Download WHY THE EU?

CHAPTER 10
THE
EUROPEAN
UNION
EU PRISMs
1. Is it a mistake for Europe to
try to integrate so many
different ethnic groups &
religions?
2. Should all EU members play by
the same rules & standards?
3. Should EU leaders be elected
by EU citizens?
4. Can nationalism play a
constructive role in the
world?
5. To what extent do
governments owe their
citizens social welfare
benefits?
6. Should economically weak
nations be excluded from
free trade agreements?
Is the EU a
model for
st
21 century
global
government?
WHY THE EU?
1. To become a “United States of Europe”
with one economic/political system on
par with the United States of America.
2. For European nations to stop being
their own worst enemies in trade &
politics.
3. Vision + Infrastructure + Cooperation
+ Regionalism over nationalism +
Power Centralization = THE WORLD’S
LARGEST ECONOMY & MARKET (30%
share of world gross product)
ECONOMIC ADVANTAGES OF THE USA THAT
THE EU WANTS TO EMULATE
1. One currency
2. One banking system
3. Uniform commercial laws
4. No tariffs between states
5. Federalism over states rights
These are referred to as the 4 EU
freedoms: freedom of goods,
services, movement of labor &
capital.
1.
2.
3.
4.
EU ECONOMIC POTENCY
7% of the world’s population—28%
of the global GDP (larger than the
USA)
454M population & 60% more
consumers than the USA
The 12 member nations using the
Euro exclusively account for 67% of
the population & 74% of the EU
GDP %
One third of the world’s 100 largest
corporations are European
EU vs. U.S.
1.Population of 454M for
EU, 1.5 times larger
than U.S.
2.EU gross regional
product of $12.5T vs.
$11.7T for U.S.
THE COSTS OF EUROPEAN INTEGRATION
1. Diminished national sovereignty of
member nations
2. Loss of national identity in in the EU’s
uniform laws & standards
3. Increased competition for corporations
less protected from their cross-border
rivals
4. Increased organized crime enabled by
removed border controls
5. Head-butting among members over
agricultural subsidies
THE BENEFITS OF EUROPEAN INTEGRATION
1. Lowered incidence of war due to
increased economic interdependency
2. The EU’s single market opens up a
huge new sales opportunities
3. Merged EU corporations are becoming
the largest in the world
4. Poorer member nations benefit from
the economic pull of richer members
5. Democracy & capitalism are promoted
in weaker EU nations
In order to admitted for
membership, EU candidate
nations must fulfill the
“Copenhagen” criteria:
1.A secular, democratic
government
2.Corresponding freedoms &
institutions
3.Respect for rule by law
POLITICAL EVOLUTION OF THE EU
1. The economic unification of Europe
began after WWII (1951) with 6 nations
(Belgium, France, Germany, Italy,
Luxembourg, & the Netherlands)
forming the European Coal & Steel
Community (the “Common Market”) to
prevent another war via trade
cooperation.
2. In 1957, the European Community (EC)
was established by the Treaty of Rome,
which pledged cooperation towards
“four freedoms”: free movement of
goods, services, capital, & people
3. Britain, Ireland, Norway, & Denmark
joined the EC in 1972. Greece, Spain,
& Portugal joined in the 1980s.
4. The European Union emerged in
1992 with the Maastricht Treaty.
5. The Euro was adopted the sole
currency of 11 EU members in 1999.
6. New EU members in 2004 included:
Estonia, Latvia, Lithuania, Poland,
Czech Republic, Hungary, Slovakia,
Slovenia, Malta, & Cyrus. Bulgaria &
Romania joined in 2007.
7.Conspicuous by their absence:
Norway (has thus far rejected EU
membership over concerns about
the Euro & centralization of EU
power) & Switzerland (historically a
politically neutral nation).
8.The political problem with Cyprus: A
civil war has split the island into 2
zones: Turkish/Cypriot (north) vs.
Greek/Cypriot (south). Only the
north Greek-Cypriot partition is
currently an EU member.
PER CAPITA GDP RANKINGS
OF EU NATIONS
Luxembourg (highest per capita GDP
income), Ireland, Denmark, UK,
Austria, Netherlands, Belgium,
Sweden, France, Germany, Italy,
Finland, Spain, Cyprus, Greece,
Slovenia, Portugal, Malta, Czech
Republic, Hungary, Slovakia,
Estonia, Lithuania, Latvia, Poland
(lowest per capita GDP income)
UNEMPLOYMENT RANKINGS
OF EU NATIONS
Luxembourg (lowest unemployment,
around 4.5%), Netherlands,
Austria, Cyprus, Ireland, UK,
Denmark, Sweden, Hungary,
Portugal, Slovenia, Czech Republic,
Belgium, Malta, Italy, Finland,
Greece, France, Germany, Estonia,
Latvia, Spain, Lithuania, Slovakia,
Poland (highest unemployment,
18%)
SEATS IN THE EU PARLIAMENT
Germany: 99; UK, Italy & France:
78; Spain & Poland: 58;
Netherlands: 27; Greece, Belgium,
& Portugal, Czech Republic &
Hungary: 24; Sweden: 19; Austria:
18; Slovakia, Denmark, & Finland:
14; Ireland & Lithuania: 13;
Latvia: 9; Slovenia: 7; Estonia,
Cyprus, & Luxembourg: 6; Malta: 5
4 EU
MEMBERSHIP
GROUPS
ANGLO-SAXONS: Ireland &
Britain
CONTINENTALS: France,
Germany, Belgium, Austria,
Luxembourg
MEDITERRANEANS: Greece,
Spain, Italy, Portugal, Cyprus
NORDICS: Demark, Sweden,
Finland, Netherlands
EU APPLICANTS FOR FUTURE
MEMBERSHIP
Turkey Albania Bosnia
Macedonia Serbia Ukraine
Moldova Belarus Georgia
It will take the former USSR nations about
50 years to catch up economically to the
rest of the EU.
