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Wall Street History
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10/13/2006
The European Union
A few weeks ago I was in Bulgaria and Romania when these two received official word they would be the 26th and 27th countries admitted to the European Union (EU) come January 2007, but with strict conditions; such as the need to curb excessive corruption, particularly in Bulgaria.
Some in the EU are complaining of “enlargement fatigue,” while others talk of further expansion, starting with the likes of Croatia (perhaps 2010) and Turkey (2015).
So I thought it was a good time just to remind everyone of just who is in the EU and how we got to this point.
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1948: Talks begin on having a “European Community” after the devastation of World War II.
1951: Treaty of Paris establishes economic union of coal and steel producers, including France and Germany, a forerunner to the EU.
1957: Treaty of Rome. Belgium, France, Italy, Luxemburg, Netherlands, and West Germany create the European Economic Community (EEC).
[In the 1960s, French President Charles de Gaulle, concerned that France’s voice in world affairs was threatened, vetoed Britain’s application for membership.]
1973: Denmark, Ireland, UK added.
1981: Greece added.
1986: Portugal, Spain added.
1991: EEC renamed European Union.
1995: Austria, Finland, Sweden added now 15 members of EU.
2002: ‘Euro’ introduced in 12 EU member states [Denmark, Sweden, and UK elect not to, or fail to meet standards.]
2004: Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, Slovenia added to EU.
2007: Bulgaria, Romania added. [26 and 27]
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How does the EU-25 (so not including Bulgaria and Romania) match up with the United States?
Population wise, the EU-25 has about 455 million versus 300 million for the U.S.
As for GDP, the EU-25 is in the $12.25 trillion range (as close as I can ascertain), while the U.S. economy now exceeds $13 trillion ($13.2 by the latest count).
[As of 2003 they were virtually equal but since then the United States has been growing at a far more rapid clip.]
Both, however, have severe pension and entitlement issues coming up as the respective Baby Boom generations age, though even here the U.S. has a distinct advantage in that America’s population continues to grow, thanks to immigration, while Europe’s is stagnating and on the verge of falling over the coming decades, which in turn will only exacerbate the pension issues on the Continent.
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On a separate matter, the European Union Constitution is said to be structured for only 27 nations and now the limit has been reached, but in proposing changes for a new document back in 2004 and 2005, voters in France and the Netherlands rejected the constitution, throwing the whole process into a state of limbo as all EU members must ratify it before it becomes law. [Not all need to hold referendums, though, as was the case in both France and the Netherlands.]
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As for the common currency, the euro, anyone who travels in Europe has to love it, except for the fact the dollar has been getting crushed against it the past few years and our greenback sure as heck doesn’t go as far as it used to. I mean have you seen the cost of a pint recently?
Twelve nations currently use the euro.
Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxemburg, Netherlands, Portugal, and Spain
Slovenia will adopt it Jan. 2007.
As noted above, Denmark, Sweden and the UK for various reasons have opted out thus far but could adopt the euro basically any time they want as long as they met various monetary targets, while the other 11 new members (including Bulgaria and Romania) will need more time before adopting the currency.
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One final issue that I’ve brought up extensively in my “Week in Review” column over the years is the fate of Turkey, which a while back was eager to join the EU. But now, with both an Islamist government in power in Ankara and an anti-immigrant backlash across Europe, post-9/11, Madrid and London bombings, etc., admission is far from a sure thing.
French Interior Minister (and possible successor to Jacques Chirac) Nicolas Sarkozy.
“Next year’s 50th anniversary of the EU’s founding Rome treaty should be celebrated with pride, for it marks an historic achievement: Half a century of reuniting a divided Continent. But there is also cause for concern. The forces driving the Union’s political momentum have run out of steam and Europe’s citizens are either doubtful or indifferent to its aims and lack any real collective hope for the future .
“Of all the countries with which the EU should have preferential relations there is Turkey, our neighbor and friend, sharing many of our security concerns and many of our values. These are good reasons for strengthening our ties with Turkey, without going so far as offering full membership.
“However, no candidate for EU membership has the right to ignore that the Union has 25 members, including Cyprus. Despite the customs union between Turkey and the EU, Turkey continues to deny access to its ports and airports to boats and airplanes that have stopped in Cyprus. This is not acceptable. I say again and again that the EU must suspend any new accession negotiations with Turkey until Ankara has ratified and implemented, in good faith, its agreed trade protocols.”
And then on Thursday, Oct. 12, the French parliament approved a bill making it a crime to deny that the 1915-17 massacres of Armenians by the Ottoman Turks constituted genocide.
Turkey strongly contests this and is furious. Turkey’s parliament speaker called the French vote “shameful” and reflected a “hostile attitude.”
The European Commission also criticized the French bill but the damage to EU-Turkish relations has been done.
Sources:
BBC News, Financial Times, Times of London, The Economist, International Herald Tribune, Wall Street Journal, European Union
Wall Street History returns next week.
Brian Trumbore
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