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A REPORT ON
EUROPEAN UNION
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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 pre-existing 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 ofpassport 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.
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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 SteelCommunity 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 AtomicEnergy 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 SchengenAgreement 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 intoforce 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.
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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.
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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 acountry'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.
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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 CommonForeign 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, aninternational organization independent from the EU.
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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 rangingcoordination 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),
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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. Thediscussion 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 ofAccession.
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 amongmember 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.
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MemberStatesGDP (PPP) 2009
millionsofeuro
GDP (PPP)percapita 2009
euro
PercentageofEU27averageGDP
(PPP) percapita 2008
European Union 12,512,070 23,700 100%1 Germany 2,238,507 27,300 116.1%
2 United Kingdom 1,705,659 27,600 117.2%
3 France 1,678,544 26,000 107.4%
4 Italy 1,404,270 23,300 100.5%
5 Spain 1,132,591 24,500 103.4%
6 Poland 535,737 14,100 57.6%
7 Netherlands 515,016 31,200 135.0%
8 Belgium 302,651 28,100 114.7%
9 Sweden 262,149 28,300 121.5%
10 Greece 261,400 23,200 93.9%
11 Austria 248,889 29,700 123.2%
12 Romania 219,909 10,200 45.8%
13 Czech Republic 198,933 18,900 80.1%
14 Portugal 192,775 18,100 75.5%
15 Denmark 152,151 27,600 118.4%
17 Ireland 143,746 32,200 136.6%
16 Hungary 145,698 14,800 62.8%18 Finland 141,811 26,600 115.1%
19 Slovakia 89,139 16,500 71.9%
20 Bulgaria 70,426 9,200 40.2%
21 Lithuania 41,802 12,500 61.1%
22 Slovenia 42,596 21,200 90.7%
23 Latvia 25,368 11,300 55.8%
24 Luxembourg 31,309 63,300 271.4%
25 Estonia 19,109 14,300 68.2%
26 Cyprus 18,029 22,500 94.7%
27 Malta 7,813 18,800 75.5%
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ECONOMIES OFMEMBER 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'sdeficit 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.
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MemberStatesortedbyGDP
GDPin
billionsofUS $
(2008)
GDP% ofEU
(2008)
Annualchange
% ofGDP
(2008)
GDPper
capitain PPP
US$(2008)
PublicDebt% ofGDP
(2008)
Deficit (-)/
Surplus(+)
% of
GDP(2008)
Inflation%
Annual
(2008)
Unemp.%
(May2009)(*Mar
2009) (**Q12009)
EuropeanUnion [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
UnitedKingdom
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
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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
CzechRepublic
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
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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, export-
oriented 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 unemploymentrate 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).
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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:
MemberState
% Unemployment
March
2005
March
2006
March
2007
March
2008
March
2009
Austria 5.1 5.1 4.5 4.1 4.5
Belgium 8.4 8.2 7.7 6.9 7.3
Denmark 5.4 4.3 4.1 3.0 5.7
Finland 8.5 7.9 7.0 6.3 7.4
France 9.7 9.1 8.6 7.6 8.8Germany 9.8 8.7 8.6 7.4 7.6
Greece 9.9 9.6 8.6 7.8 7.8
Ireland 4.5 4.2 4.6 5.6 10.6
Italy 7.8 7.7 6.1 6.6 6.9
Luxembourg
4.3 4.8 4.9 4.4 6.1
Netherlands
4.9 4.0 3.4 2.8 2.8
Portugal 7.4 7.6 8.2 7.6 8.5Spain 9.9 8.7 8.1 9.5 17.4
Sweden 6.3 7.2 6.6 5.8 8.0
UnitedKingdom
4.6 5.0 5.5 5.2 6.6
MemberState
% Unemployment Rate
March
2005
March
2006
March
2007
March
2008
March
2009
Bulgaria x x 7.5 6.1 5.9
Cyprus 5.1 5.2 4.1 3.7 4.9
CzechRepublic
8.0 7.7 5.6 4.4 5.5
Estonia 8.8 5.3 4.9 4.0 11.1
Hungary 6.8 7.4 7.3 7.6 9.2
Latvia 9.1 7.6 6.4 6.1 16.1
Lithuania 9.2 6.4 4.6 4.3 15.5
Malta 7.2 8.1 6.6 5.8 6.7
Poland 18.0 16.8 10.3 7.4 7.7
Romania x x 6.6 6.2 5.8
Slovakia 16.7 15.7 11.3 9.9 10.5
Slovenia 6.4 6.2 5.2 4.5 5.0
European Union
8.9 8.4 7.3 6.7 8.3
UnitedStates
5.1 4.7 4.4 5.1 8.5
Japan 4.5 4.1 4.0 3.9 4.4
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BUDGET
The twenty-seven member state EU had an agreed budget of 120.7 billion for the year
2007 and 864.3 billion for the period 20072013,[135] representing 1.10% and 1.05%
of the EU-27's GNI forecast for the respective periods. By comparison, the UnitedKingdom's expenditure for 2004 was estimated to be 759 billion, and France was
estimated to have spent 801 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.
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 isresponsible 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
Agriculture
47%
Structural
Actions30%
Reserves
0%
Internal Policies
9%
Administration
6%
External Actions
5%
Pre-Accession
Strategy
2%
Compensations
1%
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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 777
million following nine years of legal action.
In negotiations on the Treaty of Lisbon, French President Nicolas Sarkozy succeeded inremoving 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 thenorms and values of the union, as a full member without further conditions.
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