A BRIEF HISTORY OF THE EUROPEAN UNION

Craig Parsons
January 2009

In 1993, the twelve nations of the European Community (EC) began calling themselves the European
Union (EU). The new name, like the replacement of European Economic Community (EEC) with
the simpler EC six years before, symbolized a major step forward in their project of international
integration. The document sanctifying this step, the Maastricht Treaty on European Union, announced
a new stage in the process of creating an ever closer union among the peoples of Europe. In
particular, the treaty proclaimed that Europes national currencies would fuse into a single European
moneythe euroin 1999. Economic and Monetary Union (EMU) would radically revise the
political framework for Europes economies.
The replacement of most of Europes national currencies with the euro was the largest
peacetime logistical operation of all time, but it was successfully pulled off from 1999 to 2002. This
brought Europe to a remarkable point: EMU marked the realization of almost all of the fifty-yearold dreams of the founders of the EEC. But if in some ways the euro represented the culmination of a
immense political project, in other ways it also underscored how fuzzy that project had been all along.
Only twelve of the fifteen members initially joined the euro. (Today, sixteen of the expanded
membership of twenty-seven countries participate in the euro). It also immediately provoked debate
over whether the euro should be complemented by new steps to a more complete economic
government, which were then largely cut short by the complications surrounding expansion of the EU
into Eastern Europe. Thus if fifty years of integration have truly transformed the economic and
political landscape of the continent in concrete wayswith unprecedented powers delegated to a
complex new set of supranational institutionsthe Union remains shrouded in ambiguities. The
EUs members are still unclear on the basic institutional goals of their integration, and on who will
ultimately belong to those institutions. The stakes of these disagreements are high: having come very

far in integration, European leaders now regularly face questions of EU powers and legislation that
were only abstract debates several decades ago. The EU has entered the new millennium both as a
tremendous success, and as a group gripped by an identity crisis.
This essay spells out the origins and development of the major questions in European
integration today. Two themes dominate the story: one of continuity and one of change. The continuity
lies in the ambiguity built into European institutions. From its very beginnings, European integration
has been a battleground for competing visions of what Europe is to become. In this sense, todays
identity crisis continues the normal state of affairs. The change lies most importantly in Europes
geopolitical setting. The end of the Cold War widened these old debates into a more far-reaching set of
questions. The revolutions of 1989 erased the geopolitical basis for the national bargainsabove all
between France and Germanyupon which earlier European integration had been constructed. The
Maastricht Treaty of 1991 gave only a partial blueprint for new foundations, modifications in the
Amsterdam Treaty of 1997 and the Nice Treaty of 2000 only partly clarified the situation, and the
proposal and failure of the European Constitution from 2001-2005 left European wondering what
comes next. Long-standing institutional ambiguities and geopolitical change thus combine to pose one
of the most important questions in world politics: what Europe for the 21 st century?
The essays first section covers integration during the Cold War period, from 1945 to 1989.
The second recalls the central geopolitical bargains behind that evolution, and shows how the
revolutions of 1989 threw those bargains into question. The third addresses how the European project
has navigated the new Europe since 1989. Section four looks at the EUs current challenges and
future.

Institutions: Ambiguity and Competing Visions

Origins

European integration began as a response to the continents devastation after World War II. Ideas about
establishing peace and promoting trade by integrating Europes nation-states had existed for centuries,
but had been dismissed as idealistic. Yet from the destruction of 1945 emerged a remarkable
conjuncture of political and economic motivations to take this path.
Political motivations existed on three levels. First, most broadly, the rise of the United States
and the Soviet Union to superpower status made Europeans very conscious of their common place in
the world. The major lines of the global distribution of power were now drawn around western
European states rather than between them. Second, many saw nationalism as the basic cause of both
World Wars, and integration as a way to decrease nationalism and so avoid future war. Third, and less
altruistically, German nationalism in particular was blamed for the wars, and European leaders were
intent on ruling out the possibility of another German resurgence. The creation of European
institutions over German ones was one way of doing so.
In economic terms, motivations to integration emphasized two ideas. One was a fascination
with the scale and efficiency of American production. Europeans were painfully conscious of their
relatively small and antiquated economies. This went hand in hand with an American-inspired
enthusiasm for free trade and competition; in addition to bigger firms and modernized industry,
European economic growth required markets larger than its small countries. These related ideas were
not simply abstractions: postwar Europeans confronted powerful competitive pressures from huge US
firms, and felt that they had to do something to meet that challenge. Integration of the continent into a
Common Market became an attractive solution.
These political and economic themes were taken up by a wide array of politicians, clubs and
interest groups after 1945. With the development of the Cold War around 1947 they took on new
urgency. In the face of a growing Soviet threat, they argued, western Europe needed the economic and
political strength that only integration could bring. By 1948, European integration of some sort was on
everyones agenda.

Agreeing on what integration meant, however, was not easy. The most enthusiastic
Europeanists, led idealistically by figures like the Italian politician Altiero Spinelli and much more
pragmatically by French bureaucrat Jean Monnet, preached a vision of a federal Europe that would be
no less than a full-fledged supranational state. European institutions like those of the United States
would supersede national governance, making nations similar to American states. Less radical were
those who saw Europe not as a replacement for nation-states, but as a way to strengthen them through
cooperation. In this visionlater championed by French leader Charles de Gaulleeconomic
cooperation and foreign policy coordination between nations would allow Europe to challenge
superpower dominance of world affairs. European institutions would form an intergovernmental
confederation, with national governments retaining their authority but engaging voluntarily in
extensive cooperation. Finally, the least ambitious version of Europeanist thinking limited integration
to the economic sphere. Europe would become a free-trade area, helping competition and
modernization but constraining governments as little as possible.
These positions were so different that their proponents could hardly be expected to find a
compromise. Yet agreement on one point allowed Europeans to move past their differences: all
eventually agreed that integration should begin with economics. For the free-traders most notably
Britain, but also business interests in Germany and elsewhereintegration would end with the first
major step: a free trade area, and possibly a customs union. 1 Those with some political ambitions for
Europe, on the other hand, saw political cooperation developing from economic cooperation.
Confederalists hoped that economic cooperation would strengthen national economies, and that new
economic might could be wielded in political cooperation to reestablish European influence in world
affairs. Federalists initially wanted an immediate jump to a United States of Europe. When most
Europeans quickly rejected such plans in the 1940s, however, federalists accepted that their hopes lay
in the possibility that economic integration would spill over to create strong political bonds and a

In a free trade area, countries abolish all internal tariff barriers between them. In a customs union, countries
also adopt a common set of tariffs vis--vis third countries.

