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European Union

European Union

The European Union (EU) is an economic and political federation consisting of twenty-seven member countries that make common policy in several areas. The EU was created in 1993 with the signing of the Treaty on European Union, commonly referred to as the Maastricht Treaty, but it was preceded by various European organizations that contributed to the development of the EU. The EU represents the latest and most successful in a series of efforts to unify Europe, including many attempts to achieve unity through force of arms, such as those seen in the campaigns of Napoleon Bonaparte and World War II.


In the wake of the Second World War, which devastated the European infrastructure and economies, efforts began to forge political union through increasing economic interdependence. In 1951 the European Coal and Steel Community (ECSC) was formed to coordinate the production and trading of coal and steel within Europe. In 1957 the member states of the ECSC ratified two treaties creating the European Atomic Energy Community (Euratom) for the collaborative development of commercial nuclear power and the European Economic Community (EEC), an international trade body whose role was to gradually eliminate national tariffs and other barriers to international trade involving member countries. Initially the EEC, or, as it was more frequently referred to at the time, the Common Market, called for a twelve- to fifteen-year period for the institution of a common external tariff among its members, but the timetable was accelerated and a common tariff was instituted in 1967.

Despite this initial success, participation in the EEC was limited to Belgium, France, Germany, Italy, Luxembourg, and the Netherlands. Immediately following the creation of the EEC a rival trade confederation known as the European Free Trade Association (EFTA) was created by Austria, Britain, Denmark, Finland, Norway, Portugal, Sweden, and Switzerland. Although its goals were less comprehensive than those of the EEC, the existence of the EFTA delayed European economic and political unity.

By 1961 the United Kingdom indicated its willingness to join the Common Market if allowed to retain certain tariff structures which favored trade between Britain and its Commonwealth. Negotiations between the EEC and the United Kingdom began, but insurmountable differences arose and Britain was denied access to the Common Market in 1963. Following this setback, however, the Common Market countries worked to strengthen the ties between themselves, culminating in the merger of the ECSC, EEC, and Euratom to form the European Community (EC) in 1967. In the interim the importance of the Commonwealth to the British economy waned considerably and by 1973 Britain, Denmark, and the Republic of Ireland had joined the EC. Greece followed suit in 1981, followed by Portugal and Spain in 1986 and Austria, Finland, and Sweden in 1995.

Even as it expanded, the EC worked to strengthen the economic integration of its membership, establishing a European Monetary System (EMS) featuring the European Currency Unit (ECU, later known as the Euro) in 1979. The EC then passed the Single European Act, which strengthened the EC's ability to regulate the economic, social, and foreign policies of its members, in 1987. The EC took its largest step to date toward true economic integration among its members with the 1992 ratification of the Maastricht Treaty, after which the EC changed its name to the European Union (EU). The Maastricht Treaty also created a central banking system for EU members, established the mechanisms and timetable for the adoption of the Euro as the common currency among members, and further strengthened the EU's ability to influence the public and foreign policies of its members.


The EU originally had twelve member nations: Belgium, Denmark, France, Germany, Greece, Italy, Luxembourg, the Netherlands, Portugal, the Republic of Ireland, Spain, and the United Kingdom. In 1993, the European Council, meeting in Copenhagen, Denmark, determined the criteria for joining the EU. These requirements, known as the Copenhagen criteria, included: (1) a stable democracy which respects human rights and the rule of law; (2) a functioning market economy capable of competition within the EU; and (3) the acceptance of the obligations of membership, including EU law. The European Council has the responsibility for evaluating a country's fulfillment of these criteria.

The EU has enlarged three times since its creation. In 1995, three new members were added: Austria, Finland, and Sweden. In 2004, ten new members were added, mostly from the former Soviet bloc: Czech Republic, Cyprus, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia. In 2007, Romania and Bulgaria, who were not ready to join in 2004, were admitted. As of 2008, there were three official candidates for membershipCroatia, Macedonia, and Turkeyand five nations officially recognized as potential candidatesAlbania, Bosnia and Herzegovina, Kosovo, Montenegro, and Serbia.


One of the goals of the EU is economic integration and a common European currency. EU leaders expect great benefits from the adoption of a single currency. International trade within the single currency area will be greatly facilitated by the establishment of what amounts to a single market, complete with uniform pricing and regulation, in place of separate national markets. The creation of a single market is also expected to spur increased competition and the development of more niche products, and ease the acquisition of corporate financing, particularly in what would formerly have been international trade among members of the single currency area. Finally, in the long term, the establishment of the single currency area should simplify European corporate structures, since in time nearly all regulatory statutes within the single currency area should become uniform.

The Maastricht Treaty established conditions that EU member nations would be expected to meet before they would be allowed to participate in the introduction of the single European currency. These conditions were designed to create a convergence among the various national economies of Europe to ease the transition to a single currency and ensure that no single country would benefit or be harmed unduly by its introduction. Such a convergence would also create greater uniformity among the various national economies of the EU, making administration of economic activity within the single-currency area more feasible. The conditions set for participation in the introduction of the Euro and inclusion in the single-currency area included the following:

  • Maintaining international currency exchange rates within a specified range (called the Exchange Rate Mechanism or ERM) for at least two years prior to the introduction of the Euro.
  • Maintaining long-term interest rates within 2 percent of the national inflation rate and within 1.5 percent of the three best-performing EU member states in terms of price stability.
  • Maintaining public debt at no more than 3 percent of the gross domestic product.
  • Maintaining total government debt at no more than 60 percent of gross domestic product.

Despite difficulties faced by some members in meeting these conditions, implementation of the Euro went ahead on schedule through the three phases set forth at Maastricht. Phase one began in 1998 with an EU summit in Brussels, Belgium, that determined which of the fifteen member states had achieved sufficient convergence to participate in the introduction of the Euro. The selected participants were Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain (exceptions were Demark, Greece, Sweden and the UK). Phase two, which commenced on 1 January 1999, introduced the Euro as legal tender within the eleven selected countries, referred to as the single-currency area, although the new currency would only exist as a currency of account, that is, it would exist only on paper or for electronic transactions, as no Euro notes or coins were yet in circulation. Instead, the existing currencies of the participating countries functioned as fixed denominations of the Euro. Phase two also included the subordination of the eleven national banks in the single-currency area to the European Central Bank.

Phase three, which began on 1 January 2002, set the Euro banknotes and coins into circulation and by July 2002, it became the legal tender of the countries, replacing their national currencies. At the time of introduction there were twelve countries in the area using the Euro, known as the Eurozone: Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, and Greece. Denmark, Sweden and the UK chose not to use the Euro. By the beginning of 2008, the Eurozone had expanded to include fifteen member nations, with Cyprus, Malta, and Slovenia having joined the original members. Nine of the new EU member states were still operating with a currency other than the Euro. The Accession Treaties signed by all of

these countries requires them to join the Euro; some have already joined the ERM and others have set themselves the goal of joining the Euro as follows:

  • Slovakia: January 1, 2009
  • Lithuania: January 1, 2010
  • Estonia: January 1, 2011
  • Bulgaria, Czech Republic, Hungary, Latvia, Poland, and Romania: January 1, 2012 or later.

The initial introduction of the Euro as a currency of account began with a resounding success, as the new currency rose immediately to an exchange rate of 1.17 U.S. dollars to the Euro. Uncertainties about the further progress of European Union raised by conflicts in the Balkans in 1999 soon dampened investor interest in the Euro, however, and its value fell to 1.04 U.S. dollars per Euro by the summer of that year. The Euro continued to slip, and by late 2000, it had fallen to a record low of $0.83. Since 2003, however, the Euro has steadily risen against the dollar, gaining strength in 2007 as the U.S. economy began slipping towards recession; by mid 2008, the Euro was holding steady in the mid $1.50s.


The EU maintains four administrative bodies dealing with specific areas of economic and political activity.

Council of Ministers. The Council of Ministers comprises representatives, usually the foreign ministers, of member states. The presidency of the council rotates between the members on a semiannual basis. When issues of particular concern arise, members may send their heads of state to sit on the council. At such times the council is known as the European Council, and has final authority on all issues not specifically covered in the various treaties creating the EU and its predecessor organizations. The Council of Ministers also maintains the Committee of Permanent Representatives (COREPER), with permanent headquarters in Brussels, Belgium, to sit during the intervals between the council's meetings; and operates an extensive secretariat monitoring economic and political activities within the EU. The Council of Ministers and European Council decide matters involving relations between member states in areas including administration, agriculture and fisheries, internal market and industrial policy, research, energy, transportation, environmental protection, and economic and social affairs. Members of the Council of Ministers or European Council are expected to represent the particular interests of their home country before the EU as a whole.

European Commission. The European Commission serves as the executive organization of the EU. Currently each country has one commissioner except for the five largest countries that have two. The Commission enlarges as more countries join. The European Commission seeks to serve the interests of Europe as a whole in matters including external relations, economic affairs, finance, industrial affairs, and agricultural policies. The European Commission maintains twenty-three directorates general to oversee specific areas of administration and commerce within the EU. It also retains a large staff to translate all EU documents into each of the EU's twenty official languages. Representatives sitting on the European Commission are expected to remain impartial and view the interests of the EU as a whole rather than the particular interests of their home countries.

