Understanding the EU (European Union)
What is European Union… It is a grouping of 27 countries of Europe who
a. are democracies
b. have high degree of compatibility in political and economic matters
c. are committed to work together for peace and prosperity
A short history of the European Union .. In the aftermath of the Second World War (WWII) devastation and the resultant hardship it caused made Europeans to do some soul-searching. They wanted to preempt such a ruinous war breaking out again. For this to happen institutions and systems had to be put in place so that nations do not jump to the war option for sorting out their differences. The countries had to think of collective prosperity, accommodation, co-existence, and good governance rather than domination, battle field glories and jingoism.
Robert Schuman, a noted lawyer and foreign minister of France between 1948-52, along with his compatriot Jean Monnet mooted the idea of effective institutional bonding of European countries. They said that strong economic ties are a pre-requisite for effective political cohesion.
Accordingly, the Treaty of Paris was signed in 1951. Through this treaty, the European Steel and Coal Community (ECSC) was born. It had France, Germany, Italy, the Netherlands, Belgium and Luxembourg as members.
This experiment was a success. It led to the signing of a treaty known as the Treaty of Rome in 1958. The six founder members formed the European Economic Community and European Atomic Energy Community to work alongside the ECSC.
In 1967, a decision was taken to merge the three communities. They, collectively, became known as the European Commission. The main focus of E new body was the three communities merged to become collectively known as the European Communities (EC). Its main focus was on cooperation in economic and agricultural affairs.
The EC delivered the intended good results. Gradually, its membership swelled. In 1973, Denmark, Ireland and the United Kingdom became full EC members in 1973. Greece joined in 1981, Portugal and Spain in 1986, Austria, Finland and Sweden in 1995.
The birth of the European Union and the push for economic integration … The treaty of European Union was signed in Masstricht in Holland. The European Union became the successor to the European Commission.
The scope of the European Union concept was expanded to new areas. These included foreign policy and security. Other aspects like a common approach to grant asylum, immigration, terrorism and drugs control were brought under the ambit of the EU.
The idea of granting the inhabitants of the member countries the ‘EU citizenship’ was implemented. Through this arrangement people could travel from one EU country to another with very minimal paper work.
The treaty included a Social Chapter that laid down a common EU policy on workers’ rights and other social issues. Great Britain opted out of this arrangement.
However, the most momentous result of the Maastricht Treaty was the push towards laying down of qualifying standards of economic and budget criteria that all new aspiring members had to fulfill before being admitted. The subsequent Stability and Growth Pact fine-tuned the qualifying criteria. The EU wanted all members to exercise the desired fiscal discipline so that monetary and economic cohesion was not undermined. To underline the seriousness of the matter, provisions were made to impose fine on members who defaulted in their commitment to stick to fiscal discipline. Budget deficits had to be held within the acceptable levels at any cost.
The birth of the Euro … By the late 1980s and early 1990s, most Europeans inside the EU were unanimous in their opinion that their increasing unity was bringing them more and more concrete benefits. It led to the idea of a common currency that would be the currency of the members.
After intense debates on the pros and cons of the issue, members finally decided to abandon their old currencies and adopt the Euro in its place.
In 1999, eleven member countries agreed to enter the monetary union that would use the Euro. Entering into the Euro club was, however, conditional to the member countries satisfying certain financial criteria which were rather rigid.
Greece, which took longer to meet convergence criteria, joined two years later.
Denmark, Sweden and the UK chose not to join.
The norms of financial discipline that the members were required to follow were drawn up by the member countries themselves. But, by 2009, finances of some member countries had deteriorated as a result of their profligate spending. They found themselves in a situation where they could not meet the EU standards of prudent budgeting. They became official defaulters, and a thorn for the rest of the member countries. This led to a crisis in that year.
