European Union: History, Institutions, and Economy
Need for a European Commercial Block
Creating a European common market was not a new idea. The first proposals were translated into the variables of the Treaty of Rome, signed in 1957 by Germany, France, Italy, Belgium, the Netherlands, and Luxembourg. The treaty predicted the prosperity of the European Economic Community (EEC) and saw both economical and political unity, depending on a single internal market. The EEC established policies followed by concrete actions on the free movement of goods, services, people, and capital, freedom of competition, and the development of common law. Before the creation of the single European market, national markets could not compete effectively with the resources of potentials like the United States and Japan.
European Union
With the European Union Treaty of 1992, the space of free movement without internal borders between members of the EU started to become a reality. Signed in Maastricht, it decided on unity, created through mechanisms of citizen participation in the European Parliament elections. It established new rights for citizens, a set of internal solidarity policies with the less developed regions, and raised foreign policy and defense policy objectives. One of the initiatives with major effects was the approval of the Economic and Monetary Union (EMU). Starting on January 1, 1999, the euro became the common currency of 11 of the 15 member states. Later, Greece and Slovenia joined the EMU. On January 1, 2002, the euro began to circulate effectively, eliminating many obstacles to the free movement of persons, goods, capital, and services.
States of Europe
The countries comprising the EU are governed by basic values: peace, democracy, the rule of law, and respect for human rights. For half a century, the EU has increased the standard of living of its citizens to unprecedented levels. It created a common market without internal borders and a single currency, the euro. The EU is a major economic power and a world leader in development aid.
Objectives of the EU
The basic goals of the EU are:
- Impulse economic and social progress: Establishment of free movement or market since 1992, and the implementation of a single currency from 1999.
- Affirmation of European identity on an international level: Promotion of humanitarian aid to non-EU countries and participation in the solution of international problems.
- Implementation of European citizenship: Establishment of common citizenship for all EU citizens.
- Development of a space of freedom, security, and justice: All citizens can move freely between EU member states.
- Maintenance and development of community direction: Development of laws and rules for all EU member states.
EU and Heterogeneity
The EU is a set of heterogeneous states. This heterogeneity is evident both in levels of development and in cultural diversity. Despite unification and research in the EU, there are big social and economic differences, not only between regions but also between states themselves. With the entry into force of the EU treaty, there was an urgent need to reduce regional differences, as it was feared that economic liberalization would stress inequalities instead of ensuring balanced development. For some residents, for example in the United Kingdom, their integration into the EU is seen as a threat to their national identity.
Regional Economic Solidarity
To correct the imbalances within the countries of the EU, there is a regional economic policy dedicated to one-third of the community budget. It is based on the development of Structural Funds and Cohesion Funds, for example, granting loans to invest in the poorest regions, creating infrastructure works to solve some environmental problems, providing general technical assistance, developing common policies in cultural, educational, and youth issues, creating jobs, and granting loans and grants intended to help maintain the agricultural and fishing community.
EU Expansion
The EU enlargement process, with the incorporation of various states in 2004 and 2007, has highlighted the existence of imbalances among members, old and new. These are countries with very different degrees of development, both socially and economically. To reduce these differences, an important part of EU funds will go to new countries. In addition, a European Constitution project has been developed to achieve greater political integration and the creation of a common space of freedom, security, and justice.
EU Institutions
The EU is formed by a series of supranational organizations, that is, some institutions are above the states, with representatives from these states.
European Council
It is formed by the heads of state or government of the member states, accompanied by their respective foreign ministers. It is the highest political body of the EU, in charge of defining broad development actions.
Council of Ministers
It is formed by representatives of the states integrating the EU. The Council of Ministers makes the most important decisions and coordinates the various activities of the EU. Decisions are taken by unanimous majority.
European Parliament
It is elected by universal suffrage. It exercises the legislative function, that is, it can reform laws, and it approves the EU budgets. It is organized into committees to work on specific issues and controls the Council and the Commission of Justice.
European Commission
It has the executive function, ensures compliance with European regulations, proposes the texts of law that are presented to Parliament and the Council of Ministers, monitors compliance with agreements and treaties, and produces budgets for Parliament and the Council. It is formed by the President and Commissioners, all elected by the member states for a term of four years.
Court of Justice
It has the judicial function. It ensures compliance, interpretation, and enforcement of community laws. It is formed by a judge from each member country, who is renewed every five years. This court serves the citizens and institutions that need it.
Defender of the Town
Citizens of member states can consult if they consider that they have been wronged by any institution of the EU.
Other Institutions
- ECB (European Central Bank): Manages the euro and the EU’s monetary policy.
- Court of Accounts: In charge of controlling the Union’s costs.
- Committee of the Regions: Represents local and regional authorities.
- European Investment Bank: Funding body for the development of community economic sectors in need.
