Belgium's Economic and Monetary Affairs - Research Paper Example

History and Political Science 29 December Belgiums Economic and Monetary Affairs Introduction Belgium is considered tobe one of the core founding member countries of the European union, which was formed early after the World War II, in effort to enhance peace between the neighboring countries, and unite European nations in that period that was characterized by war. The term European Union only came into effect late 1993, since the predecessor group was referred to as the European Communities, initially consisting of Belgium, Italy, France, Netherlands, Luxembourg, and the Federal Republic of Germany who were established by the 1957 Treaties of Rome (“Glossary,” europa.eu). Belgium consists of two major nationalists, the Flemish speaking north, and the French speaking Walloons in the south. The other subset arises from Brussels, the Bilingual capital, where the two major nationalists share official ranks. It is also a constitutional monarchy that experiences lots of tension and political instabilities, as the two major cultural groups in the separate regions, fail to reconcile their differences for the coalition governments to run effectively. Belgium, as a founder member of European Union has been an active contributor to pursue European integration, fully signed up to main measures of closer co-operation, comprising of Euro and Schengen convention (“Belgium and Luxembourg,” civitas.org.uk). Belgium hosts lots of General European institutions and meetings. The headquarters of EU, venue of EU council presidencies, EESC, and CoR institutions strongly linked to EU are all based in Brussels (“Belgium and the European,” belgium.be). With continued active participation in the EU, the Belgian’s lives, country policies and identity has been structured, due to common EU policies and objectives. In turn, Belgium has influenced European policymaking in economics and the finance sectors. 2. How Belgium has Influenced European Policymaking in Economics With the country having the chance to hold seatings of major European Union institutions and meetings, the politicians within its region fully participate in decision making processes. Other nations could feel neglected as Belgium, United Kingdom, and Germany influence most of the decisions, but at the same time the power to object lies with the majority, which most of the countries do not show full commitment to. Even if Belgium is part of the small member states of the EU, it is well conversant with EU’s objectives, and takes advantage of been host to major EU functions, where personnel and policy experts actively participate, enhancing their argumentative power, which influences policy making that could favors other small member states in economical terms. Of recent, Belgium has been very active in development of the National Reform Program, which is part of the EU strategy to improve the economy in the EU trading block. According to Unfried, “In Belgium, three regions and three communities were fully involved in drafting the NRP, as was the case for Lisbon. The Belgian NRP text distinguishes between national and regional headings” (26), expressing their involvement in EU functions and ownership of their regions to prevent governance deficit. As a country experiencing difficulties with unemployment issue, it acts at the forefront, being part of the REGLEG regions to support strategies and programs, so that most of the regional economic developments can be accomplished. The association of being a REGLEG member gives Belgium an advantage, as few other regions compared to other member states. “Regions with Legislative power (REGLEG) have unique characteristics such as directly elected parliament and governments that draw up their own laws,” (Unfried 35). With competencies related to the Judiciary, legislative, and executive roles of government, which gives them a responsibility for transposing the EU law unswervingly into domestic law. Hence, Belgium’s regions enjoy the limited right to influence the national positions for the negotiation in the European Union Council. Through this, it becomes easy, together with other REGLEG members to influence the regional economic policies of the EU, among the core motivators in REGLEG, Germany, Italy, Spain, and Belgium among others. Their key concern has been to ensure that the decision making process of the EU does not ignore the regions. According to Borzel, Belgium slowly adopted a more cooperative approach towards Europeanization, which led to co-determination in European affairs that allows its communities and regions to enjoy more power, than German Lander (225). 3. Cross Border Ties for Economic Growth In the past, before European communities changed into the EU, Belgium had its three regions participate in the establishment of the channel tunnel that to date has functioned effectively to enhancing cooperation, development, and economic growth. The cross border arrangement initiated by the Belgians attracted more support from other neighboring regions, and the EU structural funds, which collectively led to development of the Belgium Transmanche Euro region. Belgium has a history of state reform, which resulted into regionalism. The role of Belgian region in political arena, enhanced due to reform process, and as a result the region became one of the strongest European Union Meso-Level actors (Cannon 8). The Euro region has served to network several other nations allowing distribution of resources and market growth widely. Due to the interest of the network of countries created via the establishment of the Transmanche euro region, their voice, needs, and accomplishments gives them an advantage of influencing economic policies and projects, to fit their interest in national and local levels. 4. Belgium’s Influence on European Union Monetary Affairs Belgian policy makers are considered to be skillful negotiators, as well as policy entrepreneurs, probably because of the political struggle in their country, which stimulates creative and diplomatic proposals of policies, in any European Union debate meetings. “Belgium has been a constant and consistent "pace-setter" in monetary matters, from the preparation of the Hague Summit to the elaboration of the EMS, the monetary chapter in the Single European Act, and the realisation of EMU”( Maes and Quanglia 4). Belgium economic and employment struggle would use the opportunity of the European integration to boost the regions, and enhance trade in the open economy once the European monetary integration took control. Hence, its aggressive support right from the start, when the members were few, contributed to the success of the EMU, which many countries are currently enjoying. Unlike other countries, “Belgium participated in the European exchange rate arrangements, initially, the Snake, and later the Exchange Rate Mechanism of the EMS” (Maes and Quanglia 15). This has enables the country to rectify its economic wage price spiral over time. As for the Belgium contribution towards monetary policies, it holds its vision for the structure and functioning of the EMU, in the Belgian plan for EMU of January 1970, as a basic blueprint (Maes and Quanglia 15). The argument is that such small countries similar to it could gain power to compete with other powerful nations in economics and development fairly. In relation to this, Belgium has been active to ensure stability in exchange rates as a way of encouraging European monetary cooperation. As a country that had been experiencing governance problems, the forces arising from its major nationalist cultural groups provided powerful social dimensions, so that the European parliament could remedy the democratic deficit during the Maastricht Treaty. 