Establishment of European Union and Integration of Europe - Essay Example

Establishment of European Union and Integration of Europe 1. Introduction European Union is an inimitable geo political entity that covers a large portion of the Europe. Numerous treaties form the base of number of treaties. This has been started with 6 member states and increased to 27. Now it includes majority of states in Europe. The entity has turned up into a political and economical community with supranational and intergovernmental features.1 In 1957 a treaty between six European Countries has been formed to give rise to European Economic Community. This has been transformed into EU in 1992 and by Lisbon treaty that has been signed in December 2007 new regulations will come into force from January 1st 2009. Before that the foundation of European Coal and Steel Community in Paris 1951 resulted in formation of EEC. Both these bodies are part and parcel of present European Union formed in 1992. 2 European Community is one of the foundations of EU and has been created in 1992 by Maastricht Treaty. This will be absorbed by EU according to Lisbon Treaty that comes into force from 2009. 3 The origins of European Union lie in the end of European hegemony in the world after 2nd world war due to the emergence of new super powers US and Soviet Union. This necessitated the European integration in a new way to reorder the European political map. The need of integration of Europe came from the identification of weaknesses in European Nations. The US and Soviet Union are economically and militarily far bigger and stronger than the individual European States. This resulted in a slow unification and European states recognized the necessity to avoid the confrontation between European states like that of in 2nd World War, which gave chance to increase the hegemony of US and Soviet Union. 2. The First Step towards Integration With the help of USA that enabled the foundation of centralised Europe, the efforts resulted in economic cooperation and led to the formation of Organisation for European Economic Cooperation in 1948. This liberalised trade among European Countries and helped in their development. The next step is formation of Council of Europe in 1949 that enhanced political cooperation between member states. This accelerated economic cooperation and laid further foundations for the formation new organisations. The next important one that led to the formation of European Union in 1993 can be termed as Schuman declaration to the Treaty of Rome in 1950-57. French Foreign minister Robert Schuman initiated the process of European Community by proposing to Germany and other European countries to join to pool their coal steel resources. This has lead to massive economic integration. According to him “Europe will not be made all at once or according to a single plan. It will be built through concrete achievements that first create a de facto solidarity.” In the time being it resulted in the unification of EU. 4 3. Treaties of Rome 3.1 The extension of ESCC: The success of ESCC and the failure of European Defence Community are the first moves to organise the economic and atomic energy areas. The organisation of these two areas is for energy and economic security. The treaty of European Economic Community and Treaty of European Atomic Energy Community being signed in 1957 were enforced from 1958. 5 3.2 The development of fascism, National Socialism and autocratic communism resulted in decrease of hegemony of Europe in the world and this resulted in formation of democratic federative state organisations and prompted them to unite in a number of treaties. This unity enabled various European state organisations to discuss the ideas and experiments under the framework of an international comparative research based on a large number of historical documents. The presence of dictatorial communist block in East and cold war between US and Soviet belated the dreams of European Unity. The crumple of the communists in 1989 and ideological unification of European countries resulted in formation of international organisation for them to compete with the other parts of the world.6 4. The Treaty of Rome and the Bretton Woods Crisis All the previously mentioned treaties are formed to guarantee the economic and political stability of the region. The number of treaties and agreements has led different countries towards unification on an international forum to achieve economic liberalisation and development. The countries having market economies have adopted Bretton Woods System in order to have a guaranteed international monetary stability. This resulted in establishment of supremacy of the dollar. At this juncture the treaties and discussions in Rome did not discuss economic policies too rigorously due to US help or due to accepting the dollar supremacy as a norm. When the leaders found the weaknesses of the system in 50s and as it led to the turbulence in markets due to devaluation of French Franc and Mark, the threat of stability of other currencies was put forth as a question. This can be termed as a main cause in further unifying European States economically and politically. After the summit in 1969 in Hague, Economic and Monetary Union has been formed keeping the goal as European Integration. At this juncture the leaders and heads of governments had come out of the era of accepting the dollar supremacy as a norm. A 10 years time period has been prescribed and prime Minister of Luxembourg; has been assigned the task of drawing report for achieving the goal of economic and monetary cooperation by 1980. Pierre Werner; Prime Minister of Luxembourg submitted, The report of Werner; in 1970 in which he visualised the achievement of full economic and monetary union within 10 years from a 3 stage plan. The liberalisation of capital movements has been mentioned as the ultimate goal. The acceptance of the report has narrowed the currency fluctuation margins and in 1972 the major European countries attempted to speed up monetary integration by creating the mechanism of the managed floating of currencies. This helped in achieving the main cause; economic stability and European Unity in the near future. In fact this system lost support in less than two years due to oil crises. This compelled to form European Monetary System. 7 5. European Monetary System 5.1 Failure of Werner Mechanism: Due to failure of mechanism initiated by Pierre Werner, in 1979 European Monetary System is created based on adjustable exchange rates. Except UK, all member states participated in this mechanism. This resulted in European unit of account that is calculated on weighted average of participating currencies. This too resulted in partial success and in a 10 year period did not show much stabilisation in European currencies and this led to further unification in the proposal of single market programme. This step has been taken to decrease the internal differences and to strengthen the unification of the Europe. 5.2 After that the European community adopted single market programme in 1985. While adopting this, it has been understood that the exploitation of internal market can be done at relatively low transaction costs linked to currency conversion. After that the integration of Europe proceeded from 1988 in monetary terms by forming a monetary union under chairman ship of Jacqueues Delors; president of European Commission. The governors of the central banks are taken and economic and monetary union has been planned to in three stages. The greater coordination is stressed that increased the integration of the European states. The European Central Bank has been established and was given responsibility of Union’s monetary policy. This resulted in monetary integration of the union and increased the cooperation between states that made them to move towards a greater union that plays a bigger role in international arena on behalf of the countries belonging to the Europe. The Strasbourg European Council in 1989 planned an Inter governmental conference that identified the amendments needed to be made and Rome European Council led the treaty of a Union that can lead to political integration. As a result on December 1991, the treaty has been adopted and signed on 7th February 1992. 