finnal essay eu-future

7/29/2019 Finnal Essay EU-Future

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A “real” European Union

World order is going to change in the near future. This year 2012 will be remembered as

the year the European Union become a reality. There are three big events occurring this year that

are promoting a larger economic, political and social unity inside the EU. A united Europe is a

project that has taken a long time to create and that had overcome many difficulties. All the

indefinitions in the EU in the past have created many problems in the present, but now they work

as a pressure mechanism to conclude the project and correct those indefinitions. If this goal of a

united Europe is reached, the consequences will be tremendous because the EU will become the

largest economy of the world, and it will have enough power to change the world in different

ways.

The development of the essay will follow a chronological perspective. First are going to

be analyzed the problems in Europe before the EU and show the developments as a clue to

develop new theories of what can happen in the future. This future is going to be a consequence

of the events happening this year and it will be the second point of analysis. The third one will be

the theory of the future creation of a real European Union after this year events. Finally, the

consequences and importance in the future of the EU created due to the events of this year.

Past

In a diachronic perspective, the European Union was something difficult to think as a

reality when the project was being born, but the overcome of all the problems can be seen as a



signal of how problems will be overcome. There was a large list of situations that had to be

removed in the 1950´s when the project started. To get to the present situation many difficult

situations have been faced, but they have been overcome.

Inside Europe there are huge economic differences between countries, but in the past they

were even larger. This represented a barrier, with UK having a GDP per capita 6 times larger

than Romania in the 50´s (see next table). How can two countries with so many differences join

to be just one country? And not just one, all the countries inside Europe have to get an

agreement. Why will they do it? Cooperation is something really important. Everything is

interdependent in the world, so if countries worked together for the same goal they could

beneficiate of each other helps. This is the reason and the origin of this project, and the goal of a

prosperous future together was strong enough to fight for the united Europe.



Fig.1. Per capita GDP in Europe, 1913-1950 (Broadberry)

The wealthy differences in the countries was a small problem compared to the ones of

creating one country with many different economic models inside its borders. By that time, there

was still an existing USSR, so which one was going to be the model to follow when there was

only one country? That will not be the only issue because there are many historical problems

between countries, and many old disputes unresolved. In summary, there were geographical and

physiological borders to destroy; even Germany was not one country. Only crazy people would

think that could be possible to create what we are talking about. Now, that it is possible to be

inside the mind of Europeans it is easy to think that the goal they have now for the future and

that will be explained later can easily be reached because it is easy compared to what it has

already been accomplished.

Another big problem to deal was how the Union would be organized. It was supposed

that it should be a democratic project but there were many nondemocratic governments in many

countries such as Spain or Portugal. In order to get a unique democratic country those regimes

had to be removed. But how can that be done? One of the characteristic of the project besides

democracy would be the use of peaceful negotiation forms instead of the army. Trough this way,

negotiations made possible that by the end of the 20th

century was reached that all European

countries have a democratic system.

While talking about the problems, we should not only talk about Europe. Africa was part

of Europe, something also interesting to consider. This was something undemocratic, so

countries have to get rid of the colonies in Africa giving them freedom. This process called



decolonization was accelerated during the 60´s. After this, Europe walked separated from Africa

and the project had fewer problems to be achieved.

It is also clear that the US was a model to copy on economic and political aspects but the

different nationalisms inside EU made of this goal something unthinkable. In the US, the citizens

feel a sense of unity around its country while in Europe every country has been fighting to each

other. The historical wars inside the continent create a sense of hates between the people of

different countries, being the most difficult issue to deal with. The answer to this have be done

does not exist. This is a point that has not been completely reached yet, but many improvements

have been done thanks to globalization, European intercultural programs and higher levels of

education.

After the analysis of 50´s Europe and comparing it to the actual situation, many

considerable problems that were inside the EU had been faced and with a successful result. The

analysis can be used to make a prediction of what it is going to occur in the near future.

Important problems that are going to be shown later will seem to be unimportant and easy to

overcome compared to those problems explained previously.

Present

Nowadays, there are many factors pushing this year 2012 to not give up with the

European project. The difficulties lived during this year represent an opportunity to correct with

an internal and external support the mistakes and lack of definitions done in the past. .



Fig. 2. Eurozone and UK 10-year Government Bonds Yields (European Central Bank)

Mediterranean economies are struggling due to some errors made during the creation of

the EU and they have to be fixed to not destroy it. In the image above is showed how the

introduction of the Euro brought low interest rates for all the members, being particularly

significant in the case of countries such as Greece. That introduction of the new currency

produced the idea that all the countries had a similar risk because they would support each other.

That was the reason why the union did it, because it would be as beneficial as it was for the US.

Anyway, when the crisis started everyone realized that the idea was false and the most

considerable problem was that in Europe there is no a Federal Reserve. The similar organism that

should be the European Central Bank (ECB) has limited power because it is divided among the

Central Banks of each country. Again, disorganization and differences between countries was the

main issue. But did not the EU countries realize that if they were together problems would be

less painful? The answer is yes and they are working to get a real union, but it is taking a long



period of time due to the old-Europe inherited problems. Countries know the objective but they

need a pressure mechanism to make them work and go ahead as fast as possible.

