A REPORT ON EUROPEAN UNION

INTRODUCTION
The European Union (EU) is an economic and political union of 27 member states located primarily in Europe. Committed to rational integration, the EU was established by the Treaty of Maastricht on 1 November 1993 upon the foundations of the preexisting European Economic Community. With almost 500 million citizens, the EU combined generates an estimated 30% share (US$18.4 trillion in 2008) of the nominal gross world product. The EU has developed a single market through a standardized system of laws which apply in all member states, ensuring the free movement of people, goods, services and capital. It maintains common policies on trade, agriculture, fisheries and development, sixteen member states have adopted a common currency, the euro. The EU has developed a limited role in foreign policy, having representation at the WTO, G8, G-20 and UN. It enacts legislation in justice and home affairs, including the abolition of passport controls by an agreement between the member states which form the Schengen Area. As an international organization, the EU operates through a hybrid system of supranationalism and intergovernmentalism. In certain areas, decisions are made through negotiation between member states, while in others; independent supranational institutions are responsible without a requirement for unanimity between member states. Important institutions and bodies of the EU include the European Commission, the Council, the European Council, the European Court of Justice, and the European Central Bank. The European Parliament is elected every five years by member states' citizens, to whom the citizenship of the European Union is guaranteed. The EU originates from the European Coal and Steel Community formed among six countries in 1951 and the Treaty of Rome in 1957. Since then, the EU has evolved through a process of enlargement while new policy areas have been added to the remit of its institutions.

HISTORY
After the end of the Second World War, moves towards European integration were seen by many as an escape from the extreme forms of nationalism which had devastated the continent. One such attempt to unite Europeans was the European Coal and Steel Community which, while having the modest aim of centralised control of the previously national coal and steel industries of its member states, was declared to be "a first step in the federation of Europe". The originators and supporters of the Community include Jean, Robert Schuman, Paul Henri Spaak and Alcide de Gasperi. The founding members of the Community were Belgium, France, Italy,Luxembourg, Netherlands and West Germany. In 1957, these six countries signed the Treaties of Rome which extended the earlier cooperation within the European Coal and Steel Community and created the European Economic Community, (EEC) establishing a customs union and the European Atomic Energy Community (Euratom) for cooperation in developing nuclear energy. In 1967 the Merger Treaty created a single set of institutions for the three communities, which were collectively referred to as the European Communities (EC), although commonly just as the European Community. In 1973 the Communities enlarged to include Denmark, Ireland and the United Kingdom. Norway had negotiated to join at the same time but Norwegian voters rejected membership in a referendum and so Norway remained outside. In 1979 the first direct, democratic elections to the European Parliament were held. Greece joined in 1981, and Spain and Portugal in 1986. In 1985 the Schengen Agreement led the way toward the creation of open borders without passport controls between most member states and some non-member states. In 1986 the European flag began to be used by the Community and the Single European Act was signed. In 1990, after the fall of the Iron Curtain, the former East Germany became part of the Community as part of a newly united Germany. With enlargement toward Eastern and Central Europe on the agenda, the Copenhagen criteria for candidate members to join the European Union were agreed. The European Union was formally established when the Maastricht Treaty came into force on 1 November 1993, and in 1995 Austria, Sweden and Finland joined the newly established EU. In 2002, euro notes and coins replaced national currencies in 12 of the member states. Since then, the eurozone has increased to encompass sixteen countries, with Slovakia joining the eurozone on 1 January 2009. In 2004, the EU saw its biggest enlargement to date when Malta, Cyprus, Slovenia, Estonia, Latvia, Lithuania, Poland, the Czech Republic, Slovakia, and Hungary joined the Union.

On 1 January 2007, Romania and Bulgaria became the EU's newest members and Slovenia adopted the euro. In December of that year European leaders signed the Lisbon Treaty which was intended to replace the earlier, failed European Constitution, which never came into force after being rejected by French and Dutch voters. However, uncertainty clouded the prospects of the Lisbon Treaty's coming into force as result of its rejection by Irish voters in June 2008. On 17 July 2009, the Parliament of Iceland agreed to formally apply for EU membership and to begin talks for an agreement to be put to a referendum to the Icelandic voters. On 23 July 2009 the Icelandic foreign minister formally submitted Iceland's application for membership to his Swedish counterpart (Sweden held the EU Presidency on this date). On 2 October 2009 the Irish voters approved the Lisbon Treaty with 67% of the votes ratifying the treaty from a total voter turnout of 58% of the electorate. With the approval by Czech President Klaus on 3 November 2009, the Lisbon Treaty was ratified by all countries and expected to go into effect soon.

