1
The
European Integration
Europe made up more than 30
countries and even more distinct cultures; it is now trying to adjust
to new
economic systems throughout the world.
In this essay I shall
attempt to
show you firstly the purpose behind the European Union /
advantages to have a united Europe to the people of Europe, secondly Spain's
accession to the European Community and thirdly the
effects of
introduction Euro.
Schemes
for European integration are almost
as old as the idea of Europe as a distinct political and cultural
entity and
much older than the conception of a Europe of nation-states. The birth
of idea
of Europe went hand in hand with the emergence of the first schemes for
European integration. Indeed, the conception of Europe as a distinct
entity
presupposed or implied a potential basis for European cohesion and
integration.
The term integration can be understood, in context of
the
European Union, as a situation of unification between individually
sovereign
nations into a collective body, sufficient to make that body a workable
whole.
A fully integrated European Union could be seen to have two possible
outcomes.
Either a)A Federalist or ‘stewed’ union, where all member states give
up their
individual sovereignty and form a superstate that would be an economic
world
power, or b)A Confederalist or ‘salad bar’ union, where each member
state has
its own place in a continental alliance, maintaining national
sovereignty and
individually contributing, through trade and cooperation, to form a
greater
whole. Sovereignty can be defined quite simply as the
supreme
authority to not only declare law but create it, deriving this power
from a
populace who have given up their personal sovereignty and power and
vested it
in the sovereign.
Europeans have long
disagreed as
to which states and poples should properly be included in Europe. There
have
been long debates as to how far countries such as Russia, Turkey,
Albania, Georgia,
Armenia, Israel or Morocco should be included in Europe, politically,
militarily, culturally or economically. The factor that must always be
borne in
mind in any consideration of Europe is that definitions of Europe and
the
configurations of European states are fluids rather than solids. They
are
constantly changing.The idea of nation and of European order based upon
sovereign nation-states is of relatively recent origin and is likely to
be as
ephemeral or short-lived as all previous European state configurations.
It is
on the eternal fluidity of European states systems, rather than on any
deterministic belief in a teleogical progression towards a preordained
"federal goal", that federalists should rest their hopes for a
federal Europe in the twenty-first century.
The EU
has stated explicitly that its objectives
are “to lay the foundations of an ever closer union among the peoples
of Europe
... the constant improvement of the living and working conditions of
the
people, and the reduction of differences in wealth between regions".
The whole purpose behind
the European Union is to maintain peace between the European
countries,
and to integrate them. The founding gentlemen of the EMS wanted to
restore the
integration of the European Communities. In 1949, the Council of Europe
was
founder to promote political and social unity in Europe. Later in 1952,
the
European Coal and Steel Community was started to “allay fears of a
‘military-industrial complex’ fuelling renascent German nationalism”.
Economic
integration and unity was brought to a head in March of 1957 when the
European
Economic Community and the European Atomic Energy Community were
formed. These
two treaties were used to help stabilize and form the ECU. All three of
these
organizations/treaties were essential to forming what is today called
the
European Union. The European Union/European Monetary System failed for
three
basic reasons in the early 1990’s. First of all, it failed because it
was
inefficient due to the low-inflation system and the recession in that
time
period. The recession elaborated on the conflicts between the member
countries
of the European Union. Second, it is not sufficiently competitive at
the
current rate of exchange. Third, the real interest rate of the world
would need
to decline drastically in order for the EU to work. Also in the early
1990’s
there were “smaller expectations of devaluations”. The current European
Union
has been a result of recent treaties. The first treaty that was signed
in
February 1992 helped the unification of Europe be that much closer. It
set the
groundwork for one currency throughout Europe called the euro. In order
to
update the current treaties the Amsterdam Treaty was signed as a result
of the
Intergovernmental Conference. This treaty resulted in a plan to listen
to the
citizens, get closer to a more secure Europe, to make Europe more vocal
throughout the world, and to make the European Union more efficient. As
of
January of 1997 there were 15 countries belonging to the regional and
economic
European Union. The countries currently involved are Austria, Belgium,
Denmark,
Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands,
Portugal,
Spain, Sweden, and the United Kingdom. In the future the European Union
hopes
to grow and add more countries to this list. The banking system that
the
European Union uses is a Central Banking System. With the evolvement of
the
Euro the economics of Europe will be easier to maintain.