European Parliament. The European Parliament comprises representatives of the EU member nations who are selected by direct election in their home countries. Although it serves as a forum for the discussion of issues of interest to the individual member states and the EU as a whole, the European Parliament has no power to create or implement legislation. It does, however, have some control over the EU budget, and can pose questions for the consideration of either the Council of Ministers or the European Commission.

Court of Justice. The Court of Justice comprises thirteen judges and six advocates general appointed by EU member governments. Its function is to interpret EU laws and regulations, and its decisions are binding on the EU, its member governments, and firms and individuals in EU member states.


From its creation the EU has maintained the Economic and Social Committee (ESC), an appointed advisory body representing the interests of employers, labor, and consumers before the EU as a whole. Although many of the ESC's responsibilities are now duplicated by the European Parliament, the committee still serves as an advocacy forum for labor unions, industrial and commercial agricultural organizations, and other interest groups.

One ongoing area of contention among the members of the EU is agricultural policy. Each European nation has in place a series of incentives and subsidies designed to benefit its own farmers and ensure a domestically grown food supply. Often these policies are decidedly not beneficial to the EU as a whole, and lead to conflict between rival national organizations representing agricultural and fisheries industries. The degree of contention on agricultural and fisheries issues within the EU can be seen in the

fact that nearly 70 percent of EU expenditures are made to address agricultural issues, even though agriculture employs less than 8 percent of the EU workforce. In an attempt to reduce conflict between national agricultural industries while still supporting European farmers, the EU adopted a Common Agricultural Policy (CAP) as part of the Treaty on European Union.

The CAP seeks to increase agricultural productivity, ensure livable wages for agricultural workers, stabilize agricultural markets, and assure availability of affordable produce throughout the EU. Although the CAP has reduced conflicts within the EU, it has also led to the overproduction of many commodities, including butter, wine, and sugar, and has led to disagreements involving the EU and agricultural exporting nations including the United States and Australia.

The European Social Fund (ESF) and the European Regional Development Fund (ERDF) were established to facilitate the harmonization of social policies within EU member states. The ESF focuses on training and retraining workers to ensure their employability in a changing economic environment, while the ERDF concentrates on building economic infrastructure in the less-developed countries of the EU.

The European Investment Bank (EIB) receives capital contributions from the EU member states, and borrows from international capital markets to fund approved projects. EIB funding may be granted only to those projects of common interest to EU members that are designed to improve the overall international competitiveness of EU industries. EIB loans are also sometimes given to infrastructure development programs operating in less-developed areas of the EU.


Although the EU has accomplished a great deal in its first two decades, many hurdles must still be crossed before true European unity can be achieved. Many EU nations experienced great difficulty in meeting the provisions required by the EU for joining the EMS, although eleven countries met them by the 1 January 1999 deadline. Meeting these provisions forced several EU members, including Italy and Spain, to adopt politically unpopular domestic economic policies. Others, such as the United Kingdom, chose not to take politically unpopular action and thus failed to qualify for participation. Even though the Euro was introduced according to schedule, economic unity has far outstripped political cooperation among EU members to date and real and potential political disagreements within the EU remain a threat to its further development. Although the Eurozone represents a formidable force in international trade, the EU faces several grave challenges as it strives to form an ever closer linkage of its national constituents.

Despite the fact that the Treaty on European Union created a central bank to supercede the national banks of its members, responsibility for the creation of fiscal policies remains in the hands of each national government. As such, there is great potential for the central authority and national economic policy making agencies to adopt conflicting programs. Furthermore, national political institutions within the EU are likely to be more responsive to the desires of their national constituencies than to the well being of the Eurozone as a whole, especially in times of economic instability. It is difficult to see how voters in the nations of the EU will be able to put the good of Europe ahead of their own particular interests.

This difficulty is particularly troublesome as political integration has progressed much more slowly than economic integration, and further political integration has recently suffered several potentially insurmountable setbacks. In 2004, the Treaty establishing a European Constitution (TCE) was signed by the representatives of all twenty-seven member nations, but the treaty failed to be ratified by all of the members. Most members did in fact ratify the TCE by parliamentary measure or popular referendum, but France and the Netherlands both rejected it in referendums. These failures led other members to postpone or call off their ratification procedures. As a result, the European Council called for a period of reflection, which subsequently led to negotiations over a new constitutional treaty, known as the Lisbon Treaty. The Treaty of Lisbon, signed on 13 December 2007, was in the process of being ratified by member nations when the Irish electorate rejected the treaty in June 2008, creating uncertainty as to the future ratification of this version of a European constitution.

Another problem also arises out of the composition of the Eurozone. According to the optimal currency theory first posed by American Robert Mundell in 1961, in order for a single currency to succeed in a multinational area several conditions must be met. There should be no barriers to the movement of labor forces across national, cultural, or linguistic borders within the single-currency area; there should be wage stability throughout the single currency area; and an area-wide system should exist to stabilize imbalanced transfers of labor, goods, or capital within the single-currency area. These conditions do not exist in present-day Europe, where labor mobility is small, largely because of language barriers, and wages vary widely among EU member countries, particularly between those in the West and in the East. Furthermore, the present administrative structure of the EU is not powerful enough to redress imbalanced transfers, which are bound to occur periodically. Such imbalances would engage the sort of

political response discussed previously, to the detriment of the EU as a whole.

Optimal currency theory also holds that for a single currency area to be viable it must not be prone to asymmetric shocks, that is, economic events that lead to imbalanced transfers. Ideally, a single-currency area should comprise similar economies that are likely to be on similar cycles, thus minimizing imbalances. Similarly, the need for a freely transferable labor force within the single-currency area is also necessary to minimize imbalances, since each national member of the area must be able to respond flexibly to changes in wage and price structures.


The EU has made remarkable progress during its first two decades. Although there are significant obstacles in the way of further strengthening of the EU, especially in political matters, the continued enhancement of economic ties binding members is likely to increase the political unity of EU members over time. That this is feasible is evidenced by the efforts of EU nations to conform to the stipulations of the Maastricht Agreement. Maintaining stable currency exchange rates, reducing public and overall government debt, and controlling long-term interest rates are all areas in which national governments and fiscal agencies had exercised complete autonomy in the past. Before the implementation of the Euro's second phase, many doubted that the EU member states could put aside their own internal interests to meet the Maastricht provisions; however, eleven of the fifteen managed to do so, and currently over half of the EU members belong to the Eurozone. Significantly, many had to experience economic slowdowns and increased unemployment in order to do so. Such resolve bodes well for continued strengthening of European unification in both political and economic areas. In fact, the history of the EU to date has been one of overcoming obstacles similar to those faced during the first two phases of the introduction of the Euro, and a unified Europe is and will remain a fact of international economic life for the foreseeable future.

SEE ALSO Free Trade Agreements and Trading Blocs; International Business; International Management


Alesian, A., and R. Rerotti. The European Union: A Politically Incorrect View. Journal of Economic Perspectives 18, no. 4 (2004): 2748.

Blair, Alasdair. The European Union Since 1945. New York: Longman, 2005.

Europe Ten Years from Now. International Economy 18, no. 3 (2004): 3439.

European Union in the U.S. Available from:

McCormick, J. Understanding the European Union: A Concise Introduction. 3rd ed. New York: Palgrave, 2005.

Phinnemore, D., and L. McGowan. A Dictionary of the European Union. 3rd ed. London and Chicago: Europa, 2006.

Pinder, John and Simon Usherwood. The European Union: A Very Short Introduction. 2nd ed. New York: Oxford University Press, 2008.

Reid, T.R. The United States of Europe: The New Superpower and the End of American Supremacy. New York: Penguin Press, 2004.

Vanthoor, W.F.V. A Chronological History of the European Union, 19462001. 2nd ed. Northampton, MA: Edward Elgar, 2002.

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European Union


EUROPEAN UNION (European Community). On 1 November 1993 the European Community (EC), a political and economic confederation of European countries, officially became the European Union (EU). The EU consists of three institutions: the European Coal and Steel Community (ECSC), the European Atomic Energy Community (EURATOM), and the European Economic Community (EEC). Its fifteen members are France, Germany, Italy, Belgium, the Netherlands, and Luxembourg (the original "Six" from the 1950s); Great Britain, Denmark, and Ireland (joined 1973); Greece (1981); Portugal and Spain (1986); and Austria, Finland, and Sweden (1995).

The EU's total area is about one-third the size of the United States, but its population in 2000 was 377.6 million, compared to 284.2 million for the United States. Their economies are of roughly comparable size. In 2000 the EU accounted for 18.2 percent of world imports and 17.2 percent of world exports, while its GDP totaled $7.8 trillion. The American figures were 23.9 percent and 15.7 percent with a GDP of $9.9 trillion. Both are also important economic partners. In 2000 the EU's trade with the United States was valued at $394.8 billion and made up 19.2 percent of its total imports and 24.7 percent of its total exports, while American trade with the EU was worth $385.2 billion and accounted for 18.1 and 21.1 percent, respectively. During the same year the EU also made $802.7 billion in direct investments in the United States and received $573.4 billion in return.