European identity in the longer term. Thus a beginning in economics provided a way to rally the
competing visions of Europe together. The trick was to do this while allowing the different groups to
believe that the initial economic framework could evolve in the political direction they preferred.
It was the inventive, well-connected bureaucrat Monnet (the cosmopolitan scion of a cognac
fortune, with strong personal contacts with leaders around Europe and in the United States) who found
such a formula. In May 1950, at Monnets suggestion, French Foreign Minister Robert Schuman
proposed the creation of a European Coal and Steel Community (ECSC). A common market for these
basic commodities would be administered by an independent High Authority, which alone had the
right to propose ECSC directives and legislation. A Council of Ministers, representing the national
governments, would oversee the Authority. The Council would vote by majority on minor decisions,
but by unanimity on major issues. An elected consultative Assembly would provide democratic input,
and a European Court of Justice (ECJ) would arbitrate. Thus national governments retained formal
powersymbolized by the ability of any one nation to veto most decisionsbut truly supranational
institutions were also created. While no coherent vision of Europe was realized, proponents of each
vision could hope theirs would be in the future.
Only the British, who still fancied themselves a global power, were not won over by this
ingenious mlange. In 1951 France, the Federal Republic of Germany (FRG), Italy, Belgium,
Luxembourg, and the Netherlands signed the treaty creating the ECSC. It began operation in 1952
with Monnet as first President of the Authority. By 1955 the Six were showing hugely expanded
trade and production in coal and steel. In June 1955 they met to discuss proposals to extend ECSC to
all economic activity. The results were the two Treaties of Rome in 1957, creating the European
Economic Community (EEC) and the European Atomic Energy Community (Euratom). 2
The EECs institutions imitated those of the ECSC. An independent Authority (renamed the
Commission) would propose legislation and set the agenda. Decision-making power resided in the
Council of Ministers. The Assembly was renamed the European Parliament. The ECJs jurisdiction
2

Euratom was and remains a rather minor European collaboration in research on atomic energy.

was expanded to all EEC-related issues. Power was still largely held by the governments, but the
independent Commission had important powers of initiative. Federalists could still hope that the
balance between governments and the Brussels-based Commission would shift in the future.
Thus the identity crisis of todays EU can be traced back to its earliest origins. In order to
attract all possible supporters, the ECSC and the EEC were designed with as much ambiguity as their
immediate tasks allowed. Europes founding fathers agreed to disagree. Such ambiguity at the outset
set the stage for competition between alternative visions of Europe, which dominated the four decades
between ECSC and EUand continues today.

Development: EEC to EC

The EECs first years were a giddy period of Euro-optimism. Surprised by its immediate economic
success, the British created a competing free-trade area in 1960, the European Free Trade Association
(EFTA).3 In response, the Six accelerated their own internal tariff reductions. In 1961, the British
recognized the EECs greater economic dynamism by applying for membership. The early 1960s also
saw the Six create the Common Agricultural Policy (CAP) to replace national agriculture programs.
This common structure of price supports essentially represented a Franco-German bargain. The French
saw trade liberalization in industrial goods as favoring strong German industries over their French
counterparts. The CAP balanced this by subsidizing French agriculture. Despite the bald-faced
national payoff behind it, however, the CAP represented a large step forward for the EECs
supranational institutions. The Commission administered the CAP, acquiring direct responsibility for
agriculture throughout the Community.
But optimism was not to last. Rather than bringing widening to new members and
deepening along the federal path, the 1960s were dominated by French President Charles de
3

The founding members of EFTA were Britain, Portugal, Austria, Switzerland, Sweden, Norway, and Denmark.
Finland joined in 1961, and Iceland joined in 1970. Britain and Denmark withdrew in 1972 on joining the EEC;
Portugal did so in 1986; and Austria and Sweden withdrew on joining the EU in 1995.

Gaulles attack on both ideas. De Gaulle had long opposed surrendering French sovereignty,
championing a confederal Europe of intergovernmental cooperation. The supranational EEC had been
negotiated before his return to power in France in 1958 4and like the British, de Gaulle was not quite
won over by Monnets formula. Once in office, he decided not to tear up the EEC treaty for fear of
upsetting intra-European relations, and accepted a supranationally-guided CAP because it subsidized
French farmers. But that was all. In 1965, de Gaulle took the pretext of an overly ambitious
Commission proposal (giving itself new budgetary autonomy) to challenge the EEC institutions.
Denouncing the illegitimate Commission, he withdrew French representatives from Brussels, and
insisted that they would only return given recognition of a permanent national veto on EEC decisions.
The crisis of the open chair lasted six months, until the other members essentially agreed to de
Gaulles demand. This Luxembourg Compromise got the EEC moving again, but the confederal
vision had scored a major victory.
De Gaulle also vetoed the British application to join in 1963, and again when they reapplied in
1967. For the French leader, the British represented a Trojan horse for American influence in
Europe; the Anglo-Saxons (meaning the US and the British) could not be trusted. He saw the major
goal of European integration as the re-establishment of European influence independent from (if still
allied with) the US superpower, and Britain could not be expected to side with Europe against America
in trans-Atlantic disputes.
When de Gaulle left office in 1969, the major obstacle to further EEC development seemed to
be lifted. Yet world events undercut Europeanist ambitions before they could regroup. First came the
dissolution of the international monetary regime (the Bretton Woods system) from 1971 to 1973. This
forced European currencies to float freely, meaning intra-EEC trade could fluctuate enormously with
changes in the relative values of European currencies. Then, as Europeans tried to grapple with this
4

De Gaulle, the leader of the French Resistance to the Nazis during World War II, was briefly Prime Minister
immediately after the war. When French politicians rejected his plans for a more centralized, presidential system,
however, he withdrew from politics, only to return in 1958 as the country fell into crisis in a fight over
independence for its largest colony, Algeria. At that point the political elite agreed to allow de Gaulle to draw up
a new, presidential constitution, the Fifth Republic.

