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Europe

The European continent was named after beautiful Phoenician woman called Europa.

Europe

When Zeus have seen Agenor's daughter Europa gathering flowers he immediately fell in love with her.

Welcome to the European Union

The European Union (EU) is an economic and political union of 27 independent Member States which are located in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community. Later, the EU has grown in size by the accession of new member states, and in power by the addition of policy areas. The Maastricht Treaty established the European Union under its current name in 1993. The latest amendment to the constitutional basis of the EU, the Treaty of Lisbon, came into force in 2009.

Berliamont building and EU Flags

The EU operates through a hybrid system of supranational independent institutions and decisions negotiated between all member states. Important institutions of the EU include are:

  1. European Parliament   - Brussels (elected every 5 years)

With a combined population of over 500 million inhabitants, or 7.3% of the world population, the EU generated in 2010 a nominal GDP of 16,242 billion US dollars, which represents an estimated 20% of the World GDP when measured in terms of the purchasing power parity.

Through the Common Foreign and Security Policy the EU has developed a limited role in external relations and defense. Permanent diplomatic missions have been established around the world and EU is represented at the United Nations, WTO, G8 and G-20.

The EU has developed a single market through a standardized system of laws which shall apply in all member states. Within the Schengen Area passport controls have been abolished. EU policies aim to ensure the free movement of people, goods, services, and capital and enact legislation and maintain common policies on trade, agriculture, fisheries and regional development. A monetary union, the Eurozone, was established in 1999 and is currently composed of 17 member states.

 

History

The Schuman Declaration (9 May 1950) led to the creation of the European Coal and Steel Community. This has started the integration process which today led us to the European Union of 27 democratic countries in Europe and Croatia being 28th waiting.

World War I and especially World War II diminished the eminence of Western Europe in world affairs. After World War II the map of Europe was redrawn at the Yalta Conference and divided into two blocs, the Western countries and the communist Eastern bloc, separated by what was later called by Winston Churchill an "iron curtain". The United States and Western Europe established the NATO alliance and later the Soviet Union and Eastern Europe established the Warsaw Pact.
The two new superpowers, the United States and the Soviet Union, became locked in a fifty-year long Cold War, centred on nuclear proliferation.

At the same time decolonisation, which had already started after World War I, gradually resulted in the independence of most of the European colonies in Asia and Africa. In the 1980s the reforms of Mikhail Gorbachev and the Solidarity movement in Poland accelerated the collapse of the Eastern bloc and brought the end of the Cold War. Germany was reunited, after the symbolic fall of the Berlin Wall in 1989, and the maps of Eastern Europe were redrawn once more.

Treaty of Rome

Signing of the Treaty of Rome in 1957 and establishing of EEC.

West European integration grew step by step after World War II starting with the Schuman Declaration in 1950. Then, the Treaty of Rome established in 1957 the European Economic Community between six Western European states with the goal of a unified economic policy and common market. At the same time the EURATOM treaty was signed to provide cooperation between the EEC states in developing nuclear capabilities. In 1967 the EEC, European Coal and Steel Community and EURATOM formed the European Community, which in 1993 became the European Union. The EU established a parliament, court and central bank and introduced the euro as a unified currency. In 2004 and 2007, Eastern European countries began joining the EU, expanding it to its current size of 27 European countries, and once more making Europe a major economical and political centre of power.

How EU works today

Out of more than 10 European Institutions three of them are of the crucial importance:

1

The European Council called also the upper house that is composed of democratically elected governments of the EU Member States.

At the beginning, when it was only six Member States, this was the place where all decisions where agreed upon and taken. Today Council has co-decision role together with EU Parliament. The Council is located in Brussels and its current president is Mr Herman Van Rompuy from Belgium.

European Council
EU Parliament

2

European Parliament called also the lower house. This was established in 1979 and is directly elected by European Member States inhabitants every 5 years.

Currently it has 736 sits and 375 million eligible voters in 2009. The Parliament has two locations, Brussels and Strasbourg and its current president is Jerzy Buzek from Poland. Administration of the Parliament is located in Luxembourg.

3

The European Commission is responsible for proposing legislation, implementing decisions, upholding the Union's treaties and the general day-to-day running of the Union.

The first Commission originated in 1951 as the nine-person "High Authority" under President Jean Monnet of the new European Coal and Steel Community. Louis Armand led the first Commission of Euratom and Walter Hallstein led the first Commission of the EEC.

On July the 1st 1967, by means of the Merger Treaty, all three commissions were combined into a single administration under President Jean Rey. Today, President of the European Commission is elected by the European Parliament and the current President of the EU Commission is José Manuel Barrosso. The Commission headquarters are located in the Berlaymont building in Brussels.

Berliamont Building
Commission Meeting Room on 13th floor

European Commission is composed of more than 40 Departments General called DG’s and a number of Services. The staff of the Commission is composed out of technocrats specialized in required areas and employed for life.

On the top of the Commission there is political staff composed out 27 Commissioners, one from each Member State. On the top of this 27 members team we have:

A Commission President – José Manuel Barrosso – Portugal

B 8 Vice – Presidents including:

B1 High Representative of the Union for Foreign Affairs and Security Policy – Catherine Ashton – UK

B2 – 7 Commissioners of most important DG’s

C 18 Commissioners supervising other Commission DG’s and Services, in some cases having two or three DG’s and/or Services under one Commissioner.

