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Economics Q 2
After the war, the nations of Europe were struggling to overcome the devastation caused by World War 2. Determined to prevent another war, Western European leaders decided to assume coordinated actions aimed at the reconstruction of European countries and their economies and the introduction of a new political order, which could guarantee the security of nations and give a chance for their successful development in the future. (European Portal of Integration and Development)
In the process of planning the introduction of a new political order in post-war Europe, it was acknowledged that the key task was the reconstruction of European economies. (European Portal of Integration and Development) Western European leaders realised that only efficient and effective European economy would be a foundation on which new safety and development structures could be built. (European Portal of Integration and Development) The American aid plan for Europe – the European Recovery Plan, called the Marshall Plan, was a great support for those plans. (European Portal of Integration and Development) At that time the actions of the Soviet Union, a former ally, which after the war began violently affirming its supremacy in the controlled area of Central and Eastern Europe, openly promoting antidemocratic communist ideology, became disturbing and at the same time mobilizing for the Europeans. (European Portal of Integration and Development) Only common, coordinated actions could provide European countries with the force with which Western Europe could resist the Soviet influence and the economic dominance of the United States of America. (European Portal of Integration and Development)
This led to Robert Schuman the French foreign minister at the time presenting the Schuman Declaration on May 9th 1950. (European Union, 2017) It proposed the creation of the European Coal and Steel Community because it was thought that the merging of economic interests would help improve the standard of living and be the first step towards a more united Europe. (European Union, 2017) The countries that signed the declaration and became members of the European Coal and Steel community were France, West Germany, Italy, the Netherlands, Belgium and Luxembourg. (European Union, 2017) Building on the success of the Coal and Steel Treaty, the six countries expanded cooperation to other economic sectors. They signed the Treaty of Rome, creating the European Economic Community (EEC) and the European Atomic Energy Community (Euratom). (Wallace, 2000) These two communities along with the European Coal and Steel Community came to be referred as the European Community. (Wallace, 2000) This was the first series of supranational European institutions that would eventually become the European Union, as we know it today.
There are many ways in which European nations have pursued European integration from 1945 till now. The first way in which European nations pursued European Integration was through the setting up of the Organisation for European Economic Co-operation (OEEC) and the European Payments Union (EPU) set up in conjunction with Marshall Plan in 1948. (Sulis, 2018) This led into the start of an “economic community” which has evolved into the modern European Union. This was set up because after the Second World War the European allies of France and Great Britain realised that they no longer had significant influence if they operated alone. (Bradley, 2012) The USA and the USSR had the economic and military power to completely immerse Europe into a ‘Cold War’ with pressure exerted from both sides. (Bradley, 2012) It became clear that European governments could only hope to control the actions of these key players on European soil if they co-operated. (Bradley, 2012) Whilst Britain where happy to align itself with its Atlantic alliance and Commonwealth, the French were very worried and it became apparent that only a united Europe could carry any weight globally. (Bradley, 2012) This concern led to the creation of the OEEC and the ECSC. The USA was happy with this idea, as it would prevent the Spread of communism throughout Europe. (Bradley, 2012)
As Mentioned previously the Treaty of Rome was signed in 1957 setting up a European Economic Community. (Bradley, 2012) This was a unity of the same six nations of the ECSC but with even stronger links and broader cooperation. (Bradley, 2012) Article 2 of the treaty set out its key objectives, which included increased stability and steady expansion; a clear sign that those six nations were consciously defending themselves against the threat of the USSR and sought closer cooperation with other European states. (Bradley, 2012) The development of Soviet nuclear arms was a real cause for concern and this Cold War security issue amongst many others proved the fact that ‘The Six’ had to work together and expand to find safety in numbers. (Bradley, 2012)
The rise in living standards caused by the Rome Treaty made nations mainly in Southern Europe and Scandinavia, see the benefits of integration for their economies and this remained a key selling point of European Integration right up to the fall of the Berlin Wall in 1989-1991. (Bradley, 2012) After the collapse of the USSR the European Union reacted quickly by signing agreements with newly free nations in Central and Eastern Europe. (Sulis, 2018) These agreements were free-trade agreements with the promise of deeper integration and some aid. After unification of Germany in 1990, Germany opened its door to a “Grand Bargain” where Germany gave up the Deutsche Mark for a European Monetary Union and East Germany joined the EU without Negotiation. (Sulis, 2018) The President of the European Commission at the time Jacques Delors proposed a radical increase in European Economic integration with the formation of a monetary union. (Sulis, 2018) The Maastricht treaty was signed in 1992, which resulted in a monetary union by 1999 and a single currency by 2002. (Sulis, 2018) In June 1993 the EU says that Central European countries and Eastern European countries (CEEC’S) that were once under Soviet rule can join the EU. (Sulis, 2018) This led to the formation of the famous Copenhagen criteria for membership where it states that there must be a stability of institutions guaranteeing democracy, rule of law, human rights and respect for and, protection of minorities and the existence of a functioning market economy as well as the capacity to cope with competitive pressure and market forces within the union. (Sulis, 2018) At the Copenhagen summit in 2002 the EU stated that 10 (CEEC’S) could join the EU in 2004, which led to the 5th enlargement of the EU in May 2004. (Sulis, 2018)