EU POPULATIONS
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Austria: 8M
Belgium: 10M
Cyprus: 1M
Denmark: 5M
Estonia: 1M
France: 60M
Finland: 5M
Germany: 83M
Greece: 11M
Hungary: 10M
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Italy: 58M
Ireland: 4M
Latvia: 2M
Lithuania: 3M
Luxembourg: 16M
Poland: 38M
Portugal: 11M
Spain: 42M
Sweden: 9M
UK: 60M
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Austria (1995)
Belgium (1950)
Bulgaria (2007)
Czech Republic (2004)
Greek-Cyprus (2004)
Denmark (1973)
Estonia (2004)
Finland (1995)
France (1950)
Germany (1950)
Great Britain (1973)
Greece (1981)
Hungary (2004)
Ireland (1973)
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Italy (1950)
Latvia (2004)
Lithuania (2004)
Luxembourg (1950)
Malta (2004)
Netherlands (1950)
Poland (2004)
Portugal (1986)
Romania (2007)
Slovenia (2004)
Slovakia (2004)
Spain (1986)
Sweden (1995)
1. The 10 newest EU member nations in the
EU (mainly former Communist Eastern
European nations) receive tens of billions
or Euros in economic subsidies (“cohesion
funds”) annually from the EU budget
(finance primarily by Germany, France,
Britain, the Netherlands, & Sweden). For
example, new member Poland received
$3.4B in 2005, twice the amount of money
it contributed to the 2005 EU budget.
2. The overall biggest competitive advantage
these newer members have is their low
labor costs compared to Germany, France,
etc.
APPLYING FOR EU MEMBERSHIP
Filling out the EU’s Stabization &
Association Agreement (SAA) is the
first step toward applying for formal
membership. Macedonia submitted
its SAA in 2001 & graduated to
candidate status in 2005. Serbia has
yet to file a SAA because it refuses to
comply with the EU’s war-crimes
investigations. Bosnia’s SAA is
currently in limbo until it implements
police reform.
STANDARD OF LIVING DISPARITIES
BETWEEN EU MEMBERS
2003 per capita incomes:
Germany: $27,600
Poland: $5,400
Romania: $4,084
Bulgaria: $3,735
Ukraine: $1,000 (potential
future member)
WHY TURKEY?
1. Controversy surrounds the membership
of Muslim/Islamic Turkey in the EU
because of historical & current conflict
between Islam & Christendom.
2. The EU hopes Turkey will be a stable
future political & economic buffer zone
between Europe & the Middle East. The
more dependent Turkey becomes on the
EU for new jobs and increased trade, the
greater the chances for peace between
these two ancient religious spheres.
3. Most EU nations worry about Turkey’s
possible membership because of its
large population (& hence voting clout),
islamic leaning, restricted human rights
(especially for women), & its illegal
government in northern Cyprus.
4. Fear of Turkey’s possible membership
was a major factor that caused the
French to reject the EU constitution.
5. Europe’s biggest worry about Muslim
Europeans is that their high population
growth rate will swamp Europe (which
is currently experiencing population
declines as a region) within 3 decades.
6. Turkey’s Prime Minister, Tayyip
Erdogan, pledged after elections in
the summer of 2007 to maintain his
country’s efforts to join the EU. He
had to reassure many of Turkey's
secular middle class that his Islamicleaning administration would not
seek to undo decades of state
religious–neutrality. However,
“Turkey’s secular elite feel more
vulnerable than ever before.”
RUSSIA & THE EU
1.
2.
3.
4.
5.
Russia currently has no desire to join the EU because
it continues to think of itself as an independent global
power that can go it alone (like India & China).
Europe worries about Russia’s lack of human rights,
corrupt business system, & rogue foreign policy.
Russia has attempted to corral former satellites
Moldova & Belarus into an informal economic
confederation to counteract Europe’s growing unity.
The former Soviet satellite nations in Eastern Europe
would oppose Russia’s European entry, fearing future
re-domination.
France would like Russia to join their EU as a foreign
policy counterweight to the U.S.; Germany also is proRussia because of its large oil reserves.
It is possible that Russia might align itself more
closely with Europe economically in the future, but
not politically.
EU OUTLIERS
1. Four Western European have declined to
join the EU: Iceland, Liechtenstein,
Norway, Switzerland
2. The 3 official candidates for the next
round of enlargement: Croatia,
Macedonia, Turkey
3. Future potential candidates: Albania,
Bosnia, Herzegovina, Montenegro,
Serbia
4. The following 4 “micro-states “ lack
formal membership status but are part
of the Euro-zone: Andorra, Monaco, San
Marino, & the Vatican
Brussels, Belgium
El capital del EU (formally
established by the Maastricht
November 1, 1993)
Belgium is partitioned into
Flanders (Dutch/AngloSaxon ethnicity) &
Walloonia (French/Latin
ethnicity). Thus Belgium is
the #1 spot for test
marketing of new products in
Europe with its mix of largely
Anglo-Saxon + Latin citizens.
Current EU treaties =
80,000 pages (!)
