european union

THE EUROPEAN

UNION

Latvia • Lithuania • Luxembourg • Malta • Netherlands • Poland • Portugal • Slovakia • Slovenia • Spain • Sweden • United Kingdom

Austria • Belgium • Cyprus • Czech Republic • Denmark • Estonia • Finland • France • Germany • Greece • Ireland • Hungary • ItalyEUROPEAN UNION

At-a-GlanceThe European Union (EU) represents a further stage of political and economic integration in the history of Europe.

It is, by far, the most ambitious attempt at regional integration attempted in modern history.

Politically, the EU is a cross between an international governmental organization (IGO) and a regional government.

Its institutions are a hybrid those geared towards consensus-building and those oriented towards policy administration.

Economically, the EU is an example of an economic union.



Types of Economic Integration

Free Trade Area

Customs Union

Common Market

Economic Union

Free Trade among

members √ √ √ √Free Factor

Mobility X X √ √Common Economic Policies

X X X √



Rationale Behind European UnionPolitical Stability

Desire to overcome the historical French-German rivalry by tying the interests of both to that of the broader European community.

Attempt to check potential German nationalism by integrating unified Germany with the rest of Europe.

Economic Stability

To stabilize the continent’s monetary affairs, making the continent attractive for investment.

International Importance

To reassert European influence on the international stage.



Views on Regional IntegrationFederalist

Emphasis on maintaining the sovereignty of independent member-states.

Regional integration should result in a Federal structure that recognizes the equality of each member state.

Functionalist

Emphasis on the relative power of member-states.

Regional arrangements must account for the relative importance of member-states to the region (and thus would include mostly very similar states).



Goals of European UnionUnified Economic and Monetary Policy

Coordinated economic policies and subsequent adoption of a common currency.

Common economic policy as a means of ensuring continental stability and thereafter further political unity.

Unified Foreign and Security Policy

Decreased dependence on American military support.

Unified Social Policy

Common policies on migration, welfare, and those towards organized labor.



A History of the European Union



A History of the European UnionOriginal EEC Members:



A History of the European UnionEC Members:



A History of the European UnionOriginal EU Members:



A History of the European UnionEU Members:



A History of the European UnionCurrent EU Members:



A History of the European UnionCurrent EU Members:

Candidates for Membership:



The Structure of the EU

EU CITIZENS

MEMBER STATE GOVERNMENTS

EU CITIZENSEUROPEAN COMMISSION

COUNCIL OF THE EU

EUROPEAN COUNCIL

EUROPEAN PARLIAMENT

COMMITTEE OF THE REGIONS

ECONOMIC AND SOCIAL COMMITTEE

Advisory

Individual Country Ministers

Members Proposed by Member States

Heads of State and Governments of Member States

PRESIDENT PRESIDENTPRESIDENCY OF THE EU

EUROPEAN COURT OF JUSTICE

Judicial

EUROPEAN COURT OF AUDITORS

Economic

EUROPEAN CENTRAL BANK

EBRD

Directly Electedby PR system



The Copenhagen CriteriaConditions established in 1993 that applicant countries must fulfill in order to join the EU:

Political: Stable institutions that guarantee democracy, the rule of law, human rights and the protection of minorities.

Economic: A functioning market economy and the capacity to handle competition arising within the EU’s internal market.

Administrative: Institutions and infrastructure that can implement the EU’s laws.



Convergence CriteriaFive criteria that countries have to meet in order to join the final stages of economic and monetary union:

Deficit: Government deficit must be below 3% of GDP.

Debt: Government debt must fall below 60% of GDP.

Inflation: Inflation rate must be within 1.5% of the three lowest inflation rates in the EU.

Interest Rates: Long-term rates must be within 2% of the three lowest rates in the EU.

Exchange Rates: Rates must be within normal fluctuating margins within the ERM.



Benefits of Monetary UnionIncreased market efficiency given the elimination of price uncertainties.

Decreased transaction costs (no more currency valuations).

Elimination of competitive currency devaluations across the region.

Increased transparency in economic policy and transactions.

Acceleration of political integration and the preparation for fiscal federalism.



Criticism of European UnionOptimum Currency Area

When the setting of nominal exchange rates between currencies does not impose real costs on their economies.

If labor and capital are perfectly mobile.

If prices and wages are flexible.

The EU is not an optimum currency area.

Prices and wages are not flexible: a recession hitting one country is likely to affect the rest of the region badly.

Labor and capital are realistically tied to specific places.



Hindsight: Lessons Learned The evolution of the EU has entailed managing different facets of political-economic integration.

Its workings are at once international, multinational, and supranational.

It is both an international arena and an international actor.

The experience of European integration demonstrates that political union (or at the very least political will) furthers economic union.

The opposite, however, does not appear to hold.



Going ForwardThe political debate: Can attempts at regional governance work elsewhere?

“Is Europe’s present Asia’s future?”

The economic debate: Is there a place for regional arrangements such as this in the broader global economy?

How to reconcile regionalism and globalization?

The administrative question: If successful, how to resolve regional interests and the dilemma of the “democratic deficit”?

Who exactly are “Eurocrats” accountable to?

!e End

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