The EU has four major governing organs. The European Commission, located in Brussels, proposes policies and legislation, is responsible for administration, and enforces both decisions made by European institutions and the provisions of European treaties. Including the commission president, twenty commissioners with individual portfolios serve five-year terms. They are appointed by the national governments but act independently of them. The Council of the European Union, consisting of ministers from each member state, coordinates intergovernmental policies and enacts binding legislation. Depending on the agenda, different types of national minister will attend each council meeting. Most decisions within it take place as a result of a majority vote (normally weighted to reflect the size and importance of the member state), although some issues, such as foreign policy, taxation, and the environment, still require unanimity. The council has a rotating presidency with a six-month term that ends with a meeting of all fifteen heads of state or government. It holds most of its meetings in the country that has the EU presidency. The European Parliament, which meets in Strasbourg, currently consists of 626 members elected for five-year terms. Members are seated by party group (such as Socialist, Christian Democrat, and Green) and since 1979 have been chosen in direct elections. The Parliament's key powers include approving or amending the EU budget submitted by the commission and publicly debating the work of the other governing organs. It may also censure the commission. The Court of Justice, which is located in Luxembourg and has fifteen judges, determines whether treaties in the European Union are being implemented and are in accordance with Union law. Both its judgments and EU law as a whole are binding on all member states.

European and American Perspectives on Integration

Although proposals for European integration go back as far as the Middle Ages, the origins of the present EU date from World War II. Many Europeans believed that for their continent to experience a political and economic revival, the national rivalries that characterized the past had to give way to greater international cooperation. However, ever since the 1940s there has been disagreement on what methods to utilize. "Federalists" like the Italian politician Altiero Spinelli advocated creating a unified European state as soon as possible. The Frenchman Jean Monnet and other "(neo)functionalists" believed that the consolidation of important industrial sectors across national lines would promote integration in all fields. Still another perspective, traditionally strong in Great Britain and Scandinavia but universally evident, advocated greater intergovernmental cooperation but remained wary about supranational organizations that would limit sovereignty. These divergent opinions have ensured that a mélange of approaches has characterized the road to the EU.

Since 1945 American policymakers have consistently supported European integration both publicly and privately, even if their active interest in promoting it waned dramatically starting in the 1960s. According to Geir Lundestad, several considerations informed their thinking. These include the belief that the new European institutions represented a healthy attempt to emulate the "American model" based around federalism, democracy, and free markets and also the idea that integration would promote a modernized Europe that was more efficient economically and less troubled by nationalist rivalries. More concretely, integration would reduce the burden of American military and economic commitments to Europe. Above all, a unified (Western) Europe could play an important role in containing both the Soviet Union and Germany. The United States also has promoted European integration for so long now that to some extent this policy has become traditional, irrespective of other considerations. Furthermore, the desire of Europeans themselves to work toward unity has been a tremendous influence on American policy as well.

American Support for European Integration during the 1940s and 1950s

During World War II, the Roosevelt administration feared that any moves toward European integration would contribute to a division of the world into political and economic blocs. However, the onset of the Cold War dramatically changed the official American attitude. Fear that communists might come to power in Western European countries due to postwar economic hardship led the Truman administration to propose the Marshall Plan in 1947. This initiative led to some modest steps toward European integration, especially the establishment of the Organization for European Economic Cooperation (OEEC) to administer Marshall aid and work for the reduction of tariffs. The Marshall Plan also helped to determine the geographic limits of integration until the 1990s since the negative Soviet reaction cemented the division of the continent. To the Truman administration's frustration, little further progress came until 1950, despite the intensification of the Cold War. The major reason was that Great Britain, at the time the most important state in Western Europe politically and economically, opposed all plans for supranational organizations.

The creation of the Federal Republic of Germany in 1949 made integration seem more urgent than ever. Under pressure from Washington but also motivated by its own interests, the French government and its unofficial advisor Monnet now assumed a leading role. The "Schuman Plan" for a European Coal and Steel Community (ECSC), developed by Monnet and announced by Foreign Minister Robert Schuman on 9 May 1950, ensured that German heavy industry would be used only for peaceful purposes, significantly upgraded the international status of the Federal Republic, and marked the start of postwar Franco-German cooperation. The Truman administration greeted it with enthusiasm. The ECSC, which came into existence in 1952, also set the pattern for further initiatives. It brought together for the first time the "Six" and created the four basic governing organs that characterized later integration. After initial hesitations, the Truman administration also gave its support to Monnet's plan for a "European Defense Community" (EDC) that would prevent the creation of an independent West German army. Although in December 1953 Secretary of State John Foster Dulles even threatened an "agonizing reappraisal" of the American security commitment to Western Europe if the EDC Treaty were not ratified, the French National Assembly rejected it on 30 August 1954, largely because of misgivings about surrendering the national army. The Eisenhower administration later gave its support to the creation of the European Economic Community (EEC) and the European Atomic Energy Community (EURATOM) in 1958. These two institutions and the ECSC, at first collectively called the "European Economic Community," were officially fused into the EC in 1967. They went a long way toward fulfilling Washington's desire for integrated Western European structures that would help contain the Soviet Union and safely incorporate the Federal Republic.

Troubled Relations between the United States and the European Economic Community

Nonetheless, doubts soon arose about whether European integration was compatible with American leadership in Western Europe. Starting in 1958 French President Charles de Gaulle challenged United States political predominance by demanding a coequal role for France with it and Britain within the North Atlantic Treaty Organization (NATO). He also pursued an increasingly independent policy on issues like Berlin, the Vietnam War, relations with communist states, nuclear weapons, and British membership in the European Economic Community (which to the chagrin of American policymakers he vetoed in 1963). American leaders tried to accommodate de Gaulle while rejecting his aspirations to leadership, but already during the Kennedy administration they began to stress the Atlantic character of European-American relations. Moreover, starting in the late 1950s negative American payment balances (at first due to high levels of American foreign investment and military aid but by the late 1960s also involving trade deficits) led to increasing worries about economic competition from the "Six." Washington responded by intensifying the process of reducing tariffs between industrialized states within the General Agreement on Tariffs and Trade and in 1961 helped create an Organization for Economic Cooperation and Development with American and Canadian membership to replace the OEEC. Since the mid-1960s, the United States and the EU have been involved periodically in trade disputes involving a variety of agricultural and industrial products.

Even though National Security Advisor Henry Kissinger proclaimed 1973 the "Year of Europe," the Nixon administration reevaluated the traditional policy of American support for European integration in light of these political and economic challenges. Henceforth the United States would no longer actively promote new initiatives for supranational integration, although it would not oppose further efforts by the Europeans themselves. Although Jimmy Carter criticized the Nixon and Ford administrations' neglect of the European allies and in January 1978 became the first president to visit the European Commission in Brussels, in practice the United States' main priority had become protecting its own national interests. This became quite clear during the 1980s, when the process of European integration revived after the relative stagnation of the previous decade. The negotiations on the "Single European Act" in 1985–1986, which aimed at the creation of a fully integrated European market by 1992, led to worried speculation in the United States about a "Fortress Europe." In addition, the Reagan administration became involved in a series of disputes over commercial policy with the EC, with which the United States had run a trade deficit starting in 1984.

Relations since 1989

By 1989 an improvement in relations was in sight, however. The end of the Cold War and the reunification of Germany made expanded European structures seem the best way of providing stability for the entire continent. In addition, by 1990 the United States had a positive trade balance with the EC again but was becoming worried about economic relations with both Japan and China. President George H. W. Bush gave increased attention to the American relationship with the EC. The 1990 Transatlantic Declaration set up a mechanism for regular consultations and reaffirmed the desire of both sides to strengthen their partnership. The Bush administration reached compromises on many of the economic disputes that had arisen as a result of the Single European Act. Moreover, it strongly supported the 1992 Maastricht Treaty that created the EU in 1993 with both an Economic and Monetary Union (EMU) and a Common Foreign and Security Policy (CFSP) among its future goals. In 1995 the United States and the EU agreed on a "New Transatlantic Agenda" that committed them to active cooperation in roughly a hundred policy areas. The EMU was realized with the introduction of a common currency, the euro, on 1 January 1999, at first on an accounting basis only. Although Denmark, Great Britain, and Sweden chose not to participate for the time being, the other twelve EU states replaced their national currencies with euro bank-notes and coins on 1 January 2002. The euro has the potential to rival the dollar as an international reserve currency. The United States remains sensitive to any developments toward a CFSP that might call NATO's preeminence into question, but the EU for some time will not have any capacity to conduct significant military operations outside of that alliance and also has signaled its continued desire to work within it. Moreover, the EU's attention during the first part of the twenty-first century will be devoted to its expansion into eastern Europe. In 1998 it began negotiations with six new candidates for admission (the Czech Republic, Cyprus, Estonia, Hungary, Poland, and Slovenia), with enlargement from this group not expected before the end of 2002. On 15 January 2000 it also initiated talks with six further applicants (Bulgaria, Latvia, Lithuania, Malta, Romania, and Slovakia). Ten of the twelve candidates should join around mid-decade, with Bulgarian and Romanian accession by 2009.