problem by somehow linking their currencies, the first oil crisis hit in 1973. Given rising
unemployment and inflation, politicians were little inclined to pursue ambitious European plans.
Furthermore, the accession of Britain, Ireland, and Denmark in 1973 (made possible by de Gaulles
resignation) introduced three adherents of the free-trade view of Europe. Federal ambitions moved
still further from the agenda. The era of Euro-pessimism had begun. 5
Only when pessimism became a profound sense of crisis did integration move forward again.
Two developments in the early 1980s persuaded many that the EEC needed reform. First was another
enlargement. Greece joined in 1981. Negotiations also began with Spain and Portugal, bringing
accession in 1986. Unanimity among twelve governments would be much harder to obtain than among
the current nine, especially since the poorer, Southern inductees made the group less homogeneous.
The second impetus was economic. Poor European gains in productivity relative to America, and
especially relative to Japan, seemed to promise the virtual disappearance of European firms from key
markets like electronics and computers. The early versions of the phenomenon later called
globalization was also putting competitive pressure on the whole range of European manufactures,
as low-cost Third World producers entered many markets. Together with the Commission (under new
President Jacques Delors), business leaders called for reenergizing industry by relaunching the EEC.
Removing the remaining non-tariff barriers within the EEC would complete a true Single Market. 6
Thus the Single Market plan confronted high-tech and Third-World competition in the same way that
the early EEC sought to meet the challenge of postwar American competition: by reducing barriers
within Europe in order to spur European firms to greater efficiency and scale. European firms would
become larger and more competitive than ever.
5

Nonetheless, two developments stand out in the 1970s. In 1974, the governments agreed to hold trimesterial
European Councils to set the political agenda for EEC. These meetings have become very important in
launching new initiatives and making major collective decisions. In 1979, they created the European Monetary
System (EMS) to dampen intra-EEC currency fluctuations.
6
Tariffs are explicit taxes on foreign trade. Non-tariff barriers are any sort of other standards or rules that may
block foreign producers from competing with national producers. For example, Germany long required that a
beverage could only be sold as beer in Germany if it had only four ingredients; this kept many other countries
beers out of the German market, and so was effectively protectionism. Similarly, national requirements on
product safety or quality or environmental standards can impede international competition. The Single Market
plan set out to create common standards (or common recognition of several standards) on all such issues.

Both enlargement and the complex Single Market project underscored a need to streamline
EECs decision-making process. Crucially, the Luxembourg Compromises unanimity rule would have
to give way to majority voting in the Council of Ministers, so that no one country could hold up
progress. This was the major development of the Single European Act (SEA) of 1986, which set 1992
as the target date for completing the Single Market, passing hundreds of directives to decrease
regulatory barriers to trade. Overall, the SEA took important steps in the supranational direction. In
addition to extending majority voting in the Council (implicitly abrogating the Luxembourg
Compromise), it awarded limited budgetary powers to the European Parliament. It also formalized a
loose framework for intergovernmental cooperation in foreign policy, and proclaimed the symbolic
change from EEC to EC. While its future remained ambiguous, the European Community was no
longer merely Economic. Whatever else happened, majority voting and the growing power of
Commission and Parliament meant the pure free-trade vision of European integration had been ruled
out.
Yet if Europes institutional questions were narrower in 1988 than in 1958, they were more
complex and pressing. The progress that ruled out the free-trade vision raised new questions. Would
the ECs European Monetary System, which linked member currencies to prevent large fluctuations,
move toward a single currency? Would foreign policy mentioned in the Single European Act, but
only as intergovernmental cooperation with no Commission rolebe subjected to majority voting?
How much would social policies be harmonized? Overall, how federal would the EC become?
These questions alone set the stage for an EC identity crisis. Integration had come to the point
that leaders had to start making choices between the visions of Europechoices which their
predecessors found easier to defer. But Europes identity crisis became still more serious after 1989,
when the Cold War suddenly ended and Germany was reunified.

Geopolitics: National Bargains and the Revolutions of 1989

All the questions and debates about European integration from 1950 to 1989 were premised on certain
assumptions about European geopolitics. East-West conflict would continue to divide the continent in
half, and Germany into two countries.
Germanys division was a constant reminder of its defeat in 1945. The Federal Republic (West
Germany) was a creation of the Western powers, and depended on them for its defense. In the
international arena, the truncated West German state was profoundly dependent on multilateral action
with its allies for respect and legitimacy. West German foreign policy choices were largely limited to
how it would act within parameters set by its Western partners.
The division of Germany also tremendously magnified French influence. No European
country was willing to follow German leadership after World War II. The British, meanwhile,
continually sought to emphasize their separation from the continent. This left France as the only real
candidate for European leadership. Only the French could aspire to speak legitimately for Europe, and
they used this leverage with skill to claim an international position disproportionate to their real power.
These Franco-German positions underlay the core bargain behind the EC. West Germany
would be reintegrated into the international community through participation in European institutions,
and France would gain a powerful and loyal follower for its ambitions of leadership. For the French,
this also ensured that West Germany would not establish a separate, threatening role in world affairs,
and that France would have the dominant voice in EC policy making. Germany and the smaller
countries would make concessions at every stage of EC development, while the French bottom line on
most issues would be respected. This bargain set the tone of European integration for forty years.
But when the revolutions of 1989 suddenly ended the East-West divide, the geopolitical
framework for this deal evaporated. The end of the Soviet threat decreased the circle-the-wagons
mentality which had held western Europe together. The reunification of West and East Germany in
1990 restored full German sovereignty, making Europes most powerful state still more powerful.

10

Could the Franco-German bargain be recast to drive integration forward in the new Europe? One
geopolitical continuity remained: if France and Germany disagreed, Europe would go nowhere.
At the beginning of the 1990s, then, Europes institutional ambiguities were aggravated by
new geopolitical questions. Now we bring the internal story of institutions together with the external
story of geopolitics, and survey integration since 1989.

Integration in the New Europe

The Triumph and Problems of Maastricht

The ECs most pressing problems after 1989 concerned German reunification. With astonishing
rapidity, Europe found itself dealing with a confident power with 80 million people and 30% of the
ECs GDP. Pundits speculated that the new Germany would turn its back on the EC. Germany, they
said, no longer depended on European institutions for legitimacy and influence.
Such fears proved unfounded. Indeed, the exact opposite took place. Rather than detaching
Germany from Europe, reunification imparted a major boost to integration. Many German leaders
were anxious to reaffirm their commitment to the EC, and Germanys partners were eager to cement
its anchorage as well. In March 1990, German Chancellor Helmut Kohl and French President Franois
Mitterrand called for the opening of two intergovernmental conferences. One would negotiate a treaty
on Economic and Monetary Union (EMU), with the ultimate goal of creating a single European central
bank and currency. The other would discuss Political Union, attempting to reform EC institutions,
introduce common social policies, and lay the groundwork for a common foreign and security policy.
The result was the Maastricht Treaty in December 1991. At British insistence, the word
federal was dropped from the treatys preamble, but as The Economist noted, Call it what you will:
by any other name it is federal government.7 On EMU, all of the members except Britain agreed to
create a single currency and a European central bank by 1999. (Britain opted out of this goal, and
7

The Economist , December 14, 1991.