The most precarious of the cases was that of Greece. During better days, Greece had gone on a very rampant borrowing spree to keep its social sector programmes afloat and keep the voters satisfied. Greece’s loan burden kept on increasing. Banks and other institutional lenders kept on lending money to Greece keeping its ‘Euro Club member’ status in mind.
When the crisis came to a head finally, Greece had run up a mountain of debt equivalent to 113% of its GDP – almost twice of the Eurozone limit of 60%.
Other Euro zone countries had to give Greece emergency assistance to stay afloat. The IMF also stepped in to save Greece from collapsing altogether. The Euro countries and the IMF joined hands to give Greece a ‘bail-out’ package of about 110 billion dollars. The loan came in May, 2009.
It was soon found that some other countries were also facing similar crises. These countries were Ireland, Portugal and Spain.
In November 2010, Ireland received a bail-out package of 85 billion euros from EU and the IMF. In May 2011 a 78 billion-euro bail-out was approved for Portugal. By the end of the summer the dark cloud of heavy indebtedness loomed heavily on Spain, Italy and Cyprus.
The debt contagion was spreading well beyond the countries of the eurozone. To stop this, sweeping measures were called for. An emergency summit of EU leaders was held in October 2011. The leaders agreed on a package of measures that included boosting the eurozone’s main bailout fund to trillion euros.
This measure, however, failed to stop the fast erosion of business confidence that appeared to blight the whole of Europe. The leaders of the leading members of the EU continued to differ on the panacea to stop the inexorable decline of the bank-centered economy.
France and Germany sought eurozone tax harmonization, while Britain demanded safeguards for its own financial sector. Germany, under Chancellor Angella Merkel continued to press for severe austerity in the distressed economies.
In the meanwhile the debt crisis deteriorated in Greece and Spain. The election of a Socialist government in France under Hollande left Germany isolated as the chief advocate of austerity within the eurozone.
EU leadership steps into the crisis with boldness –
The raging financial crisis gave the European leaders to rise to the occasion and confront the crisis.Sensing In June 2012 the European Union authorities unveiled their own vision for a future through some steps that would have far-reaching ramifications. The EU leadership gave them much greater power to intervene in times of crisis. The European treasury was given control over national budgets.
European Commission President Jose Manuel Barroso declared this as the “defining moment for European integration”, which was designed to strengthen the eurozone and prevent future crises over a ten-year period. However, the pessimism of critics saw did not ebb as they saw little in it to address pressing debt problems.
In a speech in September 2012, Mr. Barrosso called for an eventual “federation of European nation-states” to deal with bank debt by establishing an over-arching supervisory mechanism for all eurozone banks.
However, Mr. Barroso’s grand initiative was marred by internal divisions which surfaced in November 2012. A summit meeting in Brussels failed to reach agreement on the EU’s next seven-year budget. The impasse raised questions about the union’s decision-making process and embarrassingly exposed the unresolved gulf between richer countries and the poorer countries that needed EU funding most.
Other important issues before the EU…
The countries which had favored admission of new members into the elite EU club perceived a larger EU as the best way of building economic and political bonds between the peoples of Europe. This could be a good bulwark against the divisions of the past, and the fractious politics.
They envisaged that the EU, with its clout as the world’s largest single market, would expand and consolidate stability and prosperity.
Critics of the policy to expand the EU cited economic disparity as the main worry. They highlighted the fact that average GDP per head for the new member states was a mere 40% of the average for existing EU countries. Thus, the new members would be a drag on the affluent EU, they feared.
Another fear was that the decision making process might get slowed down as it would be difficult to push proposals and ideas through a larger body of member countries.
The likely flow of economically distressed job-seeking immigrants from poorer countries to the richer countries was also cited as a cause for not expanding the membership of the EU.
Despite all such dissenting voices, EU has managed to agree remarkable consensus in a few areas. One of these is the Common Fisheries Policy. In February 2013 the European Parliament voted to protect endangered stocks and end “discards” – the expensive and environmentally-harmful practice of throwing unwanted dead fish into the sea. EU governments still have to agree with the decision.