Lundestad, Geir. "Empire" by Integration: The United States and European Integration, 1945–1997. Oxford: Oxford University Press, 1998. The standard work; also provocative with its thesis of an American "empire."

Nugent, Neill. The Government and Politics of the European Union. 4th ed. Durham, N.C.: Duke University Press, 1999. The standard work on how the EU functions and its policies.

Pond, Elizabeth. The Rebirth of Europe. Rev. ed. Washington, D.C.: Brookings Institution Press, 1999. An excellent overview of European integration and its prospects and problems since 1989.

Stirk, Peter M. R. A History of European Integration since 1914. London: Continuum, 1996.

Urwin, Derek W. The Community of Europe: A History of European Integration since 1945. 2d ed. London: Longman, 1995. Both Stirk and Urwin are good general histories, with the former paying more attention to both the Atlantic framework and the Cold War as influences on the integration process.


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European Union

European Union






The European Union (EU) is a cooperative entity that has qualities of both a federal nation-state and an international organization. It is neither, but falls somewhere in between. The EU is comprised of twenty-five member-states with around 460 million citizens. All member-states are democratic countries, which have agreed to cede some of their sovereignty to the institutions of the EU by participating in the common market, making their domestic laws conform to EU laws, adopting the Euro as a common currency, and allowing free movement of goods, capital, and persons, among other things. Social scientists attempt to explain why the EU came about, the role of its institutions in promoting cooperation, and its future trajectory. Will it continue to become more federal or will it reach policy gridlock? Will it continue to enlarge or will it reach its absorption capacity?


The earliest precursor to the EU was the European Coal and Steel Community (ECSC), formed in the wake of World War II as European countries sought a way to prevent such destruction from happening again. They believed if they became economically interdependent, they would be less likely to repeat the mistakes of the past. In addition, ECSC would make economic recovery and industrial modernization possible. For West Germany in particular, Chancellor Konrad Adenauer saw it as an opportunity for rapprochement with France and new ties with the West.

It was the 1950 Schuman Declaration that unveiled Jean Monnets idea of the ECSC. Six member-states (Italy, France, Belgium, Luxembourg, The Netherlands, and West Germany) signed it into being with the 1951 Treaty of Paris. The ECSC was so successful in the early 1950s that it led to the 1957 Treaties of Rome, establishing the European Economic Community (EEC), which was a customs union, and the European Atomic Energy Community (Euratom). The 1967 Merger Treaty merged the executive bodies of the three treaties, thereby creating the institutions that continue to exist in the twenty-first century. In addition, ECSC, EEC (later EC), and Euratom became known together as the European Communities. The 1987 Single European Act replaced the Treaty of Paris and the Treaties of Rome as the ECs policy domain grew into new areas not encompassed by the original treaties. It remained the European Communities until member-states signed and ratified the 1992 Maastricht Treaty, officially creating the European Union, which established the economic, monetary, and political union.

The basic evolution of these treaties embodies not only structural and institutional changes, but an increasing recognition of Europeans common values, goals, and even identity, as well as a willingness to vest more authority in EU institutions. Besides economic integrationthe largest area of common jurisdictionthere are common policies on agriculture, culture, energy, the environment, transportation, crime, and defense, among other things. Moreover, the EU has become increasingly political over time. In addition to increasing areas of jurisdiction, the EU has experienced successive enlargements, and the treaties have also attempted to accommodate its growing size. Membership in the EU has been so attractive that many European countries have voluntarily undergone extensive measures to democratize and develop economically so that they meet the criteria to begin accession negotiations.


At the core of the EU are its institutions, which are located in Brussels, Strasbourg, and Luxembourg. The European Parliament is the only representative institution as its members are directly elected, and belong to European political parties of which there are seven. It shares some decision-making authority with the Council of the European Union, which is an intergovernmental institution comprised of ministers and ambassadors from the member-states. The Council presidency, which sets the agenda for the EU, rotates every six months. Through the co-decision procedure, the Parliament and Council together take policy decisions, pass laws, and approve the EUs 100 billion annual budget. However, it is only the European Commission that can initiate new laws. The Commission, unlike the Council, represents EU interests as a whole, rather than the interests of individual member-states. Commissioners are required to swear an oath of loyalty to this effect. There is one Commissioner from every member-state, chosen by their national governments, and only the European Parliament has the ability to approve the College of Commissioners or dissolve it. Still, the parliament is rather weak compared to the Council and Commission, and this is problematic given that it is the only directly elected body.

Besides these three major EU institutions, the European Court of Justice (ECJ) has played a significant role in the operations of the EU, and in pushing integration forward. The ECJ is comprised of one judge from each member-state, and its primary role is to ensure that national law is compatible with EU law. In their 1993 article Europe before the Court: A Political Theory of Legal Integration Anne-Marie Burley and Walter Mattli argue that the judicial legitimacy of the ECJ has enabled it to take on more jurisdiction than had been intended, and to create precedents that assert the primacy of EU law over domestic law. Consequently, many individuals and local judges bring cases directly to the ECJ instead of to their national courts. Other important institutions are the European Central Bank, Court of Auditors, the European Economic and Social Committee, and the Committee of the Regions.


Besides the business of initiating and approving new laws, the EU has undergone major changes to its treaties. Member-states have willingly ceded increasing levels of sovereignty in numerous policy areas, but their control of the treaties is fundamentally intergovernmental. In order to change the jurisdiction of the EU fundamentally, statesmen must negotiate a new treaty at an Intergovernmental Conference (IGC). However, as argued in Maia K. Davis Crosss The European Diplomatic Corps (2007), the process of negotiation is much more complex than just the IGC summit, which is typically a highly publicized two-day event. Personal representatives of the statesmen, who are usually ambassadors based in Brussels, take years to prepare a draft treaty in advance of the IGC. Ultimately, agreement must be unanimous, and member-states can choose their own method of ratification, either through a parliamentary vote or popular referendum.

The last extensive revision to the EU was the 1992 Maastricht Treaty, which created the so-called pillar system. All of the policy areas that used to fall under the EC became the first pillar, which is governed by the community method. That is, in these policy areas the EU has full control at the supranational level, above the level of national governments. The second two pillars are intergovernmental, with the Common Foreign and Security Policy as the second pillar, and Justice and Home Affairs as the third.

A major part of the first pillar is the Single Market, which removed trade barriers among member-states, as well as establishing free movement of goods and a common tariff for imports from outside of the EU. The Single Market was part of the Treaty of Rome, but it was not fully completed until 1993. The Maastricht Treaty introduced the single currency, the Euro, which went into circulation on January 1, 2002. The benefits of a single currency are that it makes economic transactions easier, encourages investment, and completely eliminates exchange rate fluctuations. All member-states, including the ten new ones, have adopted the Euro, with the exception of the United Kingdom, Denmark, and Sweden. The European Central Bank, established in 1993, is completely independent of member-states and interests groups, and is charged with managing the Euro and Single Market, setting the EUs external exchange rate policy, and ensuring price stability and low inflation within the EU.

In addition to free movement of goods, the Maastricht Treaty also established free movement of persons, capital, and services, although certain restrictions still apply. Free labor mobility is of particular importance as it clearly distinguishes the EU from other free trade areas like the North American Free Trade Agreement (NAFTA). Europeans actually have citizenship in the EU, and can move, study, travel, and work within an internally borderless EU.

The Treaty Establishing a Constitution for Europenegotiated between June and October 2004 and signed by all EU governments on October 29was an attempt to revise the EU Treaty. But the ongoing national ratification process resulted in failure when the French and Dutch referenda in May and June 2005 rejected it. Nevertheless, the ratification process continued in 2006 even as efforts were underway to devise a new version.


There are numerous scholarly debates over why the EU has continued to deepen its policies, and what its future holds. Functionalists have argued that the process of EU integration has proceeded based on functional need, and on an ad-hoc basis. Neo-functionalists have argued that once the six member-states founded the ECSC a spillover effect ensued, in which one policy area necessitated integration in other, related policy areas. For example, economic cooperation spilled over into political cooperation.

Since the 1990s the major debate has typically been between rationalists and constructivists. Rationalists argue that integration proceeded based on cost-benefit calculations. At each juncture, leaders only agreed to more integration if it directly benefited their own states economic and power interests. Rationalists deny that any significant political integration can ever take place. On the other hand, the constructivist approach argues that the EU is a product of shared norms, which grow over time through deliberation, persuasion, and socialization. There is a certain idea of Europe that many Europeans believe is a worthwhile goal, and they comply with EU rules because they know it is in the long-term benefit of everyone. Depending on the approach, predictions about the future of the EU vary.

