Consolidation and Expansion of European Community, European Union

• At the end of the Second World War in 1945, Europe lay in turmoil: large parts of Germany, Italy, Poland, and the western USSR had been devastated, and even the victorious powers, Britain and the USSR, faced serious financial difficulties because of the cost of the war.
• With a huge task of reconstruction ahead, many believed the best approach was a joint effort — some even envisioned a united Europe modelled on the United States, with European states coming together under a federal system of government.
• However, Europe soon split into two blocs over the American Marshall Plan, designed to promote European recovery:
  • Western European nations gladly accepted American aid, but the USSR refused to let eastern European countries accept it, fearing it would undermine Soviet control over the region.
  • From 1947 onwards, the two halves of Europe developed separately, divided by Joseph Stalin’s “Iron Curtain.”
• The states of western Europe recovered surprisingly quickly from the war, aided by American assistance, rising world demand for European goods, rapid technological progress, and careful government planning.
  • Steps towards unity followed, including the establishment of NATO and the Council of Europe (both in 1949), and the European Economic Community (EEC) in 1957.
• Britain’s enthusiasm for European unity grew more slowly than elsewhere, out of concern that it would threaten British sovereignty.
  • Britain chose not to join the EEC when it was founded in 1957; when it changed course in 1961, France vetoed its entry, and it was not until 1972 that Britain’s membership was finally agreed.
• Meanwhile, the communist states of eastern Europe remained satellites of the USSR, moving towards their own form of economic and political unity through the Molotov Plan (1947), the Council for Mutual Economic Assistance (COMECON, 1949), and the Warsaw Pact (1955).
  • Until his death in 1953, Stalin sought to make these states as similar to the USSR as possible; after 1953, they began asserting more independence.
    • Yugoslavia under Tito had already developed a more decentralised system built around communes.
    • Poland and Romania successfully introduced their own variations, but Hungary (1956) and Czechoslovakia (1968) went too far and were invaded by Soviet troops and brought back into line.
  • Eastern Europe enjoyed relative prosperity through the 1970s, but felt the effects of global economic depression in the 1980s.
• Growing dissatisfaction with the communist system led to its collapse across the USSR and eastern Europe between mid-1988 and the end of 1991 — except in Albania, where communism survived until March 1992.
  • Germany, divided since shortly after the war, was reunified in October 1990, once again becoming the most powerful state in Europe.
  • With the end of communism, Yugoslavia disintegrated into a prolonged civil war (1991–95).
• In the west, the European Community — renamed the European Union from 1992 — continued to function successfully, and many former communist states began applying to join. Membership stood at 25 in 2004 and later reached 28, though enlargement brought its own set of problems.

The Growth of Unity in Western Europe

(a) Reasons for Wanting More Unity

• Across every country in western Europe, there were advocates for greater unity, though they differed on what form it should take:
  • Some wanted nations to simply co-operate more closely.
  • Others — the “federalists” — wanted a full federal system of government, similar to the USA.
• Several arguments underpinned this thinking:
  • Working together and pooling resources was seen as the best way for Europe to recover from the devastation of war.
  • Individual states were considered too small and economically weak to remain viable on their own in a world now dominated by the superpowers, the USA and the USSR.
  • Closer co-operation among western European countries reduced the likelihood of renewed war between them, and offered the best path to speedy reconciliation between France and Germany.
  • Joint action would help western Europe resist the spread of communism from the USSR more effectively.
  • Germany was especially keen on the idea, hoping it would help the country regain acceptance as a responsible nation more quickly than after the First World War, when it had been made to wait eight years before being admitted to the League of Nations.
  • France believed greater unity would allow it to influence German policy and ease long-standing security concerns.
• Winston Churchill was among the strongest advocates of a united Europe:
  • In March 1943, he spoke of the need for a Council of Europe.
  • In a 1946 speech in Zurich, he proposed that France and West Germany take the lead in building “a kind of United States of Europe.”

(b) First Steps in Co-operation

• The first steps towards economic, military, and political co-operation followed soon after, though federalists were disappointed that a “United States of Europe” had not materialised by 1950.

The Organization for European Economic Co-operation (OEEC)

• Established officially in 1948, the OEEC was the first initiative towards economic unity, formed in response to the American offer of Marshall Aid.
  • Ernest Bevin, the British Foreign Secretary, led the effort to organise 16 European nations in drawing up a plan for the best use of American aid — the European Recovery Programme (ERP).
  • This committee of 16 nations became the permanent OEEC.
• Its first task, successfully completed over four years, was apportioning American aid among members; it then went on to encourage trade among members by reducing restrictions, aided by the UN General Agreement on Tariffs and Trade (GATT), which worked to reduce tariffs, and the European Payments Union (EPU), which improved the system of payments between member states so each could use its own currency.
• The OEEC’s success was reflected in trade between members doubling within its first six years.
• When the USA and Canada joined in 1961, it became the Organization for Economic Co-operation and Development (OECD); Australia and Japan joined later.

