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The European Union: Integration, Rules, and Challenges

Explore the complex issues surrounding the European Union's integration of diverse ethnic groups and religions, the need for uniform rules and standards, and the role of nationalism. Discover the economic advantages, benefits, and costs of EU membership, along with its political evolution and power dynamics.

ronaldkwilliams
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The European Union: Integration, Rules, and Challenges

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  1. CHAPTER 10 THE EUROPEAN UNION

  2. EU PRISMs • Is it a mistake for Europe to try to integrate so many different ethnic groups & religions? • Should all EU members play by the same rules & standards? • Should EU leaders be elected by EU citizens?

  3. Can nationalism play a constructive role in the world? • To what extent do governments owe their citizens social welfare benefits? • Should economically weak nations be excluded from free trade agreements?

  4. THE EU VISION

  5. Is the EU a model for 21st century global government?

  6. WHY THE EU? • To become a “United States of Europe” with one economic/political system on par with the United States of America. • For European nations to stop being their own worst enemies in trade & politics. • Vision + Infrastructure + Cooperation + Regionalism over nationalism + Power Centralization = THE WORLD’S LARGEST ECONOMY & MARKET (30% share of world gross product)

  7. ECONOMIC ADVANTAGES OF THE USA THAT THE EU WANTS TO EMULATE • One currency • One banking system • Uniform commercial laws • No tariffs between states • Federalism over states rights These are referred to as the 4 EU freedoms: freedom of goods, services, movement of labor & capital.

  8. EU ECONOMIC POTENCY 7% of the world’s population—28% of the global GDP (larger than the USA) 454M population & 60% more consumers than the USA The 12 member nations using the Euro exclusively account for 67% of the population & 74% of the EU GDP % One third of the world’s 100 largest corporations are European

  9. EU vs. U.S. • Population of 454M for EU, 1.5 times larger than U.S. • EU gross regional product of $12.5T vs. $11.7T for U.S.

  10. THE BENEFITS OF EUROPEAN INTEGRATION Lowered incidence of war due to increased economic interdependency The EU’s single market opens up a huge new sales opportunities Merged EU corporations are becoming the largest in the world Poorer member nations benefit from the economic pull of richer members Democracy & capitalism are promoted in weaker EU nations

  11. THE COSTS OF EUROPEAN INTEGRATION Diminished national sovereignty of member nations Loss of national identity in in the EU’s uniform laws & standards Increased competition for corporations less protected from their cross-border rivals Increased organized crime enabled by removed border controls Head-butting among members over agricultural subsidies

  12. EU MEMBERSHIP

  13. In order to admitted for membership, EU candidate nations must fulfill the “Copenhagen” criteria: A secular, democratic government Corresponding freedoms & institutions Respect for rule by law

  14. POLITICAL EVOLUTION OF THE EU The economic unification of Europe began after WWII (1951) with 6 nations (Belgium, France, Germany, Italy, Luxembourg, & the Netherlands) forming the European Coal & Steel Community (the “Common Market”) to prevent another war via trade cooperation. In 1957, the European Community (EC) was established by the Treaty of Rome, which pledged cooperation towards “four freedoms”: free movement of goods, services, capital, & people

  15. 3. Britain, Ireland, Norway, & Denmark joined the EC in 1972. Greece, Spain, & Portugal joined in the 1980s. 4. The European Union emerged in 1992 with the Maastricht Treaty. 5. The Euro was adopted the sole currency of 11 EU members in 1999. 6. New EU members in 2004 included: Estonia, Latvia, Lithuania, Poland, Czech Republic, Hungary, Slovakia, Slovenia, Malta, & Cyrus. Bulgaria & Romania joined in 2007.

  16. Conspicuous by their absence: Norway (has thus far rejected EU membership over concerns about the Euro & centralization of EU power) & Switzerland (historically a politically neutral nation). • The political problem with Cyprus: A civil war has split the island into 2 zones: Turkish/Cypriot (north) vs. Greek/Cypriot (south). Only the north Greek-Cypriot partition is currently an EU member.

  17. PER CAPITA GDP RANKINGS OF EU NATIONS Luxembourg (highest per capita GDP income), Ireland, Denmark, UK, Austria, Netherlands, Belgium, Sweden, France, Germany, Italy, Finland, Spain, Cyprus, Greece, Slovenia, Portugal, Malta, Czech Republic, Hungary, Slovakia, Estonia, Lithuania, Latvia, Poland (lowest per capita GDP income)

  18. UNEMPLOYMENT RANKINGS OF EU NATIONS Luxembourg (lowest unemployment, around 4.5%), Netherlands, Austria, Cyprus, Ireland, UK, Denmark, Sweden, Hungary, Portugal, Slovenia, Czech Republic, Belgium, Malta, Italy, Finland, Greece, France, Germany, Estonia, Latvia, Spain, Lithuania, Slovakia, Poland (highest unemployment, 18%)