LE TRAITÉ 1993 SUR L'UNITÉ
EUROPÉENNE (MAASTRICHT)
The Maastricht treaty established
4 economic standards European nations
must meet to qualify for EU membership:
1. Manageable government deficits
2. Stable currency
3. Mainstream interest
rates (close to the EU regional
average)
4. Inflation control
THE 4 ONE’S OF EU
CENTRALIZATION
1.One military
2.One foreign
policy
3. One banking
system
4. One currency
THE 2000 TREATY OF NICE
1. Designed a complex weighted
voting system to determine
how much influence each
member nation should
have based primarily on
population, GDP, % trade
volume.
2. Initiated a dialogue regarding how
much influence the incoming 10
members should have.
THE EU MILITARY
1. Since WWII, Europe’s main military
capability was the North American Treaty
Organization (NATO), a defense
partnership with the USA.
2. In 2003, the EU developed its own rapid
deployment military force to augment
NATO. Part of the Common Foreign and
Security Policy (CFSP), this rapid
deployment force is designed to put 60,000
troops (gathered from all EU member
nations) into European battle within 60
days.
1. The EU headquarters in Brussels has an
annual budget of $140B, funded by: (1) A
dedicated value-added sales tax (VAT) in
each country + (2) A government support
fee paid by each nation’ population (which
provides 68% of total government
funding)+ (3) Tariffs on goods entering the
EU. The bigger, richer member nations—
particularly Germany, France, and Britain—
provide most of the funds. Inevitably, the
biggest donors want the biggest say in
determining how big the budget should be
and what it should be used for.
2. The European Central Bank (ECU) in
Frankfort has 18 members who set interest
rates for the euro area.
14.The EU government currently
receives an annual budget equal to
1% of the EU’s GDP. This will be
raised to 1.14% in 2013. The 6
biggest contributors (who provide a
quarter of the entire annual
government budget) are Germany,
Britain, France, the Netherlands,
Sweden, & Austria. Almost 40% of
the total EU budget goes to
agricultural subsidies (via the EU’s
Common Agriculture Policy—CAP).
The EU is the prototype model for 21st
century global government which is
emerging via GGOs such as the WTO,
NAFTA, the International Criminal Court,
Kyoto Climate Protocol, and the
International Standards organization. The
EU is seeking to solve such thorny
governmental problems as developing one
constitution for 27 nations, managing a
single currency, & cobbling together a
multilateral foreign policy. Thus the EU is
blazing the trail for other new
organizations that fit into the global
government jigsaw puzzle.
1. European Council of Ministers: A
multiple-headed executive branch of
government (the chiefs of state) that
recommends policies to the Euro
Commission (The EU “Civil Service”).
The Council elects its own president
to a 2 1/2 year renewable term The
current President is Jose Barroso of
Portuga.l
2. Euro Parliament: Amends laws,
controls EU budget, approves
president of Euro Commission
3. The executive (“presidential”) branch of
the European Union—the entity that
does most of the work, and employs
most of the fonctionnaires—is the
European Commission. This is
essentially the cabinet of the European
government—the ministers of health,
finance, agriculture, and so on who
implement the policies of the prime
ministers and the European Parliament.
4. The new Constitution dictates that there
will be only fifteen cabinet jobs, and the
twenty-five member countries will have
to use lobbying and leverage to land one
of the slots.
5. The EU Commission is charged with
proposing new laws for the EU
Parliament to consider. Each EU
member nation is represented by a
single commissioner with a 5-year
renewable term who has one vote
in the Council.
6. The members elect one of its own
members to serve as president who
oversees the day-to-day operations
of the Eurocrats in Brussels.
7. The Council of the EU is charged with
enacting EU laws & controlling the EU
budget. The Council is headed by a
different nation on a rotating basis every 6
months.
8. During the half year a given nation presides
over the Council, it is in the driver’s seat to
chair Council meetings, set the agenda, &
to broker deals between nations. The
Council also is charged with enacting new
laws.
9. Each nations has from 3 (Malta) to 29
(France, Germany, Italy, & Britain) votes.
Le Parlement d'EU
located in Strasbourg, Fr.
Current President: Spain’s
Josep Borrell
10.The European Parliament is the
legislative branch of the EU, an
assembly of members elected
to five-year terms by the voters
of each of the member states.
11. Parliament passes laws, passes
the final EU budget, & supervise
other EU institutions.
12.The parliament now meets half
the time in Strasbourg and half
the time in Brussels.
13.There are 732 seats in the European
Parliament, roughly one for each
600,000 people, which creates a
constituency for each member about
the same size as a congressional
district in the United States.
14.This means Germany, France, Britain,
and Poland have the most seats in the
Parliament (about eighty seats for
each of those large countries), and
the tiny states like Malta and
Luxembourg get four or five seats
apiece.
15. Voting in the Parliament, though, tends not to
follow national lines. Rather, the MEPs (MEP is
the abbreviation for Member of the European
Parliament) have formed various party groupings
along policy lines. The biggest “party” in the
Parliament is a combination of Christian
Democrats and Conservatives, a political
alignment that is known in Europe as “centerright,” but is actually far more liberal on most
issues than left-wing Democrats would be in the
United States.
16. There’s also a large grouping called the party of
European Socialists (PES), which is generally
described as “center-left:” but is not at all centrist
by U.S. political definitions. The third largest
party is a self-described “Reform” camp, which
consists largely of people who are fed up with the
traditional politics of both the Left and the Right.