The North Atlantic Treaty Organization (NATO)

• (Covered in a separate chapter.)

The Council of Europe

• Set up in 1949, this was the first attempt at some form of political unity.
  • Its founder members were Britain, Belgium, the Netherlands, Luxembourg, Denmark, France, Ireland, Italy, Norway, and Sweden.
  • By 1971, all western European states except Spain and Portugal had joined, along with Turkey, Malta, and Cyprus, bringing total membership to 18.
• Based in Strasbourg, it consisted of foreign ministers of member states and an Assembly of representatives chosen by national parliaments.
  • It held no real powers, as several states — including Britain — refused to join any organisation that threatened their sovereignty.
  • It could debate issues and make recommendations, and achieved useful work sponsoring human rights agreements, but it was a considerable disappointment to federalists.

The European Community

• Known in its early years as the European Economic Community (EEC) or the Common Market, the Community was officially established under the Treaty of Rome (1957), signed by six founder members: France, West Germany, Italy, the Netherlands, Belgium, and Luxembourg.

(a) Stages in the Evolution of the Community

Benelux

• In 1944, the governments of Belgium, the Netherlands, and Luxembourg — meeting in exile in London while their countries were under German occupation — began planning for the post-war period.
  • They agreed to establish the Benelux Customs Union, removing tariffs and other customs barriers to allow free trade, put into operation in 1947.
  • The driving force behind it was Paul-Henri Spaak, the Belgian socialist leader who served as Prime Minister of Belgium from 1947 to 1949.

The Treaty of Brussels (1948)

• Under this treaty, Britain and France joined the three Benelux countries in pledging “military, economic, social and cultural collaboration.”
  • While military collaboration eventually led to NATO, the next step in economic co-operation was the ECSC.

The European Coal and Steel Community (ECSC)

• Set up in 1951, the ECSC was the brainchild of Robert Schuman, France’s Foreign Minister from 1948 to 1953.
  • Like Spaak, Schuman strongly favoured international co-operation, hoping that involving West Germany would improve Franco-German relations while making European industry more efficient.
  • He declared his aim was to “make war not only unthinkable but materially impossible,” to be achieved through regional integration, of which the ECSC was the first step.
• The Treaty of Paris, signed on 18 April 1951 by France, West Germany, Italy, and the three Benelux countries, formally established the ECSC.
  • All duties and restrictions on trade in coal, iron, and steel among the six members were removed, and a High Authority was created to run the Community and organise a joint programme of expansion.
  • Britain refused to join, believing membership would mean handing control of its industries to an outside authority.

Achievements and Failures of the ECSC

• Achievements:
  • Trade between members increased, saving money that would otherwise have gone towards importing resources from the United States.
  • The High Authority issued modernisation loans to industry, helping improve output and reduce costs; costs were further reduced by the abolition of border tariffs.
  • On welfare, the ECSC financed 112,500 flats for workers over 15 years, enabling many to buy homes they could not otherwise have afforded, and paid half the occupational redeployment costs of workers who lost their jobs as coal and steel facilities closed.
  • Most significantly, beyond creating Europe’s first social and regional policy, the ECSC helped introduce a lasting peace in Europe.
• Failures:
  • The ECSC failed to prevent the resurgence of large coal and steel groups such as the Konzerne, which had earlier helped Adolf Hitler rise to power — in the trade-offs of the Cold War, cartels and major companies re-emerged, leading to apparent price-fixing.
  • In a period of high inflation and monetary instability, the ECSC also fell short of ensuring an upward equalisation of workers’ pay within the market.
• Despite this, the ECSC’s initial success created a desire for further integration, though attempts to create a European Defence Community and a European Political Community failed, leading to a return to economic matters — resulting in the creation of the EEC and EAEC through the Treaties of Rome (1957).
  • The ECSC’s success was striking even without Britain, with steel production rising by almost 50% during its first five years, prompting the six members to extend integration to cover all goods.

The EEC

• Paul-Henri Spaak, by now Belgium’s foreign minister, was again a driving force behind the initiative.
• The Treaty of Rome, signed on 25 March 1957 by Belgium, France, Italy, Luxembourg, the Netherlands, and West Germany, led to the founding of the European Economic Community (EEC) on 1 January 1958.
  • The six countries agreed to gradually remove all customs duties and quotas between themselves to create free competition and a common market, while retaining (though reducing) tariffs against non-members.
  • The treaty also provided for a Common Agricultural Policy, established in 1962 to protect EEC farmers from agricultural imports.
  • It further committed members to improving living and working conditions, expanding industry, encouraging development in the world’s backward regions, safeguarding peace and liberty, and working towards closer union among European peoples.
  • Some, such as Jean Monnet — French economist and Chairman of the ECSC High Authority — clearly envisioned something wider than a common market, setting up an action committee to work towards a “United States of Europe.”
• The EEC was an early success:
  • Trade among members quadrupled in value between 1958 and 1968.
  • Within five years, it had become the world’s biggest exporter and buyer of raw materials, and was second only to the USA in steel production — though Britain once again chose not to join.