The question of how far enlargement can continue is also an area of attention. With the addition of ten new member-states in 2004, many scholars and politicians argue that the EU has reached its absorption capacity in the near term, and will have to wait many years before it is ready to undergo further enlargement. If the EU enlarges too quickly, it may be impossible for Europeans to continue to deepen integration, or deal with problems of democratic accountability at the supranational level.

Finally, scholars and policy practitioners debate the future role of the EU as an international actor. The strength and cohesion of the EU internally has a direct impact on its relations with the United States, its growing global security role, and its ability to be economically competitive. The EU has played a strong role in facilitating the ongoing Middle East peace process. Its policy is to favor the creation of two states to resolve the Israel-Palestinian conflict, and to find a solution to the Palestinian refugee crisis. The EU participates in numerous diplomatic and humanitarian assistance efforts to ensure the success of the roadmap to peace. The EU is the largest trading, scientific, and research partner with Israel, and provides the greatest amount of aid to the Palestinians and United Nations Relief and Works Agency. The EU responded to the 2006 crisis in Lebanon with numerous high-level diplomatic meetings with both Lebanese and Israel governments, the international community, and the United States. It also devised evacuation and humanitarian corridors to assist victims in escaping the violence, or to get supplies into the region.

Besides extensive aid to the Middle East, EU member-states as a whole give about $30 billion per year in development cooperation or aid to the third world more generally. Recipient countries include seventy-seven African, Caribbean, and Pacific countries. The EU seeks to reduce poverty in the third world by slowing the spread of HIV/AIDS, increasing education, providing debt relief, and improving the coherence between development and trade policies. To that end, the EU supports a number of associated territories, giving them preferential treatment and access to the European Development Fund for financing projects.

Overall, the EU leads the world in environmental protection and humanitarian aid, its economy is roughly the same size as that of the United States, and it has a high level of soft power or influence. While there are many areas of controversy and hurdles to cooperation in the foreseeable future, the EU has repeatedly proven itself to be a viable world player with much potential.

SEE ALSO Euro, The


Burley, Anne-Marie, and Walter Mattli. 1993. Europe before the Court: A Political Theory of Legal Integration. International Organization 47 (1): 4176.

Cross, Maia K. Davis. 2007 The European Diplomatic Corps: Diplomats and International Cooperation from Westphalia to Maastricht. Houndmills: Palgrave.

Dinan, Desmond. 2003. Ever Closer Union: An Introduction to European Integration. Boulder, CO: Lynne Rienner Publishers.

McCormick, John. Understanding the European Union. New York: Palgrave Macmillan.

Moravcsik, Andrew. 1999. A New Statecraft? Supranational Entrepreneurs and International Cooperation. International Organization 53 (2): 267303.

Nelson, Brent F., and Alexander Stubb. 2003. The European Union: Readings on the Theory and Practice of European Integration. New York: Palgrave Macmillan.

Maia K. Davis Cross

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European Union

European Union (EU), name given since the ratification (Nov., 1993) of the Treaty of European Union, or Maastricht Treaty, to the European Community (EC), an economic and political confederation of European nations, and other organizations (with the same member nations) that are responsible for a common foreign and security policy and for cooperation on justice and home affairs. In Dec., 2009, following the ratification of the Treaty of Lisbon, the EU officially replaced and succeeded the EC. Twenty-eight countries—Austria, Belgium, Bulgaria, Croatia, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany (originally West Germany), Great Britain, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, and Sweden—are full members of the organizations of the EU.

Organizational Structure

The former EC, which formed the core of the EU, originally referred to the group of Western European nations that belonged to each of three treaty organizations—the European Coal and Steel Community (ECSC), the European Economic Community (EEC), and the European Atomic Energy Community (Euratom). In 1967 these organizations were consolidated under a comprehensive governing body composed of representatives from the member nations; further modifications since then have established the institutions of the EU as the European Parliament, the European Council, the Council of the European Union, the European Commission, and the Court of Justice of the European Union, the European Central Bank (see European Monetary System), and the Court of Auditors.

Although the EU has no single seat of government, many of its most important offices are in Brussels, Belgium. The European Commission is headquartered there, as is the European Council and the Council of the European Union; it is also where the various committees of the European Parliament generally meet to prepare for the monthly sessions in Strasbourg, France. The European Central Bank is in Frankfurt, Germany; the Court of Justice and the Court of Auditors are in Luxembourg, Luxembourg.


The history of the EU began shortly after World War II, when there developed in Europe a strong revulsion against national rivalries and parochial loyalties. While postwar recovery was stimulated by the Marshall Plan, the idea of a united Europe was held up as the basis for European strength and security and the best way of preventing another European war. (This last motivation in particular informed the awarding of the 2012 Nobel Peace Prize to the European Union, which also mentioned the EU's fostering of democracy in its member nations.) In 1950 Robert Schuman, France's foreign minister, proposed that the coal and steel industries of France and West Germany be coordinated under a single supranational authority. France and West Germany were soon joined by four other countries—Belgium, Luxembourg, the Netherlands, and Italy—in forming (1952) the ECSC. The EEC (until the late 1980s it was known informally as the Common Market) and Euratom were established by the Treaty of Rome in 1958. The EEC, working on a large scale to promote the convergence of national economies into a single European economy, soon emerged as the most significant of the three treaty organizations.

The Brussels Treaty (1965) provided for the merger of the organizations into what came to be known as the EC and later the EU. Under Charles de Gaulle, France vetoed (1963) Britain's initial application for membership in the Common Market, five years after vetoing a British proposal that the Common Market be expanded into a transatlantic free-trade area. In the interim, Britain had engineered the formation (1959) of the European Free Trade Association. In 1973 the EC expanded, as Great Britain, Ireland, and Denmark joined. Greece joined in 1981, and Spain and Portugal in 1986. With German reunification in 1990, the former East Germany also was absorbed into the Community.

The Single European Act (1987) amended the EC's treaties so as to strengthen the organization's ability to create a single internal market. The Treaty of European Union, signed in Maastricht, the Netherlands, in 1992 and ratified in 1993, provided for a central banking system, a common currency to replace the national currencies (the euro), a legal definition of the EU, and a framework for expanding the EU's political role, particularly in the area of foreign and security policy. The member countries completed their move toward a single market in 1993 and agreed to participate in a larger common market, the European Economic Area (est. 1994), with most of the European Free Trade Association (EFTA) nations. In 1995, Austria, Finland, and Sweden, all former EFTA members, joined the EU, but Norway did not, having rejected membership for the second time in 1994.

A crisis within the EU was precipitated in 1996 when sales of British beef were banned because of "mad cow disease" (see prion). Britain retaliated by vowing to paralyze EU business until the ban was lifted, but that crisis eased when a British plan for eradicating the disease was approved. The ban was lifted in 1999, but French refusal to permit the sale of British beef resulted in new strains within the EU. In 1998, as a prelude to their 1999 adoption of the euro, 11 EU nations established the European Central Bank. The euro was introduced into circulation in 2002 by 12 EU nations; additional EU nations have since adopted it.

The EU was rocked by charges of corruption and mismanagement in its executive body, the European Commission (EC), in 1999. In response the EC's executive commission including its president, Jacques Santer, resigned, and a new group of commissioners headed by Romano Prodi was soon installed. In actions taken later that year the EU agreed to absorb the functions of the Western European Union, a comparatively dormant European defense alliance, thus moving toward making the EU a military power with defensive and peacekeeping capabilities.

The installation in Feb., 2000, of a conservative Austrian government that included the right-wing Freedom party, whose leaders had made xenophobic, racist, and anti-Semitic pronouncements, led the other EU members to impose a number of sanctions on Austria that limited high-level contacts with the Austrian government. Enthusiasm for the sanctions soon waned, however, among smaller EU nations, and the issue threatened to divide the EU. A face-saving fact-finding commission recommended ending the sanctions, stating that the Austrian government had worked to protect human rights, and the sanctions were ended in September.

In 2003 the EU and ten non-EU European nations (Estonia, Latvia, Lithuania, Poland, the Czech Republic, Slovakia, Hungary, Slovenia, Cyprus, and Malta) signed treaties that resulted in the largest expansion of the EU the following year, increasing the its population by 20% and its land area by 23%. Most of the newer members were significantly poorer than the largely W European older members. The old and new member nations at first failed to agree on a constitution for the organization; the main stumbling block concerned voting, with Spain and Poland reluctant to give up a weighted system of voting scheduled for 2006 that would give them a disproportionate influence in the EU relative to their populations. In Oct., 2004, however, EU nations signed a constitution with a provision requiring a supermajority of nations to pass legislation. The constitution, which needed to be ratified by all members to come into effect, was rejected by voters in France and the Netherlands in 2005, leading EU leaders to pause in their push for its ratification.

Meanwhile, in 2003 the EU embarked, in minor ways, on its first official military missions when EU peacekeeping forces replaced the NATO force in Macedonia and were sent by the United Nations to Congo (Kinshasa); the following year the EU assumed responsibility for overseeing the peacekeepers in Bosnia. EU members also took steps toward developing a common defense strategy independent of NATO, and agreed in 2004 to admit Bulgaria and Romania in 2007. José Manuel Barroso succeeded Prodi as president of the European Commission late in 2004. Accession talks with Turkey were partially suspended in Dec., 2006, over the issue of Turkish relations with Cyprus because Turkey was unwilling to open its ports to Cypriot trade unless the EU eased its trade restrictions on North Cyprus.

