THE EUROPEAN UNION

1
CHAPTER 10

• THE EUROPEAN UNION

2
EU PRISMs

• Is it a mistake for Europe to try to integrate so
  many different ethnic groups religions?
• Should all EU members play by the same rules
  standards?
• Should EU leaders be elected by EU citizens?

3

1. Can nationalism play a constructive role in the
   world?
2. To what extent do governments owe their citizens
   social welfare benefits?
3. Should economically weak nations be excluded from
   free trade agreements?

4
THE EU VISION
5

• Is the EU a model for 21st century global
  government?

6
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 WORLDS LARGEST ECONOMY
   MARKET (30 share of world gross product)

7
ECONOMIC ADVANTAGES OF THE USA THAT THE EU WANTS
TO EMULATE

• One currency
• One banking system
• Uniform commercial laws
• No tariffs between states
• Federalism over states rights
• These are referred to as the 4 EU freedoms
  freedom of goods, services, movement of labor
  capital.

8
EU ECONOMIC POTENCY

1. 7 of the worlds population28 of the global
   GDP (larger than the USA)
2. 454M population 60 more consumers than the USA
3. The 12 member nations using the Euro exclusively
   account for 67 of the population 74 of the EU
   GDP
4. One third of the worlds 100 largest corporations
   are European

9
EU vs. U.S.

• Population of 454M for EU, 1.5 times larger than
  U.S.
• EU gross regional product of 12.5T vs. 11.7T
  for U.S.

10
THE BENEFITS OF EUROPEAN INTEGRATION

1. Lowered incidence of war due to increased
   economic interdependency
2. The EUs 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

11
THE COSTS OF EUROPEAN INTEGRATION

1. Diminished national sovereignty of member nations
2. Loss of national identity in in the EUs 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

12
EU MEMBERSHIP
13
(No Transcript)
14

• In order to admitted for membership, EU candidate
  nations must fulfill the Copenhagen criteria
• A secular, democratic government
• Corresponding freedoms institutions
• Respect for rule by law

15
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

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• 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.

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1. 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).
2. 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.

18
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)

19
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)

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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

21

• 4 EU MEMBERSHIP GROUPS

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• ANGLO-SAXONS Ireland Britain
• CONTINENTALS France, Germany, Belgium, Austria,
  Luxembourg
• MEDITERRANEANS Greece, Spain, Italy, Portugal,
  Cyprus
• NORDICS Demark, Sweden, Finland, Netherlands

23
RECENT EU EXPANSION
24
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.
25
EU POPULATIONS

• Italy 58M
• Ireland 4M
• Latvia 2M
• Lithuania 3M
• Luxembourg 16M
• Poland 38M
• Portugal 11M
• Spain 42M
• Sweden 9M
• UK 60M

• Austria 8M
• Belgium 10M
• Cyprus 1M
• Denmark 5M
• Estonia 1M
• France 60M
• Finland 5M
• Germany 83M
• Greece 11M
• Hungary 10M

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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)

• 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)

27

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.

28
APPLYING FOR EU MEMBERSHIP

• Filling out the EUs 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 EUs war-crimes
  investigations. Bosnias SAA is currently in
  limbo until it implements police reform.

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NEW MEMBER SPECIAL CHALLENGES
30
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)

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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.

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• Most EU nations worry about Turkeys possible
  membership because of its large population (
  hence voting clout), islamic leaning, restricted
  human rights (especially for women), its
  illegal government in northern Cyprus.
• Fear of Turkeys possible membership was a major
  factor that caused the French to reject the EU
  constitution.
• Europes 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.

33

• 6. Turkeys Prime Minister, Tayyip Erdogan,
  pledged after elections in the summer of 2007 to
  maintain his countrys efforts to join the EU. He
  had to reassure many of Turkey's secular middle
  class that his Islamic-leaning administration
  would not seek to undo decades of state
  religiousneutrality. However, Turkeys secular
  elite feel more vulnerable than ever before.