EU PROGRESS CHECK
Thus far, the EU has:
 A flag
 An anthem
 A currency
 A central bank
 A supreme
court
 A parliament
• A foreign
minister
• A president (of
the European
Commission)
• A budget
• A military
• A (non-ratified)
constitution
ECONOMIC PROGRESS
1. Lisbon agenda: for the EU to be the
world’s strongest economy by 2010
2. EU integration added only 1.3% to the
region’s GDP during the 1990s, but since
1992, EU output increased 2.2%,
creating 2.75M new jobs.
3. EU’s competitiveness has been limited
by (1) Lower work hours vs. the USA; (2)
High welfare state benefits (3) Slow
population growth
4. $500B of trade between EU &
USA annually
5. U.S. companies employ 6M
EU workers vs. 4M Americans
who work for EU companies
6. The per capita income of
Ireland went from 62% of the
EU average in 1981 to 121%
in 2002
L'EURO (official in 2002)
1. The EU wants the Euro to pass up the
American dollar as the world’s most used
currency. The Euro has been stronger than
the dollar over the past 2 years. 16 member
nations currently use the Euro as their official
currency.
2. The U.S. dollar fell 31%
vs. the Euro between 7/01 to
12/03 (when 1 Euro was
worth $1.20)
3. The main cause was tied to America’s record
current account deficit (exports – imports) in
2003 of $½ T (5% of GDP)
HOW THE STRONGER EURO IS
IMPACTING THE EU
1. Increased off-shoring of
manufacturing
2. Greater reliance on
exporting within the Euro
zone
3. Increased importing of
supplies
4. Seeking more non-European
mergers
5. Before the euro, prices for McDonald’s
Big Mac varied by as much as 75 percent
across the eurozone, from roughly $3.55
in Finland to about $2.00 in Greece. Two
years after the euro was introduced,
there were still national differences in
McDonald’s menus, but prices had
converged dramatically. The average
Big Mac price was 2.71 euros (roughly
$3.30), and the difference between
Finland and Spain had dropped from 75
to 15 percent.
THE BENEFITS OF CURRENCY UNIFORMITY
1. Greater clarity of comparing prices
across European borders
2. Greater efficiency of conducting
business & investing across borders
3. Greater willingness of investors to
invest regionally instead of just
locally
4. Emergence of the Euro as a worldclass currency
EURO DAMAGE CAUSE BY THE GREEK
FINANCIAL CRISIS
1. The EU’s efforts (in partnership with
the IMF) in the first quarter of 2010
to provide a financial bail-out for
the 150% of GDP federal deficit of
Greece caused the Euro to drop
about 20%. Currency traders inside
& outside the EU recognize that
“there is no instruction manual for
rescuing a euro-zone country
nearing default.”
LOCAL OR TRULY REGIONAL MARKETING?
Although the EU promises regional
integration of trade and business deals
(reflected by EU corporations earning
almost 2/3 of their revenue regionally),
so far local consumers continue to do
most of their shopping, investing, and
work at home—86% of people’s income
was generated at home & only 10%
across borders. 2/3 of equity investments
are with home companies rather those in
other parts of the EU.
THE SCHENGEN NO-PASSPORT AGREEMENT
In 1985 (in the small town of Schengen,
Luxembourg), 30 nations in Europe
agreed to create passport-free passage
across borders. Thus far, 15 of these
nations have implemented the borderless
policy, & the others will comply in the
near future. Security control is
maintained by requiring people to show a
passport upon leaving a signatory nation.
Non-EU citizens can obtain a special visa
to use instead of a passport.
SCHENGEN NO-PASSPORT
ZONES
Austria , Belgium, Denmark,
Finland, France, Germany,
Greece, Iceland, Italy,
Luxembourg, Netherlands,
Norway, Portugal, Spain,
Sweden, Switzerland
During 21C, the rest of the
world will be evolving in
the same direction as the
EU: less nationalistic +
regional cooperation +
power centralization + the
“2-generation effect”
THE TWO GENERATION EFFECT
People’s sense of history
normally extends back only
2 generations, so over the
next 20 years Europeans
are likely to become less
and less nationalistic as a
result of emergent EU
regionalism.
THE MODERN EUROPEAN
“MIXED CAPITALISM” ECONOMIC SYSTEM
1. The state runs core economic
sectors (public capitalism) and
private companies the other sectors
(private capitalism).
2. The state owns parts of private
companies and employs a
significant number of people
3. The state regulates the private
sector & shapes the overall
economic system
4. The
state delivers an extensive
welfare system: generous
welfare support, strong labor
protections, single-payer health
care systems, zoning restrictions
on the encroachment of megaretailers, subsides for child-care,
pension security, & pregnancy
leave. Many European nations
offer nationalized health care.
Germany, France, &
Italy are the big 3
economic powers in
the EU, accounting for
70% of the region’s
total GDP.
THE EU’S “LURCH & MUDDLE”
FEDERAL POWER STRATEGY
• React to problems as they occur
(such as approval of a constitution
& the admission of Turkey to
membership) rather than have a
principled master plan
• “Get the agreement and worry
about the details later.”
• “The nations will eventually cave in
& consent”
THE POLITICS OF
“MULTIPLE-SPEEDS” CONCESSION
Under the multiple-speeds EU, members
nations that want to experimentally
implement new policies (“core” Europe)
are free to do so, while other nations can
implement them when they are ready.
“This approach would allow coalitions of
willing nations to work toward greater
cooperation in controversial
areas (such as defense & the
constitution) and move ahead of those
nations who are uncertain.”
SELECTIVE SUPPORT OF EU POLICIES
1. Only 13 of the EU’s members
use the Euro as their sole
currency.
