THE EUROPEAN UNION OR A CONTRADICTION IN

TERMS?

Hilary Ingham

Lancaster University

&

Mike Ingham

Ansdell Consulting

One World 2008

Origins of EU

• Current EU-27 is latest stage in a process of European post-War reconstruction that was rather ironically American inspired.

• While much activity preceded it, the formal launch of the project might conveniently be ascribed to the signing of the Treaty of Rome in 1957 that ushered in the European Economic Community.

• Signed by Belgium, France, Germany, Italy, Luxembourg and the Netherlands, it sought to inter alia:

Treaty of Rome• lay foundations of an ever closer union among peoples of Europe

• ensure economic & social progress by eliminating barriers dividing Europe

• constantly improve living & working conditions

• bring steady expansion, balanced trade & fair competition

• strengthen unity by reducing regional development differences

• progressively abolish restrictions on international trade

• confirm the solidarity that binds Europe

• preserve peace & liberty

• invited other European countries sharing the ideals to join the founders

Copenhagen Criteria

With a clear focus on CEE & Turkey, Copenhagen Council 1993 formalised the admission criteria:

• democracy

• the rule of law

• human rights & protection of minorities

• functioning market economy

• capacity to cope with competitive pressures and market forces in EU

The Lure of the EU

• 1973Denmark, Ireland, UK

• 1981Greece

• 1986Portugal, Spain

• 1995Austria, Finland, Sweden

• 2004Czech Rep, Cyprus, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, Slovenia

• 2007Bulgaria, Romania

An Unbridled Success?

• "The time for individual nations [in Europe] having their own tax, employment and social policies is definitely over. We must finally bury the erroneous ideas of nations having sovereignty over foreign and defence policies. National sovereignty will soon prove itself to be a product of the imagination."

• Gerhard Schröder, 1999

• “Throughout my life, I have been a convinced European.....The wars and atrocities in former Yugoslavia have demonstrated what Europeans can do to each other when the forces of disintegration are allowed to overtake the wish for unity...... Enlargement of the EU is progressively reuniting our continent...... The historic achievement of the European Community, now the European Union, was to avoid conflict, or even war, through the economic and political integration of its members. To extend that to the rest of Europe is a benefit of immeasurable value.”

• Wim Kok, 2003

Or Reckless Monster?We’ll negotiate withdrawal from the EEC which has drained our natural resources and destroyed jobs.

Tony Blair, 1983, 1st EU President?

Europe [exhibits] evident, undoubtedly unfavourable trends and tendencies. They include:•long-term economic slowdown (both in relative and absolute terms); •loss of cultural dynamism coinciding with the victory of multiculturalism and with the belief in the possibility to preserve traditional European values when abolishing the original institution that made them possible; •loss of leadership, depersonification of decision-making, increasing collective (ir)responsibility; •growing disbelief in politics and in politicians at the moment when increasing range of human actions is becoming subject to collective, public choice procedures; •undermining of national identity.

Because everything will be bigger and more complicated [following the recent enlargement] the inherent failings of the current EU system will increase and will be more visible:•the democratic deficit and the lack of democratic accountability of EU institutions will be more apparent; •the composition of decision-making procedures will further shift from a democratic to a hierarchical one; •the power of the EU "core" will be strengthened; •majority voting instead of unanimity will dominate decision-making in more and more fields; •attempts to get rid of existing deviations from the "norm" will lead to more intervention from above; •the distance of citizens from the centre of power, from Brussels, will grow; •the anonymity in decision-making will increase.

Vaclav Klaus, speech to Bruges Group 2004

WHAT DO EUROPEANS THINK?

Our Membership a Good Thing: Autumn 2006 (%)

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Accession Referenda

• No votes in Cyprus, Bulgaria and Romania

Accession Referenda (% Eligible Population Yes)

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CZ EE HU LV LT MT PL SI SK

Attitudes towards the EU

No simple correlate with these results, but influenced by, amongst others, economic, cultural, political and philosophical factors. However, not convincing evidence of attainment of ToR goal of solidarity.

Here look at the credibility factor, using the contrast between the Lisbon Strategy (not to be confused with the Lisbon Treaty) and the accession programme.

Helsinki Council December 1999

The European Council confirms the importance of the enlargement process launched in Luxembourg in December 1997 for the stability and prosperity of the entire European continent. An efficient and credible enlargement process must be sustained.

The Lisbon Strategy

Lisbon Council March 2000 set a new strategic goal for the EU in the ensuing decade:

to become the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion.

Accompanied by various ambitious targets.

Some Lisbon and Allied Targets for 2010

• Overall employment rate of 70%

• Female employment rate of 60%

• 55-64 year old employment rate of 50%

• Average exit age of 64.9

• 2006

• 64.4

• 57.2

• 43.5

• 61.2

GDP per Capita PPS (EU15 = 100) 2000 & 2006

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BG CY CZ EE HU LV LT MT PL RO SI SK

Productivity per Person Employed PPS (EU15 = 100) 2000 & 2006

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Unemployment (%) 2000 & 2006

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BG CY CZ EE HU LV LT MT PL RO SI SK EU15

Some evident convergence of NMS to EU 15, but is Lisbon really succeeding?

Italy & Portugal Inflate Success of NMS

• Members old and new(ish) can unravel the EU scheme.

• Even inside the Eurozone, domestic policy still critical.

Real GDP Growth (%) 2000 - 2006

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-1

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EU15

Italy

Portugal

After an inauspicious start, Lisbon re-branded as a Jobs and Growth strategy in 2005.

Same goals retained.

Greater social cohesion?

Total Unemployment

2000 2006

EU15 13,533,000 14,466,200

NMS12 5,962,200 4,721,800

Total 19,495,200 19,188,000

Unemployment in 2006 equal to combined populations of Portugal and Sweden.

Total Employment

2000 2006

EU15 159,514,100 171,198,700

NMS12 42,845,100 42,758,400

Total 202,359,200 213,957,100

Growth in NMS totally jobless.

Regional Cohesion & Enlargement

• The reduction of regional differences through convergence was highlighted at Lisbon, just as it was in the Treaty of Rome.

• How does this fit with enlargement?

• 2004 latest available year.

GDP per Cap PPS NUTS 2 Regions 2004 (EU27 = 100)

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Most Competitive Economy in the World?

• 2000 - 2006

Growth GDP per Capita 2000 - 2006

Employment Growth 2000 - 2006

LFPR 2006 (%)

Unemployment Rate

2006 (%)

Australia 19.7 13.3 77.5 4.9

Canada 16.6 11.7 79.4 6.3

Japan 9.0 0.0 79.3 4.1

Korea 31.2 9.4 70.5 3.4

Mexico 12.1 n.a. 66.0 3.2

US 15.4 5.5 78.4 4.6

EU27 12.2 5.7 70.6 8.2

N.B. Saying nothing about Brazil, Russia, India or China

The Future

• Only a brave person would predict what will happen to the NMS once the systemic deficit is finally cleared.

• Probably some leaders and some laggards, as in EU15.

• But 2010 will have come and long gone before we find out.

• It would take a braver person still to forecast the future position of the EU on the European and world stages.