Will Europe Really Unite?
IF YOU find it hard to believe that Europe is serious about unification, you need only cross a few of its internal borders. People now move freely within the European Union (EU). Waiting time at border crossings has virtually disappeared. Travelers, of course, are delighted—but they are not the only ones to benefit. Now citizens of EU countries can easily study, work, and set up businesses anywhere within the EU. This, in turn, has led to economic progress in the poorer areas of the Union.
The ease of crossing borders is certainly a major change. Should we conclude, though, that Europe is already unified and that there are no roadblocks to unification? On the contrary, obstacles loom ahead, some of them quite daunting. But before we discuss these, let us look into one of the greatest strides toward unity that has been made so far. In that way we may better understand why people entertain so much hope for unity.
Steps Toward Monetary Unification
Maintaining borders can be expensive. Customs formalities among the 15 member countries of the EU once cost those nations some 12 billion euros a year. Not surprisingly, the new situation at Europe’s borders has spurred economic growth. When you think of the 370 million inhabitants of the EU moving freely from country to country within a single common market, it is clear that the economic potential is outstanding. What made such progress possible?
Back in February 1992, government leaders took a big step on the road toward unity by signing the Treaty on European Union, or the Maastricht Treaty. That treaty laid the basis for establishing a unified market within Europe, a central bank, and a single currency. Yet, another important step needed to follow: the removal of exchange rate fluctuations. After all, tomorrow’s exchange rate can throw a whole new light on today’s transaction.
This obstacle on the road to unity was removed by setting up the Economic and Monetary Union (EMU) and introducing the euro as a common currency. Exchange costs have now disappeared, and businesses no longer have to protect themselves against exchange rate risks. The result is lower business expenses and more international trade. In turn, this may lead to more jobs and increased spending power—which would benefit everyone.
The founding of the European Central Bank in 1998 marked another important step toward adopting a single currency. This independent bank, located in the German city of Frankfurt, holds monetary sovereignty over the participating governments. It strives to keep inflation low in what is termed the euro zone, consisting of 11 participating countries,a and to stabilize exchange rate fluctuations between the euro, the dollar, and the yen.
So when it comes to money, great strides toward unity have been made. However, money matters also illustrate the profound disunity that still exists among European nations.
More Monetary Matters
The poorer nations in the EU have their grievances. They feel that the richer member nations are not sharing enough of their wealth with them. None of the member nations deny the need to offer the poorer European partners extra financial support. Yet, the richer nations feel that they have valid reasons for holding back.
Take Germany as an example. That country’s enthusiasm to act as paymaster for European unification has clearly waned now that its own financial burden has mounted. The price tag of unifying East Germany and West Germany alone has been enormous—almost a hundred billion dollars a year. That is a quarter of the national budget! These developments have caused the German national debt to skyrocket to such heights that Germany had to make great efforts to meet the admission criteria set by the EMU.
New Members Knocking on the EU Door
In the short term, advocates of a single currency hope that the EU countries not yet in the EMU will overcome their obstacles before the year 2002, when euro coins and notes are supposed to replace today’s European currencies. If Britain, Denmark, and Sweden shed their reluctance, even the people in those lands may see their pounds, kroner, and kronor replaced by the euro.
Meanwhile, six other European countries are knocking on the EU door. They are Cyprus, the Czech Republic, Estonia, Hungary, Poland, and Slovenia. Five more countries are awaiting their turn, namely, Bulgaria, Latvia, Lithuania, Romania, and Slovakia. Their entrance will not come cheap. Estimates are that between the years 2000 and 2006, the EU will have to provide 80 billion euros to help the ten newcomers from Eastern Europe.
However, the funds that the newcomers will have to raise in order to meet EU entrance requirements are many times more than the amount they will receive in EU aid. For example, Hungary will have to spend 12 billion euros on developing its roads and railways. The Czech Republic will need to spend more than 3.4 billion euros on water treatment alone, and Poland must spend 3 billion euros to reduce sulfur emissions. Even so, the applicants feel that the benefits outweigh the costs. For one thing, their trade with EU countries will increase. Yet, the applicants may have to wait in line for a while. According to present public opinion, new member nations should be accepted only after the EU has straightened out its own financial matters.