The US presidential election at the end of this year is the perfect mechanism of pressure

to solve the crisis because European problems are affecting American economy. Now, there is a

support of the largest economy of the world due to the benefits of the resolved crisis will not

only for EU, but also for external countries whose economies are very dependent.

Fig. 3. Contributions to US GDP growth (Thomson Reuters)

The US government had made many efforts to recover its economy but they cannot get

the expected recovery because the problems in Europe are affecting many American companies.

In the image above can be identify how important used to be to the net trade; something nearly

inexistent now and without exportations a growth cannot be possible. The goal of the US is now

to be a link connecting euro countries to arrange agreements to solve the “confidence” problem

mentioned previously.



The first event of this year mentioned was about the actual financial problems and how

unity could be beneficial and necessary. The second one pointed out that the elections in the US

were a mechanism of pressure to reach an immediate agreement and get the objective. And the

third significant event is the elections in many European countries such as Greece or France, in

which the victory was to candidates supporting a stronger EU. The analysis of the results shows

the popular support to the project inside Europe; citizens believe in the project and they are going

to do what can be necessary to reach the goal of a large and united Europe.

Fig. 4. Greek election results (Patrick Jackson)

The elections in Greece this year have been probably one the most challenging situation

in recent times in the EU. The Greeks had to decide if they wanted to leave the euro or continue

in it having to go through many difficulties. The result showed the popular support to Eurozone



(see graphic above) despite they had to take many unpopular austerity measures as a

consequence of the bailout for continuing in the EU.

Future

The events in this year are showing the solution to the problem. It seems that in the

future, there is going to be a real unity in every single way. And that unity is not only the

response to problems, but also the way to reach higher goals in the social, political and economic

fields.

The first issue in the list is the function of the European Central Bank (ECB). It has to

change its role at the same time the monetary policies have to do it too as a way to help the

economy during struggling situations by working besides the European Government and making

money available when needed. Again, the model is the US and its Federal Reserve System

(FED).



Fig. 5. The European System of Central Banks (European Central Bank).

The image above explains how it is organize right now, an organization with too many

heads. It is obvious that 27 Central Banks looking for their own benefits cannot work together

because they do not have the same goal. Also, the large amount of regulation limiting the power

of each other has made that anyone has real power and it is impossible to take important

decisions. In conclusion, a unique central bank with the goal of integrating the interests of the

countries is the solution.

The second step has to be a fiscal unity. Everyone inside Europe must have the same tax

obligations to equal the life of the people all over the continent and create a sense of equality and

community. As an example to see the actual differences will be used the average VAT rate,

while in Luxembourg is 15% at the same time in Hungary is 27% (European Central Bank).

Those tax differences are a problem if the goal is to create a sense of community. If a person



does not feel equal in those issues, he does not feel to be part of the same project or nation.

Therefore, the second thing to do to create that united Europe that we are talking about is to

equal tax rates and fiscal equality among the EU members.

The last important issue in the list of future things that need to be done to get a united

Europe is social equality. It is the final goal of this big project called EU and to get it everyone

has to be in the same team, having the same rights and benefits and creating also sense of unity

around them. Social benefits as education or healthcare should be equivalent in the EU countries.

The objective reached with this will be similar to the one explained before with fiscal equality.

A country becomes a country when there is something that join the people living in a

territory. Europe wants to become a country and they are making steps to get it. The events of

this year are pushing to accelerate the process of union and to get it there must be three steps that

need to be done as have been explained before: monetary, fiscal and social changes.

Consequences

If the European Union become a reality as it seems is going to happen, it will have huge

consequences in many different ways that can alter the way the world runs today. The

importance of this united Europe is due to it will become the largest economy in the world with

enough power to change the relations among countries all over the globe.



Fig. 6. Largest economies by nominal GDP, 2011 (International Monetary Fund)

The first considerable consequence will be that the EU could get the role of world leader

that the US has right now. But it is necessary to consider that the EU has a different a different

point of view and a smaller army.



Fig. 7. European Military Expenditure (European Union military Staff)

Using a historic point of view, the world leader has been the largest economy, but also it

has had a powerful army. In the image above we can see how if we join the power of the armies

of European countries, the combined spend is only a third of the US budget. This means that

there is going to be a break in human history. It will be the first time in the humanity that the

largest economy of the world has not military power.

The power of the EU as the largest economy will have implications in the international

trade of goods, changing dramatically because the Union will be able to produce new legislation

that can alter the world economy. Using the example of a hypothetical limitation to the import of

goods from China, it will stop the growth of the third economy of the world in a way that would

create immeasurable consequences. The power of EU as a world leader in the economy field can

cause many changes in the trade all over the world.

The third related consequence of creating a real united Europe will be the power that it

will have as model to the rest of the world to copy and imitate its style. During the last years, an

Americanization of the world was the phenomenon in which all the countries tried to copy the

American life-style. Now, a new leader that have the social welfare programs as an identity of

its economical lifestyle can be copied by the rest of the world. The meaning of this change will

be huge; the predominant economic model can change. After many wars between liberals and

communists trying to impose an economic system, the winner could be the European

Keynesianism.

This year 2012 will be highlighted in history books. The events of this year described

before in the essay will promote future changes that will create a real European Union. The



consequences of having a real united Europe will be memorable in the next centuries because it

will create a new world leader with power to change the world in social, political and economic

aspects.

finnal essay eu-future

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