The EU opted for incremental reforms over a new constitution in 2007, when member nations signed the Lisbon Treaty. The treaty reorganized the European Council, established an elected president of the European Council and a single EU foreign policy official, and reformed the EU's system of voting, among other changes. (The reforms will be phased in through 2017.) In June, 2008, however, Irish voters—the only national electorate given the opportunity to ratify the treaty—rejected it in a referendum, a potentially fatal setback. A year later, however, EU nations agreed on a number of guarantees to the Irish Republic that were designed to lead to a new Irish referendum on the treaty (several other nations also received various exemptions). Irish voters approved the treaty in a revote in Oct., 2009; ratification was completed the following month; and the treaty came into force in Dec., 2009.

Weaknesses in an EU system in which economic and monetary integration was not bolstered by political unity were revealed by the economic crisis of 2008, when measures such as bank-deposit guarantees adopted by some euro nations forced most EU nations to adopt similar measures in order to avoid bank runs. Eurozone nations were unable to agree on a common approach to the crisis and resulting recession, and subsequent high budget deficits in Greece and some other eurozone countries strained the monetary union and forced eurozone nations to adopt sometimes stringent austerity programs. At the same time, however, many non-euro European nations, whether members of the EU or not, found their financial systems stressed, at least initially, to a greater degree by the crisis than many euro nations did. In 2010 the effects of the crisis forced EU nations and the IMF to adopt a $950 billion package to aid financially troubled eurozone nations and support the euro; additional measures were adopted and additional funds set aside in 2011 and 2012, and in Oct., 2012, the eurozone's permanent European Statility Mechanism was established

By 2011 Greece, then Ireland, and later Portugal had been forced to accept international rescue packages, and they and some other EU nations were forced to adopt significant austerity budgets that led in many cases to economic recession, increased unemployment, and further budget deficits. In Mar., 2012, all but two EU nations (Britain and the Czech Republic) signed an agreement intended prevent future budget crises, though many criticized the accord for emphasizing budgetary discipline without consideration for its relationship to economic growth. Spain and Cyprus subsequently also sought international financial aid. At the same time, however, there was increasing public resistance to additional austerity measures in many hard-hit EU nations, and in the EU as a whole unemployment increased to record levels. In July, 2013, Croatia joined the EU.

In the 2014 elections for the European parliament, a number of parties on the far right and left that were strongly opposed to various aspects of the EU made significant gains, primarily in Great Britain, France, and Greece. Although pro-EU parties nonetheless won a significant majority of the seats, the vote was seen as a sign of increasing unhappiness with the EU within some of its member nations. The subsequent nomination of Jean-Claude Juncker to succeed Barroso as president of the European Commission was strongly opposed by Great Britain, who called for choosing someone less identified with increased EU integration, but nearly all EU nations supported his nomination, and he was easily elected to the post. Negotiations in 2015 over Greece's ongoing economic difficulties and debt produced divisions in the European Union, most notably between Germany and France (with France unsuccessfully favoring a less hardline approach), that combined with economic divisions reinforced national political agendas and undermined the sense of common European purpose and integration.


See W. Diebold, The Schuman Plan (1959); R. L. Heilbroner, Forging a United Europe (Public Affairs Pamphlet, 1961); B. Morris and K. Boehm, ed., The European Community (1986); H. Wallace and A. Ridley, Europe: The Challenge of Diversity (1986); M. Burgess, Federalism and European Union (1989); J. Roy, A Historical Dictionary of the European Union (2006); H. James, Making the European Monetary Union (2012).

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European Union

European Union


The European Union (EU) is a long-standing political and economic federation of autonomous European nations. With the consent of member states, the EU legislates a variety of issues by treaty, including trade, customs, travel, currency, and defense. Members choose to participate in various EU institutions, delegating sovereignty in order to achieve common goals.

The organization embraces democracy and the rule of law, requiring member states to possess some form of representative government, elected by universal adult suffrage of the adult citizenry. The mission of the EU is to promote economic growth in Europe, create a strong international market, lobby for European interests in the international community, raise standards of living, and promote peace.

History. European integration, the process that eventually yielded the EU, began on May 9, 1950, when France proposed to create a European trade organization. Two years later, France and Germany established the European Coal and Steel Community. Both nations sought to solve disputes over coal mining territories and industry competition unresolved since the end of the Second World War. Belgium later joined France and Germany, uniting most of Western Europe's continental coal and steel industry.

Continued success of the European Coal and Steel Community prompted its president to lobby European governments for the establishment of a large-scale economic and trade union. In 1957, six nations (France, Germany, Belgium, the Netherlands, Luxembourg, and Italy) signed the Treaty of Rome, establishing the European Economic Community (EEC). The EEC standardized some tariffs, opened borders to free trade, promoted industry cooperation, regulated industry standards, and synchronized export practices.

In 1967, the member nations brought the European Coal and Steel Community and the European Atomic Energy Community (Euratom) into the fold of the EEC. The new unified organization was officially named the European Community (EC), though many continued to use to older designation, EEC, to refer to the new union.

Several nations in Europe chose not to join the original EEC, the most prominent of which was Great Britain. In January 1960, Britain formed a more loosely regulated economic union to rival the EC. The European Free Trade Association (EFTA), known colloquially as the "Seven," included Britain, Austria, Denmark, Norway, Portugal, Sweden, and Switzerland. A year later, Britain applied for membership in the EC, but France rejected their proposal to join the organization. The French government subsequently vetoed Britain's second application for membership in 1964.

Britain, along with Ireland, Denmark, and Norway, became members of the EC in 1973. In a series of accessions, six more nations joined the EC before 1995. The organization adopted a more ambitious mandate in the 1990s, establishing government and judiciary organizations in an attempt to closely unite European interests. Adoption of the new mandate by member states established the European Union.

Organization. Today's EU mission encompasses more than economic goals. The principal objectives of the EU are to establish European citizenship, ensure civil rights of European citizens, promote social progress, protect European security, and ensure justice. To these ends, the European Union maintains its own government and supporting agencies. These institutions are granted sovereignty by the member states to legislate European affairs and create international law. Final adoption of EU policy, however, is left to the individual member states.

Five primary institutions comprise the government of the EU. Its overall structure embraces the three-branch democratic model of government, with executive, legislative, and judicial bodies. The European Commission is the primary institution of the executive branch. Members are elected or appointed by the European Parliament. The Council of the Union is composed of representatives from the governments of the member states. The Council governs the EU as a collective, requiring majority support to set or endorse policy.

The European Parliament, the legislative body, is elected by the people of the member states. Committees within the European Parliament address specific concerns, such as health care, preservation of the environment, and trade regulation. The Court of Auditors, the committee responsible for overseeing and managing the EU budget, remains separate from every branch of the EU government, but works closely with the Parliament to appropriately allocate funds and resources.

The EU judiciary is the Court of Justice. The jurisdiction of the European court is somewhat dubious, and member states recognize its authority to varying degrees. The court is similar in structure and function to those of the United Nations, but is permitted to pursue only cases that affect member states.

A myriad of committees and support institutions comprise the rest of the EU government. The EU maintains its own central finance system, including the European Central Bank and the European Investment Bank. These contain funds used by the EU or granted to individual member states for various joint projects. In 1999, nine nations adopted a standard European currency, the Euro.

Membership. Fifteen member states currently comprise the European Union: Austria, Belgium, Denmark, Germany, Greece, Finland, France, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden, and the United Kingdom of Great Britain and Northern Ireland. These member nations participate in the EU to varying degrees. For example, Britain participates in EU economic and trade associations, but uses its national currency, the pound, instead of the euro.

In 1998, the EU began negotiations with several eastern and southern European nations regarding EU expansion. Still recovering from decades of Soviet Communist domination, many of these nations possess fledgling free market economies. Introduction of former Eastern Block nations into the EU holds the potential for economic growth and expanded investment opportunities for European industry. However, expansion also poses liabilities to more economically robust EU nations.

The EU granted admission to the following candidate nations in 2002: Czech Republic, Cyprus, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovenia, and Slovakia. These nations officially join the EU on May 1, 2004, assuming that they ratify membership in a national, public referendum. Bulgaria and Romania are scheduled join the EU in 2007. Some negotiations on expansion proved contentious. The EU denied Turkey's application to join the organization, despite the nation's numerous economic and trade associations with Europe. The EU will review Turkey's application again in 2004, if the nation furnishes evidence that it has met EU demands to improve human rights and maintain a stable democratic government. The nation of Cyprus, divided between Grecian southern Cyprus and nationalist Turkish Cypriots, failed to reunify before the EU accepted the national proposal to join the EU. Therefore, only the independent half of the nation will join the EU in 2004.

