Monthly Archives: July 2016

The European Union: A History Lesson

british flagOver the last few weeks there has been much discussion concerning the United Kingdom’s decision to separate itself from the European Union, the EU. In the wake of this decision there has also been increasing concern about the long-term ramifications of the separation on the EU, United Kingdom and United States.

To better understand this decision, with 52 percent of United Kingdom’s voters (53.4 percent of England’s voters) opting to leave the EU, and its possible ramifications, a general understanding, history lesson, so to speak, seems appropriate.

The EU was created by the Maastricht Treaty, which officially took effect on November 1, 1993. However, the EU as we know it today represents a series of efforts by several western European countries to integrate Europe following WWII. These founding countries, Belgium, France, Italy, Luxembourg, the Netherlands and West Germany, under the Treaty of Paris in 1951, then called the European Coal and Steel Community (ECSC), sought closer economic, social and political ties to achieve economic growth and military security, and to promote a lasting reconciliation between France and Germany.

Over the next 40 years, a series of further international treaties (two Treaties of Rome, the Brussels Treaty and Lisbon Treaty) and treaty revisions, based largely on the ECSC model, eventually led to the Maastricht Treaty and the creation of the EU.

The Maastricht Treaty consisted of three major components: the European Communities (EC), a common foreign and security policy and enhanced cooperation concerning domestic affairs and justice. The treaty also incorporated a monetary policy into the EC and formalized the planning, which had begun in the late 1980s, to replace national currencies with a common currency, the euro, that would be managed by common monetary institutions.  The euro was introduced for use by the general public on January 1, 2002. (Nine EU members – Bulgaria, Croatia, the Czech Republic, Demark, Hungary, Poland, Romania, Sweden and the United Kingdom – don’t use the euro.)

The treaty’s second component defined and implemented common foreign and security policies. EU members agreed that, where possible, they’d adopt common defense policies. These policies would be implemented through the Western European Union, a security organization that includes many EU members.

The treaty’s final component, the Single Market, eliminated border controls, allowing free movement of goods, services, people and money, within EU’s borders.

Today, the European Union is comprised of 28 European countries – Austria, Belgium, Bulgaria, Croatia, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the United Kingdom. The EU was awarded the Noble Prize for Peace in 2012, recognizing the organization’s efforts to promote peace and democracy in Europe.

Reasons behind Brexit

Those opposed to the EU argued that it has become a “dysfunctional economic entity.” According to these challengers, the EU failed to address the widespread economic problems that have been plaguing Europe (e.g. 20 percent unemployment) since 2008.

The second reason sighted is the rise of nationalism across the world. There’s been a growing distrust of multinational financial, trade and defense organizations that were created following WWII (e.g. EU, IMF and NATO).

Many EU opponents feel these institutions no longer serve a purpose, and take control away from the individual nations. This mistrust and loss of control prompted Brexit as a practical solution.

In addition, similar to the sentiment of many Americans, many EU opponents see immigration as a national issue, affecting the internal life of their country. This sentiment is in direct contrast to some EU leaders, who argue that aiding refugees is a moral obligation of the EU.

Many are convinced that Brexit was a vote against the British elite, the politicians, business leaders and intellectuals that have lost their right over the last several years to control the system.

Interestingly, this is not a new phenomenon or one limited to Great Britain. It appears to be an ideology that is sweeping Europe, China as well as the U.S.

What does Brexit mean for the United Kingdom, the EU and the U.S.?

Great Britain’s referendum result is not legally binding. Parliament still has to pass the laws that will remove Britain from the 28-nation bloc, starting with the repeal of the 1972 European Communities Act, and ratify the withdrawal agreement.

If, however, what appears to be the inevitable happens, the EU will be losing one of its largest and wealthiest members. In addition, the consequences for the British people will be significant. Britain’s economy and legal system have become deeply entrenched in Europe. Unraveling their relationships with the remaining members of the EU is likely, at least at the onset, to be economically and socially unsettling.

Many speculate that Britain’s exit will be initially disruptive for the other EU countries. But, most EU advocates believe the larger threat is that Britain will pave the way for other EU members, and could be the first step towards the disintegration of the EU.

From an American perspective, British exit from the EU is more about geopolitics than economics. Since WII, the U.S. has been deeply devoted to maintaining peace and prosperity in Europe. The U.S. still has thousands of troops stationed in Germany in an attempt to minimize the possibility of conflict.

Only time will tell if Europe will ultimately emerge stronger and more prosperous. But, the likelihood of turmoil in Europe as it muddles through Britain’s departure is cause for concern for the U.S. and the rest of the world.