MEMBERS
The European Union is composed of 27 sovereign Member States: Austria, Belgium, Bulgaria, Cyprus, the Czech, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom. Only six of these ± France, (then-West) Germany, Italy, and the three already integrated Benelux countries; Belgium, Netherlands, and Luxembourg ± were members at the start, with membership having grown as countries willingly accede to the treaties and by doing so, pool sovereignty in exchange for representation in the institutions. To join the EU a country must meet the Copenhagen criteria, defined at the 1993 Copenhagen European Council. These require a stable democracy that respects human rights and the rule of law; a functioning market economy capable of competition within the EU; and the acceptance of the obligations of membership, including EU law. Evaluation of a country's fulfillment of the criteria is the responsibility of the European. No member state has ever left the Union, although Greenland (a territory of Denmark) withdrew in 1985. Until the Treaty of Lisbon, which comes into force 1 December 2009, the EU did not have a framework specifying how a country could exit the Union. There are three official candidate countries, Croatia, Macedonia and Turkey. Albania, Bosnia and Herzegovina, Montenegro, Serbia and Iceland are officially recognized as potential candidates. Kosovo is also listed as a potential candidate but the European Commission does not list it as an independent country because not all member states recognize it as an independent country separate from Serbia. Four Western European countries that have chosen not to join the EU have partly committed to the EU's economy and regulations: Iceland, which has now applied for membership, Liechtenstein and Norway, which are a part of the single market through the European Economic Area, and Switzerland, which has similar ties through bilateral treaties. The relationships of the European microstates, Andorra, Monaco, San Marinoand the Vatican include the use of the euro and other areas of co-operation.

GOVERNANCE
The presidency of the Council of Ministers, which rotates per year, is currently help by Sweden.

The EU's work is divided into three areas of responsibility, called pillars. The original European Community policies form the first pillar, while the second consists of Common Foreign and Security Policy. The third pillar originally consisted of Justice and Home Affairs, however owing to changes introduced by the Amsterdam and Nice treaties; it has been reduced to Police and Judicial Co-operation in Criminal Matters (other matters were transferred to the Community). Broadly speaking, the second and third pillars can be described as the intergovernmental pillars because the supranational institutions of the Commission, Parliament and the Court of Justice play less of a role or none at all, while the lead is taken by the intergovernmental Council of Ministers and the European Council (which operate more by consensus then majority in these pillars). Most activities of the EU come under the first, Community pillar. This is mostly an economically oriented pillar and is where the supranational institutions have the most influence. The activities of the EU are regulated by a number of institutions and bodies. They carry out the tasks and policies set out for them in the treaties. The EU receives its political leadership from the European Council, which is composed of one representative per member state ± either its head of state or head of government ± plus the President of the Commission. Each member state's representative is assisted by its Foreign Minister. The Council uses its leadership role to sort out disputes which have arisen between member states and the institutions, and to resolve political crises and disagreements over controversial issues and policies. These procedures are all subject to the principle of subsidiary which requires that action only be taken at EU level where an objective cannot be sufficiently achieved by the member states alone. The Council is headed by a rotating presidency, with every member state taking the helm of the EU for a period of six months during which that country's representatives chair meetings of the European Council and the Council of Ministers. The member state holding the presidency typically uses it to drive a particular policy agenda such as economic reform, reform of the EU itself, enlargement or furthering European integration. The Council usually meets four times a year at European Summits. The European Council should not be mistaken for the Council of Europe, an international organization independent from the EU.