2. Fifteen have implemented the
Schengen agreement for
passport-free travel.
3. Sixteen nations have approved
the proposed EU constitution &
2 have rejected it.
Germany, France,
& the “BENELUX”
nations (Belgium,
Luxembourg, the
Netherlands) are
the lead climbers.
THE EU’S UNOFFICIAL POLITICAL COALITIONS
In the absence of true European unity in a
number of areas (immigration, addition of new
members, approval of the constitution, foreign
policy, etc.), EU members have aligned
themselves into several birds of a feather”
factions: those using the Euro vs. those who
don’t; members of the Schengen passport-free
zone; nations participating in the Common
Foreign & Security Policy (the EU’s rapid
response military force); the 7-nation Prum
group that seeks cross-border police & border
control cooperation; those who support the
membership of Turkey vs. those opposed; the
institutionalists vs. the incrementalists.
EU INSTITUTIONALISTS vs.
INCREMENTALISTS
1. EU institutionalists want to seek integration
primarily through creating formal institutions
such as governmental units & agencies
2. Incrementalists would like to see the EU
evolve slowly over time with maximum “grass
roots” participation of member nations.
3. Both factions agree that remedies for the
following temporary structural compromises
of the EU must be sought: the 6-month
rotating presidency; the bizarre member
weighted voting system; a bloated European
Commission (parliament); muddles foreign
policy.
THE EU’s FLIMSY POWER BASE
4. Still in its infancy, the EU government
lacks strong federalist (centralized)
power over the member nations
5. Brussels must thus rely on member
cooperation/goodwill to advance its
policy initiatives. Unless, members are
“happy campers,” progressive change is
tough to come by.
6. An additional power problem for the EU
is whether or not small, economically
weak nations should be extended full
membership privileges.
7.Thus, in 2003, the EU developed an
experimental “European Neighborhood
Policy” originally designed to build
informal, non-membership free trade
relationships with areas outside, but
strategically close to Europe: North
Africa (Morocco, Algeria, Tunisia) + the
southern Caucasus (former Soviet
satellites Georgia, Moldova, Belarus,
Ukraine) + Eastern Europe (Bosnia,
Montenegro, Macedonia, Albania,
Serbia, Croatia, Bulgaria, Romania).
8. These “neighborhood” nations would receive
certain trading privileges with the EU but not
become full-fledged members (due to their
political & economic deficiencies). The main
benefits withheld would include passport-free
travel, free movement of labor across
European borders, agricultural subsidies, &
voting on constitutional issues.
9. The EU government is now considering
whether this “neighborhood” arrangement
might be Europe’s future structure—the EU
would become a loose confederation of “first
& second class” nations rather than a
federation of nations all possessing the same
privileges. This might be the best & only way
for Europe to continue to grow without
contending with all of the problems of nations
that are ill-matched economically & politically.
10.Under this “a la carte” European
(confederation) model, both fullprivilege members & partial-privilege
“neighbors” would be able to pick &
choose among their benefits,
responsibilities, & desired level of selfgovernance.
11.The main drawback of a confederation
EU structure (rather than a federalist
structure) would be: (1) less progressive
government; (2) rivalries between first
class & second class nations; (3)
diminished capacity of the EU
government to upgrade the standard of
living in weaker “neighbor” economies
Scandinavian nations + Great
Britain tend to be
confederationists, preferring
that the EU be mainly an
economic free-trade
agreement, but not the
political union envisioned by
the federalist-leaning
Germans, French, Italians,
Dutch, etc.
THE EU
CONSTITUTION
1. In 2004, the EU put forth its
first prototype constitution
consisting of 200 pages &
70,000 words in length--10
times longer than the U.S.
Constitution.
2. In actuality, this initial
constitution was a detailed
rule book & procedures
manual for EU economic,
governmental, and political
policy
KEY FEATURES OF THE
CONSTITUTION
1. Charter of fundamental rights
2. Primacy of EU law over national law
3. Gives the EU legal personality to
sign international agreements
4. Provides nations with veto rights
over direct EU taxation, foreign &
defense policy & the EU budget
5. Right for EU members to leave the
EU
ABCs of the CONSTITUTION
1. Approved by EU heads of state in 6/04.
2. To be adopted, the had to be ratified by all
member nations.
3. Under the prototype constitution,
legislative policies would pass if approved
by at least 15 member nations, so long as
they comprise at least 65% of the 455M EU
population
4. Legislative measures can be blocked if
vetoed by at least 4 member nations with
35% of the EU population
5. Consolidates all previous EU
treaties into a single document &
adds a bill of rights & member
expectations
6. The constitution must be
approved by ALL member nations
(6 via popular referendum) in
order to take effect
7. Nations can re-vote as often as
desired
THE CONSTITUTION’S PROGRESS
1. 16 EU nations have approved the
constitution so far, but 2 (France & the
Netherlands) have rejected it. Four
nations, led by Britain, have put their
pending constitutional referendums on
hold until EU leadership can figure out
how to reverse the 2 no votes & restabilize Europe’s current fractious
political environment.
2. A “period of reflection” in 2006-2007
to gave EU members more time to
resolve constitutional issues.
THE TWO NO VOTES
3. The French rejected (by a 55% no vote) the
EU competition in popular referendums in the
summer of 2005, raising the specter of
governmental paralysis as the EU hierarchy
struggles to centralize enough power to run
the economy & foreign policy smoothly.
4. 66% of Dutch voters voted the constitution
down & Denmark, Poland, & the Czech
Republic have said they will do the same
thing.