  19. SEATS IN THE EU PARLIAMENT Germany: 99; UK, Italy & France: 78; Spain & Poland: 58; Netherlands: 27; Greece, Belgium, & Portugal, Czech Republic & Hungary: 24; Sweden: 19; Austria: 18; Slovakia, Denmark, & Finland: 14; Ireland & Lithuania: 13; Latvia: 9; Slovenia: 7; Estonia, Cyprus, & Luxembourg: 6; Malta: 5

  20. 4 EU MEMBERSHIP GROUPS

  21. ANGLO-SAXONS: Ireland & Britain CONTINENTALS: France, Germany, Belgium, Austria, Luxembourg MEDITERRANEANS: Greece, Spain, Italy, Portugal, Cyprus NORDICS: Demark, Sweden, Finland, Netherlands

  22. RECENT EU EXPANSION

  23. EU APPLICANTS FOR FUTURE MEMBERSHIP Turkey Albania Bosnia Macedonia Serbia Ukraine Moldova Belarus Georgia It will take the former USSR nations about 50 years to catch up economically to the rest of the EU.

  24. Austria: 8M Belgium: 10M Cyprus: 1M Denmark: 5M Estonia: 1M France: 60M Finland: 5M Germany: 83M Greece: 11M Hungary: 10M Italy: 58M Ireland: 4M Latvia: 2M Lithuania: 3M Luxembourg: 16M Poland: 38M Portugal: 11M Spain: 42M Sweden: 9M UK: 60M EU POPULATIONS

  25. Austria (1995) Belgium (1950) Bulgaria (2007) Czech Republic (2004) Greek-Cyprus (2004) Denmark (1973) Estonia (2004) Finland (1995) France (1950) Germany (1950) Great Britain (1973) Greece (1981) Hungary (2004) Ireland (1973) Italy (1950) Latvia (2004) Lithuania (2004) Luxembourg (1950) Malta (2004) Netherlands (1950) Poland (2004) Portugal (1986) Romania (2007) Slovenia (2004) Slovakia (2004) Spain (1986) Sweden (1995)

  26. The 10 newest EU member nations in the EU (mainly former Communist Eastern European nations) receive tens of billions or Euros in economic subsidies (“cohesion funds”) annually from the EU budget (finance primarily by Germany, France, Britain, the Netherlands, & Sweden). For example, new member Poland received $3.4B in 2005, twice the amount of money it contributed to the 2005 EU budget. • The overall biggest competitive advantage these newer members have is their low labor costs compared to Germany, France, etc.

  27. APPLYING FOR EU MEMBERSHIP Filling out the EU’s Stabization & Association Agreement (SAA) is the first step toward applying for formal membership. Macedonia submitted its SAA in 2001 & graduated to candidate status in 2005. Serbia has yet to file a SAA because it refuses to comply with the EU’s war-crimes investigations. Bosnia’s SAA is currently in limbo until it implements police reform.

  28. NEW MEMBER SPECIAL CHALLENGES

  29. STANDARD OF LIVING DISPARITIES BETWEEN EU MEMBERS 2003 per capita incomes: Germany: $27,600 Poland: $5,400 Romania: $4,084 Bulgaria: $3,735 Ukraine: $1,000 (potential future member)

  30. WHY TURKEY? • Controversy surrounds the membership of Muslim/Islamic Turkey in the EU because of historical & current conflict between Islam & Christendom. • The EU hopes Turkey will be a stable future political & economic buffer zone between Europe & the Middle East. The more dependent Turkey becomes on the EU for new jobs and increased trade, the greater the chances for peace between these two ancient religious spheres.

  31. Most EU nations worry about Turkey’s possible membership because of its large population (& hence voting clout), islamic leaning, restricted human rights (especially for women), & its illegal government in northern Cyprus. • Fear of Turkey’s possible membership was a major factor that caused the French to reject the EU constitution. • Europe’s biggest worry about Muslim Europeans is that their high population growth rate will swamp Europe (which is currently experiencing population declines as a region) within 3 decades.

  32. 6. Turkey’s Prime Minister, Tayyip Erdogan, pledged after elections in the summer of 2007 to maintain his country’s efforts to join the EU. He had to reassure many of Turkey's secular middle class that his Islamic-leaning administration would not seek to undo decades of state religious–neutrality. However, “Turkey’s secular elite feel more vulnerable than ever before.”