11

from the treatys social chapter). The European Parliament gained important powers, including a
veto on legislation in many areas. The Commissions responsibilities were expanded to include
consumer protection, education, health, trans-European energy and transport networks, and some
aspects of social policy. European aid to its poorer members (Spain, Portugal, Greece, and Ireland)
was doubled to decrease income disparities. Foreign policy cooperation was slightly strengthened.
Maastricht clearly pushed Europe further down the federal path. EC had become EU. But
two developments disrupted this picture by complicating Europes structure. First, new agreements in
foreign policy and justice (crime, immigration) were set up as intergovernmental pillars outside the
existing institutions. Economically-focused integration in the existing EC was labeled the first pillar
of the EU; foreign policy/security and justice became the second and third pillars, with different
(and less supranational) institutional rules. Since foreign policy and justice raise such sensitive issues
of sovereignty, the supranational institutional actors (the Commission, Parliament, and ECJ) were
given a diminished role in the newer pillars. This meant certain issue-areas might remain outside the
federal project. Second, the opting out clauses for Britain on EMU and social policy set a precedent
for Europe la carte, or a multi-speed Europe. This meant different areas of integration could
have different memberships. Instead of being a coherent federation, Europe might comprise many
overlapping, issue-specific institutions. As an open admission of these loose ends, the Maastricht
treaty provided for another conference on institutional issues in 1996.
A multi-speed future also seemed to be foreshadowed by problems with EMU. When
Maastricht was signed, only two members (France and Luxembourg) met the five criteria for national
economies it set as preconditions for EMU.8 Global recession and the costs of German reunification
were partly to blame, but some members seemed unlikely ever to meet the criteria. Greece and
Portugal met none in 1991, Italy and Spain only one. Even the core countries of Italy and Belgium
could clearly not lower their public debt in 20 yearsmuch less by 1999to meet the conditions.
8

The criteria were: inflation rate within 1.5% of the average of the three lowest members rates, long-term
interest rates within 2% of the average of the three lowest members rates, annual budget deficit below 3% of
GDP, total public debt ratio under 60% of GDP, and at least 2 years participation in the European Monetary
Systems limited exchange-rate bands.

12

Not only did the treaty leave unanswered questions, but other events soon complicated the
picture. In June 1992, Denmark stunned Europe by narrowly rejecting its national referendum to ratify
the treaty. One major complaint behind the Danish no was the EUs so-called democratic deficit.
Except for the modestly-empowered European Parliament, European institutions have little direct
democratic input or control. Commission personnel do not answer directly to any elected body. Even
national-government actors in Brussels tend to be unelected representatives of elected national
representatives. To many Europeans, the Brussels technocracy shows little consideration for public
opinion. Maastricht, like all the proceeding steps of integration, was negotiated as a deal between
governments, without any real popular input. The Danish populace refused to sanction this elite deal.
While the Danes later voted to ratify (once they were given an EMU opt out clause like the
British), their challenge knocked Europe off its fast track. It influenced the French referendum on
ratification in September 1992, whose razor-thin approval (51% to 49%) further sapped European
confidence. More importantly, the combination of this political challenge with economic recession
undermined the credibility of national commitments to keep their currencies from fluctuating in the
European Monetary System (EMS). In September 1992, speculators drove the British pound and the
Italian lira out of the system. Then the entire EMS collapsed in a wave of speculation in June 1993.
While the system was patched back together, progress to a single currency seemed further away than
ever.
In sum, the Maastricht Treaty resulted from two impulses, and had two major consequences.
The first impulse came from Europes own internal development, and the gradual success of
federalism. Equally important was the external push from German reunification. The first major
consequence was that Europe took its largest step yet to federalism, with EMU. But the second was to
raise questions about the EUs overall coherence, its popular support, and its economic viability.
Furthermore, Maastricht did almost nothing to deal with another huge consequence of the end
of the Cold War: Eastern enlargement. In addition to ending the division of Germany, the revolutions
of 1989 produced new capitalist democracies in Eastern Europe. They all immediately aspired to join

13

the club of rich democracies to the west. The EU was besieged by requests for trade agreements,
which signaled that all Eastern countries would apply for full EU membership as soon as they had any
hope of success. A whole new set of questions confronted integration. Could the EU possibly unite
Western and Eastern Europe? How would it have to change to do so?
EU leaders gave no clear answers in the early 1990s. Nonetheless, in December 1994 they
formally accepted that enlargement was inevitable. In order to stabilize Eastern democracies and
markets, Western Europeans would admit their poorer neighbors into their club. Twelve countries
quickly applied.9 But how would the club change with these new members? And could its ambitious
EMU project come to fruition?

Muddling Through the 1990s

These two issuesEMU internally, and Eastern enlargement externallydominated the EU agenda
through the 1990s. While both projects reached fruition, this does not mean the questions they raised
were clearly answered.
To everyones surprise, the immediate uncertainties surrounding EMU steadily decreased after
the post-Maastricht scare. Not only did Europes leaders resolutely maintain their commitment to
EMU despite much domestic criticism and through the EMS crises of 1992-3, they successfully led
their nations through remarkable economic sacrifices in order to meet the EMU criteria. 10 France,
Germany, and the Benelux11 all implemented painful and politically unpopular budget cuts. Spain and
Italy quickly decreased their immense budget deficits by more than half. Fudging of the EMU criteria
was necessary to allow certain countries to participate, but ambiguous wording in the treaty allowed

Poland, Hungary, the Czech Republic, Slovakia, Slovenia, Estonia, Latvia, Lithuania, Bulgaria, Romania,
Cyprus, and Malta. Turkey had also applied previously, making for 13 candidates overall.
10
Though the EMS crisis of summer 1993 forced a widening of the fluctuations permitted between European
currencies (from +2.25% to +15%), speculation quickly diminished and exchange rates stabilized within the
prior margins.
11
Belgium, Luxembourg, and the Netherlands.