(b) The Machinery of the European Community

The European Commission

• The body responsible for the Community’s day-to-day work, based in Brussels and staffed by civil servants and expert economists who took key policy decisions.
  • It held strong powers to withstand criticism and opposition from member governments, though in theory its decisions required approval from the Council of Ministers.

The Council of Ministers

• Composed of government representatives from each member state, tasked with exchanging information on national economic policies and coordinating them along similar lines.
  • Friction existed between the Council and the Commission, as the Commission often seemed reluctant to heed the Council’s advice while issuing a steady stream of new rules and regulations.

The European Parliament

• Met in Strasbourg, comprising 198 representatives chosen by the parliaments of member states; it could discuss issues and make recommendations but had no control over the Commission or Council.
  • In 1979, a new system was introduced under which representatives were directly elected by the people of the Community, rather than nominated by national parliaments.

The European Court of Justice

• Established to resolve disputes arising from the interpretation and operation of the Treaty of Rome, it soon became the body citizens could appeal to if their government was thought to be violating Community rules.

EURATOM

• The six EEC nations also pooled efforts towards developing atomic energy through EURATOM.
  • The Euratom Treaty, signed on 25 March 1957 alongside the EEC Treaty, established the European Atomic Energy Community, with the aim of creating a common market for the peaceful use of atomic energy among Belgium, France, West Germany, Italy, Luxembourg, and the Netherlands.
• In 1967, the EEC, ECSC, and EURATOM formally merged and, dropping the word “Economic,” became simply the European Community (EC).

(c) Britain Holds Back

• Although Churchill had been one of the strongest supporters of a unified Europe, he showed little enthusiasm for British membership when he returned as Prime Minister in 1951; Anthony Eden’s Conservative government (1955–57) subsequently decided not to sign the 1957 Treaty of Rome.
• Several reasons underpinned Britain’s refusal to join:
  • The main objection was that membership would mean losing full control over Britain’s economy, since the European Commission in Brussels would be able to make key decisions affecting Britain’s internal economic affairs — a sacrifice the other six governments accepted for the sake of overall efficiency, but which Britain was not prepared to make.
  • There were also fears that membership would damage Britain’s relationship with the Commonwealth and its “special relationship” with the USA, ties not shared by other European states.
  • Most British politicians feared economic unity would eventually lead to political unity and the loss of British sovereignty.
• At the same time, Britain and other states outside the EEC worried about being shut out of EEC markets by high import duties, and in 1959 Britain took the lead in forming a rival group, the European Free Trade Association (EFTA).
  • Britain, Denmark, Norway, Sweden, Switzerland, Austria, and Portugal agreed to gradually abolish tariffs between themselves.
  • Britain favoured EFTA because it involved no common economic policies and no Commission interfering in members’ internal affairs.

(d) Britain Decides to Join

• Within four years of the Treaty of Rome, Britain changed course and sought EEC membership, for several reasons:
  • By 1961, the EEC’s success without Britain was evident — French production had risen by 75% and German production by almost 90% since 1953, while British production had grown by only about 30% over the same period, alongside a balance of payments deficit of around £270 million in 1960.
  • EFTA, while successful in boosting trade among its members, was far less successful than the EEC, and the Commonwealth, despite its large population, lacked comparable purchasing power.
  • Prime Minister Harold Macmillan believed EEC membership need not conflict with Commonwealth trade, especially as the EEC seemed willing to make special arrangements for Commonwealth countries and other former European colonies to become associate members, potentially alongside Britain’s EFTA partners.
  • It was also argued that EEC competition would spur British industry towards greater efficiency, and that Britain could not afford exclusion if the EEC evolved into a political union.
• Edward Heath, an enthusiastic supporter of European unity, was given charge of negotiating Britain’s entry.
  • Talks opened in October 1961, but in 1963, French President Charles de Gaulle unexpectedly broke off negotiations and vetoed Britain’s entry.

(e) Why Did the French Oppose British Entry into the EEC?

• De Gaulle argued that Britain’s economic problems would only weaken the EEC, and objected to concessions for the Commonwealth as a drain on European resources — even though the EEC had just agreed to provide aid to France’s former African colonies.
• The British believed de Gaulle’s real motive was a desire to continue dominating the Community, seeing Britain as a serious potential rival.
• De Gaulle was also uneasy about Britain’s close ties with the USA, fearing British membership would let America dominate European affairs, producing what he called “a colossal Atlantic grouping under American dependence and control.”
  • He was reportedly annoyed that the USA had offered Britain Polaris missiles without making a similar offer to France, and was determined to demonstrate that France was a great power that did not need American help.
  • This Franco-American friction eventually contributed to de Gaulle withdrawing France from NATO’s integrated military command in 1966.
• French agricultural interests also played a role: EEC tariffs kept farm prices in Europe well above British levels, and French farmers — with smaller, less efficient farms — feared exposure to competition from Britain’s more efficient, subsidised agriculture, and potentially the Commonwealth.

