The European Union (EU), which consists of 27 member nations with equal sovereignties, is a single political and economic union. The EU, which functions as a significant economic bloc and has 19 members who all use the euro as their official currency, supports democratic values throughout all of its member nations.
The EU’s Gross Domestic Product, which was created out of a post World War II aim to strengthen political and economic cooperation throughout Europe, reached an astonishing €14.45 trillion in 2021.
Since its founding, this organization has undergone significant changes, from its origins in the European Coal and Steel Community to its current structure.
In a Nutshell
- A political and economic union of 27 countries, the European Union (EU) is founded on shared democratic ideals.
- 19 EU members utilize the euro as their primary form of payment.
- Several former Soviet socialist governments have joined the EU since the Soviet Union’s fall.
- Following the Brexit referendum in 2016, the UK made the decision to leave the EU, and it did so formally in 2020.
History of the European Union (EU)
The origins of the EU go back to the European Coal and Steel Community, founded in 1950 with only six members: Belgium, France, Germany, Italy, Italy, Luxembourg and the Netherlands. In 1957 it became the European Economic Community under the Treaty of Rome and was subsequently renamed the European Community (EC).
The European Union is the world’s most successful invention for advancing peace.
Tony Blair
This served to deepen the integration of the foreign, security and home affairs policies of the member countries. That same year the EU created a common market to promote the free movement of goods, services, people and capital across its internal borders.
The EC initially focused on a common agricultural policy and the elimination of customs barriers. Denmark, Ireland and the United Kingdom joined in 1973 in the first wave of expansion. Direct elections to the European Parliament began in 1979.
Creation of a Common Market
In 1986, the Single European Act launched a six year plan to create a common European market by harmonizing national regulations.In 1993, the Maastricht Treaty came into force, replacing the EC with the European Union (EU). The euro debuted as the single common currency for EU members on January 1, 1999.
Denmark and the United Kingdom negotiated “opt out” provisions that allowed countries to maintain their own currencies if they wished.Several of the new EU members do not yet meet the criteria for adopting the euro or have opted not to do so.
The European Debt Crisis
Following the global financial crisis of 2007-2008, the EU and the European Central Bank struggled to deal with high sovereign debt and slow growth in Italy, Spain, Portugal, Ireland and Greece.Greece and Ireland received financial bailouts from the EU in 2010 conditional on the implementation of fiscal austerity measures.
Portugal followed in 2011. Greece needed a second bailout in 2012.The crisis subsided after the European Union and the European Central Bank adopted a series of measures to support the sovereign debt and banking sector of the affected countries.
Long Term Measures
These include the creation in October 2012 of the European Stability Mechanism (ESM), established to help EU members experiencing severe financial problems, including the inability to access bond markets. The ESM replaced the temporary support mechanism of the European Financial Stability Facility, in place since 2010. The European Central Bank conducted a series of “targeted longer term refinancing operations” in 2014, 2016 and 2019 to provide concessional funding to EU financial institutions.
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In 2015, the European Union relaxed the provisions of the 2011 Stability and Growth Act that required member states to have a public debt target of less than 60% of gross domestic product and annual public budget deficits of less than 3% of GDP over the medium term.In the same year, a new EU agency, the Single Resolution Board, assumed responsibility for resolving bank failures in the euro area.
EU North South Issues
Although the relief measures have addressed the crisis, they have not tackled one of its main causes: the great disparity in wealth and economic growth between the heavily industrialized north of the European Union and its poorer, less urbanized and more agriculture dependent southern periphery.
Since the industrialized North and the more rural South share a common currency, the struggling economies of the South cannot take advantage of currency depreciation to improve their international competitiveness. Without currency depreciation, Southern exporters end up finding it difficult to compete with their Northern rivals, which benefit from faster productivity growth.
How it Works in the U.S.
In the United States, federal transfers help to alleviate similar economic disparities between regions and states.States with higher average incomes tend to contribute a disproportionately large share of federal revenues, while those with lower incomes tend to account for a higher share of federal outlays.In the European Union, the COVID 19 pandemic prompted joint spending measures that some have called an “incomplete and fragile fiscal union in the making.”
The Brexit Bombshell
After rejecting previous calls for a popular referendum on the United Kingdom’s membership of the European Union, Conservative Prime Minister David Cameron promised a vote in 2013 and scheduled it for 2016. It was a time of growing popularity for the UK Independence Party, which opposed EU membership.
After trailing in recent polls, the “Leave” option won with almost 52% of the vote on June 23, 2016. Cameron resigned the following day. The United Kingdom officially left the EU on January 31, 2020.In July 2020, a report by the UK Parliament’s Intelligence and Security Committee noted widespread media reports of Russian efforts in favor of the Leave option and reproached the Government for failing to investigate Russian involvement in British politics.
Wrap Up
Since it was founded in 1950 as the European Coal and Steel Community, the EU has seen a remarkable evolution. It has expanded from a six nation alliance to a 27 nation union with significant political and economic clout. The journey has not been without its challenges, though.
The European Union escaped its debt crisis, but it is still struggling with the economic divide between its northern and southern regions. The Brexit result also signaled a fundamental shift in the EU’s dynamics.
Even as it grows its membership and takes on the challenges of the twenty first century, the EU is devoted to its objective of bringing European states closer together for the purpose of mutual economic, social, and security well being.
FAQs
For the benefit of Europe’s overall economic, social, and security well being, the EU was established. One of many initiatives to unite European states into a single body launched in the years following World War II was this one on unification.
The founding states of the EU were from Western Europe. However, in the twenty first century, the EU has increased the number of its members to include the countries of Eastern Europe that arose following the dissolution of the Soviet Union. Bulgaria, Croatia, the Czech Republic, Estonia, Latvia, Lithuania, Poland, Romania, Slovakia, Slovenia, and Estonia are currently members of this group.
To prevent a recurrence of the horrific wars that had plagued Europe for centuries, the EU was primarily founded after World War II. Additionally, it was becoming increasingly clear that in the post war world, a unified Europe would possess much more economic and political influence than individual nations.
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