34
RUSSIA THE EU

1. 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
   Russias lack of human rights, corrupt business
   system, rogue foreign policy.
2. Russia has attempted to corral former satellites
   Moldova Belarus into an informal economic
   confederation to counteract Europes growing
   unity.
3. The former Soviet satellite nations in Eastern
   Europe would oppose Russias European entry,
   fearing future re-domination.
4. France would like Russia to join their EU as a
   foreign policy counterweight to the U.S. Germany
   also is pro-Russia because of its large oil
   reserves.
5. It is possible that Russia might align itself
   more closely with Europe economically in the
   future, but not politically.

35
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

36
THE EUS FINANCIAL FAULT LINES

1. 5 EU nations have been red-flagged as EU
   PIIGS (Portugal, Ireland, Italy, Greece, Spain)
   because of their unmanageable government debt
   problems.
2. Greece and Ireland developed serious financial
   problems in 2009-2010, each requiring billion
   dollar bail outs from the Eurozone, European
   Central Bank, and the International Monetary
   Fund.
3. Both nations struggled with imminent national
   loan default Greece due to large government
   deficits that diluted its currency and Ireland
   due to bank defaults stemming from
   over-investment in subprime mortgages a la the US
   other EU nations.

37

• 16 of 27 EU members that have adopted (1999) the
  Euro as their official national currency
• PIIGS
• Core EU govt. deficit nations
• Portugal, Ireland, Italy,
• Greece, Spain

38

• PIIGS governments are in financial jeopardy due
  to high social welfare (vote-buying) deficits
  the high value of the Euro. Their rotten
  economies endanger the value of the Euro the
  existence of the EU.
• PIIGS economies are too poor to afford the Euro
  on their own (like living in New York or Tokyo on
  a Waco income).

39

• Northern EU nations subsidize their use of the
  Euro hence PIIGS social welfare benefits.
• Germany the USA have pushed the EU to create an
  emergency bailout fund to use should any of the
  PIIGS go bankrupt.
• EU USA leaders worry that this fund will not be
  adequate that the world doubts the stability
  of the Euro thus trade with the EU.

40

• Should PIIGS be forced to drop the Euro reuse
  their weaker former currencies?
• Should the EU cancel PIIGS membership to halt
  subsidies their economic baggage?
• Is use of the Euro as the EUs official currency
  unrealistic hence the EU itself?

41
EU TREATIES
42
Brussels, Belgium El capital del EU (formally
established by the Maastricht November 1, 1993)
43
Belgium is partitioned into Flanders
(Dutch/Anglo-Saxon 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.
44
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
45
THE 4 ONES OF EU CENTRALIZATION
1.One military 2.One foreign policy 3. One
banking system 4. One currency
46
THE 2000 TREATY OF NICE

• 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.

47
THE EU MILITARY

• 1. Since WWII, Europes 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.

48

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 nations
   population (which provides 68 of total
   government funding) (3) Tariffs on goods
   entering the EU. The bigger, richer member
   nationsparticularly Germany, France, and
   Britainprovide 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.

49

1. The EU government currently receives an annual
   budget equal to 1 of the EUs 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 EUs Common
   Agriculture PolicyCAP).

50
EU GOVERNMENT
51
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.
52

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

53

1. The executive (presidential) branch of the
   European Unionthe entity that does most of the
   work, and employs most of the fonctionnairesis
   the European Commission. This is essentially the
   cabinet of the European governmentthe ministers
   of health, finance, agriculture, and so on who
   implement the policies of the prime ministers and
   the European Parliament.
2. 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.

54

• 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.
• The members elect one of its own members to serve
  as president who oversees the day-to-day
  operations of the Eurocrats in Brussels.

55

• 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.
• During the half year a given nation presides over
  the Council, it is in the drivers seat to chair
  Council meetings, set the agenda, to broker
  deals between nations. The Council also is
  charged with enacting new laws.
• Each nations has from 3 (Malta) to 29 (France,
  Germany, Italy, Britain) votes.

56

1. 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.
2. Parliament passes laws, passes the final EU
   budget, supervise other EU institutions.
3. The parliament now meets half the time in
   Strasbourg and half the time in Brussels.

57

1. 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.
2. 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.

58

• 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
  center-right, but is actually far more liberal
  on most issues than left-wing Democrats would be
  in the United States.
• Theres 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.