14

for this.12 By 1997, it was clear that 11 of the EUs members (numbering 15 since Austria, Finland, and
Sweden joined in 1995) would move to a single currency in 1999. In January 1999 this took place with
little trouble: the participating countries exchange rates were frozen irrevocably, effectively creating
one pool of money. Euro bills and coins replaced francs, marks, lira, and the other currencies in
January 2002, making the transition complete.
This still meant that Britain, Denmark, Sweden, and Greece would remain outside the most
important step yet in federal-style integration. Greece, the poorest member at the time, was unable to
meet the EMU criteria by 1997 (even with fudging). Important domestic economic reform at the end
of the 1990s, however, allowed the Greeks to join EMU in 2001. The other three countries could have
met the EMU criteria, but chose to stay outside the single currency for the moment. It was no
coincidence that all three also remained supporters of the confederal vision of the EU, hoping to
minimize the accretion of power in the European institutions. The federal-confederal debate was still
alive, preserved by the possibility of a multi-speed Europe.
Slow progress towards Eastern enlargement also fed this debate. A survey of previous
enlargements helps to see why. Widening membership has always made deepening integration
more complicated. The more countries that join the EU, and the more disparate they are in wealth and
culture, the harder it becomes to integrate them into a single framework. When Britain, Denmark, and
Ireland joined in 1972, they brought in a distinctly anti-federalist vision of Europe. This helped bring
on Euro-pessimism: the EC was tied up in institutional and budgetary conflicts for a decade. When
Greece, Spain and Portugal joined in the early 1980s, the EC stopped being a small club of very rich
nations. This time the problemsthe complication of functioning with twelve members, and the need
for aid to the poorer countrieswere resolved in the push to the SEA. Institutional reform was judged
necessary to keep Europe working. As noted above, Austria, Sweden, and Finland joined on January 1,
1995. Despite the fact that these countries are all richer than the EU average and culturally similar to

12

Countries like Belgium, with total public debt far in excess of 60% of GDP, were allowed to participate if they
were making progress in the right direction.

15

their neighbors, expansion to fifteen members almost undermined previous progress toward
deepening. Changes in the vote count required to reject most decisions in the Council of Ministers (a
blocking minority) were only accepted by Britain, Spain, and Italy in 1994 after a long crisis. 13
But these problems paled in comparison to the difficulties of incorporating Eastern Europe.
The clearest obstacle was poverty: eight of the thirteen candidate countries were less than half as
wealthy as the existing EU average. The most direct problem created by this disparity concerned EU
subsidies. The EU Structural and Cohesion Funds transferred one-third of the EU budget to its poorer
regions (at that time, mainly Greece, Portugal, Spain, and Ireland). Extending similar aid to the much
poorer Easterners would be enormously expensive. Any resolution would mean upsetting the deals
between current members. Richer members like Germany and Britain hoped to use this opportunity to
decrease the costly Structural Fund programs. But the poorer current members were determined fight
against any change in their income.
Other thorny problems arose in trade and competition, agriculture, and social and
environmental legislation. In order to match EU regulations, Eastern countries had to pass close to
100,000 pages of existing EU rules to eliminate subsidies, create market competition, and adopt all the
standards of the Single Market program. Even if Easterners could suppress subsidies and adopt EUstyle legislation, a long transition period would be necessary before many of their industries could
survive in direct competition with Westerners.
In agriculture, introducing more competition was not the problem. In fact, East European
agriculture was often too competitive. Prices were considerably lower than those supported by the
Common Agricultural Policy (CAP). The CAP currently functions by paying farmers the difference
between the world price for each product and an artificially high target price. As with the Structural
13

Previous to the enlargement, a qualified majority in the Council of Ministers required 54 of 76 votes; 23 was
thus a blocking minority. France, Germany, Britain, and Italy each had 10 votes; Spain had 8; Belgium, Greece,
the Netherlands, and Portugal had 5; Denmark and Ireland 3; and Luxembourg 2. With the addition of Sweden,
Austria, and Finland, the blocking minority became 26, making certain previous blocking minorities (i.e. Britain,
Germany, and the Netherlands often allied on free-trade issues; Spain, Italy, and Greece formed the olive belt)
insufficient. The British, Spanish, and Italian challenge was an attempt to keep the blocking minority at 23 while
adding the new votes. An elaborate compromise ended the crisis and further complicated the rules.

16

Funds, extending the same system to the East would be expensive. Either the EUs Western members
would have to pay more to the CAP budget, Western farmers would have to lose some of their
benefits, or the new members would not receive the same generous subsidies.
Finally, extending EU social and environmental regulations to cover the East was problematic.
While new members could in principle opt out of the new social chapter as did the British, they
could not avoid a great deal of basic harmonization with the West. 14 Throughout the East, struggling
firms could ill afford the costly requirements of Western labor legislation. Massive environmental
problems could make EU environmental regulations equally difficult to apply. Yet failing to raise
Eastern standards could mean a rapid transfer of jobs from the high-cost West (already averaging more
than 10% unemployment) to the low-cost East. Indeed, this was already happening by the mid-1990s.
Besides these policy problems, enlargement raised tricky institutional issues that promised to
radically alter the EU. An EU of 27 members (if all the Eastern Europeans joined, with Malta and
Cyprus) would require rebalancing all the careful weighting of national influence in the European
institutions. In a much larger EU, how would voting in the Council of Ministers weight the
representation of large versus small states? The latter were already overrepresented relative to their
population, and adding more small states under the current system would further undercut the power
of the big states (Germany, France, Britain, Italy, Spain). 15 Would the Commission and Parliament add
new members, even if this made them unworkably large? If not, the balance between current members
would have to be revised. Overall, would a wider Union mean more reliance on majority voting, even
on those intergovernmental pillar issues (crime, immigration, foreign policy) where governments
had retained vetoes to that point?
These questions set the agenda for the 1996 intergovernmental conference scheduled at
Maastricht. It produced the Treaty of Amsterdam, signed in May 1997. Once again, Europes leaders
muddled through without clear answers. The most important issue, reweighting Council voting after
14

Harmonization is the EU term for making disparate national legislation more similar.
At the time, Luxembourgs 2 votes in the Council of Ministers each represented less than 200,000 people;
Germanys 10 votes each represented 8 million.
15