  33. RUSSIA & THE EU • Russia currently has no desire to join the EU because it continues to think of itself as an independent global power that can go it alone (like India & China). Europe worries about Russia’s lack of human rights, corrupt business system, & rogue foreign policy. • Russia has attempted to corral former satellites Moldova & Belarus into an informal economic confederation to counteract Europe’s growing unity. • The former Soviet satellite nations in Eastern Europe would oppose Russia’s European entry, fearing future re-domination. • France would like Russia to join their EU as a foreign policy counterweight to the U.S.; Germany also is pro-Russia because of its large oil reserves. • It is possible that Russia might align itself more closely with Europe economically in the future, but not politically.

  34. EU OUTLIERS • Four Western European have declined to join the EU: Iceland, Liechtenstein, Norway, Switzerland • The 3 official candidates for the next round of enlargement: Croatia, Macedonia, Turkey • Future potential candidates: Albania, Bosnia, Herzegovina, Montenegro, Serbia • The following 4 “micro-states “ lack formal membership status but are part of the Euro-zone: Andorra, Monaco, San Marino, & the Vatican

  35. THE EU’S FINANCIAL FAULT LINES • 5 EU nations have been “red-flagged” as EU “PIIGS” (Portugal, Ireland, Italy, Greece, Spain) because of their unmanageable government debt problems. • Greece and Ireland developed serious financial problems in 2009-2010, each requiring billion dollar bail outs from the Eurozone, European Central Bank, and the International Monetary Fund. • Both nations struggled with imminent national loan default: Greece due to large government deficits that diluted its currency; and Ireland due to bank defaults stemming from over-investment in subprime mortgages a la the US & other EU nations.

  36. 16 of 27 EU members that have adopted (1999) the Euro as their official national currency “PIIGS”: • Core EU govt. deficit nations Portugal, Ireland, Italy, Greece, Spain

  37. PIIGS governments are in financial jeopardy due to high social welfare (vote-buying) deficits & the high value of the Euro. Their rotten economies endanger the value of the Euro & the existence of the EU. PIIGS economies are too poor to afford the Euro on their own (like living in New York or Tokyo on a Waco income).

  38. Northern EU nations subsidize their use of the Euro & hence PIIGS social welfare benefits. • Germany & the USA have pushed the EU to create an emergency bailout fund to use should any of the PIIGS go bankrupt. • EU & USA leaders worry that this fund will not be adequate & that the world doubts the stability of the Euro & thus trade with the EU.

  39. Should PIIGS be forced to drop the Euro & reuse their weaker former currencies? • Should the EU cancel PIIGS membership to halt subsidies & their economic baggage? • Is use of the Euro as the EU’s official currency unrealistic & hence the EU itself?

  40. EU TREATIES

  41. Brussels, Belgium El capital del EU (formally established by the Maastricht November 1, 1993)

  42. Belgium is partitioned into Flanders (Dutch/Anglo-Saxon ethnicity) & Walloonia (French/Latin ethnicity). Thus Belgium is the #1 spot for test marketing of new products in Europe with its mix of largely Anglo-Saxon + Latin citizens.

  43. LE TRAITÉ 1993 SUR L'UNITÉ EUROPÉENNE (MAASTRICHT) The Maastricht treaty established 4 economic standards European nations must meet to qualify for EU membership: 1. Manageable government deficits 2. Stable currency 3. Mainstream interest rates (close to the EU regional average) 4. Inflation control

  44. THE 4 ONE’S OF EU CENTRALIZATION 1.One military 2.One foreign policy 3. One banking system 4. One currency

  45. THE 2000 TREATY OF NICE • Designed a complex weighted voting system to determine how much influence each member nation should have based primarily on population, GDP, % trade volume. 2. Initiated a dialogue regarding how much influence the incoming 10 members should have.

  46. THE EU MILITARY 1. Since WWII, Europe’s main military capability was the North American Treaty Organization (NATO), a defense partnership with the USA. 2. In 2003, the EU developed its own rapid deployment military force to augment NATO. Part of the Common Foreign and Security Policy (CFSP), this rapid deployment force is designed to put 60,000 troops (gathered from all EU member nations) into European battle within 60 days.

  47. The EU headquarters in Brussels has an annual budget of $140B, funded by: (1) A dedicated value-added sales tax (VAT) in each country + (2) A government support fee paid by each nation’s population (which provides 68% of total government funding)+ (3) Tariffs on goods entering the EU. The bigger, richer member nations—particularly Germany, France, and Britain—provide most of the funds. Inevitably, the biggest donors want the biggest say in determining how big the budget should be and what it should be used for. • The European Central Bank (ECU) in Frankfort has 18 members who set interest rates for the euro area.

  48. The EU government currently receives an annual budget equal to 1% of the EU’s GDP. This will be raised to 1.14% in 2013. The 6 biggest contributors (who provide a quarter of the entire annual government budget) are Germany, Britain, France, the Netherlands, Sweden, & Austria. Almost 40% of the total EU budget goes to agricultural subsidies (via the EU’s Common Agriculture Policy—CAP).

  49. EU GOVERNMENT

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