59

• EUROZONE
• (EU 16 of 27 member nations who use the Euro as
  their official currency)
• Austria, Belgium, Cyprus,
• Estonia, Finland, France, Germany, Greece,
  Ireland, Italy, Luxembourg, Malta, the
  Netherlands, Portugal, Slovakia, Slovenia, and
  Spain

60
EU PROGRESS
61
EU PROGRESS CHECKThus 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

62
ECONOMIC PROGRESS

• 1. Lisbon agenda for the EU to be the worlds
  strongest economy by 2010
• 2. EU integration added only 1.3 to the regions
  GDP during the 1990s, but since 1992, EU output
  increased 2.2, creating 2.75M new jobs.
• 3. EUs competitiveness has been limited by (1)
  Lower work hours vs. the USA (2) High welfare
  state benefits (3) Slow population growth

63

1. 500B of trade between EU USA annually
2. U.S. companies employ 6M EU workers vs. 4M
   Americans who work for EU companies
3. The per capita income of Ireland went from 62 of
   the EU average in 1981 to 121 in 2002

64
L'EURO (official in 2002)

• 1. The EU wants the Euro to pass up the American
  dollar as the worlds 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 Americas record
  current account deficit (exports imports) in
  2003 of ½ T (5 of GDP)

65
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

66

• 5. Before the euro, prices for McDonalds 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 McDonalds 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.

67
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 world-class currency

68
EURO DAMAGE CAUSE BY THE GREEK FINANCIAL CRISIS

1. The EUs 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.

69
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
  home86 of peoples 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.

70
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.

71
SCHENGEN NO-PASSPORT ZONES

• Austria , Belgium, Denmark, Finland, France,
  Germany, Greece, Iceland, Italy, Luxembourg,
  Netherlands, Norway, Portugal, Spain, Sweden,
  Switzerland

72

• 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

73
THE TWO GENERATION EFFECT

• Peoples 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.

74

• EURO-NOMICS

75

• 16 of 27 EU members that have adopted (1999) the
  Euro as their official national currency
• PIIGS
• Core EU govt. deficit nations
• Portugal, Ireland, Italy,
• Greece, Spain

76

• PIIGS governments are in financial jeopardy due
  to high social welfare (vote-buying) deficits
  the high value of the Euro. Their rotten
  economies endanger the value of the Euro the
  existence of the EU.
• PIIGS economies are too poor to afford the Euro
  on their own (like living in New York or Tokyo on
  a Waco income).

77

• Northern EU nations subsidize their use of the
  Euro hence PIIGS social welfare benefits.
• Germany the USA have pushed the EU to create an
  emergency bailout fund to use should any of the
  PIIGS go bankrupt.
• EU USA leaders worry that this fund will not be
  adequate that the world doubts the stability
  of the Euro thus trade with the EU.

78

• Should PIIGS be forced to drop the Euro reuse
  their weaker former currencies?
• Should the EU cancel PIIGS membership to halt
  subsidies their economic baggage?
• Is use of the Euro as the EUs official currency
  unrealistic hence the EU itself?

79
THE EU'S ADMINISTRATIVE STRATEGY
80
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

81

• 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
  mega-retailers, subsides for child-care, pension
  security, pregnancy leave. Many European
  nations offer nationalized health care.

82

• Germany, France, Italy are the big 3 economic
  powers in the EU, accounting for 70 of the
  regions total GDP.

83
THE EUS 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

84

• 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.

85
SELECTIVE SUPPORT OF EU POLICIES

• Only 13 of the EUs members use the Euro as their
  sole currency.
• Fifteen have implemented the Schengen agreement
  for passport-free travel.
• Sixteen nations have approved the proposed EU
  constitution 2 have rejected it.

86
Germany, France, the BENELUX nations
(Belgium, Luxembourg, the Netherlands) are the
lead climbers.
87
THE EUS 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 dont members of
  the Schengen passport-free zone nations
  participating in the Common Foreign Security
  Policy (the EUs 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.

88
THE EU FEDERALIST GOVERNMENT OR CONFEDERATION?
89
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) muddled foreign policy.

90
THE EUs FLIMSY POWER BASE

1. Still in its infancy, the EU government lacks
   strong federalist (centralized) power over the
   member nations
2. 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.
3. An additional power problem for the EU is whether
   or not small, economically weak nations should be
   extended full membership privileges.

