose to exclude itself from EU membership.
Common defense and security: the future of the EU. A series of treaties in the 1980s and 1990s expanded the political, defense, and military role of the European Union. Formerly an instrument of economic and social policy, the EU adopted the Common Foreign and Security Policy (CFSP) in response to global instability and the rise or terrorism. The creation of the European Security and Defense Policy (ESDP) followed, outlining the EU's international responsibilities to defend European territory and interests while cooperating with organizations such as the North Atlantic Treaty Organization ( NATO ) and the United Nations.
Defense and security strategy remains one of the most contentious aspects of European Union policy. Some member states prefer to rely on their connections to NATO, or their own defenses, for protection. Others are wary of creating an EU military force under international command.
The EU established several crisis management tasks, known as the Petersberg Tasks, a foreign policy priority. For the purpose of humanitarian aid and rescue, peacekeeping, and crisis management, the EU created a military task force of 60,000 reserve troops. Member states can choose to contribute and deploy national military troops to EU operations on a case-by-case basis.
The EDSP launched its first operation, a police mission in Bosnia and Herzegovina, in January 2003. The first EU military operation commenced in Macedonia two months later.
With the aid of ESDP liaisons in 2002, the EU candidate nations signed a declaration warning Iraqi leader Saddam Hussein that military action was justified if United Nations weapons inspections were not permitted to freely proceed. The statement angered several EU members, causing a rift in EU foreign policy. Although the EU did not formally support the subsequent United States led action in Iraq , several member and candidate nations supported the Coalition military action. Some of the most influential EU nations, such as France and Germany, voiced strong opposition to the 2003 war in Iraq.
█ FURTHER READING:
European Union. <http://www.europa.eu.int> (May 9, 2003).
SEE ALSO
NATO (North Atlantic Treaty Organization)
United Nations Security Council
EUROPEAN UNION
The European Union is a rapidly changing economic and political union of mostly western European nations that arose out of the European Community in 1993. This international organization is not meant to replace the sovereignty of the individual countries but rather to unify them under a common currency and economic structure, as well as under some shared principles of law and human rights. One of the cornerstones of the European Union has been the new currency, known as the euro, and the creation of a new European Central Bank. This new group of nations is to rival the United States and to increase trade among its member nations. This is no easy feat because of the strong national identities of these nations, including language barriers and long-standing cultural disputes.
HISTORY
The beginnings of the European Union were cultivated soon after the end of World War II (1939–1945), when it appeared that Europe would once again be a battleground between the United States and the Union of Soviet Socialist Republics. On May 9, 1950, the French foreign minister, Robert Schuman, proposed the first agreement to pool coal and steel resources. In 1952 the European Coal and Steel Community was established, and it included Belgium , France , Italy, Luxembourg, the Netherlands , and West Germany . It was hoped that this new spirit of cooperation would not only prevent war from breaking out between member nations but also present a strong economic face to the United States.
With this newfound success, the European Coal and Steel Community evolved in 1958 to become the European Economic Community. This was an attempt to integrate further other parts of these varied economies in order to remove other trade barriers. The Treaty of Maastricht in 1992 continued the evolution by introducing new areas of cooperation including defense, justice, and home affairs. These combined areas created the "community" relationship that exists today. Also in 1992, twelve of the fifteen nations agreed to a single European currency, called the euro, which was to have been managed by the new European Central Bank.
In 2005 the members of the European Union included: Austria , Belgium, Cyprus , the Czech Republic , Denmark , Estonia , Finland , France, Germany, Greece , Hungary , Ireland , Italy, Latvia , Lithuania , Luxembourg, Malta , the Netherlands, Poland , Portugal , Slovakia , Slovenia , Spain , Sweden , and the United Kingdom . The candidate countries were Bulgaria , Croatia , Romania , and Turkey . Macedonia , formerly a part of Yugoslavia , had a pending application. A new constitution was being proposed for 2006, but by 2005 France and Belgium had turned it down. The United Kingdom delayed the vote in that country pending a hearing to determine what the possible ramifications of the failure could be.
GOVERNMENT MAKEUP
Three main institutions make up this union of nations. The first one is the Council of the European Union. This body represents the individual member states. The second body is the European Parliament meant to represent the citizens of the European Union. The third body is the European Commission, which is to represent the common interests of the continent of Europe. These three parts are to represent all parts of the constituency of Europe.
The Council of the European Union is the main decision-making body in which the control of the body rotates every six months to another member nation. Depending on what the agenda is for particular meetings determines which minister from each nation attends. For instance, if there is a meeting on agriculture, the agriculture ministers from each nation would attend. There are nine different policy areas that the council considers. The General Secretariat is the administrative part of the council, and it is based in Brussels . The ambassadors of the member nations determine the agenda for the council.
The council and the European Parliament share legislative authority and responsibility for the budget. On important events such as amending treaties, a unanimous decision must be met; on other votes, however, only a qualified majority of 232 votes is required. Voting rights are based on the size of the population of the member state.