5. Since all EU members must approve the
constitution, the no votes mean future
constitutional compromise is mandatory…but
how long will it take?
EU CONSTITUTIONAL WRANGLING
1. One size fits all member nations
& 470M Europeans?
2. Support the Constitution or leave the
EU?
4. EU parliament levying taxes & passing
federalist legislation?
5. Popularly elected EU Commission
President? (Until the constitution is
approved, nations serve in a rotating
ceremonial presidency every 6 months)
6. In the current debate over the new EU
constitution, the 4 most populous
nations (Germany, France, Britain, Italy)
want a dominating 29 votes each in the
EU Council of Ministers (sorta like the
Executive branch of the USA), while
Spain & Portugal would get 27 each. The
other EU members would then be left
with less than 40% of the overall voting
power
7. The other nations back a proposal for
laws to be approved by a simple
majority vote as long as 60% of the EU’s
overall population is represented in
these votes.
8. Uniformity of criminal law (such as
legal drugs & euthanasia
in the Netherlands)?
9. Uniform immigrations policies,
taxes & social welfare benefits
(the Scandinavian welfare
state)?
10. How can common citizens
popularly elect EU govt. officials
from diverse nations & cultures?
Religious freedom?
(No mention of
religion in the
constitution)
•Women’s rights?
•Military inscription?
•Citizens rights to
bear arms?
THE CONSTITUTIONAL ANXIETY OF
EUROPEANS
1. Worry over loss of national economic control at
a time when many EU members nations are
struggling economically and fear constitutional
centralization will further sap their economic
vitality
2. Worry over possible diminished social welfare
benefits in richer EU nations as poorer nations
receive greater benefits under constitutional
entitlement
3. Worry that Europe’s recent economic
stagnation & high unemployment rate may be
harder to reverse with 25 member nations all
walking “lock-step”
4. Worries
about the mythical “Polish
plumber” (& other workers from low
wage EU nations) stealing jobs away
from workers in EU nations with a
higher standard of living (especially
Germany, France, Netherlands, Italy)
5. Worry in non-Anglo/Saxon nations
that A/S profit maximization (“neoliberal”) capitalism might run
rampant over community &
consumer rights & social welfare
benefits
6. Worries about Europe's shrinking
population & heavy burden of providing
for the retirements of a record number of
baby boomers & continued decline of
Europe’s standard of living.
7. Resentment among the Dutch, Germans,
French, Swedes, Brits, & Austrians that
they contribute significantly more to the
EU budget than they get back.
8. Europeans feel geographically vulnerable
due to their close proximity to unstable
Russia & Muslim nations.
9. Several EU nations (especially
Britain) & growing public
opinion would prefer that the
EU grow in an organic, grassroots (non-federalist) manner
that makes a constitution
unnecessary.
10.Do you think Americans would
re-approve the U.S.
Constitution if voted on today?
OPTIONS FOR BREAKING THE EU
CONSTITUTIONAL LOG JAM
1. “Cherry pick” which pieces of the
constitution EU members do agree on
and jettison the remainder of the
document.
2. Let nations who back the constitution
proceed to operate under its provisions,
while foot-draggers would carry on
independently.
3. Empower the 10 or 12 strongest EU
nations to control the constitutional
approval process, binding the other
members.
4. Seek to get approval for a future revised
constitution via national parliaments
instead of the more politically volatile
grassroots referendum approach.
5. To hem in the potential for controversy,
reduce the number of constitutional
provisions to a bare minimum.
6. Abandon symbolic constitutional
provisions (the EU flag design, adopting
an EU national anthem, & creation of an
EU foreign minister position).
THE LISBON
AGENDA: A
BACK DOOR
CONSTITUTION
The Lisbon agenda (an 2000 EU
developmental plan that calls for the EU to
become the world’s largest & most dynamic
economy by 2010) outlines a political
agenda for the EU to phase in between
2014-2017 that achieves much of what the
proposed constitution seeks. The Council of
Ministers (made up of representatives of
national governments) will convert to
majority voting decision-making in which
decisions will be approved if 55% or more
of nations representing at least 65% of the
EU population agree.
Majority voting will also go into effect in 50
policy areas, including immigration,
criminal justice, & the policies of the
European Court of Justice. The European
Council (comprised of the heads of state)
will elect their own president to as many as
2 two-and-a-half year terms. A Charter of
Fundamental Rights will extend EU workers
the right to strike, access to preventive
health care, and governmental intervention
into labor disputes. Also a majority of
national parliaments have the right to
protest any EU governmental policy & write
an alternative proposal.
IS THE LISBON TREATY ALREADY DEAD?
Ireland rejected the Lisbon Treaty in the
summer of 2008, raising doubts that
the Lisbon reversion of the original EU
constitution is viable. Even though the
Lisbon treaty sought to improve the
Brussels bureaucracy and synthesize
a fairer voting system for EU
members, “few EU governments or
institutions are genuine enthusiasts
for the treaty in its present form.
Most nations want to simply get it out
of the way to move on to more
compelling and viable issues.”
WHERE THE EU LEADS AMERICA IN
QUALITY OF LIFE
1. Better income distribution: High
income Americans average 5.6 times
more income than low-income
Americans vs. 3 times more in
Northern Europe & 3.3 times more in
Central Europe. Overall, the U.S. has
the highest income inequality of the
18 wealthiest nations
2. During the 1980s, the U.S. had the
least growth (-0.3) in total workforce
compensation among developed
nations
3. More Americans (17%; 8% of whites &
24% of blacks) live in poverty than in
the top 16 European nations; Finland =
5.1%; Sweden = 6.6%; Germany =
7.5%; France = 8%; Netherlands =
8.1%; Belgium = 8.2%; Spain = 10.1%;
Ireland = 11.1%; Italy = 14.2%.