17

enlargement, was deferred to another round of negotiations in 2000. Plans for unifying the Maastricht
Treatys intergovernmental pillars into the main structure were diluted. A few clear steps were taken:
Commission and Parliament membership were capped, and the Parliaments powers were extended. 16
The former will help keep the institutions manageable, and the latter responded somewhat to
democratic deficit concerns. Additionally, a single High Representative for EU foreign policy was
created, to centralize the expression of EU positions. But if this all streamlined the institutions, the
Amsterdam Treaty also codified the multi-speed Europe informally introduced in Maastrichts opt
out clauses. In the future, said the treaty, certain EU countries could pursue closer cooperation on
certain issues without all the EU members.
Negotiations began with the enlargement candidates in 1998, and their progress forced the
next round of intra-EU discussions to resolve some of these lingering questions. In December 2000 the
Treaty of Nice brought agreement on the extension of majority voting to many areas, and most
importantly on weighted voting in the Councilbut not without arrangements that preserved much of
the ambiguity of the past. While the wider application of majority voting and the addition of new
qualified-majority votes in the Council will make that body look less like a ministerial club and more
like a Senate in the future (with many actors and potentially shifting coalitions), the big countries also
altered the basic voting to prevent them from being constantly outvoted by their smaller neighbors. A
qualified majority now required approximately 75% of the total of weighted votes (as opposed to
about 70% currently), and the support of countries representing 62% of the total EU population. In
other words, the Nice Treaty set the foundations for a wider, superficially-more-federal EU, while
actually raising some of the obstacles to smooth collective decision-making within it.
The resolution of the enlargement negotiations similarly danced around some of the big
questions. Eventually it was agreed that ten countriesall of the applicants except the most
problematic Eastern European countries, Bulgaria and Romania, and Turkeywould join on May 1,
16

Parliament membership was limited to 700 seats, even though this means current members will lose some
seats after enlargement. The Commission currently includes one member for each small country, and two for
each big country; after enlargement, it will simply be one member per country.

18

2004 in a big bang enlargement. To avoid redirecting Structural Fund spending entirely away from
earlier beneficiaries, the EU member-states agreed that any state could receive no more than 4% of its
GDP from these funds. This matched roughly what Greece, Spain, Portugal, and Ireland had received
in the previous decade, but it also meant that the new accession countries, with much lower GDPs,
would effectively receive much less money. On agricultural policy, the Western states agreed that
Eastern farmers would eventually receive full CAP payments, but only after a lengthy transition
period. In the near term their payments would begin at 25% of Western levels and would rise slowly
thereafter. Transition periods were also negotiated on many regulatory issues to allow the new
members to adapt to EU rules. Overall, the enlargement deal avoided upsetting the main arrangements
between the Western states and gave the Eastern members less favorable conditions than they had
hoped forleaving to the future a variety of battles over the principles of equal membership and how
much value the EU places on supporting its poorer regions.
Thus integration carried its ambiguities into the new Europe of the 21 st century. Its most
surprising successprogress towards EMUdefinitively installed elements of a federal system. But
the multi-speed nature of that project, and the simultaneous steps towards enlargement, kept
Europes future murky.

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The constitutional episode

After the messy bargaining over the Treaty of Nice at the end of 2000, many EU leaders agreed that a
crisis point was approaching. The EU had become steadily more complicated as it became more
powerful. Enlargement to ten more countries was about to make it even harder to manage. Old patterns
of intergovernmental bargaining over EU policies seemed unable to produce agreements. Perhaps
worst of all (for advocates of the EU), it was increasingly clear that the EU had a growing public
relations problem. From the rumblings in Denmark and elsewhere in the early 1990s over a
democratic deficitthe notion that the transfer of power to the EU had not been followed by equal
channels of popular representation and accountabilityhad developed a widespread sense across
European publics that the EU was too distant, closed, and confusing. Partly for this reason, partly
because they felt that they needed to break out of old bargaining procedures to clean up the Nice
treaty, and partly because they did not have any other major ideas about what to do with the EU, they
decided to have a novel constitutional convention to propose changes to the EU treaties. With luck
this would allow EU citizens to express their views of how to make the EU more transparent and
appealing, engaging the populace to deal with the democratic deficit, and it might lead to
innovations in EU structures that were difficult to achieve through standard national-government
negotiation.
One hundred and five delegates from the national governments, EU institutions, and elsewhere
meet in Brussels in 2001-2002. To the surprise of many, Convention President (and ex-French
President) Valry Giscard dEstaing eventually managed to bring the delegates into quasi-consensus
on a moderately ambitious set of proposals. Some changes were cosmetic: the complicated EU treaties
would be given a grand preamble and labeled a constitution, though little was done to reduce the
complexities of their 300+ pages. More importantly, the voting rules in the Council of Ministersthe
most important rules of the EUwould be simplified from their complex weighted majority to a
double majority rule (requiring 50% of member-states and 60% of the population). Majority voting

20

would be extended to everything except taxation and foreign policy. Cooperation in foreign policy
would be strengthened by the creation of a European Foreign Minister and staff. An EU Charter of
Fundamental Rights that had been drawn up in the late 1990s would be given legal force. Other
changes would slightly streamline the growing European Parliament and European Commission.
If the Convention was successful (if not quite revolutionary) at its immediate drafting task, it
failed as a public relations effort. EU citizens did not avail themselves much of the elaborate Internetbased opportunities for input and paid little attention in general. Nor did this new process manage to
escape the ugly horse-trading and stalemates of national-government bargaining. The governments had
not agreed to simply accept the Conventions proposals; after its work was done, they settled in to
negotiate how much of the Convention draft they would accept in a standard intergovernmental
conference (IGCthe format for all previous changes to the EU treaties). Though the governments
agreed to much of the draft constitution, they came to deadlock in December 2003 over the voting
changes to the Council of Ministers. Spain and Poland had been oddly advantaged by the voting rules
agreed in the Nice Treaty (giving them almost as many votes as the EUs largest states despite having
roughly 2/3 the population of Britain, France, or Italy, and half that of Germany), and they refused to
accept the double majority system. A deal was eventually brokered in spring 2004. The double
majority would rise to 55% of states and 65% of populationmaking Council of Ministers passage
of legislation harder than ever. The constitution could move forward, but any hoped-for image of
thoughtful constitutional design was dispelled.
Now all of Europe looked toward ratification of the constitutional treaty. In some states
national procedures called just for parliamentary votes, but in others ratification required or allowed
for a popular referendum. A positive outcome in multiple referendums was far from certain. The
constitutional negotiations had done little to restore stronger popular support for the EU. During the
process, the EU members had divided sharply over the American-led invasion of Iraq in 2003,
weakening the apparent promise of a European Foreign Minister. More importantly, Western European
citizens were beginning to react negatively to the consequences of the big bang enlargement of