Some nations in Western Europe have chosen to remain outside of the European Union. Switzerland, and EFTA members, did not join the union on the grounds that membership in the EU threatened its national policy of declared neutrality. Norway also chose to exclude itself from EU membership.

Common defense and security: the future of the EU. A series of treaties in the 1980s and 1990s expanded the political, defense, and military role of the European Union. Formerly an instrument of economic and social policy, the EU adopted the Common Foreign and Security Policy (CFSP) in response to global instability and the rise or terrorism. The creation of the European Security and Defense Policy (ESDP) followed, outlining the EU's international responsibilities to defend European territory and interests while cooperating with organizations such as the North Atlantic Treaty Organization (NATO) and the United Nations.

Defense and security strategy remains one of the most contentious aspects of European Union policy. Some member states prefer to rely on their connections to NATO, or their own defenses, for protection. Others are wary of creating an EU military force under international command.

The EU established several crisis management tasks, known as the Petersberg Tasks, a foreign policy priority. For the purpose of humanitarian aid and rescue, peacekeeping, and crisis management, the EU created a military task force of 60,000 reserve troops. Member states can choose to contribute and deploy national military troops to EU operations on a case-by-case basis.

The EDSP launched its first operation, a police mission in Bosnia and Herzegovina, in January 2003. The first EU military operation commenced in Macedonia two months later.

With the aid of ESDP liaisons in 2002, the EU candidate nations signed a declaration warning Iraqi leader Saddam Hussein that military action was justified if United Nations weapons inspections were not permitted to freely proceed. The statement angered several EU members, causing a rift in EU foreign policy. Although the EU did not formally support the subsequent United States led action in Iraq, several member and candidate nations supported the Coalition military action. Some of the most influential EU nations, such as France and Germany, voiced strong opposition to the 2003 war in Iraq.



European Union. <> (May 9, 2003).


NATO (North Atlantic Treaty Organization)
United Nations Security Council

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European Union


The European Union is a rapidly changing economic and political union of mostly western European nations that arose out of the European Community in 1993. This international organization is not meant to replace the sovereignty of the individual countries but rather to unify them under a common currency and economic structure, as well as under some shared principles of law and human rights. One of the cornerstones of the European Union has been the new currency, known as the euro, and the creation of a new European Central Bank. This new group of nations is to rival the United States and to increase trade among its member nations. This is no easy feat because of the strong national identities of these nations, including language barriers and long-standing cultural disputes.


The beginnings of the European Union were cultivated soon after the end of World War II (19391945), when it appeared that Europe would once again be a battleground between the United States and the Union of Soviet Socialist Republics. On May 9, 1950, the French foreign minister, Robert Schuman, proposed the first agreement to pool coal and steel resources. In 1952 the European Coal and Steel Community was established, and it included Belgium, France, Italy, Luxembourg, the Netherlands, and West Germany. It was hoped that this new spirit of cooperation would not only prevent war from breaking out between member nations but also present a strong economic face to the United States.

With this newfound success, the European Coal and Steel Community evolved in 1958 to become the European Economic Community. This was an attempt to integrate further other parts of these varied economies in order to remove other trade barriers. The Treaty of Maastricht in 1992 continued the evolution by introducing new areas of cooperation including defense, justice, and home affairs. These combined areas created the "community" relationship that exists today. Also in 1992, twelve of the fifteen nations agreed to a single European currency, called the euro, which was to have been managed by the new European Central Bank.

In 2005 the members of the European Union included: Austria, Belgium, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom. The candidate countries were Bulgaria, Croatia, Romania, and Turkey. Macedonia, formerly a part of Yugoslavia, had a pending application. A new constitution was being proposed for 2006, but by 2005 France and Belgium had turned it down. The United Kingdom delayed the vote in that country pending a hearing to determine what the possible ramifications of the failure could be.


Three main institutions make up this union of nations. The first one is the Council of the European Union. This body represents the individual member states. The second body is the European Parliament meant to represent the citizens of the European Union. The third body is the European Commission, which is to represent the common interests of the continent of Europe. These three parts are to represent all parts of the constituency of Europe.

The Council of the European Union is the main decision-making body in which the control of the body rotates every six months to another member nation. Depending on what the agenda is for particular meetings determines which minister from each nation attends. For instance, if there is a meeting on agriculture, the agriculture ministers from each nation would attend. There are nine different policy areas that the council considers. The General Secretariat is the administrative part of the council, and it is based in Brussels. The ambassadors of the member nations determine the agenda for the council.

The council and the European Parliament share legislative authority and responsibility for the budget. On important events such as amending treaties, a unanimous decision must be met; on other votes, however, only a qualified majority of 232 votes is required. Voting rights are based on the size of the population of the member state.

The European Parliament is the representative arm of the European Union. Every five years the people of Europe elect the membership in a direct election. In 2005 the European Parliament had 732 members, which was expected to be increased to 786 in 2007. The European Parliament is also the body responsible for open debate. It has become the area where the people's opinion meets the democratic process, creating some of the most innovative

policies. Because of its representative nature, the Parliament most accurately reflects the ideals and opinions of its people.

The European Commission is an independent political body meant to act upon the interests of the European Union as a whole. The commission is made up of one person from each nation. It is also the executive arm of the European Union and follows through with the decisions made by the council. In the event of censure by the Parliament, the entire body must resign. Censure requires a two-thirds vote by the Parliament in order to be passed and is an effective check on the balance of power within the European Union.

The judicial branch is known as the Court of Justice of the European Union. It meets in Luxembourg and is made up of one judge from each country serving an initial term of six years with additional terms of three years. The role of the Court of Justice is not only to make sure the laws created are fair and just, but also to guarantee that member nations fulfill their European Union obligations.


The primary strength of the European Union lies within its strong currency known as the euro. It has become the second most important currency along with the U.S. dollar. While the U.S. dollar has become less important because of world events such as stock market scandals and terrorist attacks, the euro has become more widely sought after. The euro began circulation in January 2002, replacing the individual currencies being used at the time in twelve nations. What is remarkable about the new currency is that it not only replaced the currencies of these nations, but also replaced icons of national and cultural symbols. This contributed to the new "European identity." One of the other benefits was the ability to travel within member nations without having to exchange currencies.

The process of bringing member nations on board with the single currency was not easy or painless. The new currency requires economic discipline by reducing budget deficits, curbing inflation, curbing interest rates, and reducing public borrowing to below 60 percent of gross domestic product to ensure the stability of the new currency. In order to make this happen, the European Central Bank was created in 1999. The bank set was ordered to set and maintain the value of the euro interest rates, and develop sound fiscal policy. One of the tenets of the fiscal policy is to maintain budget discipline in order to remain vigilant over the budget deficits of other member nations. A second tenet of the European Central Bank is that employment be a priority of the bank. Not all nations agreed to take on the euro as its national currency. Some nations such as the United Kingdom, Denmark, and Sweden did not accept the currency until they gave it much thought and discussion.


The goals of the European Union include banishing trade barriers detrimental to free trade among member nations while at the same time supporting the people of these individual countries in their everyday lives. Difficulties arise when differing cultures must cooperate and make joint decisions. The areas of agriculture and immigration are of particular concern. Some nations have long histories of protectionist philosophies for their food as well as with the issue of illegal immigrants.

In agriculture there have been other questions concerning issues that have to do with monetary policy, language barriers, and long-standing feuds. Of particular importance are the addition of the former Eastern European nations into the European Central Bank and the management of the euro in the global economy. Significant concerns include whether these nations can appropriately manage their economies to qualify for inclusion into the European Central bank and if they can, whether they will be able to maintain economic discipline. If they cannot, the concern is that their collective economies could sabotage what the European Union has worked so hard to establish since the mid-twentieth century.

Other concerns are how the roles of terrorism, the rising demand for oil, and the rise of other large economies such as China may affect the stability of the currency and the world economy in general. These challenges are indeed unique and will present a future of cooperative communication.

see also Trading Blocs


Fontaine, Pascal (2003, October). Europe in 12 lessons. Europa. Retrieved November 2, 2005, from

European Union.

Kagan, R. (2003). Of paradise and Power: America and Europe in the new world order. New York: Knopf.

Smith, N. (ed) (2005). The European Union. Bronx, NY.

Lawrence F. Peters, Jr.

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European Union (EU)

European Union (EU)

The European Union (EU), formerly known as the European Community (EC), was formed in the 1950s to encourage and oversee political and economic cooperation between numerous European nations. In the nearly half-century since it was formed, the EU has gradually succeeded in becoming the dominant governing economic body in Europe, and it now affects every aspect of business in its member states.


The EU had its origins in an upsurge of warfare which began in 1870 with the Franco-Prussian war and then continued through two world wars. World War II barely over, Winston Churchill, in a speech at Zurich University given in September 1946 called for "a kind of United States of Europe." Churchill's was a prominent voice but he expressed what many other leaders in Europe were feeling at the time. Two years later Belgium, France, Luxembourg, the Netherlands and the United Kingdom formed the West European Union aimed at mutual defense; that same year 16 other nations joined to form the Organization for European Economic Cooperation (OEEC) to oversee implementation of the U.S.-created Marshall Plan. OEEC later evolved into OECD (Organization for Economic Cooperation and Development), with the U.S. and Japan joining as well.