4. 37% of Americans work more than 50
hours per week & 80% of male
Americans work more than 40 hours.
70% of Americans say they lack quality
time with their children & 61% say they
rarely have excess time. Europeans
average 4-10 weeks of vacation
annually.
5. 48M (mostly working) Americans currently
lack health insurance, even though
America spends more on per person on
health care ($4900) than any other nation
(primarily due to higher administrative
costs associated with a complex net of
private insurers).
6. The premiums of corporate-provided
health care policies are rising by about
12% annually, and Medicare recipients
about 15%.
7. “America’s future Medicare costs will be a
tsunami compared to the a mere tidal
surge caused by Social Security.”
8. Between 1997-1999, America’s
homicide rate was 6.26 per 100,000 vs.
1.7 per 100,00 for Europe. America’s
rate of childhood diseases, suicides,
and gun-related deaths are the highest
of the 25 wealthiest nations in the
world. The homicide rate for American
children was 5 times higher than the
combined total of the 25 nations; U.S.
suicide rates for children were 2 times
higher than the combined 28 European
nations.
9. The U.S. houses one quarter of all the
prisoners in the world (2M). Europe has 87
prisoners per 100,00 vs. 685 for the U.S.
10.The U.S. has the highest rate of senior
citizen poverty in the industrialized world.
11.The EU’s 2003 GDP was $10.5T vs. $10.4T
in the U.S.
12.Average number of annual vacation days
for workers: France (39); Germany (27);
Netherlands )25); Britain (23); Canada
(20); USA (12)
13. Americas work a longer work day than
Europeans & take less time for lunch (29
minutes).
RECENT AREAS OF
AMERICAN SOCIAL PROGRESS
1.Successful welfare reform
2.Improved racial attitudes
3.Rising volunteerism &
charitable contributions
4.Smooth absorption of
recent immigration
EU vs. THE USA IN COMPETITIVENESS
1. 61 of the top 140 global corporations are
European vs. 50 for the U.S. & 29 in Asia.
2. 14 of the 20 largest commercial banks in
the world are Euro; 3 of the top 5
engineering/construction firms; 5 of the
top 10 food & drug retailers; 6 of the top
11 telecommunications firms; 5 of the top
10 pharmaceuticals (with the U.S. having
the other 5)
3. In a recent survey by Global Finance
magazine, 49 of the 50 companies judged
best in the world were European.
4. Europe now has a larger share of smallto-medium size entrepreneurial firms
(67% of the total Euro economy) than
the U.S. economy (46%).
5. The EU lags behind the U.S. in valueadded to high tech products, number of
high tech patents, & % of workers with
a high school degree. The U.S. lags
behind Europe in number of
science/engineering college grads;
government-financed R&D; & in new
capital raised.
6. The U.S. consumes 1/3 more energy
than Europe.
EU vs. THE USA IN PRODUCTIVITY
1. From 1990-1995, 12 EU nations
experienced higher productivity growth
than the U.S.; the U.S. moved ahead
from 1996-1999, with a 1.9%
productivity increase vs. 1.3% for the
EU.
2. In 2000, 6 European nations outproduced the U.S. in productivity per
worker. The U.S. per worker output =
$38.83 vs. $45.55 for Norway & $41.85
for France.
DECLINING AMERICAN COMPETITIVENESS
The World Economic Forum’s 2006 annual poll of
national showed that America fell from first place in
annual competitiveness in 2005 to 6th place in 2006
due to the high deficits produced by Hurricane
Katrina; federal government corruption associated
with the Abramoff political scandals; restrictions on
immigration; and debt financing the Iraqi war. While
strengths in technological innovation and economic
efficiency explain America’s overall high ranking of
6th, the economy suffers from significant
weaknesses. The World Economic Forum concluded
that America’s overall future competitiveness is
currently at risk, which means that the future of the
overall global economy is also at risk given America’s
dominate position in the global marketplace.
AMERICA’S FALLING LIFE EXPECTANCY
A 2007 survey disclosed that 41 nations
(including almost all of Europe) have a
longer life expectancy than America. The
average American lifespan of 77.9 years
ranks 42nd in the world (down from 11th two
decades ago). Health experts blame the sky
high American obesity rate and luxury
lifestyle available to most Americans.
“Something’s wrong when on of the richest
countries in the world, and the one that
spends the most of health care, is unable to
keep other with other developed countries.”
European markets (especially
in the “big 3” economies of
Germany, France, & Italy,
which produce 1/3 of the EU’s
entire regional GDP) are over
regulated & inflexible due to
unions, high employee
benefits, & complex
government regulations.
“Right now, Europeans seem to look to
the future with more fear than hope.
The core fact is that the European
model is foundering under the fact that
billions of people are willing to work
harder than the Europeans are. The
recent Western European standard of
living is about a third lower than the
American standard of living, and it’s
sliding. Europeans clearly love their
way of life but don’t know how to
sustain it.”
“Europe resembles a
teenager who has just gone
through a tremendous
physical growth spurt but
without a parallel growth in
intellectual and moral
maturity: physically an
adult but philosophically an
adolescent.”
