Monday, 29 October 2012

The European Union - Worth fighting for!

The recent announcement that the European Union (EU) would be awarded the Nobel Peace Prize may seem strange – the Prize typically goes to an individual whereas the EU is an organization which governs relationships between countries in Europe.  And why now?  The EU has done nothing of late that was worthy of the Prize and is on the verge of irrelevance due to political infighting.  But the Norwegians who dish out the Nobel Prizes are not shy of making a statement and Your Neighbourhood Economist supports their stance which can be seen as a timely reminder of what the EU has achieved and what the governing body of Europe still has to offer.

The reason behind why the EU has been awarded the Nobel Prize is its role in promoting peace and reconciliation.  The origins of the EU stem from the aftermath of WWII when leaders in Europe looked to increase the ties that bind the former foes of Europe as a counterweight against the feverish nationalism that brought about the War.  The political impetus behind the growing notion of community in Europe also took on economic ramifications with the European common market.  The EU itself was formed in 1993 out of the precursor organizations and this was followed by the launch of the euro in 2002.  The size of the membership has increased from an original six back in the first agreements in 1951 to 27 with Romania and Bulgaria as the last to join and Croatia set to join in July 2013.  The Eurozone countries make up a smaller subset of these countries and currently number 17.

Much has been made of the cooperation between France and Germany along with the United Kingdom as one of the profound benefits stemming from the EU.  Yet, it is unclear the extent to which the EU has contributed in getting the major powers of Europe to work together rather than fight among themselves.  Your Neighbourhood Economist would argue that it is the outward spread of democracy and the rule of law and order to the growing number of countries which have joined the EU which has provided a greater bounty. 

To be accepted into the EU, candidate countries must meet certain standards which include institutions to guarantee democracy and the protection of human rights as well as a functioning market economy.  Many of the countries have been pushed to apply these rules to a greater extent than would have happened otherwise and this has brought political emancipation and economic prosperity to many that would have otherwise remained side-lined.  Entry into the EU also comes with funds to be spent on infrastructure which helps the newer members to economically integrate to the good of all.

But the expansion of the EU is not over.  The EU has already absorbed a large portion of the old Soviet bloc but there are still countries such as Ukraine which would benefit from the carrot of entry into the EU to reform their political system.  But bigger challenges and benefits wait in the prospect of membership for countries which made up part of the old Yugoslavia in the Balkans.  Many of these countries are still mired in conflict and need the prospects of EU membership for politicians to help the region to shape up.  And then there is Turkey whose entry is controversial in the EU but who would also add a growing economy and a link to the Muslim world.

What should be clear from the above paragraph is that there is still considerable scope for the EU to do good things in the periphery of Europe even disregarding its work elsewhere in the global.  And it is for this reason that Your Neighbourhood Economist believes that the EU is worth fighting for.  Yet it is euro that could be the key.  If the current members are not willing to make the sacrifices to hold together the Eurozone, the outlook for the inclusion of new countries would be bleak.  Furthermore, a squabbling and inward looking Europe would unravel much of the good work from the past sixty years and would signal an end to the principles that earned the EU its well-deserved Nobel Prize as well as its hopes for a role as a dominant player on the world stage – if only the politicians in Europe could look further than their front door steps.  

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