- Economic and Social Council: Represents organized civil society (unions, employers, consumers, etc.).
CAP (Common Agricultural Policy)
This policy helped to modernize the field and justify large expenditures to encourage intensive agriculture and improve production. To achieve these changes, the EU favored the concentration of holdings that were too small, and cheap agricultural credit was given. Farmers were assured an interesting price for their products, and if they could not sell them, the EU would purchase the surpluses. The EU also limited imports of food from outside.
Objectives of the CAP
It aims to achieve self-sufficiency within the EU. This has resulted in large increases in agricultural production and a considerable increase in livestock. However, this exceeds the food consumption capacity of Europeans. The surplus envelopes are placed on the world market, where prices are much lower than what the EU offers its farmers and ranchers. To solve this problem, the EU proposes new proposals to reduce the area devoted to crops, convert part of the land into forest or recreational space, and reduce the warranty price that the EU pays to farmers. The European Agricultural Guidance and Guarantee Fund (EAGGF) is the instrument that decides the participation of each state at the time of receiving economic aid for agriculture and livestock.
Community Fishing Sector
Twenty-two of the 27 EU member states are maritime. In some states, there is an important fishing sector, such as in Denmark, Spain, the United Kingdom, France, the Netherlands, and Italy. This generates great economic activity in sectors linked to fishing. The Common Fisheries Policy (CFP) of the EU is responsible for establishing exclusive fishing zones, the volume and size of catches, and the signing of treaties and agreements with non-EU states.
Major Industrial Areas of the EU
The EU is one of the most important areas of industrial production, along with North America and Japan. Industrial activity is the main source of economic development in Europe. The area of industrial development in the EU is an axis that runs from the southeast of the United Kingdom to northern Italy, following the Rhine Valley in Germany. It includes important cities such as London, Paris, Amsterdam, Brussels, Frankfurt, and Milan. This area is characterized by traditional industries (textiles, metallurgical, chemical, etc.). In other areas, such as the United Kingdom or the rest of the Cantabrian coast, industrial activity has declined since 1980, despite the renewal policies that the EU has been carrying out. Some Eastern countries that joined the EU had large areas of heavy industry that were obsolete and had to close because they were not profitable. However, they currently receive investments from Western Europe because wages and production costs are much lower, and the labor is qualified.
Industrial Production
Currently in the EU, while the old industries (textiles, steel, etc.) are in a time of recession, high-tech industries (electronics, aerospace, biomedicine, etc.) are in a phase of important dynamism. These growing industries are located around urban areas and major transportation and communication networks. The industrial production of the EU has a fundamental problem: the lack of energy resources, such as oil, and the importation of commodities, which is very large. To ensure constant research, production costs have been lowered by moving manufacturing to countries outside the EU, giving rise to industrial relocation.
Towards an Economy of Services
The EU countries receive most of their wealth and employ more than 65% of the population in the service sector, in activities such as trade, transport, banking, education, healthcare, leisure, and tourism.
Trade
Trade between EU member countries and the rest of the world takes a great volume. EU imports during 2005 were 40% of world exports.
Transportation
The EU has a powerful transportation network for the movement of freight and people. The majority of transportation within the EU is by road. The EU plans to improve the rail network with the High-Speed Rail plan for 2010. Maritime transport between EU countries represents 90% of trade with the rest of the world, so the EU allocates part of its budget to create port infrastructure, especially integrated ports. Air transport is a key element for the market and for the economic and social cohesion of the EU. The busiest airports are London, Paris, Frankfurt, Amsterdam, and Madrid.
Spain in Europe
The first steps of European integration (ECSC in 1951 and the constitution of the EEC in 1954) were taken without Spain, as the Spanish regime was dictatorial and undemocratic and did not meet the requirements required by the founding states of the project. In February 1979, Spain became a democracy and opened negotiations for Spanish accession to the EEC. These negotiations lasted seven years and were characterized by the need for adaptation of the Spanish economy to the community economy, especially in agricultural production and fishing.
Balance of Spain’s Incorporation into the EU
The economic and social development that Spain enjoys today is due in part to the European integration process. The Spanish state has received funding from the EU worth 0.8% of its GDP each year since 1987. EU aid has created about 300,000 jobs per year in Spain. Ninety percent of foreign investment received by Spain comes from the EU.
European Use of Funds
Community funds help finance many projects in Spain, for example: 40% of road sections, expansions of the Madrid and Barcelona airports, the Seville metro, the City of Arts and Sciences in Valencia, or the expansion of the Port of Las Palmas in Gran Canaria. Educational programs like Erasmus or Lingua. The European Health Card ensures medical and surgical treatment for Spaniards elsewhere in the Union. Restoration of the Court of the Lions of the Alhambra in Granada and the Monastery of Guadalupe or the reconstruction of the Liceo Theater in Barcelona.