5. How the European Union has Influenced Belgium in Economics and Monetary Affairs Since the invention of the common currency in Europe, Belgium adopted the use of the Euro, which became a useful tool, stimulating competition within the European zones, and international level in economic development. Belgium’s economy has undoubtedly grown following the economic and monetary policies implementation. It operates using the second largest currency after the US dollar. As Belgium uses the Euro, the currency exchange fees are eliminated, when it engages in business activities with other members of European Union. The policy has stimulated economic growth in Belgium, as it gets a better platform of participating in economic competition. The policy also strengthened employment opportunities within the EU countries, intensifying investment within Belgium, and across the continent generally. Belgium is among the countries that have benefited from the euro, being among those who had lower costs of issuing government debts, as much as it has been strained through certain policies designed for the EU in General (Dominguez 69). This principle could best apply to Belgium but similarly, the introduction of regionalism could have limited its power in internal policy making. The regionalism limits Belgium to raise its concerns to the EU institutions with uniformity, which could serve to limit their ability to monopolize policies. According to Borzel, due to the regional economic policies, Belgium in turn suffers from lack of uniformity, to speak in one voice, preventing its regions and communities from having full capacity to influence European institutions (225). With the acceptance of the Euro currency across the continent, countries authorities have to be updated with the changes in the EU to reflect internal policies. “Overall, European exchange rate arrangements and EMU have been used by Belgian Policymakers, as major arguments for the adoption, and implementation of reforms” (Maes and Quanglia 16). The economic stability has been shaped and reinforced by ECB policy, which works to ensure price stability. Following the transfer of power to regional levels after the European integration, the central state autonomy reduced, and the change of sub national policy activism, institutional development, and decision making related to regional economic development policies in Belgium, ended up being altered (Villiers and Delmartino 254). Several policy approaches within Belgium after regionalism have been influenced by the Monetary Union, and EU regional policy. The stability of the EU exchange rate policy helped shape the poor economy of Belgium that had seen its Belgium Franc devaluate, which had caused tension in the European authority. The EMU and EMS back then had formed a good foundation for the other economic and monetary polices to come. According to Maes and Verdun, the “new policy led to an improvement in the economic fundamentals, which enabled the Belgian authorities gradually to pursue a more ambitious exchange rate policy” (334). It earlier led to pegging of Belgian Franc, with that of more economically developed and powerful Germany. The National Bank of Belgium also had to restructure to effectively perform with proper transparency in national dealings with the European Central Bank. Generally, the policy laid down in Belgium’s economy due to EU economic and monetary union assists the policy makers and decision makers to take stock of their situation, as they get formulate proper solutions to the problems they face as a country. The entrepreneurship in Belgium has gained quite huge support in measures surrounding implementation, enjoying more favorable view than most of other EU members. The GDP, private sector, and price response in Belgium has been performing much better, as the policy changes to reflect the EU economic and monetary programs in the regions. Currently, as the General Euro experiences strain from the zones financial crisis, the ECB continues to liaise with the National Bank of Belgium (NBB) at the countries national level, to adjust its monetary policies for the essence of managing, and preventing the impact of the crisis deep in Belgium. Works Cited “Belgium and European Union.” belgium.be . 2010. Web. 29 December, 2012 http://diplomatie.belgium.be/en/policy/european_union/belgium_and_the_eu/ “Belgium and Luxembourg.” civitas.org.uk. 25 May, 2012, Web. 29 December, 2012. http://www.civitas.org.uk/eufacts/FSMS/MS6.htm Börzel, T. A. States and Regions in the European Union: Institutional Adaptation in Germany and Spain. Cambridge: Cambridge University Press, 2002. Cannon, M. “Cross-border Regionalism Co-operative Europeanization or Competitive Globalization?” 31 October 2005. Web. 30 December, 2012. www.uzh.ch/wsf/WSFocus_Cannon.pdf Dominguez, K. M. E. “The European Central Bank, the Euro, and Global Financial Markets.”Journal of Economic Perspectives Vol 20, No 4 (2006)67–88. Web. 30 December, 2012.http://www-personal.umich.edu/~kathrynd/JEP.ECB%26Euro.Fall06pdf.pdf “Glossary: EU Enlargement.” europa.eu. 7 September, 2012. Web. 29 December, 2012. http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Glossary:EU_enlargements Maes, I., and Quaglia, L. “The Process of European Monetary Integration: A Comparison of the Belgian and Italian Approaches.” NBB Working Paper No.40 (AUGUST 2003):1-46. Web. 30 December, 2012. http://www.nbb.be/doc/ts/publications/wp/WP40en.pdf Maes, I., and Verdun, A. “Small States and the Creation of EMU: Belgium and the Netherlands, Pace-setters and Gate-keepers.” JCMS Vol 43. No 2. (2005) 327–48. Web. 30 December, 2012. http://web.uvic.ca/~polisci/verdun/pdf/JCMS%202005%2043%202.pdf Unfried, M. “EU Economic Governance and the Role of Regions with Legislative Powers (REGLEG)” December 2011. Web. 29. December, 2012. http://www.regleg.eu/downloads/activities/EIPA.pdf Villiers, B. D., Delmartino, F., and Alen, A. (eds.). Institutional Development in Divided Societies. Pretoria: HSRC Press, 1998. Read More