91

• 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).

92

1. 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.
2. The EU government is now considering whether this
   neighborhood arrangement might be Europes
   future structurethe 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.

93

• Under this a la carte European (confederation)
  model, both full-privilege members
  partial-privilege neighbors would be able to
  pick choose among their benefits,
  responsibilities, desired level of
  self-governance.
• 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

94

• 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.

95

• THE EU
• CONSTITUTION

96

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

97
KEY FEATURES OF THE CONSTITUTION

• Charter of fundamental rights
• Primacy of EU law over national law
• Gives the EU legal personality to sign
  international agreements
• Provides nations with veto rights over direct EU
  taxation, foreign defense policy the EU
  budget
• Right for EU members to leave the EU

98
ABCs of the CONSTITUTION

• Approved by EU heads of state in 6/04.
• To be adopted, they 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

99

• 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

100
THE CONSTITUTIONS PROGRESS

• 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 re-stabilize Europes
  current fractious political environment.
• A period of reflection in 2006-2007 to gave EU
  members more time to resolve constitutional
  issues.

101
THE TWO NO VOTES

1. 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.
2. 66 of Dutch voters voted the constitution down
   Denmark, Poland, the Czech Republic have said
   they will do the same thing.
3. Since all EU members must approve the
   constitution, the no votes mean future
   constitutional compromise is mandatorybut how
   long will it take?

102
EU CONSTITUTIONAL WRANGLING

• 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)

103

• 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 EUs overall population is represented
  in these votes.

104

• 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?

105

• Religious freedom? (No mention of religion in the
  constitution)
• Womens rights?
• Military inscription?
• Citizens rights to
• bear arms?

106
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 Europes recent economic stagnation
  high unemployment rate may be harder to reverse
  with 25 member nations all walking lock-step

107

• 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 (neo-liberal) capitalism
  might run rampant over community consumer
  rights social welfare benefits

108

• 6. Worries about Europe's shrinking population
  heavy burden of providing for the retirements of
  a record number of baby boomers continued
  decline of Europes 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.

109

• Several EU nations (especially Britain) growing
  public opinion would prefer that the EU grow in
  an organic, grass-roots (non-federalist) manner
  that makes a constitution unnecessary.
• Do you think Americans would
• re-approve the U.S. Constitution if voted on
  today?

110
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.

111

1. Seek to get approval for a future revised
   constitution via national parliaments instead of
   the more politically volatile grassroots
   referendum approach.
2. To hem in the potential for controversy, reduce
   the number of constitutional provisions to a bare
   minimum.
3. Abandon symbolic constitutional provisions (the
   EU flag design, adopting an EU national anthem,
   creation of an EU foreign minister position).

112

• THE LISBON AGENDA A BACK DOOR CONSTITUTION

113
The Lisbon agenda (an 2000 EU developmental plan
that calls for the EU to become the worlds
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.
114
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.
115
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.

116
The EU vs. AMERICA
117
WHERE EUROPE HAS THE EDGE OVER AMERICA
118
WHERE THE EU LEADS AMERICA IN QUALITY OF LIFE

• 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
• During the 1980s, the U.S. had the least growth
  (-0.3) in total workforce compensation among
  developed nations

119

• 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.
• 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.

120

• 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).
• The premiums of corporate-provided health care
  policies are rising by about 12 annually, and
  Medicare recipients about 15.
• Americas future Medicare costs will be a
  tsunami compared to the a mere tidal surge caused
  by Social Security.

121

• 8. Between 1997-1999, Americas homicide rate was
  6.26 per 100,000 vs. 1.7 per 100,00 for Europe.
  Americas 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.

122

1. 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.
2. The U.S. has the highest rate of senior citizen
   poverty in the industrialized world.
3. The EUs 2003 GDP was 10.5T vs. 10.4T in the
   U.S.
4. Average number of annual vacation days for
   workers France (39) Germany (27) Netherlands
   )25) Britain (23) Canada (20) USA (12)
5. Americas work a longer work day than Europeans
   take less time for lunch (29 minutes).