The European Parliament is the representative arm of the European Union. Every five years the people of Europe elect the membership in a direct election. In 2005 the European Parliament had 732 members, which was expected to be increased to 786 in 2007. The European Parliament is also the body responsible for open debate. It has become the area where the people's opinion meets the democratic process, creating some of the most innovative
policies. Because of its representative nature, the Parliament most accurately reflects the ideals and opinions of its people.
The European Commission is an independent political body meant to act upon the interests of the European Union as a whole. The commission is made up of one person from each nation. It is also the executive arm of the European Union and follows through with the decisions made by the council. In the event of censure by the Parliament, the entire body must resign. Censure requires a two-thirds vote by the Parliament in order to be passed and is an effective check on the balance of power within the European Union.
The judicial branch is known as the Court of Justice of the European Union. It meets in Luxembourg and is made up of one judge from each country serving an initial term of six years with additional terms of three years. The role of the Court of Justice is not only to make sure the laws created are fair and just, but also to guarantee that member nations fulfill their European Union obligations.
MONETARY POLICY
The primary strength of the European Union lies within its strong currency known as the euro. It has become the second most important currency along with the U.S. dollar. While the U.S. dollar has become less important because of world events such as stock market scandals and terrorist attacks, the euro has become more widely sought after. The euro began circulation in January 2002, replacing the individual currencies being used at the time in twelve nations. What is remarkable about the new currency is that it not only replaced the currencies of these nations, but also replaced icons of national and cultural symbols. This contributed to the new "European identity." One of the other benefits was the ability to travel within member nations without having to exchange currencies.
The process of bringing member nations on board with the single currency was not easy or painless. The new currency requires economic discipline by reducing budget deficits, curbing inflation, curbing interest rates, and reducing public borrowing to below 60 percent of gross domestic product to ensure the stability of the new currency. In order to make this happen, the European Central Bank was created in 1999. The bank set was ordered to set and maintain the value of the euro interest rates, and develop sound fiscal policy. One of the tenets of the fiscal policy is to maintain budget discipline in order to remain vigilant over the budget deficits of other member nations. A second tenet of the European Central Bank is that employment be a priority of the bank. Not all nations agreed to take on the euro as its national currency. Some nations such as the United Kingdom, Denmark, and Sweden did not accept the currency until they gave it much thought and discussion.
AREAS OF DISAGREEMENT
The goals of the European Union include banishing trade barriers detrimental to free trade among member nations while at the same time supporting the people of these individual countries in their everyday lives. Difficulties arise when differing cultures must cooperate and make joint decisions. The areas of agriculture and immigration are of particular concern. Some nations have long histories of protectionist philosophies for their food as well as with the issue of illegal immigrants.
In agriculture there have been other questions concerning issues that have to do with monetary policy, language barriers, and long-standing feuds. Of particular importance are the addition of the former Eastern European nations into the European Central Bank and the management of the euro in the global economy. Significant concerns include whether these nations can appropriately manage their economies to qualify for inclusion into the European Central bank and if they can, whether they will be able to maintain economic discipline. If they cannot, the concern is that their collective economies could sabotage what the European Union has worked so hard to establish since the mid-twentieth century.
Other concerns are how the roles of terrorism, the rising demand for oil, and the rise of other large economies such as China may affect the stability of the currency and the world economy in general. These challenges are indeed unique and will present a future of cooperative communication.
see also Trading Blocs
European Union (EU)
The European Union (EU), formerly known as the European Community (EC), was formed in the 1950s to encourage and oversee political and economic cooperation between numerous European nations. In the nearly half-century since it was formed, the EU has gradually succeeded in becoming the dominant governing economic body in Europe , and it now affects every aspect of business in its member states.
HISTORY
The EU had its origins in an upsurge of warfare which began in 1870 with the Franco-Prussian war and then continued through two world wars. World War II barely over, Winston Churchill , in a speech at Zurich University given in September 1946 called for "a kind of United States of Europe." Churchill's was a prominent voice but he expressed what many other leaders in Europe were feeling at the time. Two years later Belgium , France , Luxembourg, the Netherlands and the United Kingdom formed the West European Union aimed at mutual defense; that same year 16 other nations joined to form the Organization for European Economic Cooperation (OEEC) to oversee implementation of the U.S.-created Marshall Plan. OEEC later evolved into OECD (Organization for Economic Cooperation and Development), with the U.S. and Japan joining as well.
Communities: Coal , Atomic Energy, Economics
In 1951 Belgium, West Germany , Luxembourg, France, Italy, and the Netherlands established the European Coal and Steel Community (ECSC) empowered to make decisions about these industries for the group as a whole. Jean Monnet, who had given an influential speech about this subject in 1950 was named as the ECSC president. ECSC was a great success. In 1957 the same six countries created the European Atomic Energy Community (EURATOM) and the European Economic Community (EEC) to handle atomics and economic development in the same way, principally by removing trade barriers and creating a "common market." These "communities," focused on specific areas, were a step toward a greater union.