(f) Expansion in 1973

• On 1 January 1973, Britain, Ireland, and Denmark finally joined the EEC, expanding the Six to the Nine.
• Britain’s entry was made possible by two factors:
  • De Gaulle’s resignation in 1969 and the more Britain-friendly stance of his successor, Georges Pompidou.
  • The skilled and persistent negotiation of Britain’s Conservative Prime Minister, Edward Heath, who — having long championed European unity — finally led Britain into Europe.

The European Community from 1973 to Maastricht (1991)

(a) The Lomé Convention (1975)

• Facing criticism that the EC was too inward-looking and indifferent to poorer nations, this agreement — negotiated in Lomé, the capital of Togo — allowed goods from over 40 countries in Africa and the Caribbean, mostly former European colonies, to enter the EEC duty-free, alongside a promise of economic aid; other Third World countries were added to the list later.

(b) Direct Elections to the European Parliament (1979)

• Despite existing for over two decades, the EC remained remote from ordinary citizens, prompting the introduction of direct elections to foster greater public engagement.
• The first elections, in June 1979, chose 410 Euro-MPs: France, Italy, West Germany, and Britain were allotted 81 seats each, the Netherlands 25, Belgium 24, Denmark 16, Eire 15, and Luxembourg 6.
  • Turnout varied widely — under a third of the British electorate voted, while Italy and Belgium recorded turnouts over 80%.
  • Overall, right-wing and centre parties won a comfortable majority over the left in the new Parliament.
• By the next elections in 1984, Greece had joined, bringing the total to 434 seats.
  • British turnout again fell to just 32%, compared with 92% in Belgium and over 80% in Italy and Luxembourg — though voting was more or less compulsory in these three countries. The highest turnout in a country with voluntary voting was 57%, in West Germany.

(c) The Introduction of the Exchange Rate Mechanism (ERM) (1979)

• The ERM was introduced to link member currencies and limit fluctuations in their relative value, in the hope of controlling inflation and eventually paving the way for a single European currency.
  • Britain initially kept the pound outside the ERM, joining only in October 1990 — at a relatively high, and ultimately costly, exchange rate.

(d) Community Membership Grows

• Greece joined in 1981, followed by Portugal and Spain in 1986, bringing total membership to 12; these countries had previously been barred from joining due to undemocratic political systems.
  • Their entry, as poorer members, increased the Community’s internal pressure to support less industrialised states and narrow the economic gap between rich and poor members.
• Membership grew again in 1995, with the accession of three relatively wealthy states: Austria, Finland, and Sweden.

(e) Britain and the EC Budget

• Many in Britain were disappointed at the perceived lack of benefit from EC membership, especially compared with Ireland, which enjoyed an immediate surge in prosperity as its agricultural exports found new markets.
  • Britain, by contrast, stagnated through the 1970s, with imports from the Community growing faster than exports, reflecting Britain’s difficulty producing competitively priced goods for export.
• A major crisis erupted in 1980 when Britain’s budget contribution was set at £1,209 million, compared with £699 million for West Germany and just £13 million for France.
  • The disparity arose because contributions were partly based on import duties collected from goods entering from outside the EC, and Britain imported far more from the rest of the world than other members.
  • After negotiation by Prime Minister Margaret Thatcher, a compromise reduced Britain’s contribution to a total of £1,346 million over the following three years.

(f) The Schengen Agreement

• Signed on 14 June 1985 by five of the EEC’s ten member states near the town of Schengen in Luxembourg, this agreement led to the creation of Europe’s borderless Schengen Area, though it was only partially implemented from 1995.
  • It proposed the gradual abolition of border checks at signatories’ common borders and the harmonisation of visa policies.

(g) The 1986 Changes

• In 1986, all 12 members negotiated significant reforms intended to strengthen the EC, including:
  • A move towards a completely free and common market by 1992, with no restrictions on internal trade and movement of goods.
  • Greater EC control over health, safety, environmental protection, and consumer protection.
  • More encouragement for scientific research and technology, and additional support for backward regions.
  • The introduction of majority voting on many Council of Ministers issues, preventing a single state from vetoing a measure over perceived national interest.
  • Expanded powers for the European Parliament to speed up the passage of measures — meaning national parliaments gradually ceded some control over their own internal affairs.
  • The adoption of the European flag by the Community.
• While federalists welcomed the last two points, they reignited sovereignty concerns in states such as Britain and Denmark.
  • Margaret Thatcher publicly opposed any move towards a politically united Europe, warning that “a centralized federal government in Europe would be a nightmare” and that co-operation must not come “at the expense of individuality, the national customs and traditions which made Europe great in the past.”