FOREIGN RELATION
Foreign policy cooperation between member states dates from the establishment of the Community in 1957, when member states negotiated as a bloc in international trade negotiations under the Common Commercial Policy. Steps for a more wide ranging coordination in foreign relations began in 1970 with the establishment of European Political Cooperation which created an informal consultation process between member states with the aim of forming common foreign policies. It was not, however, until 1987 when European Political Cooperation was introduced on a formal basis by the Single European Act. EPC was renamed as the Common Foreign and Security Policy (CFSP) by the Maastricht Treaty. The Maastricht Treaty gives the CFSP the aims of promoting both the EU's own interests and those of the international community as a whole. This includes promoting international co-operation, respect for human rights, democracy, and the rule of law. The Amsterdam Treaty created the office of the High Representative for the Common Foreign and Security Policy(currently held by Javier Solana) to co-ordinate the EU's foreign policy. The High Representative, in conjunction with the current Presidency, speaks on behalf of the EU in foreign policy matters and can have the task of articulating ambiguous policy positions created by disagreements among member states. The Common Foreign and Security Policy require unanimity among the now 27 member states on the appropriate policy to follow on any particular issue. The unanimity and difficult issues treated under the CFSP makes disagreements, such as those which occurred over the war in Iraq, not uncommon. Besides the emerging international policy of the European Union, the international influence of the EU is also felt through enlargement. The perceived benefits of becoming a member of the EU act as an incentive for both political and economic reform in states wishing to fulfill the EU's accession criteria, and are considered an important factor contributing to the reform of former Communist countries in Central and Eastern Europe. This influence on the internal affairs of other countries is generally referred to as "soft power", as opposed to military "hard power". Besides the CFSP, the Commission also has its own representation in international organisations. This is primarily through the European Commissioner for External Relations, who works alongside the High Representative. In the UN, as an observer and working together, the EU has gained influence in areas such as aid due to its large contributions in that field (see below). In the G8, the EU has rights of membership besides chairing/hosting summit meetings and is represented at meetings by the presidents of the Commission and the Council. In the World Trade Organization (WTO),

where all 27 member states are represented, the EU as a body is represented by Trade Commissioner Catherine Ashton. There has been discussion among political analysts as to whether the European Union represents a new type of geopolitical actor that focuses on supranational law and economic and political rivalries rather than military and ideological rivalries. The discussion is typified by the debate over the extent to which the European Union sees itself, or is seen by others, as a "postmodern superpower" ± either now or in the foreseeable future.

CURRENCY
The official currency of the European Union is the euro, used in all its documents and policies. The Stability and Growth Pact sets out the fiscal criteria to maintain for stability and (economic) convergence. The euro is also the most widely used currency in the EU, which is in use in 16 member states known as the Eurozone. All other member states, apart from Denmark and the United Kingdom, which have special opt-outs, have committed to changing over to the euro once they have fulfilled the requirements needed to do so. Also, Sweden can effectively opt out by choosing when or whether to join the European Exchange Rate Mechanism, which is the preliminary step towards joining. The remaining states are committed to join the Euro through their Treaties of Accession.

ECONOMIC VARIATION
Below is a table showing, respectively, the GDP (PPP) and the GDP (PPP) per capita for the European Union and for each of its 27 member states, sorted by GDP (PPP) per capita. This can be used as a rough gauge to the relative standards of living among member states, with Luxembourg the highest and Bulgaria the lowest. Eurostat, based in Luxembourg, is the Official Statistical Office of the European Communities releasing yearly GDP figures for the member states as well as the EU as a whole, which are regularly updated, supporting this way a measure of wealth and a base for the European Union's budgetary and economic policies. Figures are stated in euro. All data for 2008 are projections.

Member States European Union 1 Germany ¼ 2 United Kingdom 3 France ¼ 4 Italy ¼ 5 Spain ¼ 6 Poland 7 Netherlands ¼ 8 Belgium ¼ 9 Sweden 10 Greece ¼ 11 Austria ¼ 12 Romania 13 Czech Republic 14 Portugal ¼ 15 Denmark 17 Ireland ¼ 16 Hungary 18 Finland ¼ 19 Slovakia ¼ 20 Bulgaria 21 Lithuania 22 Slovenia ¼ 23 Latvia 24 Luxembourg ¼ 25 Estonia 26 Cyprus ¼ 27 Malta ¼