In the Next stage of my essay I wish to discuss the Factors promoting and slowing down the process of integration. European integration has been driven largely by the desire to prevent another European war and the desire to share the gains of integration with the newly democratic nations in Central and Eastern Europe. (Sulis, 2018) After the war the division of Europe (East and West) and the need for security from the Soviet threat and expansion of communism was a major threat to the desire of preventing another war. (Sulis, 2018) The position of America after the war gave them an unusual scope for shaping events in Europe. (EICHENGREEN, 2007) The Americans saw European integration as positioning the continent in an established democratic system. (EICHENGREEN, 2007) They saw the creation of pan European institutions as a way of forming a united front to beat back the soviet threat during the Cold War. (EICHENGREEN, 2007) The Americans saw stability and prosperity as the best guarantees that this united front would garner popular support. (EICHENGREEN, 2007) The introduction of these Pan-European institutions such as the OEEC and the ECSC helped to combat the need for rapid development in standards of livingand economic performanceto establish long-lasting peace and security. One of the most beneficial factors that have promoted European integration is the economic politics within the member states of the EU who are currently enjoying access to free trade, free movement of goods, services and people and low tariffs. (Sari) The discriminatory effects of EU integration have created a powerful pull effect that has steadily drawn all but the most reluctant Europeans into the EU. (Sulis, 2018)
In recent times there have been many factors that have slowed down the process of European integration. One of the main factors is countries rejecting treaties where all member states of the EU need to approve the treaty in order to pass. It started off with Denmark rejecting the Maastricht Treaty in 1992, as there were fears that Denmark’s Economy would be subsumed by Germany’s and would be captive to a remote bureaucracy in Brussels. (Bilefsky, 2016) The European community breathed a sigh of relief when Denmark voted in favour of the treaty in a second referendum in 1993. (Bilefsky, 2016) In 2001 Ireland initially opposed E.U expansion through the form of the Nice Treaty. (Bilefsky, 2016) But voters overwhelmingly approved the Nice Treaty in a second vote on Oct. 19, 2002, when voters were persuaded by a European Union guarantee that Ireland could opt out of military operations. (Bilefsky, 2016) In 2005 France and the Netherlands rejected the constitutional treaty which proposed to pave the way for a common bill of rights and to reduce the ability of member states to veto decisions in areas like asylum and immigration. (Bilefsky, 2016) Both countries were hesitant about losing power under proposed changes in voting rules. (Bilefsky, 2016) Following inadequate reform attempts (Amsterdam and Nice Treaties), negotiations and four rejections by European voters, it soon became apparent that EU institutional reform was difficult and not popular with EU voters. (Sulis, 2018) To avoid referenda in as many nations as possible, main reforms in Constitutional Treaty, which had been found to be politically acceptable to all EU members, were repackaged in the Lisbon Treaty signed in 2007 and came into effect in 2009. (Sulis, 2018) Initially rejected by Irish voters in 2008, which voted yes in second vote in 2009. (Sulis, 2018) In 2016 following the majority Yes vote in its referendum on Brexit, UK became the first member state to trigger Article 50. (Sulis, 2018) Article 50 refers to a clause in the Lisbon Treaty, which provides “for a mechanism for the voluntary and unilateral withdrawal of a country from the EU” (Sulis, 2018)
The most important factor in my view to have promoted the process of European integration relies on the tragic experiences connected with the largest and also most devastating armed conflict in human history, caused by Nazi Germany. (European Portal of Integration and Development) After the war in Europe, and more specifically in its western part, there arose conditions favourable for the start of a new planned integration of the countries of the Old Continent. (European Portal of Integration and Development) Western European countries though very weakened after the war, were agreeable to the necessity of defending basic human rights and democratic values. (European Portal of Integration and Development) Western European leaders decided to undertake coordinated actions aiming at the reconstruction of European countries and their economies and introduction of a new political order which could guarantee the security of nations and give a chance for their successful development in the future. (European Portal of Integration and Development)
Another important factor behind European integration has been economic. Fritz Scharpf convincingly explains that the core of European integration, despite recurring attempts to strengthen the “social dimension” of the EU, has mainly consisted in measures aimed at extending market mechanisms such as the free movement of goods, capital, services and labour. (Afonso, 2013) The achievements of the EU in this domain have been very impressive, set against the anti-competitive practices that prevailed in many member states in the 1970s and 1980s, including public monopolies, protectionist non-market arrangements, different standards and rules across countries, cartels, restrictive immigration policies, etc. (Afonso, 2013)
The main factor that has slowed down European integration is the fact that European integration has become an increasingly politicised issue in domestic level politics. (Afonso, 2013, p. 64) The market making impetus of European integration has created a substantial amount of resistance at the domestic level, as shown by the misfortunes of the EU Constitutional Treaty in France and the Netherlands in 2005. (Afonso, 2013, p. 64) Eurosceptic parties have become considerable electoral forces in many European countries and have contributed to restructuring coalition politics also in strictly domestic policy domains. (Afonso, 2013, p. 64) For example in David Cameron’s second term as Prime Minister of the UK he had to make an agreement with Ukip to hold a referendum on whether to trigger Article 50 in order to remain in power. This of course resulted in Britain leaving the European Union.