(h) The Common Agricultural Policy (CAP)

• One of the EC’s most controversial policies, the CAP paid subsidies to farmers to keep them in business and ensure the Community could sustain its own food production, while aiming to keep consumer prices reasonable.
  • The subsidies proved so generous that farmers were encouraged to overproduce; by 1980, roughly three-quarters of the entire EC budget went towards farm subsidies.
  • Britain, the Netherlands, and West Germany pushed for subsidy limits, but France resisted, keen to protect its farmers, who benefited significantly from the system.
• By 1987, stockpiles had reached extreme levels — a wine “lake,” a butter “mountain” of 1.5 million tonnes (enough to supply the entire EC for a year), and milk powder stocks sufficient to last five years, with storage costs alone running to £1 million a day.
  • Surplus disposal efforts included cut-price sales to the USSR, India, Pakistan, and Bangladesh, free distribution of butter to the Community’s poor, conversion into animal feed, and even burning some of the oldest butter stocks in boilers.
  • This contributed to a severe budget crisis in 1987, with Community debts reaching £10 billion.
• In response, the EC introduced production curbs and a price freeze, provoking protests from farmers but successfully shrinking surpluses by the end of 1988, as member states turned their attention to preparing for the single European market of 1992.

(i) Greater Integration: The Maastricht Treaty (1991)

• Formally the Treaty on European Union, this was agreed at a summit of EC heads of state in Maastricht, the Netherlands, in December 1991, committing members to “a new stage in the process of creating an even closer union among the peoples of Europe.” Key provisions included:
  • Expanded powers for the European Parliament.
  • A central banking system and greater economic and monetary union, culminating in a common currency — the euro — for all member states by around the end of the century.
  • A common foreign and security policy, and greater co-operation on the environment, policing, and social policy.
  • EU citizenship for every citizen of a member state, allowing them to vote and stand for office in local and European Parliament elections wherever in the EU they resided.
  • A timetable for achieving these goals.
• Britain strongly objected to the ideas of a federal Europe and monetary union, and to the Social Chapter — a set of worker-protection regulations covering safe working conditions, gender equality at work, worker consultation, and protection for redundant workers.
  • France, the Netherlands, and Belgium strongly supported the Treaty, seeing it as a way to contain and control the power of reunified Germany within the Community.
• Public enthusiasm lagged behind that of political leaders:
  • Denmark initially rejected the Treaty, approving it only narrowly in a second referendum (May 1993) after determined government campaigning.
  • Switzerland and Norway voted not to join the Community (December 1992), and even the French referendum passed by only a tiny margin.
  • In Britain, where no referendum was held, the governing Conservatives were deeply split over Europe, and the Treaty passed Parliament by only the narrowest of majorities.
• By the mid-1990s, after almost 40 years, the European Community — known since 1992 as the European Union — had achieved considerable economic success and fostered good relations among members, though key questions remained about how much closer economic and political co-operation could go. The collapse of communism in eastern Europe added a new dimension, as former communist states began seeking membership — Poland and Hungary formally applied in April 1994.

The Three Pillars of the EU

• Between 1993 and 2009, the European Union was legally structured around three pillars, introduced by the Treaty of Maastricht on 1 November 1993 and abandoned only on 1 December 2009, when the Treaty of Lisbon gave the EU a consolidated legal personality.
  • Pillar I — The European Communities (supranational co-operation): covered the customs union and single market, the Common Agricultural and Fisheries Policy, competition law, structural policy, trade policy, EU citizenship, education and culture, trans-European networks, consumer protection, health, research, the environment, social policy, asylum policy, external borders (the Schengen framework), and immigration policy — and included EURATOM and the ECSC.
  • Pillar II — Common Foreign and Security Policy (intergovernmental co-operation): covered foreign policy co-operation, common positions and measures, human rights, democracy, and aid to non-member countries, as well as security policy matters such as the European Security and Defence Policy, EU battlegroups, and peacekeeping and disarmament.
  • Pillar III — Co-operation in Justice and Home Affairs (intergovernmental co-operation): covered co-operation between judicial authorities in civil and criminal law, police co-operation, combating racism and xenophobia, fighting drug and arms trafficking, organised crime, crimes against children and human trafficking, and counter-terrorism.

Europe Since Maastricht

The Copenhagen Criteria

• With further enlargement planned to include former communist states, Cyprus, and Malta, the Copenhagen criteria for candidate membership were agreed at the European Council in Copenhagen, Denmark, in June 1993.
  • These required that a candidate state have institutions capable of preserving democratic governance and human rights, a functioning market economy, and acceptance of the obligations and intent of the EU.
• Following the EU’s creation in November 1993, it enlarged to include sixteen further countries:
  • Austria, Finland, and Sweden joined in 1995.
  • The EU’s biggest enlargement to date came in 2004, when Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia joined, leaving only Norway, Iceland, and Switzerland among major western European states outside the Union.