123
RECENT AREAS OF AMERICAN SOCIAL PROGRESS

• Successful welfare reform
• Improved racial attitudes
• Rising volunteerism charitable contributions
• Smooth absorption of recent immigration

124
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/constru
   ction 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.

125

1. Europe now has a larger share of small-to-medium
   size entrepreneurial firms (67 of the total Euro
   economy) than the U.S. economy (46).
2. The EU lags behind the U.S. in value-added 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 RD in new capital raised.
3. The U.S. consumes 1/3 more energy than Europe.

126
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 out-produced the U.S.
   in productivity per worker. The U.S. per worker
   output 38.83 vs. 45.55 for Norway 41.85
   for France.

127
DECLINING AMERICAN COMPETITIVENESS

• The World Economic Forums 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 Americas overall high ranking of 6th,
  the economy suffers from significant weaknesses.
  The World Economic Forum concluded that Americas
  overall future competitiveness is currently at
  risk, which means that the future of the overall
  global economy is also at risk given Americas
  dominate position in the global marketplace.

128
AMERICAS 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.
  Somethings 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.

129
WHERE AMERICA HAS THE EDGE OVER EUROPE
130

• European markets (especially in the big 3
  economies of Germany, France, Italy, which
  produce 1/3 of the EUs entire regional GDP) are
  over regulated inflexible due to unions, high
  employee benefits, complex government
  regulations.

131

• 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
  its sliding. Europeans clearly love their way
  of life but dont know how to sustain it.

132

• 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.

133
EUROPES DECLINING POPULATION

• 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.
• Number of children per family France 1.7
  Germany 1.3 Italy 1.2 Spain 1.1
• By 2050, Spains population will decline by 31M
  to 40M Germany will lose more people than in
  all of former East Germany.
• 55 of EU workers will retire over the next 25
  years its total workforce will shrink by 8.
• If these population trends persist, Muslims will
  emerge as the dominant ethnic group in Europe by
  2050

134

• 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.

135
WHAT EUROPE MUST DO IN THE FUTURE TO IGNITE MORE
ECONOMIC GROWTH

• Strengthen the work ethic
• Strengthen innovative entrepreneurship
• Rein in the cradle-to-grave social welfare
  system
• Increase indigenous population growth
• Keep the EU governments bureaucracy in check

136

• 1. Americas population is rising more
• than twice as fast as the EUs. In the
• 20th century, Americas 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.

137

1. New markets are easier for American companies to
   penetrate in comparison with European companies.
2. Americas markets for financial capital are
   deeper than European capital markets.
3. The hyper-competitive American marketplace weeds
   out weak, uncompetitive companies more
   efficiently than Europes competitive system.

138

• ECONOMIC PERFORMANCE OF THE EUs 4 MEMBERSHIP
  GROUPS

139

• 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

140
FUTURE CHALLENGES FOR THE EU
141
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.
142
THE ROADBLOCK OF LOW CITIZEN AWARENESS

• 90 of Spaniards werent aware of the EU
  constitution
• 25 of Brits didnt know GB belonged to the EU
• 31 of Germans had never heard of the EU
  Commission (the EUs giant Civil Service)

143
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

144
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

145
SOCIALISM THE EUs ARTERIOLOSCLEROSIS

1. Bloated welfare/pension/health-care system
2. Rigid labor market regulations unionism, short
   work week, early retirements
3. Sweden/Denmark/Finland spend 33 of GDP on social
   benefits (vs. 25 for Germany France 14 for
   USA).
4. For every 100 working Europeans, 35 are on
   pensions by 2050, there will be 75 on pensions
   for every 100 working

146
ONE-UPMAN-SHIP vs. THE USA

• The EU is gunning to surpass America as the
  worlds largest economy by 2010
• The EUs political rivalry with the U.S. is
  reflected in its post 9/11 anti-American foreign
  policy stances

147
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

148
EU-USA TRADE TENSIONS

• Unresolved disputes over U.S. tariffs, ag.
  subsidies, U.S. airline subsidies, EU beef
  hormones, genetically modified foods
• 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.

149

• 3.In the summer of 2005, the EU broke up
  Coca-Colas 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 Cokes competitive practices were unfair and
  in restraint of trade.