EUROPE’S DECLINING POPULATION
1. 18 European nations have a declining population
rate. France, Britain, the Netherlands, & Norway
are holding their own with a fertility rate of over
2.0. Italy & Spain have the most pessimistic
future population outlook.
2. Number of children per family: France = 1.7;
Germany = 1.3; Italy = 1.2; Spain = 1.1
3. By 2050, Spain’s population will decline by 31M to
40M & Germany will lose more people than in all
of former East Germany.
4. 55% of EU workers will retire over the next 25
years & its total workforce will shrink by 8%.
5. If these population trends persist, Muslims will
emerge as the dominant ethnic group in Europe
by 2050
“Why is Europe committing demographic
suicide, systematically depopulating itself
well beyond what the Black Death
wrought in the 14th century? Europe is
experiencing a crisis of civilization morale
today stemming from its violent wars of
the 20th century, loss of religion, and its
profound secularization. It has forgotten
its history. Europeans have convinced
themselves that in order to be modern
and free, they must be radically secular.
That conviction has had crucial, indeed
lethal, consequences for European public
life and culture.”
WHAT EUROPE MUST DO IN THE FUTURE
TO IGNITE MORE ECONOMIC GROWTH
1. Strengthen the work ethic
2. Strengthen innovative
entrepreneurship
3. Rein in the “cradle-to-grave” social
welfare system
4. Increase indigenous population
growth
5. Keep the EU government’s
bureaucracy in check
1. America’s population is rising more
than twice as fast as the EU’s. In the
20th century, America’s population
increased by 250% vs. just 60% in
France & Britain.
2. America has freer markets & U.S.
companies capitalize on new
technology at a faster rate.
3. America spends twice as much as
Europe on higher education.
4. New markets are easier for
American companies to penetrate in
comparison with European
companies.
5. America’s markets for financial
capital are deeper than European
capital markets.
6. The hyper-competitive American
marketplace weeds out weak,
uncompetitive companies more
efficiently than Europe’s
competitive system.
ECONOMIC
PERFORMANCE
OF THE EU’s 4
MEMBERSHIP
GROUPS
ANGLO-SAXONs: High employment rates
but significant economic inequality
CONTINENTALS: Good at helping people
avoid poverty (due to generous social
benefits), but sub-par job creation
MEDITERRANEANS: Sub-par
performance in both elimination of
poverty & avoiding unemployment
NORDICS: Successful in both economic
performance areas of poverty
reduction + achieving high
employment
The EU has accomplished most
of the easy stuff & is currently
stuck in a holding pattern:
waiting for a constitution to be
approved; determining where
Turkey & Russia fit in;
stabilizing its many struggling
new members. Future progress
promises to be much tougher
to come by.
THE ROADBLOCK OF
LOW CITIZEN AWARENESS
1. 90% of Spaniards weren’t
aware of the EU constitution
2. 25% of Brits didn’t know GB
belonged to the EU
3. 31% of Germans had never
heard of the EU Commission
(the EU’s giant “Civil Service”)
PERCENTAGE OF EU MEMBERS WITH A
POSITIVE IMAGE OF THE EU
•
•
•
•
•
•
•
•
•
•
Italy: 58%
Spain: 56%
Portugal: 55%
Turkey: 53%
France: 45%
Slovakia: 42%
Poland: 38%
Germany: 36%
Netherlands: 33%
Britain: 27%
% OF EUROPEANS WHO FEEL THE EU
SHOULD BE A SUPER POWER LIKE THE USA
•
•
•
•
•
•
•
•
•
France: 82%
Netherlands: 77%
Spain: 75%
Germany: 71%
Italy: 71%
Poland: 68%
Portugal: 66%
Britain: 58%
Turkey: 40%
1.
2.
3.
4.
SOCIALISM THE EU’s
ARTERIOLOSCLEROSIS:
Bloated welfare/pension/health-care
system
Rigid labor market regulations:
unionism, short work week, early
retirements
Sweden/Denmark/Finland spend 33%
of GDP on social benefits (vs. 25% for
Germany & France & 14% for USA).
For every 100 working Europeans, 35
are on pensions; by 2050, there will be
75 on pensions for every 100 working
ONE-UPMAN-SHIP vs. THE USA
1.The EU is gunning to
surpass America as the
world’s largest economy by
2010
2.The EU’s political rivalry
with the U.S. is reflected in
its post 9/11 anti-American
foreign policy stances
THE EU WANTS ONLY EUROPEAN
COMPANIES TO HAVE THE RIGHT TO USE
THE FAMOUS NAMES OF THE FOLLOWING
REGIONAL EUROPEAN FOOD PRODUCTS
•
•
•
•
•
•
•
Champagne
Cognac
Burgandy
Chianti
Madeira
Port
Mozzarella
• Roquefort
• Feta
• Bologna
• Nougat
• Saffron
• Parmagian
EU-USA TRADE TENSIONS
1. Unresolved disputes over U.S.
tariffs, ag. subsidies, U.S. airline
subsidies, EU beef hormones, &
genetically modified foods
2. EU trade commission fined
Microsoft $613 million (500M
Euros) in 2004 for monopolistic
practices in Europe & an additional
$357M in 2006 for failing to comply
with the 2004 antitrust order.
3.In the summer of 2005, the EU
broke up Coca-Cola’s dominance
(50% market share & twice the sales
of the nearest soft drink competitor)
of the European market by outlawing
exclusive contract arrangements
Coke forced its retailers into. Coke
can longer require retailers to give
shelf space preference to Coke
products or to ban certain products
of competitors. The EU ruled that
Coke’s competitive practices were
unfair and in restraint of trade.