The Treaty of Amsterdam (1997)

• This treaty further developed and clarified the 1991 Maastricht agreement, committing the Union to promoting full employment, better living and working conditions, and more generous social policies.
  • It gave the Council of Ministers the power to penalise member states that violated human rights, and granted the European Parliament additional powers.
  • Its changes came into effect on 1 May 1999.

Enlargement: Issues and Concerns

• Enlargement raised several concerns:
  • Many former communist states of eastern Europe were considered too economically backward to join on equal terms with advanced members like Germany and France.
  • There were fears that a larger Union would slow decision-making and make consensus on major policy difficult, with federalists worrying that closer political integration would become nearly impossible in a Union of 25–30 states unless a “two-speed Europe” emerged — allowing pro-integration states to move faster towards a federal system while others moved more slowly, or not at all.
  • There was a growing sense that the Union’s institutions needed reform to become more open, democratic, and efficient.
• The Union’s prestige suffered a serious blow in March 1999, when a report exposed widespread corruption and fraud in high places, forcing the entire 20-member Commission to resign.

The Treaty of Nice (2001)

• Signed on 26 February 2001 and entering into force on 1 February 2003, the Treaty of Nice was designed to address institutional reforms needed for enlargement — a task originally intended for, but not completed by, the Treaty of Amsterdam.
  • It amended both the Maastricht Treaty and the Treaty of Rome.
• The treaty’s entry into force was initially in doubt after Irish voters rejected it in a June 2001 referendum, largely due to concerns that the changes would boost the influence of larger states like Germany at the expense of smaller ones, and unease about Irish participation in peacekeeping forces; the result was reversed in a second referendum held just over a year later.

Key Provisions of the Treaty of Nice

• New voting rules were introduced in the Council of Ministers: while many policy areas had previously required unanimous approval (giving any single country an effective veto), most now required “qualified majority voting” (QMV) — approval by members representing at least 62% of the EU population, along with either a majority of members or a majority of votes cast. Taxation and social security, however, still required unanimous approval.
• Council membership and the composition of the European Parliament were adjusted to more closely reflect member states’ populations.
  • The five largest states — Germany, the UK, France, Italy, and Spain — moved from two Commissioners each to one; every member state would have one Commissioner, up to a maximum of 27, and the Commission President gained greater independence from national governments.
• “Enhanced co-operation” was permitted, allowing any group of eight or more member states to pursue greater integration in specific areas.
• A German-Italian proposal was accepted for a conference to clarify and formalise an EU constitution by 2004.
• A plan for a European Union Rapid Reaction Force (RRF) of 60,000 troops was approved to provide military back-up in emergencies, with NATO remaining the basis of Europe’s defence system — a compromise that satisfied neither the French President, who wanted the RRF independent of NATO, nor the USA, which feared the initiative would eventually exclude it and complained of being kept in the dark, describing the EU’s plans as posing “one of the greatest dangers to the transatlantic relationship.”

Problems and Tensions After Nice

• Rather than a smooth transition towards enlargement in May 2004, the period following the Treaty of Nice was marked by unexpected problems and tensions.
• Divisions widened between those favouring closer political union — a form of “United States of Europe” — and those preferring a looser association with power remaining in member states’ hands.
  • Germany, supported by Belgium, Finland, and Luxembourg, favoured a stronger European government with more power for the Commission and Council of Ministers, and a constitution reflecting a federal vision.
  • Britain felt political integration had gone far enough and preferred closer co-operation between national governments over further transfers of power to Brussels or Strasbourg.
• The 11 September 2001 terrorist attacks in the USA left the EU in some confusion: while EU leaders quickly declared solidarity with the USA, foreign and defence matters were areas where the EU was poorly equipped for rapid collective action, leaving individual state leaders — including the German Chancellor, the French President, and UK Prime Minister Blair — to take the initiative, a situation resented by smaller member states who felt bypassed.
• The March 2003 Iraq War caused fresh tensions:
  • Germany and France strongly opposed military action without UN authorisation, believing Iraq could be disarmed peacefully and that war would cause civilian deaths, destabilise the region, and hinder the global fight against terrorism.
  • Spain, Italy, Portugal, and Denmark, along with prospective members Poland, Hungary, and the Czech Republic, supported the joint US-UK action.
  • The American Defence Secretary dismissed German and French opposition as representing “old Europe” — a rift that did not bode well for the EU’s efforts to formulate a common foreign and defence policy, then under discussion for the new EU constitution.
• A separate dispute arose over budget rules in autumn 2003, when it emerged that both France and Germany had breached the Maastricht rule limiting budget deficits to 3% of GDP; EU finance ministers allowed both states an extra year to comply, angering smaller members such as Spain, Austria, and the Netherlands, and raising questions about whether smaller states would receive similar leniency and whether the 3% limit was realistic during economic stagnation.
• The most serious setback came in December 2003, when a Brussels summit collapsed without agreement on a new EU constitution, chiefly over disagreements on voting powers and the balance between smaller and larger states.
  • Despite this, enlargement went ahead as planned on 1 May 2004.
  • By June 2004, a Constitutional Treaty was drawn up for ratification, consolidating previous treaties into a smoother decision-making framework, granting national parliaments somewhat greater powers (including a procedure for states to leave the Union), and preserving member states’ vetoes on taxation, foreign policy, and defence, while giving the EU overriding control over competition policy, customs, trade policy, and marine life protection.
    • The voting dispute was resolved by requiring a measure to be supported by at least 15 countries representing 65% of the EU’s population to pass, with at least 4 countries representing 35% of the population able to block a measure — a safeguard against domination by the largest states.
• A revised agreement, preserving much of this reform while addressing earlier objections, was signed by all member states at Lisbon in December 2007, aimed at completing the process begun by the Treaties of Amsterdam and Nice.