Maastricht
Milestones along the way were the merger, in 1967, of the three "communities" under a single Commission alongside a Council of Ministers and a European Parliament. In 1979 member countries' populations participated in direct elections of members of this parliament. Elections have been held at five-year intervals since. The Treaty of Maastricht, signed in 1992, created the European Union itself in 1992 by enabling member states to cooperate in defense and in the areas of justice and home affairs as well.
Common Policies and Market—and a Single Currency
The collective aim of these arrangements had always been greater efficiency and the achievement of economic power on a larger and more coordinated scale. Removal of trade barriers, common policies in many fields (agriculture, culture, energy, food purity, transportation, trade, etc.), and a common point for negotiating trade and aid agreements have been aims. The EU formed an economic and monetary union in EMU in part to implement some of these goals; it created the European Central Bank and projected the use of a single currency, the euro. The euro became the official currency in 2002 of 12 of the then 15 members: Belgium, Germany, Greece , Spain , France, Ireland , Italy, Luxembourg, the Netherlands, Austria , Portugal , and Finland . Denmark , Sweden , and the U.K retained their own currencies. Since 2002 the euro has become an important global currency.
Expansion and Consolidation
In 2002 the EU voted to admit ten additional countries, most of them formerly communist states. In consequence, in 2003, Cyprus , the Czech Republic , Estonia , Hungary , Latvia , Lithuania , Malta , Poland , Slovakia , and Slovenia joined the EU. The Treaty of Nice, which came into force on February 1, 2003 was intended to regulate the newly enlarged union. An EU constitution was framed and will replace Treaty of Nice regulations if all EU member nations approve it in 2006.
STRUCTURE
The EU's several governing bodies oversee different aspects of the union's operations. In addition, each country in the union takes turn acting as chairman; the position changes hands every six months. The European Commission (EC) is perhaps the most important of the governing bodies: it proposes policies and is the only body authorized to propose legislation (besides the national governments of each state). It also oversees the day-to-day operations of the union and ensures that treaties are being carried out as intended. The commission is comprised of 20 commissioners, including a president, all appointed by member states and approved by the parliament.
Once legislation is passed, it is administered by the European Council. The council is comprised of ministers who represent the national governments of the 25 members of the union. Actions of the European Council are approved on a majority vote of 13 of 25 commissioners.
Members of the European Parliament are directly elected by the people of each nation, and members serve five-year terms. While the parliament did gain some legislative power from the Maastricht Treaty, it mainly serves as the public forum of the EU, holding open debates on important issues and overseeing the activities of the council and the commission. The Court of Justice oversees EU laws and regulations and issues rulings when conflicts arise. The court sits as a "Grand Chamber" of 13 judges or in chambers of three or five judges. Decisions issued by the court are binding on member states.
Important but specialized activities of the EU are managed by nine additional bodies:
European Economic and Social Committee (civil society, employers, and employees).
Committee of the Regions (represents regional and local authorities).
European Investment Bank (finances projects and helps small business by means of the European Investment Fund).
European Central Bank (monetary policy, especially in euro-based countries).
European Ombudsman (investigates complaints).
A " UNITED STATES OF EUROPE "?
Is the EU a sovereign entity comparable to the United States? The answer is no—but with the provision that the EU may in the future gradually evolve in that direction if historical forces favor that development. William Underhill wrote in Newsweek International, reviewing a book by Boris Johnson (The Dream of Rome , HarperCollins): "To Johnson, the idea of Rome is lodged in European folk memory. Deep down, he argues, the continent yearns to re-create an Augustan Age, when 80 million people from Syria to Scotland enjoyed the benefits of Pax Romana." But Johnson evidently doubts the possibility that the old Roman—or the later Holy Roman—empire could be rebuilt, basing his views on the great cultural diversity and fierce national loyalties that the patchwork of nations in Europe represents. The EU was and largely remains an economic venture aiming to present to the world a single, large market (like that of the United States). This emerges from its proposed and still pending (2006) constitution. For those in business dealing with European customers, however, the EU is a much easier entity to deal with than 25 separate states, each with specific rules—no doubt one reason why the EU is successful despite continuing and chronic disagreements among its members.
BIBLIOGRAPHY
European Union. "The History of the European Union." Available from http://europa.eu.int/abc/history/index_en.htm. Retrieved on 26 March 2006.
The European Union in the United States. Available. from http://www.eurunion.org/states/home.htm. Retrieved on 26 March 2006.
Europe's Unreformed Economies. Global Agenda. 24 March 2006.
Underhill, William. "The Lessons of History: In a new book, British M.P. Boris Johnson wonders: why can't the EU be more like the Roman Empire ?" Newsweek International. 20 March 2006.
Weidenfeld, Werner. Europe from A to Z: A Guide to European Integration. Office for Official Publications of the European Communities, 1997.
"What is 'Your Europe—Business'?" European Commission. Available from http://europa.eu.int/business/en/advice/theeuro/index.html. Retrieved on 26 March 2006.
                                   Darnay, ECDI