21

2004. They often perceived the small but increasing western movements of Polish and other postcommunist people as a deep social threatrepresenting low-cost competition that would undercut the
generous social regulations and welfare states of the West. In France, the most well-known figure in
the long and involved public debate that preceded the May 2005 referendum was the Polish plumber
whom EU rules would ostensibly allow to immigrate and outcompete better-paid and better-regulated
French plumbers.
It did not help that the most pro-EU advocates had difficulty getting excited about the
constitution. Even though the treaty contained several important innovations, it was difficult to argue
that it would make the EU substantially more democratic, transparent, fair, or effective. Moreover, as
specialists of EU law pointed out, it was just a public-relations ploy to portray this agreement as a
constitution in contrast to the earlier treaties. Arguably the EU already had a de facto constitution,
if by that word we mean a body of basic law that trumps all other law and that is especially difficult to
amend. As early as the 1960s the court of the EEC, the European Court of Justice, had established that
the EEC treaties were supreme even to national constitutions (requiring them to be changed if they
contradicted EU law). The European treaties were clearly much harder to change than normal law,
since amendment required elaborate negotiation and consensus between all the governments. Thus
Europe already had a constitution in everything but name, and this new document did not radically
alter it.
Perhaps even more important for the result of the referendums in France and the Netherlands
in May and June 2005 was that this modest, messy, misleadingly-named constitution came before the
voters in a time of economic and social malaise and unpopular national leaders. Even citizens who
might have been fairly pro-European under other conditions were tempted to use the referendum as a
protest vote about other things. With hindsight, then, the clear French no of 54.7% and the even
higher Dutch no of 61.6% several days later may not seem terribly surprising. But for European
elites it was a shock of historic proportions. While France had come close to rejecting a European
treaty before, in the narrow vote to ratify the Maastricht Treaty in 1992, the repeated success of treaty

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after treaty had given the EU project an aura of inevitability. It seemed that Europe would always
move forward. Now the advocates of that movement in Brussels and national capitals fell into a deep
depression. They had played up a treaty modification as a constitution and invited European citizens
to participate like never before in EU institution-buildingand the citizens had first expressed little
interest and then rejected the result. That this rejection occurred in France and the Netherlands, the
historic core of the EU, was an especially devastating blow. The EU could work around the Danish
rejection of the Maastricht Treaty in 1992, but nothing could be done with clear no votes in these
two countries. The other countries that had scheduled referenda canceled them. The constitution was
dead.

The Constitutions reprise: fall of the Lisbon Treaty

This is effectively where the EU stands today, as an attempt since 2005 to revive the Constitutional
Treaty failed in summer 2008. For more than a year after the 2005 referendums, Europe stood in an
impasse. In particular everyone was waiting for the French presidential elections of 2007, since the
French rejection of the Constitutional Treaty seemed to mean that things could only move forward
once France changed its tune. This moment duly arrived with the election of the most self-confident
French leader since de Gaulle, Nicolas Sarkozy. Sarkozy, a self-labeled maverick and pragmatic
political fixer, quickly proposed to strip out the symbolic elements of the Constitutional Treaty and
repackage its institutional reforms in a toned-down deal that became known as the Lisbon Treaty
(following the EU habit of naming treaties for their place of negotiation). He and other national
leaders also agreed to avoid referendums in ratifying the new treaty, if at all possible, instead making
use of parliamentary procedures to ratify. But in one countryIrelanda referendum was
constitutionally required. It was difficult not to see that EU elites were attempting to sneak the same
Constitution reforms past their citizens, and outrage over this kind of politics was as much a factor as
any substantive complaints in the Irish rejection (by 53%) of the Lisbon Treaty in June 2009. Though

23

almost all other member-states had successfully ratified the Treaty through their parliaments, a single
rejection is sufficient to block its implementation. At the time of writing, EU leaders are now
preparing to ask the Irish people to vote again. They are banking on the argument that the Irish will
change their minds when it is clear that the functioning of the EU rides on their vote alone. Even if this
logic eventually wins the day and gets the EU out of its immediate impasse, however, the series of
rejections in referendum augur poorly for progress in European integration in the future. Overall, the
constitutional episode did not only fail to redress perceptions of a European democratic deficit, but
greatly worsened them.

Looking forward

Todays EU still lies under the shadow of the failed Constitutional Treaty. This will remain true even if
the Lisbon Treaty is eventually approved. Lacking a major new substantive project and fearful of
rising unpopularity, the EUs champions have turned their attention in two directions. One is to smaller
(if not unimportant) projects within the current framework. Most prominent among these is the
Lisbon agenda, a collection of proposals for still-greater liberalization of the Single Market. Though
originally intended to produce a new burst of activity like the Single Market 1992 plan of the 1980s
and announced in 2000 with the audacious goal of giving Europe the most competitive economy in
the world by 2010the Lisbon agenda has mostly fizzled. Public support for liberalization is low,
and may well be disappearing entirely with the onset of the global financial crisis in 2008. The other
major focus of attention is one that has dominated the scene for many years now: enlargement. Again,
part of the no votes against the Constitution clearly flowed from protests about the consequences of
the 2004 enlargement (even if the Constitution itself would have done nothing to affect them). Many
Western Europeans seem to feel that the original European project was designed to shore up their
social model and strength in the world, and that extending the EU to poorer, less socially-generous