GDP (PPP) 2009 GDP (PPP) Percentage of EU27 millions of per capita 2009 average GDP euro euro (PPP) per capita 2008 12,512,070 2,238,507 1,705,659 1,678,544 1,404,270 1,132,591 535,737 515,016 302,651 262,149 261,400 248,889 219,909 198,933 192,775 152,151 143,746 145,698 141,811 89,139 70,426 41,802 42,596 25,368 31,309 19,109 18,029 7,813 23,700 27,300 27,600 26,000 23,300 24,500 14,100 31,200 28,100 28,300 23,200 29,700 10,200 18,900 18,100 27,600 32,200 14,800 26,600 16,500 9,200 12,500 21,200 11,300 63,300 14,300 22,500 18,800 100% 116.1% 117.2% 107.4% 100.5% 103.4% 57.6% 135.0% 114.7% 121.5% 93.9% 123.2% 45.8% 80.1% 75.5% 118.4% 136.6% 62.8% 115.1% 71.9% 40.2% 61.1% 90.7% 55.8% 271.4% 68.2% 94.7% 75.5%

ECONOMIES OF MEMBER STATES
Economic performance varies from state to state. The Growth and Stability Pact governs fiscal policy with the European Union. It applies to all member states, with specific rules which apply to the eurozone members that stipulate that each state's deficit must not exceed 3% of GDP and its public debt must not exceed 60% of GDP. However, many larger members have consistently run deficits substantially in excess of 3%, and the eurozone as a whole has a debt percentage exceeding 60% . The following table shows information relating to the member states of the European Union, ordered according to the 'Size' of their economies. (NB: Were the table ordered according to 'GDP per capita' this would perhaps better reflect the strength of an individual economy. But this is not how such tables are commonly structured). The data for GDP, Annual change of GDP, GDP per capita and inflation are IMF estimates made in May 2008.

Deficit (GDP GDP Annual Public )/ GDP per Inflation Member State in change Debt Surplus % of capita % sorted by billions % of % of (+) EU in PPP Annual GDP of US $ GDP GDP % of (2008) US$ (2008) (2008) (2008) (2008) GDP (2008) (2008)

Unemp. % (May 2009)(*Mar 2009) (**Q1 2009)

European Union [11]