The Lisbon Treaty

• The Lisbon Treaty amended the Maastricht Treaty, the Treaties of Rome, and other founding documents to simplify and streamline the EU’s institutions.
  • Proposed in 2007 and ratified by most member states in 2008, it was rejected by Irish voters — the only country to hold a public referendum on it — on 12 June 2008, putting the entire treaty in jeopardy.
  • A second Irish referendum, held on 2 October 2009, passed. Poland, which had also expressed reservations, ratified the treaty a week after the Irish vote after securing opt-outs on certain EU social policies, such as abortion.
  • Having been ratified by all member states, the treaty entered into force on 1 December 2009.
• The Lisbon Treaty restructured the EU’s legal framework by merging the three pillars and abolishing the European Community, with the European Union becoming its legal successor; it also created a permanent President of the European Council and strengthened the role of the High Representative.

The Future of the European Union

• Despite various setbacks, the EU cannot be considered a failure: the countries of western Europe have remained at peace with each other since 1945, an achievement of real significance given Europe’s war-torn history, and largely attributable to the European movement.
  • The Union’s development remains incomplete — it could eventually become a united federal state, or, more likely, remain a looser political organisation with its own reformed and streamlined constitution.
• The EU has already demonstrated considerable potential:
  • Its economy could rival the USA’s in both size and cohesion, and it has provided well over half the world’s development aid — far more than the USA, with the gap growing over time.
  • The EU has shown willingness to stand up to the USA — for example, when it pressed ahead with the European Galileo satellite-navigation system in March 2002, despite strong US objections that it might interfere with signals from the American GPS system. The French President warned that allowing US dominance of space would make Europe “first scientific and technological vassals, then industrial and economic vassals of the US”; the EU held its ground and the project proceeded.
• Nonetheless, the enlarged EU faces serious weaknesses that still need addressing:
  • The Common Agricultural Policy continues to encourage high production at the expense of quality, damaging developing-world economies.
  • The EU’s confusing institutional structure needs simplification, and its politicians need to better communicate with, and regain the trust of, ordinary citizens.
• The EU also faces two further challenges: immigration and a deepening economic crisis.
  • Rising immigration into the EU, roughly half of it from Muslim-majority countries, has fuelled racial and religious tensions, with some observers describing a “battle at the borders” over immigration control.
    • Concerns centred on declining native birth rates alongside rising Muslim populations in major cities — in Brussels, over half of children born each year were to Muslim immigrants, and in Amsterdam, practising Muslims outnumbered both Protestants and Catholics.
    • Poverty and unemployment among migrants remained above the national average, alongside pervasive discrimination, and political parties built on xenophobic opposition to immigration gained ground in countries including France, Denmark, the Netherlands, and Italy.
  • Rising terrorism carried out by Muslim extremists in the 2000s led some observers to speak of a looming “war between Islam and the West,” though others hoped that economic recovery and full employment could ease tensions and allow multiculturalism to succeed.
  • By 2009, however, this hope seemed distant: the economic crisis deepened, with some economists predicting the euro was beyond saving and speculating the EU itself might disintegrate.
    • In February 2012, German Chancellor Angela Merkel warned that Europe faced its gravest test in decades and predicted 2012 would be worse than 2011, as governments across the Union introduced unpopular austerity measures.
    • Greece, which had manipulated its borrowing figures to qualify for euro membership in 2001, defaulted on enormous debts, with disastrous knock-on effects for banks and economies elsewhere; Italy, Ireland, Spain, and Portugal also faced huge debts and economic crisis, alongside widespread unemployment across the Union.

