The EEC and the March Towards Economic and Monetary Unity, Research Paper Example

The goal of European unity began to take shape in the aftermath of World War II. With the Soviet Union threatening political stability in Eastern Europe, European nations in the West began to consider the idea of economic and political unity as a defense against the perceived expansionist interest of the Soviets (Gosper, 2012). An example of this is when the author says,    “recognizing that a unified Europe could compete politically and economically with the ideological enemy of Communism, political and business leaders began to forge the alliances and draw up the treaties that would eventually lead to the European Union (Gosper, 2012).” Here the author recognizes that the development of the European Union was not just a political effort but an economic one that was driven by many of the contemporary business men of their era.

By joining forces politically and economically, the nations of Europe also hoped to avoid international wars among themselves, having learned from recent history about the horrors of such wars (Gosper). The earliest stages off such European unity took the form of cooperation between various industries, cooperation that was formed on the basis of various treaties. The concept of monetary unity, and the use of a single currency, was not a part of the original plans for European unity, but would soon come to be seen by many as a necessary and logical evolutionary step.

Along with the notion that European nations could avoid war and bloodshed among themselves by unifying on an economic basis, so too would that economic unity provide Europe with greater economic strength. The reasoning behind this was that, according to some economic theories, the individual nations were simply too small to compete in the emerging global economy; by joining forces, they would be able to flex greater economic might. One of the first steps towards unity was the formation of the European Economic Community, whose member states included Belgium, France, West Germany, Luxembourg, Italy, and the Netherlands (El-Agraa, 2011). These early moves towards unity did not include Great Britain; that nation chose to remain uninvolved with the EEC at the time, based largely on the notion that, having been victorious in World War II, it stood as one of the world’s superpowers (El-Agraa, 2011). This position would have consequences down the line, when Great Britain chose not to join the euro, the European Union’s common currency.

The path towards economic and monetary union in Europe was a long one; throughout the 1970s and into the 1980s, the move towards unity seemed to stall somewhat, as nations and corporations found partnerships both within and outside of the member nations of the EEC (El-Agraa). In 1986, the passage of the Single European Act (SEA) would put the nations of Europe back on a direct path towards economic and monetary unity. While the earlier efforts towards unity had focused largely on cooperation on a political level, it was the SEA that began to bring the nations of Europe together on economic and monetary levels. The idea behind the SEA was to create a “true single market” (El-Agraa) that would combine economic, monetary, and political policies; this marked a significant step towards the creation of the European Union and the development of a unified monetary policy.

The SEA generally received support among the nations of Europe. While the goals of achieving a common European market had not been entirely successful, the idea of such unity remained attractive to businesses and industries that believed such unity was a necessary goal (McCormick, 2011). The SEA was a wide-ranging agreement, and had the effect of moving member nations towards agreement not just on economic issues, but also on foreign policy and other points of consensus (El-Agraa, 2011). The SEA stipulations delineated a move towards establishing a strong single market “over a period expiring on 31 December 1992” (europa.eu).  Among other considerations, the SEA focused on establishing unified standards that would “(encourage) improvements, especially in the working environment, as regards the health and safety of workers” (europa.eu).  As seen through this perspective, the SEA served to strengthen cooperation and agreement among businesses and industries, as well as strengthening the political cooperation among member nations.

The Common Market that had already been established did start the process of fomenting cooperation among some of the nations of Europe, while the SEA had the goal of moving that Common Market in a true single market (El-Agraa, 2011). The fact that the SEA passed was driven by a number of factors, most notably the sluggish economies of many European nations that were weighed down by strict regulations and the heavy burden of maintaining a strong welfare state (McCormick, 2011). Supporters believed that the SEA, by creating a true single market, would give the member nations the strength in numbers that would help them overcome these sometimes-crippling economic factors (El-Agraa) “The SEM is defined in the Single European Act (SEA) as ‘an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured (El-Agraa, 2011).”

The SEA garnered support not just on a political level, but also among businesses which saw it as a necessary step towards economic unity. The SEA did not satisfy everyone, however, and some nations took additional steps towards achieving European unity. Among these steps was the drafting of the Schengen Agreement, which was intend to promote “the fast-track removal of border controls” (McCormick, 2011). The various steps along the way towards European unity were starting to become readily apparent to citizens of Europe, as everything from travel restrictions to international cooperation among businesses became easier (El-Agraa, 2011). “Every participating nation in such a common market would have equal access to the products of these industries wherever they might be located, and, to reinforce this, discrimination on the grounds of nationality was o be forbidden (El-Agraa, 2011).” While the SEA did not seek to establish a unified European currency, the goals of the SEA were to lift as many political, economic, and border restrictions as possible in Europe.

The wide-ranging goals of the SEA served to set the stage for the eventual development of the European Union. While the goal of a unified Europe was a worthy goal, the results of such unity have been problematic in many ways. The global recession of 2008 exposed the weaknesses of the European Union, and some theorists posit that the situation in the EU market will continue unless major restructuring takes place (Whyte & Tilford, 2011). As the move towards economic unity gathered strength, the member nations also found that the financial burdens borne by the individual nations began to weigh down the economies of other nations, and of the EU market as a whole (Soong & Harjani, 2012) “He added that euro zone nations need to ensure that Spain and Italy have access to funding as they carry out their reforms — through measures such as the European Stability Mechanism or euro bonds (Soong, Harjani, 2012).”. Continuing efforts to get the EU back on track economically have met with varying degrees of success; despite the best efforts of those who developed agreement such as the SEA, many politicians and economists, including the president of the EU, predict that the Eurozone and the euro may not survive the current economic crises (lemonde.fr, 2010). In light of the ongoing economic challenges in the U.S., Europe, and around the globe, it remains to be seen if the move towards European unity will withstand the current pressures, or if it will disintegrate as the member nations revert back to fending for themselves.

Bibliography

El-Agraa, Ali M. The European Union: Economics and Policies. Cambridge University Press. New York, New York. 2011.

Europa.eu. The Single European Act. http://europa.eu/legislation_summaries/institutional_affairs/treaties/treaties_singleact_en.htm

Gosper, Jonathan. Can The Eurozone Survive? Miami-Florida European Union Center of Excellence. Vol. 12, No. 4. May 2012.

Le Monde.fr. For the President of the EU, the euro area plays its survival. 11 November 2010.(translated from original French by Google Translate) http://www.lemonde.fr/economie/article/2010/11/16/pour-le-president-de-l-ue-la-zone-euro-joue-sa-survie_1440666_3234.html?xtmc=european_union_european_union&xtcr=15

McCormick, John. European Union Politics. Palgrave MacMillan. New York, NY. 2011.

Soong, Martin & Harjani, Ansuya. Monetary Policy Role in EU Debt Crisis Limited: Zoellick.

Whyte, Phillip and Tilford, Simon. Europe’s Future: Division or Unity? Center for Eurpean Reform. 10 November 2011. http://www.cer.org.uk/in-the-press/europes-future-division-or-unity