Communities: Coal, Atomic Energy, Economics

In 1951 Belgium, West Germany, Luxembourg, France, Italy, and the Netherlands established the European Coal and Steel Community (ECSC) empowered to make decisions about these industries for the group as a whole. Jean Monnet, who had given an influential speech about this subject in 1950 was named as the ECSC president. ECSC was a great success. In 1957 the same six countries created the European Atomic Energy Community (EURATOM) and the European Economic Community (EEC) to handle atomics and economic development in the same way, principally by removing trade barriers and creating a "common market." These "communities," focused on specific areas, were a step toward a greater union.


Milestones along the way were the merger, in 1967, of the three "communities" under a single Commission alongside a Council of Ministers and a European Parliament. In 1979 member countries' populations participated in direct elections of members of this parliament. Elections have been held at five-year intervals since. The Treaty of Maastricht, signed in 1992, created the European Union itself in 1992 by enabling member states to cooperate in defense and in the areas of justice and home affairs as well.

Common Policies and Marketand a Single Currency

The collective aim of these arrangements had always been greater efficiency and the achievement of economic power on a larger and more coordinated scale. Removal of trade barriers, common policies in many fields (agriculture, culture, energy, food purity, transportation, trade, etc.), and a common point for negotiating trade and aid agreements have been aims. The EU formed an economic and monetary union in EMU in part to implement some of these goals; it created the European Central Bank and projected the use of a single currency, the euro. The euro became the official currency in 2002 of 12 of the then 15 members: Belgium, Germany, Greece, Spain, France, Ireland, Italy, Luxembourg, the Netherlands, Austria, Portugal, and Finland. Denmark, Sweden, and the U.K retained their own currencies. Since 2002 the euro has become an important global currency.

Expansion and Consolidation

In 2002 the EU voted to admit ten additional countries, most of them formerly communist states. In consequence, in 2003, Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia joined the EU. The Treaty of Nice, which came into force on February 1, 2003 was intended to regulate the newly enlarged union. An EU constitution was framed and will replace Treaty of Nice regulations if all EU member nations approve it in 2006.


The EU's several governing bodies oversee different aspects of the union's operations. In addition, each country in the union takes turn acting as chairman; the position changes hands every six months. The European Commission (EC) is perhaps the most important of the governing bodies: it proposes policies and is the only body authorized to propose legislation (besides the national governments of each state). It also oversees the day-to-day operations of the union and ensures that treaties are being carried out as intended. The commission is comprised of 20 commissioners, including a president, all appointed by member states and approved by the parliament.

Once legislation is passed, it is administered by the European Council. The council is comprised of ministers who represent the national governments of the 25 members of the union. Actions of the European Council are approved on a majority vote of 13 of 25 commissioners.

Members of the European Parliament are directly elected by the people of each nation, and members serve five-year terms. While the parliament did gain some legislative power from the Maastricht Treaty, it mainly serves as the public forum of the EU, holding open debates on important issues and overseeing the activities of the council and the commission. The Court of Justice oversees EU laws and regulations and issues rulings when conflicts arise. The court sits as a "Grand Chamber" of 13 judges or in chambers of three or five judges. Decisions issued by the court are binding on member states.

Important but specialized activities of the EU are managed by nine additional bodies:

  • European Economic and Social Committee (civil society, employers, and employees).
  • Committee of the Regions (represents regional and local authorities).
  • European Investment Bank (finances projects and helps small business by means of the European Investment Fund).
  • European Central Bank (monetary policy, especially in euro-based countries).
  • European Ombudsman (investigates complaints).
  • European Data Protection Supervisor (concerned with data privacy).
  • Office of Official Publications of the European Communities.
  • European Personnel Selection office (recruitment).
  • European Administrative School (staff training).


Is the EU a sovereign entity comparable to the United States? The answer is nobut with the provision that the EU may in the future gradually evolve in that direction if historical forces favor that development. William Underhill wrote in Newsweek International, reviewing a book by Boris Johnson (The Dream of Rome, HarperCollins): "To Johnson, the idea of Rome is lodged in European folk memory. Deep down, he argues, the continent yearns to re-create an Augustan Age, when 80 million people from Syria to Scotland enjoyed the benefits of Pax Romana." But Johnson evidently doubts the possibility that the old Romanor the later Holy Romanempire could be rebuilt, basing his views on the great cultural diversity and fierce national loyalties that the patchwork of nations in Europe represents. The EU was and largely remains an economic venture aiming to present to the world a single, large market (like that of the United States). This emerges from its proposed and still pending (2006) constitution. For those in business dealing with European customers, however, the EU is a much easier entity to deal with than 25 separate states, each with specific rulesno doubt one reason why the EU is successful despite continuing and chronic disagreements among its members.


European Union. "The History of the European Union." Available from Retrieved on 26 March 2006.

The European Union in the United States. Available. from Retrieved on 26 March 2006.

Europe's Unreformed Economies. Global Agenda. 24 March 2006.

Underhill, William. "The Lessons of History: In a new book, British M.P. Boris Johnson wonders: why can't the EU be more like the Roman Empire?" Newsweek International. 20 March 2006.

Weidenfeld, Werner. Europe from A to Z: A Guide to European Integration. Office for Official Publications of the European Communities, 1997.

"What is 'Your EuropeBusiness'?" European Commission. Available from Retrieved on 26 March 2006.

                                   Darnay, ECDI

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EUROPEAN UNION, short form EU. An association of European countries, until the end of 1994 twelve in number: Belgium, Denmark, France, Germany, Greece, the Irish Republic, Italy, Luxembourg, the Netherlands, Portugal, Spain, and the United Kingdom. Membership now also includes Austria, Cyprus, Czech Republic, Estonia, Finland, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, Slovenia, and Sweden. In 1993, the EU subsumed the European Community (EC), previously known as the European Economic Community (EEC), which came into being in 1967 through the merger of several earlier associations formed after the Second World War. Its headquarters is in Brussels in Belgium, its Parliament mainly in Strasbourg, northern France, with some central institutions in Luxembourg. Its official working languages are ENGLISH and FRENCH, and its official languages DANISH, DUTCH, English, Finnish, French, GERMAN, GREEK, ITALIAN, PORTUGUESE, SPANISH, and Swedish. All eleven are used in EC meetings with simultaneous translation as a matter of course. Official documents must be published in all the official languages. In the period 1982–90, 40m ECUs (European Currency Units) were provided for EUROTRA automatic translation. There are between 30 and 40 minority languages, depending on definition, some of them varieties of official languages (such as Alsatian German in France), some unique (such as Breton in France and Basque in France and Spain). All member countries save Portugal have regional minority languages (such as GAELIC, SCOTS, and WELSH in the UK). The European Bureau for Lesser-Used Languages, set up in 1982 with its headquarters in DUBLIN, represents all such languages but not the ‘trans-European’ minority languages YIDDISH and ROMANY.

English is increasingly the LINGUA FRANCA of the EU. Representatives of smaller countries, such as Denmark and Greece, often give press conferences in English: ‘The Danes are keener to speak English even than the British … .The Spanish on the other hand tend to talk French. On political subjects both languages are used in discussions. The French are very concerned to protect their language. But in more technical sectors—telecommunications or research for example—it is overwhelmingly English, as the technical vocabulary has developed on a more global basis' ( Michael Berendt, The Times, 23 Oct. 1989). In Belgium, a country often disturbed by tensions between speakers of Flemish and French, English is a neutral medium. British television is widely watched along the north-western European coast, and in the Netherlands interviews in English on national television are often not translated. American TV is also widely available by satellite and cable.

While the aim of the Union is harmonization rather than homogenization, there is a strong EU-wide tendency towards greater use of English. Indeed, the results of any drive towards foreign-language learning may strengthen the already most prominent language: English is the first second language in all EU countries, including France.

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European Union

European Union (EU) Organization of 25 European countries, established in 1993 following the ratification of the Maastricht Treaty (1992). In 1993, there were 15 members: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden, United Kingdom. The EU assumed control of the existing framework and institutions of the European Community (EC), such as the European Commission and European Parliament (EP), but extended the role and scope of the EC according to the criteria of the Maastricht Treaty. The member states agreed to greater cooperation, particularly in areas such as foreign and security policies (see Western European Union), and internal and judicial policies. The UK and Denmark ‘opted out’ of the first stage in the creation of a single European currency (the euro). In addition to reforms of existing policies, such as the Common Agricultural Policy (CAP), the EU faces the challenges posed by enlargement. On May 2, 2004 ten new members joined: Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, Slovenia. In addition to the Commission and Parliament, the EU's institutional structure comprises the European Council of Ministers, the Economic and Social Committee (which advises on draft EC legislation), the European Central Bank, and the European Court of Justice. See also European Monetary System (EMS)

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EU • abbr. European Union.

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European Union

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EU ( (European Union))

EU: see European Union.

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