European issues are under increasing public scrutiny and bringing in unpopular EU reforms can now have severe electoral consequences. (Afonso, 2013, p. 65) There is substantial evidence that European integration has become increasingly prominent and controversial as a political issue in domestic politics. (Afonso, 2013, p. 65) For instance the share of news reports devoted to European integration in France, the Netherlands, Germany, Britain, Switzerland and Austria has more than doubled between the 1970s and the 1990s. (Afonso, 2013, p. 65) Similarly, the share of national protest actions directed towards “Europe” have increased from 5-10 per cent in the 1980s to 20-30 per cent in the second half of the 1990s. (Afonso, 2013, p. 65) Finally, an expert survey found that European integration was the third most important issue in national party competition in Western Europe in 2003, behind taxes/public expenditures and deregulation/privatisation, but ahead of immigration. (Afonso, 2013, p. 65)
To end this essay on a positive note I will quote a speech made in 2005 by Otmar Issing a Member of the Executive Board of the ECB where he said “If we think in terms of European history, the fact that we have come this far is an incredible achievement. We should never forget that European integration has been driven by the political will to overcome centuries of hostility and war. Moreover, we have had difficult times and crises before. And we have always found ways to overcome them. If the past is our guide to what the future will bring, we should remain confident that we will also find answers to our current problems.” (European Central Bank, 2005)
- Afonso, A. (2013). Social Concentration In Times of Austerity. Amsterdam: Amsterdam University Press.
- Bilefsky, D. (2016, April 19). Voting on European Integration: A Long History of Skepticism. Retrieved October 26 , 2018, from www.nytimes.com: https://www.nytimes.com/2016/04/19/world/europe/europe-integration-timeline.html
- Bradley, B. (2012, February 15). Post- war European Integration: How We Got Here. Retrieved October 25, 2018, from www.e-ir.info: https://www.e-ir.info/2012/02/15/post-war-european-integration-how-we-got-here/
- EICHENGREEN, B. (2007). THE EUROPEAN ECONOMY SINCE 1945 (1st Edition ed.). Princeton , New Jersey, USA: Princeton University Press.
- European Central Bank. (2005, June 16). European integration – achievements and challenges. Retrieved October 26, 2018, from www.ecb.europa.eu: https://www.ecb.europa.eu/press/key/date/2005/html/sp050616_1.en.html
- European Portal of Integration and Development. (n.d.). History of European Integration. Retrieved 10 24, 2018, from europejskiportal.eu: http://europejskiportal.eu/history-of-european-integration/
- European Union. (2017, 10 24). The Schumann Declaration – 9 May 1950. Retrieved 10 24, 2018, from europa.eu: https://europa.eu/european-union/about-eu/symbols/europe-day/schuman-declaration_en
- Sari, O. (n.d.). Main Factors behind the European Integration after World War 2 and driving forces of Eu. Retrieved October 26, 2018, from academie.edu: http://www.academia.edu/9802186/Main_Factors_behind_the_European_Integration_after_World_War_II_and_driving_forces_of_EU
- Sulis. (2018, September 17). Sulis Ec4027 SEM1 2018/2019 : Resources. Retrieved October 26, 2018, from www.sulis.ul.ie: https://sulis.ul.ie/portal/site/3a8710c4-3290-436f-945d-e5ad25cd8b64/tool/c050af4e-1f33-436d-89ce-9c76b51ac43b?panel=Main
- Wallace, H. W. (2000). Policy Making in the European Union (4th Edition ed.). Oxford, UK: Oxford University Press Inc.
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