18,493.0 100.0%

0.9 30,393

61.5

-2.3

3.7

8.9

Germany

3,653.3 19.8%

1.3 35,441

65.9

-0.1

2.8

7.7

France

2,843.1 15.4%

0.4 34,208

68.0

-3.4

3.2

9.3

United Kingdom

2,690.0 15.3%

0.7 36,522

52.0

-5.5

3.6

7.2*

Italy

2,330.0 12.6%

-1.0 30,580

105.8

-2.4

3.5

7.4**

Spain

1,622.5

8.8%

1.2 30,620

39.5

-3.8

4.1

18.7

Netherlands

862.9

4.7%

2.1 41,019

58.2

1.0

2.2

3.2

Belgium

507.1

2.7%

1.1 36,235

88.6

-1.2

4.5

8.2

Sweden

502.5

2.7%

-0.2 37,245

38.0

2.5

3.3

8.9

Poland

450.6

2.4%

5.0 17,481

47.1

-3.9

4.2

8.1

Austria

418.7

2.3%

1.8 39,634

65.2

-0.4

3.2

4.3

Greece

361.6

2.0%

2.9 30,534

97.6

-5.0

4.2

8.7**

Denmark

349.2

1.9%

-1.1 37,265

33.3

3.6

3.6

5.7

Ireland

290.7

1.6%

-2.3 41,520

43.2

-7.1

3.1

11.7

Finland

273.1

1.5%

0.9 36,217

33.4

4.2

3.9

8.1

Portugal

248.9

1.3%

0.0 22,189

66.4

-2.6

2.7

9.3

Czech Republic

211.7

1.1%

3.2 25,395

28.8

-1.5

2.2

6.1

Romania

187.9

1.0%

7.1 12,579

13.6

-5.4

7.9

6.2**

Hungary

155.2

0.8%

0.5 19,499

73.0

-3.4

6.0

10.2

Slovakia

88.9

0.5%

3.5 22,040

27.6

-2.2

3.9

11.1

Luxembourg

57.0

0.3%

-0.9 82,306

14.7

2.6

4.1

6.4

Slovenia

53.3

0.3%

3.5 29,472

22.8

-0.9

5.5

5.9

Bulgaria

49.3

0.3%

6.0 12,340

14.1

1.5

12.0

6.5

Lithuania

48.1

0.3%

3.0 18,945

15.6

-3.2

11.1

14.3

Latvia

35.8

0.2%

-4.6 17,071

19.5

-4.0

15.3

16.3

Estonia

25.4

0.1%

-3.6 20,259

4.8

-3.0

10.6

15.6

Cyprus

24.5

0.1%

3.7 29,829

49.1

0.9

4.4

5.3

Malta

8.4

0.1%

2.7 23,760

64.1

-4.7

4.7

7.1

ECONOMIC GROWTH
The EU's share of Gross world product (GWP) is stable at around one fifth . GDP growth, though strong in the new member states, is being offset by sluggish growth in France, Italy and Portugal. The twelve new member states of Central and Eastern Europe have enjoyed a higher average percentage growth rate than their Western European counterparts. Notably the Baltic States have achieved massive GDP growth, with Latvia topping 11%, close to China, the world leader at 9% on average for the past 25 years. Reasons for this massive growth include government commitments to stable monetary policy, exportoriented trade policies, low flat-tax rates and the utilisation of relatively cheap labour. For the last year (2008), Romania had the biggest GDP growth from all the states in EU. The current map of EU growth is one of huge regional variation, with the larger economies suffering from stagnant growth and the new nations enjoying sustained, robust economic growth. Although EU27 GDP is on the increase, the percentage of Gross world product is decreasing due to the emergence of economic powers such as China, India and Brazil. In the medium to long term, the EU will be looking to increase GDP growth in the central European economies such as France, Germany and Italy and stabilise growth in the new Central and Eastern European states to ensure sustained economic prosperity.

UNEMPLOYMENT
The seasonally adjusted unemployment rate in the European Union (EU27) in March 2009 was 8.3% compared to 6.7% in March 2008. The Eurozone (EA16) unemployment figure for January 2009 was 8.2% compared to 7.3% in January 2008.[6] The unemployment rate (EU25) had previously declined in prior years from 8.9% in March 2005 to 8.4% in March 2006 to 7.3% in March 2007. The rate varies widely by member state. There has been a steep upturn in the unemployment rate in recent months due to the worldwide credit crunch and following recession. The countries within the EU which were most affected were Spain, Ireland and the Baltic countries with the unemployment rate doubling or in case of the Baltic countries nearly tripling. By comparison in March 2009 the United States had an unemployment rate of 8.6% (2008: 5.1; 2007: 4.4; 2006: 4.7) which was higher than the EU-27's unemployment rate but lower than the EU-16 Eurozone rate of 8.9%. Japan's unemployment rate remained comparatively steady at 4.4% (2008: 3.9; 2007: 4.0; 2006: 4.1).

The following tables show the current unemployment rate of all Member States for March 2009 with comparisons to March 2008, 2007, 2006 and 2005 and comparisons to the United States and Japan:

% Unemployment Member State Austria Belgium Denmark Finland France Germany Greece Ireland Italy Luxembour g Netherland s Portugal Spain Sweden United Kingdom Marc Marc Marc Marc Marc h h h h h 2005 2006 2007 2008 2009 5.1 8.4 5.4 8.5 9.7 9.8 9.9 4.5 7.8 4.3 4.9 7.4 9.9 6.3 4.6 5.1 8.2 4.3 7.9 9.1 8.7 9.6 4.2 7.7 4.8 4.0 7.6 8.7 7.2 5.0 4.5 7.7 4.1 7.0 8.6 8.6 8.6 4.6 6.1 4.9 3.4 8.2 8.1 6.6 5.5 4.1 6.9 3.0 6.3 7.6 7.4 7.8 5.6 6.6 4.4 2.8 7.6 9.5 5.8 5.2 4.5 7.3 5.7 7.4 8.8 7.6 7.8 10.6 6.9 6.1 2.8 8.5 17.4 8.0 6.6 Member State Bulgaria Cyprus Czech Republic Estonia Hungary Latvia Lithuania Malta Poland Romania Slovakia Slovenia Europea n Union United States Japan