8 5.3 Ratification and monetary instability: At this stage due to UK’s opt out clause to exempt itself from the third stage of EMU, in the form of protocol ratification has been slowed down. As the protocol is necessary to secure the UK’s agreement on treaty, the UK Government has to decide about the third stage moves. Even in Denmark in 1992, a referendum regarding third stage has been rejected. Then the monetary instability occurred and this forced UK, Italy and other countries to withdraw currencies from exchange rate mechanism. The analysis of the situation proved that this is due to the non introduction of single currency and this made Euro a reality in the future. 9 The foundation of different acts has been formed during single European act in 1986. The single act has been summarised that the commitment of implementing big market with no frontiers should be done with more economic and social cohesion. This resulted in ratification of European Council that further increased the integration of European states. Even this level of integration is not sufficient and the strategic decisions and deliberations resulted in a thought of European Parliament. Though European Parliament has not been materialised, the progressive establishment of a common market over a period concluding by December 1992 has been stipulated. This resulted in an area of no obstacles for free movement of goods, people, services and capitals. This also resulted in speeding up of economic reforms in Europe and the determined goal compiled by 282 measures has been recognised, to be reached within a foreseen term. Even the integration in the field of social rights has been discussed. This resulted in greater economic and social cohesion. The single European act is an important step in ongoing process of integration of Europe. Jacques Delors; French socialist promoted economic and monetary union and also worked for European integration by proposing social charter. Even at this juncture UK under the leadership of Margaret Thatcher is against the stance of Delors and the European commission. UK was against the important aspect in the social charter that guarantees particular rights to every European worker. In this context UK worked with US and without harming the integration process of Europe. This resulted in the deregulation of economic areas, decreasing workers unions influence, reduction of taxes and social welfare in European states. The European integration indeed suffered a setback due to British non contribution but did not collapse. Being most developed nation in Europe, the continent’s integration is damage to British interests and this has been evident by following Thatcher’s words, “To try to suppress nation hood and concentrate power at the centre of a European conglomerate would be highly damaging.” In 1989, the developments in central and Eastern Europe due to the fall of communism in the world enticed Delor to give a call for accelerating the process of integration. The re unification of Germany in 1990, is the key point to reduce the hegemony of Britain and France and remove the obstacles regarding integration up to some extent as the country is having 30 percent of GDP of European Economic Commission. Even the financial and monetary uncertainty helped in keeping Britain and France in control against Germany. The crisis is due to stock exchange crash in 1987. The devaluation of major European Currencies prompted to take a decisive step towards formation of European Union. In 1989 due to the request of Delor, Inter Governmental Conference has been called, and this established monetary and economic union. Another IGC in 1990 resulted in the study of constitution of political union for the continent. Both France and Germany avowed that “We consider necessary to accelerate the political construction of Europe of the twelve. We think that this is the right moment to transform the whole of the relationships among the member states in European Union and to endow it of the necessary means of action.” After 3 years of discussions and due to transparency demanded by European public, finally European Council in Maastricht on December 1991, approved the treaty of European Union and the entity came into force on 7th February 1992. 10 6. European Integration Through European Union Once if the process of formation of European Union has been memorised, it can be known that all the European institutions formed after 2nd world war defined the policies and aims to achieve unity as well as integration of European countries. The purpose of integration is the economic, social and political development in international arena. European leaders recognised that the process of integration and development can only be possible with institutional frame work and worked in that way to share the sovereignty in different sectors of the economy. At the final stage the institution wants to call for political union. In real terms the concerns of the founders of union after 2nd world war is to avoid another war in Europe. This resulted in participation of UK, though reluctantly. Later the developments in Eastern and Central Europe lead the leaders of all states of Europe to strive for economic integration to exploit internal market as well as external markets. This resulted in transformation of European Economic communities as European Union by treaty of Maastricht. This resulted in including 27 countries in Europe to come under the aegis of European Union and yet 26 countries should ratify the treaty or to be accepted by the union. In the near future of 3 to 4 years 7 member states are set to join and this indicates that still some process of integration is pending in the form of non member countries of EU in Europe. The inclusion of other members needs the amendments to institutional framework of the Union and this is being done to increase the scope of Union and to include other countries. 11 7. Advantages and Disadvantages of European Union The foremost advantage of forming European Union is that it avoided another war or conflict in Europe after 2nd world war that reduced hegemony of Europe due to US and Soviet Union. The union of Germany and fall of Communism raised fears about another German upraise, but it has been cleared by the actions of Helmet Kohl and his successor. This made Germany, France and Britain (though with reluctance) in Europe to move towards economic integration. The different unions regarding monetary, social and political aspects resulted in economic integration and economic reforms that made Europe a powerful area in international economy. The economic benefits and integration of markets compelled the leaders to think about political integration. Though it has not been done completely till the present date and even the inclusion of some European states into the organisation is kept pending the idea has been discussed in several forums. The economic development through different forums that resulted in forming of EU, has distributed technology all over the member countries evenly at least up to some extent. This increased the living standards and social security of member states as the Union tried to avoid financial and monetary breakdowns with a separate currency ‘Euro’ that is competing with dollar. This gave a sense of political unity and economic stability to the member states of Union. References 1. 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