Left, Commission Meeting place on 13th floor

European Commission is the place when legislative initiative is taken. This means that all legislative acts are drafted and then drawn by the Commission team of legislators ensuring that the European Law is coherent what can not be said about most national laws. The idea of drawing new law however can be put forward by European Parliament or by Member State(s) within the European Council. When Parliament and Council agree on the necessity of a new law European Commission gets new order to draft new law on defined subject.

Later, the draft law is sent to 27 Member States and to the European Parliament for discussion. Each Parliament Member may suggest his/her amendments but the final wording of any amendment if agreed upon will be again drawn by the professional legislators in the Commission.

Right, Press Meting room of the Commission

Commission Pers Meeting Room

Finally, after months or even years of discussions, the New Law is positively voted by EU Parliament and EU Council and from this moment it became new European Law. This has to be implemented in all national laws by all Member States within defined time schedule. The Commission is then observing if the national implementations of the EU law are not diverging from the original legislative act.

Euro area

In 1998 eleven European Union member states had met the convergence criteria, and the Euro area came into existence with the official launch of the euro (alongside national currencies) on 1 January 1999. Greece qualified in 2000 and was admitted on 1 January 2001 before physical notes and coins were introduced on 1 January 2002 replacing all national currencies. Between 2007 and 2011, five new states acceded including Slovenia, Cyprus, Malta, Slovakia and Estonia bringing total number of Euro area to 17 countries.

Euro Area

Other ten States (Bulgaria, the Czech Republic, Denmark, Hungary, Latvia, Lithuania, Poland, Romania, Sweden, and the United Kingdom) are EU Members but do not use the euro. Before joining the Euro area, a state must spend two years in the European Exchange Rate Mechanism (ERM II). As of 2011, the National Central Banks (NCBs) of Latvia, Lithuania, and Denmark have participated in ERM II.

Denmark and the United Kingdom obtained special opt-outs in the original Maastricht Treaty. Both countries are legally exempt from joining the Eurozone unless their governments decide otherwise, either by parliamentary vote or referendum. Sweden gained a de facto opt-out by using a legal loophole. It is required to join the Euro area as soon as it fulfils the convergence criteria, which include being part of ERM II for two years but; joining ERM II is voluntary. Sweden has so far decided not to join ERM II.

Countries of Euro area are shown in blue, countries that declared to join euro in th future are shown in green and countries that opt out are shown in brown. Two countries shown in fiolet use euro not being the members of EU.

The 2008 financial crisis increased interest in Denmark and initially in Poland to join the Euro area, and in Iceland to join the European Union, a pre-condition for adopting the euro.

Since Latvia requested help from the International Monetary Fund (IMF), as a precondition, it may be forced to drop its currency peg. This would take Latvia out of ERM II and possibly move the euro adoption date even further from 2013 than currently planned.

However, by 2010, the debt crisis in the Euro area caused that the interest to join from Poland and the Czech Republic cooled out.

Euro bilieten

European sovereign debt crisis

European Central Bank

From late 2009, fears of a sovereign debt crisis developed among investors concerning rising government debt levels across the globe together with a wave of downgrading of government debt of certain European states. Concerns intensified early 2010 making it difficult or impossible for Greece, Ireland and Portugal to re-finance their debts.

On 9 May 2010, Europe's Finance Ministers approved a rescue package worth €750 billion aimed at ensuring financial stability across Europe by creating the European Financial Stability Facility (EFSF).

In October 2011 Euro area leaders agreed on another package of measures designed to prevent the collapse of member economies. This included an agreement with banks to accept a 50% write-off of Greek debt owed to private creditors, increasing the EFSF to about €1 trillion, and requiring European banks to achieve 9% capitalization.

To restore confidence in Europe, EU leaders also suggested creating a common fiscal union across the Euro area with strict and enforceable rules embedded in the EU treaties.

On the left, Central European Bank in Frankfurt 

On 9 December 2011, due to strange objections from the site of UK, it was agreed that the new strict rules on budget deficits and total sovereign debt (including putting these rules to the Member States Basic Acts) will be introduced using multinational agreements between 17 Euro area countries and a number of other EU countries willing to do so.  

The most endangered Euro area countries as of December 2011 are:

Country

Debt in 2011 as % of GDP

Budget deficit of 2011 as % of GDP

Unemployment 2010

S&P rating Feb. 2012

10 years bonds on November 2011

Greece
159%
-8,5%
19,2%
CC
18,0%
Portugal
99%
-6,3%
12,8%
BB
12,5%
Ireland
107%
-11,0%
14,3%
BBB+
9,0%
Italy
123%
-4,1
8,5%
BBB+
7,0%
Spain
69%
-8,2
22,9%
A
6,0%
Belgium
100%
-4,0
8,5%
AA
4,8%

As of December 2011 only UK has opt out from the budget discipline proposal explaining this as step to secure UK sovrenty and making possible in the future to not apply any financial regulation of Europe. It was explained later in the British parliament that in this way premier Cameron want to keep the freedom from European regulations for the City of London Financial Center and its companies. This was two days later strongly critisized in the EU Parliament.

The European sovereign debt crisis is not over yet and it will closely watched by the whole financial world.