% Unemployment Rate Marc Marc Marc Marc Marc h h h h h 2005 2006 2007 2008 2009 x 5.1 8.0 8.8 6.8 9.1 9.2 7.2 18.0 x 16.7 6.4 8.9 5.1 4.5 x 5.2 7.7 5.3 7.4 7.6 6.4 8.1 16.8 x 15.7 6.2 8.4 4.7 4.1 7.5 4.1 5.6 4.9 7.3 6.4 4.6 6.6 10.3 6.6 11.3 5.2 7.3 4.4 4.0 6.1 3.7 4.4 4.0 7.6 6.1 4.3 5.8 7.4 6.2 9.9 4.5 6.7 5.1 3.9 5.9 4.9 5.5 11.1 9.2 16.1 15.5 6.7 7.7 5.8 10.5 5.0 8.3 8.5 4.4

BUDGET
The twenty-seven member state EU had an agreed budget of ¼120.7 billion for the year 2007 and ¼864.3 billion for the period 2007±2013,[135] representing 1.10% and 1.05% of the EU-27's GNI forecast for the respective periods. By comparison, the United Kingdom's expenditure for 2004 was estimated to be ¼759 billion, and France was estimated to have spent ¼801 billion. In 1960, the budget of the then European Economic Community was 0.03% of GDP. In the 2006 budget, the largest single expenditure item was agriculture with around 46.7% of the total budget. Next came structural and cohesion funds with approximately 30.4% of the total. Internal policies took up around 8.5%. Administration accounted for around 6.3%. External actions, the pre-accession strategy, compensations and reserves brought up the rear with approximately 4.9%, 2.1%, 1% and 0.1% respectively.
External Actions Compensations Pre-Accession 1% Strategy Administration 5% 2% 6% Internal Policies 9% Reserves 0%

Agriculture 47% Structural Actions 30%

COMPETITION
The EU operates a competition policy intended to ensure undistorted competition within the single market. The Commission as the competition regulator for the single market is responsible for antitrust issues, approving mergers, breaking up cartels, working for economic liberalisation and preventing state aid. The Competition Commissioner, currently Neelie Kroes, is one of the most powerful positions in the Commission, notable for the ability to affect the commercial interests of trans-national corporations. For example, in 2001 the Commission for the first time

prevented a merger between two companies based in the United States (GE and Honeywell) which had already been approved by their national authority. Another high profile case against Microsoft resulted in the Commission fining Microsoft over ¼777 million following nine years of legal action. In negotiations on the Treaty of Lisbon, French President Nicolas Sarkozy succeeded in removing the words "free and undistorted competition" from the treaties. However, the requirement is maintained in an annex and it is unclear whether this will have any practical effect on EU policy.

CONCLUSION
The largest segment of world history consists of the history of Europe, which has mostly been determined by the concepts of sovereignty, religion (Christianity) and war. The interplay between these three factors has always yielded outcomes in the forms of compromises, agreements and treaties. The latest struggle related to them was the Second World War, which manufactured the European Union as an outcome. The European Union, even at its early stage, transformed these three deterministic concepts and provided them with a new dimension, which resolves the issue of sovereignty, Christianity, and war. This new dimension liberated the European Union from a power-based center and allowed her to move towards a system based on universal norms and values. This turned out to be the main distinction between the Europe before and after the Second World War. Naturally, this indicates that European Union plays a significant role in shaping international society rather than international order. The European Union has been enhancing this role through various characteristics that the Union acquired in the process of integration such as (1) Implicit formation, (2) Passive defense, and (3) Willpower and concert. However, the success of the Union in this process depends on achieving good results in the relations with Turkey. Since the European Union does not have any comparative advantage in the struggle for international power except in trade and business, the greatest outcome of the integration process will be that of a union molding the international society with universal, modern, European values. With this purpose, the European Union should minimize the inconsistencies within the Union and accept Turkey, who conforms to the norms and values of the union, as a full member without further conditions.

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