Positives and Negatives of the EU

Positives

Broad Political and Legal Benefits

• European harmony: EU countries are no longer at loggerheads as they once were; aside from the Yugoslav civil war (Yugoslavia was not an EU member at the time), Europe has largely healed the divisions so painfully exposed by the two World Wars. Many eastern European states have sought EU membership to promote economic and political stability, and the EU has helped consolidate democracy in many nations following the fall of the USSR.
• Legal and human rights: The EU’s strong commitment to human rights, non-discrimination, and due process makes it attractive to countries such as Ukraine seeking similar protections, and the prospect of membership has helped modernise countries like Turkey. The Copenhagen Criteria enshrine commitment to human rights, rule of law, and market economy, encouraging candidate countries to implement human rights legislation.
• Being part of a large supranational body gives member states greater influence in world affairs, along with enhanced collective security and reduced individual defence spending.
• The Working Time Directive protects workers from exploitation, while consumers enjoy rights rarely matched elsewhere in the world.
• Greater cooperation on national security issues, including drug trafficking and cyber-crime, along with the European Health Insurance Card, which guarantees EU citizens the same standard of medical care as local citizens when ill or injured in another member state. This relates to EU citizenship. (Write more points from the chapter explained above)

Economic Benefits

• The EU is one of the world’s strongest economic areas — with 500 million people (7.3% of the world’s population), it accounts for 23% of nominal global GDP.
• Free trade and the removal of non-tariff barriers have reduced costs and prices for consumers, while increased trade has created jobs and boosted incomes; the Single Market is estimated to have boosted the EU’s GDP by €877 billion over ten years.
• The removal of customs barriers has eliminated the need for around 60 million customs clearance documents annually, cutting bureaucracy, costs, and delivery times.
• EU countries rank among the highest on the Human Development Index (HDI), and poorer members such as Ireland, Portugal, and Spain have achieved significant economic development since joining.
• The Social Cohesion Fund and EU structural funds have invested in poorer regions to reduce disparities, which should also benefit wealthier members in the long run as these economies grow and increase their purchasing power; the EU has also attracted greater inward investment from outside the Union, supported further by the European Social Fund (ESF).

Labour and Free Movement of People

• Free movement of labour and capital has helped create a more flexible economy — rather than “taking jobs,” migration has increased productive capacity and contributed positively to tax revenues.
• Mutual recognition of qualifications makes it easier to study and work across member states without retraining, while harmonised safety standards have reduced costs for firms, encouraging small and medium businesses reliant on low-cost exports.
• The Social Charter enshrines worker protections, including a maximum working week, the right to collective bargaining, and fair pay, while the European Arrest Warrant (EAW) scheme has made it easier to track criminals across the continent.

Environmental Benefits

• The EU has raised the quality of sea water and beaches through regulations on water standards, and has taken action on tackling global warming and acid rain.

Consumer Benefits

• EU competition policy has harmonised regulation of monopoly and cartel power across Europe, and consumers can shop across EU countries without paying tariffs or excise duties on returning home.

Negatives

• Larger member states contribute more financially but also wield greater influence in decision-making and policy.
• The EU has taken away certain national powers, such as control over trade agreements, and has contributed to a greater influx of immigrants in some countries.
• The Common Fisheries Policy has arguably had negative effects on the fishing industry.
• The euro has faced serious problems in recent years due to the lack of a fiscal or banking union, while the EU Working Time Directive has raised costs for both businesses and consumers.
• The European Health Insurance Card also allows EU nationals to draw on the National Health Service, adding to the cost burden it carries.
• The “single currency” remains a persistent challenge, given that not all member states use the euro despite the EU’s emphasis on its adoption.
• Overcrowding: freedom of movement has led to overcrowding in major cities, raising house prices and road congestion.
• Other concerns include ongoing migration pressures, pressure towards austerity, growing bureaucracy alongside concerns about democratic accountability, and inefficient policies — a large share of EU spending still goes towards the Common Agricultural Policy. (Write more points from the chapter explained above)

Euroscepticism

• Euroscepticism refers to the body of criticism directed at the EU and opposition to the process of political European integration, found across the political spectrum.
  • Traditionally, its main basis has been the belief that integration weakens the nation state; other eurosceptic views include perceptions of the EU as undemocratic or overly bureaucratic.
• Euroscepticism spans both left and right-wing political parties.
  • The 2014 European elections saw a significant anti-establishment vote, with eurosceptic parties winning around 25% of available seats.
    • National election wins included UKIP in the UK (the first time since 1906 that a party other than Labour or the Conservatives had won a national vote), the National Front in France, the People’s Party in Denmark, and SYRIZA in Greece, with strong second-place finishes for the Five Star Movement in Italy and Sinn Féin in Ireland.
    • Following the elections, European Council President Herman Van Rompuy agreed to re-evaluate the EU’s economic agenda and launch consultations on future policy areas with the 28 member states.