As of January 1, 1999 the
national central banks and the European Central Bank were formed to
help
institute the monetary policy using the euro. The macroeconomics theory
accompanied with the use of economic analysis can illustrate the ideas
behind
the EMS. The members of the EU have put a strong emphasis into the
monetary and
macroeconomic policies. In order to ”reduce inflation the tried to have
more
stable competitive conditions within in the EMS which resulted in
strict
exchange rates”. The European Union has a long way to go before it
achieves
100% success. There are many advantages to having a united Europe to
the people
of Europe. One benefit is trade. There is now a free movement of goods,
services, people and, money within the countries belonging to the
European
Union. Having a united Europe, which will result in the euro, will
benefit
information technology, administrative changes, and the information and
training of employees. The benefits of the EU on citizens, businesses,
and
tourists will be determined by how much attention is paid by each
particular
country to maintaining and promoting good relations with one another.
American
businesses are affect by the united Europe. For example, in 1980-85
there was
an unpredicted increase in the value of the dollar. As a result of the
dollar
appreciation many American industrial firms that competed in the
international
market were more profitable than in the past. The European Union also
affects
the business in the United States because the “cash forward market
liquidity
tends to ‘dry up’ in the middle of the afternoon because that is when
the
European currency traders are going home for the day. Investors in the
ECU are
growing on a daily basis. Investors tend look at the Union as a
risk-returning
investment according to dollar assets and the foreign alternatives that
are
available.
About Spain and European
Integration we can say that Spain's accesion to European
Community
in January 1986 was the consummation of a political and economic
transformation
that had been taking place since 1959, when a group of Catholic Opus
Dei
technocrats began to open up the Spanish economy to foreign trade and
investment, reversing the autarkic and isolationist policies pursued
from 1939
to 1951, during the most fascist phase of Franco's dictatorship. The
more
serious discussions which begun abortively in 1964 and again in 1967
eventually
led to a preferential trade agreement in 1970, but the EC was unwilling
to
enter a closer liaison as long as Franco ruled Spain.
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The
reforming conservative colition government of Adolfo Suárez (1976-1981)
applied for full EC membership in july 1977, four months after Portugal
and one
month after winning a sweeping victory in the first democratic
elections held
since Franco's death. The government had hoped that entry terms could
have been
negotiated and agreed by 1980, in time for admission soon after Greece.
But
Franch, Italian and subsequently Greek fears of the economic
consequences of
Spain entry - mainly for their own producers of Mediterranean farm
products,
but also for the CAP and for EC industries such as steel, coal, cars,
textiles
and footwear - and German concerns over the budgetary implications,
dragged out
the negotiations from late 1979 until March 1985. When Spain finally
entered
the EC in 1986, it had a socialist government under Felipe González.
Spain's EC admission did
indeed
seem to pose a major challenge for its existing members, especially
France,
Italy and Greece. Spain's accesion was to increase Ec territpry by
nearly one
third, total population by 14 per cent, cultivated area by 30 per cent,
agricultural population by 25 per cent and fishing fleet by 70 per
cent. Spain
then accounted for over 40 per cent of the world's olive-oil production
and 20
per cent of world's citru-fruit exports. It also had Europe's most
extensive vineyards,
although its grape yields were well bellow those of France and Italy.By
the
early 1980s Spain's industrial and agricultural exports exceeded those
of all
the other Mediterranean states put together. Thus the admissionof Spain
to the
EC would further disavantage those Mediterranean states which were not
members
and add to EC surpluses of wine and olive-oil and to CAP costs,
altough, as a
net importer of grain and dairy produce, it would help to reduce EC
grain and
milk product surpluses.
For Spain the importance of
EC
accession was primarily political and psychological, marking a
"return" to a Europe from wich it had stood apart for too long and a
concern to consolidate and enlist European support for the then still
fragile
restoration of parliamentary democracy and the rule of law. Accession
to the EC
and the long negotitions that preceded it provided Spain's
post-Francoist
governments with additional leverage to push through far-reaching
measures of
political and economic liberalization which brought Spain into line
with the
laws, procedures, standards and commercial practices of Northwestern
Europe.