Resentment, Nationalism, and Unemployment
Despite all the efforts that have been made toward greater unity, there is, both inside and outside Europe, concern over the developments on the Continent. There is also much uneasiness about how to deal with ethnic conflicts, such as those in the disintegrating Balkan region—first the war in Bosnia and then the conflict in Kosovo. EU member nations often disagree on how to handle such conflicts in Europe and beyond. Since the EU is not a federation of states and has no common foreign policy, national interests dominate all too often. Clearly, national interests are a huge obstacle to a ‘United States of Europe.’
Europe has yet another pressing problem—high unemployment. On an average, 10 percent of the labor force is unemployed. This means that more than 16 million people are out of work. In many countries young people, who form almost one quarter of EU population, have put forth great efforts to find jobs but without success. No wonder many people feel that fighting mass unemployment is Europe’s number one challenge! So far, efforts to reform the labor market have proved unfruitful.
However, there is a still greater roadblock to unity.
Who Is in Charge?
Sovereignty remains the biggest hurdle in achieving a united Europe. Member nations must agree to what extent they are willing to forgo national sovereignty. The aim of the EU is to establish a supranational form of rulership. If this is not realized, notes Le Monde, the introduction of the euro will be merely “a provisional victory.” Some member nations, though, find the idea of letting go of authority hard to accept. For example, the leader of one EU member nation stated that his country was “born to be a leader of nations, not a follower.”
Understandably, the smaller member nations fear that in the long run, the larger nations will call the shots and will refuse to accept decisions that could harm their own interests. Smaller nations wonder, for example, how it will be decided which countries will have the headquarters of the various EU agencies. This is an important decision because such agencies boost the job market in the host countries.
In the face of these daunting roadblocks to unity—economic disparity, war, unemployment, and nationalism—it might seem easy to feel disappointed on the subject of the unification of Europe. The fact is, though, that extraordinary progress has been made. How much more progress lies ahead is uncertain. The problems that beset those trying to unify Europe are, in the main, the same problems that beset all human governments.
Will it ever be possible to bring about a government that can solve such problems as ethnic strife, mass unemployment, poverty, and war? Is it realistic to think of a world where people live in true unity? The following article will consider an answer that may surprise you.
a These countries are Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain. For various reasons, Denmark, Great Britain, Greece, and Sweden are not yet included.
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Here Comes the Euro!
Although present national coins and bank notes of European Union members will not disappear until 2002, noncash transactions are already taking place in euros. This monetary transition has been a huge undertaking for banks. However, exchange rates between the national currencies of member countries and the euro are now fixed. Stock exchanges also show prices in euros. Many shops and businesses now price their products in both euros and the local currency.
Such commerce calls for drastic adjustments—especially for many older people, who will no longer be able to use their familiar deutsche mark, franc, or lira. Even cash registers and automatic teller machines need to be modified. To make the transition as smooth as possible, official information campaigns have been organized to inform people about the arrival and use of the euro.
Whatever the remaining obstacles, the euro is coming. In fact, coining and printing of the euro has already begun. And it is quite a task. Even in a small country like the Netherlands, with some 15 million inhabitants, coining and printing presses will be running for three years straight to produce 2.8 billion coins and 380 million bank notes by January 1, 2002. If all these new bank notes were put in a pile, they would make a stack about 12 miles [20 km] high!
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Early in 1999 the European Commission, the executive body of the European Union (EU), barely survived a serious setback. The commission was charged with fraud, corruption, and nepotism. A committee was formed to investigate the charges. After a six-week-long investigation, the committee found that fraud and mismanagement by the European Commission had taken place. However, the investigative committee found no evidence that commissioners had enriched themselves.
After the committee’s report was published, the entire European Commission resigned in March 1999—an unprecedented move. It sparked a deep crisis for the EU. Time magazine called it “a Euromassacre.” Only the passage of time will tell what effect this crisis will have on the process of European unification.
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It has already become far simpler to cross borders in Europe
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The European Central Bank, in Frankfurt, Germany, was established in 1998