The birth of the Lisbon Treaty …
Expansion of the EU will continue as more and more countries aspire for the membership of this ‘elite’ club. Bulgaria and Romania were admitted in January 2007. Sometime this year, Croatia is expected to become the EU’s 28th member. Serbia’s application for membership is pending since 2009.Talks over Turkey’s possible accession began in October 2005, and is continuing despite so many opinions against it.
In anticipation of admission of a large number of new nations, a convention was established in 2002 to draft a constitution for the EU. The new constitution was intended to simplify the complex maize of treaties and agreements which then governed the EU. The other motive was to define the powers of the body.
After intensive, often rancorous negotiation, the final text of the constitution was approved at a meeting of the 25 EU heads of state in Brussels. This historic effort of giving the EU a simpler, leaner, and more workable constitution came to fruition in June 2004.
However, there was a rider. Every EU country had to ratify the constitution either through its national parliament or by a public referendum, before it could take effect. Sadly, the voters of France and the Netherlands gave a death blow to the constitution by rejecting it in the referendums held in May and June 2005.
The constitution had to be kept put on hold, although not fully abandoned. Germany became the president of the EU in January 2007. The shelved constitution was brought back to the agenda again.
The members got down to intense negotiations to write a Reform Treaty. The talks continued through the year 2007. Finally, on December 13, 2007, the Lisbon Treaty was signed. It was signed in the Portuguese capital Lisbon. Most European leaders acknowledged that the main substance of the constitution would be preserved, but they argued that Lisbon simply amended previous European treaties. In their view, it did not make any fundamental new shift in powers.
The year 2008 was set as the deadline by which all 27 EU countries were expected to ratify the Treaty. If this deadline could be met, the new treaty could become operational by 2009. However, the voters of Ireland acted as the spoiler this time by delivering a loud ‘no’ vote in the country’s referendum. This single small country, thus, gave a death blow to the collective wish of other 26 nations.
European Commission President Jose Manuel Barroso urged other countries to go ahead with the process of ratifying the Treaty Good sense prevailed on the voters of Ireland and they approved it in a second referendum in October 2009.
The last hurdle was crossed the following month when the well-known critic of the Treaty, the Czech President Vaclav Klaus, signed it. finally signed it. The ratification process was thus formally completed.
New presidency …
The Belgian Prime Minister Herman Van Rompuy assumed charge as the first president of the European Council after the Council of Ministers approved his candidature in November, 2009. The names of quite a few higher-profile candidacies were rejected. One among these rejected candidates was the former British prime minister Tony Blair. Mr Van Rompuy formally took office in January 2010.
Around the same time, the European Union Trade Commissioner, Britain’s Baroness Ashton, was appointed High Representative for foreign affairs. She took office when the Lisbon Treaty came into force in December 2009.
Under Baroness Ashton’s chairmanship, EU foreign ministers have taken a more proactive stand on issues in the Middle East. Sanctions against Iran’s nuclear programme were clamped mainly due to her dogged initiatives. In January 2012, EU formally banned import of Iranian oil signaling a hardening of stance against the intransigent Iranian government.
Mr Van Rompuy got a two-and-a-half-year term, much longer than the earlier half-yearly tenure allowed to the presidents who rotated their positions after every sin months. Redistribution of power among the Commission, Parliament and Council was effected.
By 2014, the number of Commissioners will be pruned, so that not every member-state will have its own Commissioner.
In crucial areas of the budget and agriculture, Parliament will be put in equal footing with the Council under a system dubbed the “co-decision”.
The Commission and Court of Justice will have more powers in justice and home affairs.
National vetoes will be removed in some areas leaving aside subjects like tax, foreign policy, defence and social security.
Voting weightage of member nations will be recast. . This will be done in a phased manner between 2014 and 2017. Fifty five percent of member-states will be entitled to pass certain measures as they account for 65% of the EU population.