European Union Essay Research Paper Dilemmas asymmetries

European Union Essay, Research Paper

Dilemmas, asymmetries and equilibria of European integration

The European Union has been vacillating between a Federation and a Common- wealth approach. An unpleasant situation has evolved, where all participants feel they are cheated: large States think their smaller partners wield disproportionate clout, small States fear their marginalisation. No system of checks-and-balances seems to exist e.g. in the field of Monetary Union. Moreover, no real solution has been proposed for the difference in development levels within the ever-closer Union and no credible equilibrium has been sought between the competitivity race on one hand and a .social profile. for the Union on the other. A series of re-equilibrations has to occur in Europe for the future to happen without shocks.

Whatever shines is not made of gold

The long-winded negotiations of the IGC ad the much-hailed Amsterdam Treaty have brought little change to the European Parliament. One technical point, though, may lead to an important future shift in priorities. The maximum number of EuroMPs has been fixed at 700; thus if enlargement takes place as expected, the number of sitting EuroMPs of present EU members will have to shrink. For a country like Greece, this would give 21-22 members instead of the present 25. This should lead to a more rational choise of postings on the part of EuroMPs, who have been neglecting useful and even powerful Committees so as to sit on more decorative functions.

EU: Greece Admitted As Member Of Euro Common Currency

Greece thus becomes the 12th member of the currency union, and the first to join since the project was launched just 18 months ago. Greeks are jubilant, saying the move represents a recognition of the economic maturity achieved by their country.

Athens-based media commentator Andreas Papageorgopoulos, who was at the summit site in Porto, put it this way: “For Greece it’s a big day, it proves that the Greek people through their government in the last few years have achieved an enormous task. They have overcome a number of obstacles, and now we are not at the door of Europe, but virtually inside.”

But not everybody views the Greek accession as positive. The infant euro has had a hard time since its inception, losing almost a quarter of its value against the U.S. dollar because of lack of investor confidence. German bankers and financiers, in particular, have been outspoken in their belief that including in the euro Greece, a country traditionally plagued by economic problems, would send the wrong signal to the markets.

It is true that in the past Greece has had high inflation and interest rates, and a public debt reaching 114 percent of gross domestic product. In the last two years, however, Athens has made monumental efforts to get its economic house in order, and the figures speak for themselves. Inflation is down to 5 percent, interest to 9 percent, and public debt is 104 percent of GNP and falling. If Greece can stay on course and improve further in the coming years, there appears no reason to fear that its presence inside the eurozone will further weaken the common currency.

Ironically, the biggest psychological impact of Greece’s accession may be on a country that is not even inside the eurozone, namely Britain. Britain is a major holdout against the common currency, with opinion polls showing that 60 percent of the tradition-minded British public favor keeping the national currency the pound.

In any event, Greek accession to the eurozone is likely to re-awaken debate on joining the euro within the British government

Macroeconomic stability

While no EU member state experienced comparable restrictions on their civil and property rights, Greece, Portugal and Spain had to change their economic regime through a series of structural reforms where the pressure of qualifying for Economic and Monetary Union (EMU) played a crucial role. The fulfillment of the convergence criteria for the euro is not part of the enlargement negotiations but the needed change in the economic regime of the CEAS is already monitored by world financial markets, in the attempt to anticipate whether stability will be sustained after membership – and at what cost in terms of social cohesion.

In an environment of global policy convergence, the main effect of EU enlargement on growth and investment will depend on the progress of transition rather than on geographical proximity, or even on any order of entry into the EU. The progress depends, in turn, on macroeconomic stability and structural reforms. Accordingly, macroeconomic policy sustainability serves as a guide for the timing of a convergence program to macroeconomic stability including a catalog of structural measures capable of improving corporate governance, fighting corruption and promoting national cohesion. The structural dimension is specified in the form of principles of good government at the public and corporate levels which reflect the standards found in all mature democracies and currently promoted by international organizations such as the EBRD, the World Bank or the OECD.

Some of the CEAS are in the middle of the current EU group in terms of the budgetary institutions, suggesting that they are better fit for fiscal consolidation and, hence, for EU membership than Greece, Portugal o