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countries has eviscerated the framework (or will eventually). But the most recent attention has focused
on a potential enlargement that provokes even greater anxiety: that of Turkey.
Turkey originally applied to the EU in 1987, but was not taken seriously. Though it was a
longtime NATO member and had extensive trade deals with the EC already, Turkey was a poor
Muslim country in which the military retained a distinctly undemocratic role in politics. For a long
time few in Brussels believed that the Turkish application could change its status. Central and Eastern
Europe marketized, democratized, and finally joined while Turkey stood on the sidelines. But at the
turn of the millennium came a surprising chain of developments. Turkey elected a new leader, Recep
Erdogan, from a supposedly less pro-Western, more Islamist partyand he began a remarkable series
of reforms with the explicit goal of moving his country toward EU membership. Though few Western
Europeans were genuinely enthusiastic about Turkish membership, they had difficulty denying that
they would begin negotiations on accession if it could meet the criteria outlined for Eastern European
candidates (the so-called Copenhagen criteria of viable democracy, a functioning market economy,
respect for human rights and minorities, and willingness to accept the full body of EU legislation). In
particular, Western leaders and diplomats were anxious to avoid saying no explicitly to Turkey, for
fear of political developments that might follow from a clear statement that Turkey would never be
welcome in the EU. To the further surprise of most people in the EU, Turkey made steady progress on
its agenda of domestic change and in October 2005 the EU agreed to open official negotiations to
prepare its accession.
This prospect evokes all the fears that came with the 2004 enlargement and then some. If
Turkeys relative poverty (a GDP of about 30% of the EU-25 average) and lack of generous social
regulation and welfare raises the specter of a Turkish plumber in economic competition,
demography and culture expand on that perception of threat. The big bang enlargement of 2004
brought in 10 states, but only one with more a population over 10 million (Poland, with 40 million).
Turkey has 70 million, and perhaps more importantly, it is growing rapidly in an era when both
Western and Eastern European populations are projected to shrink. By the time it might join the EU, it

25

would be the largest member-stategiving it the most weight in the Council of Ministers and
Parliament. Though its 99% Muslim population has lived with a severely secular state for most of the
20th century, their religion is a source of major anxiety. Even before the events of September 11, 2001
and the opening of the Bush administrations war on terror, integration (or basic acceptance) of
Muslim immigrants in Europe was a salient and difficult issue. Overall, then, some EU citizens see
Turkish accession as opening doors to a burgeoning source of economic competition, demographic
takeover, social conflict, and possibly terrorism.
More broadly, Turkish accession symbolizes profound choices in what the EU project will be
about in the future. The positive rationale for membership, like the key EU thinking on Central and
Eastern Europe a decade ago, is that EU accession is the best way to consolidate democracy, human
rights, and markets in this critical state on Europes borders. Welcoming Turkey in will strengthen its
pro-Western forces internally. Not only will this dynamic operate in Turkey, hopefully, but its
inclusion may be a potent symbol of Western acceptance of Muslims elsewhere. If Turkey is left out
when equally poor countries in southeastern Europe are not, on the other hand, many Muslims in
Turkey and elsewhere may take this as a strong signal to turn away from the West. Thus Turkish
accession seems like a logical extension of the rationale for the 2004 enlargement: using the EU
project mostly as a set of incentives and a strong framework for the consolidation of democracy, the
rule of law, and market capitalism. On the other hand, besides the worries noted above, a Turkish
accession might signal a decisive shift away from the European side of the EU and toward more
passive aspirations of just Union. That is, it may mean giving up on the notion of building a strong
European actor in the world, and instead focusing mainly on extending a unified zone of peace and
prosperity. As Giscard dEstaing remarked undiplomatically during the Convention, many of those
who hope that the EU will deepen into a powerful actor on the world stage see Turkish accession as
the end of Europe. Turkey is arguably so big and so different from current members that it will make
cohesive EU action in foreign policy (or major internal policies like social policies) hard to imagine.

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Some point out that this decision may already have been made with the 2004 enlargement. In
shifting from a Europe of fifteen mostly rich, Western European states to one of twenty-seven (as of
the accession of Romania and Bulgaria in 2007) with much greater heterogeneity, the character of EU
decision-making changed a great deal. Not so long ago meetings of members heads of state in the
European Council were clubby, intimate affairs of personal relations and quiet deal-making. Today
these meetings include over a hundred people and have taken on more of the dynamics of an assembly.
Turkish accession might just consolidate a change that has already taken place, pushing European
coherent centralized action off the stage in favor of a more diffuse union-focused arena.
To the extent that this logic prevails, the future EU might drop any pretenses of centralized
action outside of economic policies and look to leverage its incentives of membership into extending
its zone of peace and prosperity as far as possible. Since the late 1990s there have been serious
discussions in Brussels of enlargement east to Russias borders. If Turkey is accepted, we might next
see debate over possible membership for Morocco. The European aspect of the project might fall
away, growing into an organization devoted to the ever-wider spread of open markets, democracy, the
rule of law, and human rights. This scenario certainly seems to play to the strengths of the EU project
so far. It has been extraordinarily successfulfairly called the most successful effort in historyat
anchoring previously-antagonistic countries into cooperative relations, similar basic values, and
openness. It has been considerably less successful in its attempts to rally European countries into a
single voice in world affairs, or in centralizing large positive policy actions internally.
Yet it is also not hard to see why many Europeans may feel less inspired by an EU that focuses
on the extension of unionand thus why we should expect continued challenges to the clarification of
the EU project around this less European conception. One of the original motivations for delegations
of national sovereignty to these new institutions was to allow Europes small and medium-sized states
to recapture some of the influence and capacity for action that they enjoyed before the rise of the
superpowers. Turning over French or Spanish or Belgian power in order to gain a strong voice on the
world stage is easily connected to benefits for the French, Spanish, or Belgian people who are turning

27

over the power. Doing the same in order to help consolidate the rule of law in Turkey has a more
distant and complicated relationship to such benefits. It seems likely, then, that to the extent EU
enlargement continues, we will see increasing attention to multi-speed proposals. The old Western
European core will consider deeper, more centralized policy integration that excludes the more recent
members. Depending on how successful they are, the EU may not only maintain its institutional
ambiguity but render it even more complicated.

Todays European Union remains embroiled in its identity crisis. Many of its ambiguities have been
left behind on the road to todays quasi-federal EU. But at the same time, the development of EU
institutions and geopolitical change confront Europeans with more questions than ever.
One clear message sent by todays EU is that more education about it is necessary. The
distance of EU institutions from their citizens lives, their arcane policy-making processes, and the
technical nature of their responsibilities have created one of the least understood political systems in
modern times. This is true not just of average Europeans, but of elites as well. The stakes and rules of
the EU game are often only understood by specialists and direct participants in EU policies. It is even
more true in the United States, where ignorance of how our closest allies have transformed their
continent is near complete. If this essay has taken a small step to change this, it has attained its goal.

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