In june 1989, just after
three
and a half years after joining the EC, González decided to take spain
into the
Exchange Rate Mechanism. Spain's decision to join was facilitated by
the
stength at that time of the peseta, which was buoyed up by the huge
influx of
foreign investment and private loan capital into Spain after its
accession in
1989 and by the high interest rates adopted from mid-1988 onward in an
attempt
to restrain the ensuing economic boom and inflationary pressures.
Spain's
economy grew by 5 per cent annually from 1986 to 1989 inclusive and
approximately $30 bn of direct foreign investment was pemped into the
economy.
However, while Spain became a major recipient of EC "structural" and
"cohesion" funds, such transfers amounted to less than 1 per cent of
its comparatively large GDP in the early 1990s.
Table 1. The Spanish economy,
1985-1994 (%)
'85
'86
'87
'88
'89
'90
'91
'92
'93
'95
GDP growth
2.3
3.2
5.5
5.3
5.2
3.7
2.3
0.8
-1.0
1.1
Inflation
8.8
8.8
4.6
5.8
6.9
6.7
5.9
5.9
4.6
4.7
Unemployment
23.0
21.5
20.8
20.6
16.2
16.1
16.3
19.6
23.4
24.0
Awash with foreign capital,
Spain's per capita GDP rose from 72 per cent of the EC average in 1986
to 78
per cent by 1991. However, while Spain's real GDP trebled between 1964
and
1994, recorded employment remained almost static at 11.7 million,
despite a 25
per cent population increase over the same period. This left 3.7
million
people, or 24.2 per cent of the workforce, without declared employment
in June
1994. Even though up to a million of the regitered unemployed were
considered
to have significant undeclared earnings from the sizeable "black
economy", Spain nevertheless continued to have the EU's highest
unemployment levels and this in likely to remain the case throughout
the 1990s.
The essential problem has been that the expanding economic activities
are
mainly capital-intensive, whereas the declining ones are mainly
labour-intensive.
The Euro can
be defined as the common monetary system by which the participating
members of
the European Community will trade. Twelve Member States of the European
Union
are participating in the common currency. They are:
Belgium, Germany, Greece, Spain, France,
Ireland, Italy, Luxembourg, The Netherlands, Austria, Portugal,
Finland.
Denmark, Sweden and the United Kingdom are members of the European
Union but are
not currently participating in the single currency.The combined
countries, now
more commonly referred to as Euroland, will fall under one national
bank. This
bank, the European Central Bank, will determine the economic fate of
the entire
“Union”. today trade using the Euro has begun. The conversion rates
have been
set for the eleven nations that will partake. If business outside of
the EMU
thinks that they will be unaffected by the Euro they have a surprise in
store.
When it fully takes effect all trade for gods and services will be
conducted
with the Euro. Companies that trade within the EMU will no longer have
to worry
about costly conversion rates and delays that is inherent when using
different
currency for business. As far as trade goes there will be no boarders.
Countries that refuse to trade in the Euro may have difficulties. At
some point
in time they will receive payment for goods or services from an EMU
country. If
they are not prepared to deal with the EURO they will loose business to
competitors that are prepared. Part of being prepared is having the
financial
software that is compatible with the Euro and opening bank accounts so
they can
transact with Euro currency. Traveling in Europe will be less of a
hassle in
regards to exchanging currency.
Europe does not have a
centralized tax system to coincide wit the Euro so it may not be so
well suited
for a single currency union. Maybe in the future as Europe becomes
increasingly
integrated will with its economies will it become the new currency
standard of
the globe. Many see the Euro as a positive development for Europe the
United
States and world economy. The European Economic Union will be the most
ambitious economic projects undertaken in this century.
In conclusion the European
Union is the name of the organization for the countries that
have to
decide to co-operate on a great number of areas, ranging from a single
market
economy, foreign policy's, same sets of environmental laws, mutual
recognition
of school diplomas, to exchange of criminal records are among the few.
EU has
noted that the current eleven official working languages will be
unworkable; an
expansion to sixteen or more will be impossible.
The results of the first
decade
of Spanish EC membership not only accelerated economic growth and
structural
change, but also brought tangible welfare gains to most of their
inhabitats and
"progressive" changes in thinking, attitudes, institutions and
practices. I think that more important than the programmes themselves
was the
creation of political coalitions or crossparty consensuses with the
necessary
degree of resolve to see such prograes through to fruition.
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