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Wall Street History
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10/13/2006
The European Union
A few weeks ago I was in Bulgaria and Romania when these two
received official word they would be the 26th and 27th countries
admitted to the European Union (EU) come January 2007, but
with strict conditions; such as the need to curb excessive
corruption, particularly in Bulgaria.
Some in the EU are complaining of “enlargement fatigue,” while
others talk of further expansion, starting with the likes of Croatia
(perhaps 2010) and Turkey (2015).
So I thought it was a good time just to remind everyone of just
who is in the EU and how we got to this point.
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1948: Talks begin on having a “European Community” after the
devastation of World War II.
1951: Treaty of Paris establishes economic union of coal and
steel producers, including France and Germany, a forerunner to
the EU.
1957: Treaty of Rome. Belgium, France, Italy, Luxemburg,
Netherlands, and West Germany create the European
Economic Community (EEC).
[In the 1960s, French President Charles de Gaulle, concerned
that France’s voice in world affairs was threatened, vetoed
Britain’s application for membership.]
1973: Denmark, Ireland, UK added.
1981: Greece added.
1986: Portugal, Spain added.
1991: EEC renamed European Union.
1995: Austria, Finland, Sweden added now 15 members of
EU.
2002: ‘Euro’ introduced in 12 EU member states [Denmark,
Sweden, and UK elect not to, or fail to meet standards.]
2004: Cyprus, Czech Republic, Estonia, Hungary, Latvia,
Lithuania, Malta, Poland, Slovakia, Slovenia added to EU.
2007: Bulgaria, Romania added. [26 and 27]
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How does the EU-25 (so not including Bulgaria and Romania)
match up with the United States?
Population wise, the EU-25 has about 455 million versus 300
million for the U.S.
As for GDP, the EU-25 is in the $12.25 trillion range (as close as
I can ascertain), while the U.S. economy now exceeds $13
trillion ($13.2 by the latest count).
[As of 2003 they were virtually equal but since then the United
States has been growing at a far more rapid clip.]
Both, however, have severe pension and entitlement issues
coming up as the respective Baby Boom generations age, though
even here the U.S. has a distinct advantage in that America’s
population continues to grow, thanks to immigration, while
Europe’s is stagnating and on the verge of falling over the
coming decades, which in turn will only exacerbate the pension
issues on the Continent.
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On a separate matter, the European Union Constitution is said to
be structured for only 27 nations and now the limit has been
reached, but in proposing changes for a new document back in
2004 and 2005, voters in France and the Netherlands rejected the
constitution, throwing the whole process into a state of limbo as
all EU members must ratify it before it becomes law. [Not all
need to hold referendums, though, as was the case in both France
and the Netherlands.]
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As for the common currency, the euro, anyone who travels in
Europe has to love it, except for the fact the dollar has been
getting crushed against it the past few years and our greenback
sure as heck doesn’t go as far as it used to. I mean have you seen
the cost of a pint recently?
Twelve nations currently use the euro.
Austria, Belgium, Finland, France, Germany, Greece, Ireland,
Italy, Luxemburg, Netherlands, Portugal, and Spain
Slovenia will adopt it Jan. 2007.
As noted above, Denmark, Sweden and the UK for various
reasons have opted out thus far but could adopt the euro basically
any time they want as long as they met various monetary targets,
while the other 11 new members (including Bulgaria and
Romania) will need more time before adopting the currency.
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One final issue that I’ve brought up extensively in my “Week in
Review” column over the years is the fate of Turkey, which a
while back was eager to join the EU. But now, with both an
Islamist government in power in Ankara and an anti-immigrant
backlash across Europe, post-9/11, Madrid and London
bombings, etc., admission is far from a sure thing.
French Interior Minister (and possible successor to Jacques
Chirac) Nicolas Sarkozy.
“Next year’s 50th anniversary of the EU’s founding Rome treaty
should be celebrated with pride, for it marks an historic
achievement: Half a century of reuniting a divided Continent.
But there is also cause for concern. The forces driving the
Union’s political momentum have run out of steam and Europe’s
citizens are either doubtful or indifferent to its aims and lack any
real collective hope for the future .
“Of all the countries with which the EU should have preferential
relations there is Turkey, our neighbor and friend, sharing many
of our security concerns and many of our values. These are good
reasons for strengthening our ties with Turkey, without going so
far as offering full membership.
“However, no candidate for EU membership has the right to
ignore that the Union has 25 members, including Cyprus.
Despite the customs union between Turkey and the EU, Turkey
continues to deny access to its ports and airports to boats and
airplanes that have stopped in Cyprus. This is not acceptable. I
say again and again that the EU must suspend any new accession
negotiations with Turkey until Ankara has ratified and
implemented, in good faith, its agreed trade protocols.”
And then on Thursday, Oct. 12, the French parliament approved
a bill making it a crime to deny that the 1915-17 massacres of
Armenians by the Ottoman Turks constituted genocide.
Turkey strongly contests this and is furious. Turkey’s parliament
speaker called the French vote “shameful” and reflected a
“hostile attitude.”
The European Commission also criticized the French bill but the
damage to EU-Turkish relations has been done.
Sources:
BBC News, Financial Times, Times of London, The Economist,
International Herald Tribune, Wall Street Journal, European
Union
Wall Street History returns next week.
Brian Trumbore
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