Wednesday, April 6, 2011

How the European Union Works

I am, to be honest, appalled at how poorly the workings of the European Union tend to be spelled out, so I guess this is going to be largely a "political" week. Many people don't understand what's going on with the EU and why it's simultaneously so strong and so weak.

The European Union, as we know it today, was formed via the Maastricht Treaty of 1992 and amended by several subsequent treaties. It is currently comprised of 27 member states and the goal is to create a single market within the EU, though there is work on common foreign policy and other ventures. There are several components to the EU government.
  1. European Commission
  2. Council of the European Union
  3. European Council (not the same thing!)
  4. European Parliament
  5. European Central Bank
  6. Court of Justice of the European Union
  7. European Court of Auditors
Sound complicated? It is.

The European Commission is where the real power lies. They're the "executive branch" of government and handle day-to-day affairs. There are 27 Commissioners, one for each country, and one of them serves as the President of the EU on a six month rotating basis. They have the power to propose laws.

The European Parliament and the Council of the European Union (#2 above) form the two halves of the legislative body of the EU. The parliament is comprised of hundreds of directly elected parliamentarians, their numbers proportional to state populations. The Council, however, is comprised of 27 members, one from each state, and depending on the topic they're considering, the council's representative for each state will be the minister of that state who handles the area in question. For example, if discussing foreign policy, the UK will send a minister who deals with foreign policy, not one who deals with agricultural policy.

The European Council (#3 above) is comprised of the 27 heads of state of the various countries and they meet at least twice every six months. Though having little formal power, their decisions help set the tone for upcoming EU decisions.

The European Court of Justice attempts to ensure that laws related to the EU treaties are being observed. The European Court of Auditors, on the other hand, isn't really a court. They audit the EU budget and make sure legally and appropriate management. The European Central Bank, naturally, handles the monetary policy of the EU.

What does this mean?

As my wife is keen to make clear, the European Union is not a government. It's merely a framework of treaties in which the member states work together to achieve commonly agreed upon goals. Primarily they work to maintain a single market across the EU with monetary union (the Eurozone) being the driving force, but increasing attempts to develop a common foreign policy and human rights agreements. For the US readers out there, the EU represents the "state's rights" which so many Republicans talk about. While hardly a perfect comparison (it's impossible), it's a pretty good one.

What makes the EU powerful is that it's a common market with a population of 500 million and a strong currency. Many markets have considered switching from dollars to Euros and there's been some discussion of oil markets making this switch. The collapse of the dollar against the Euro is leading this and there's been discussion of switch oil revenues to a basket of currencies instead of relying solely on the dollar. The euro, of course, being one of the leading currencies in said basket.

However, the EU as a major political union is hobbled by their lack of a common foreign policy and their lack of a strong central government. The lack of a common foreign policy means that they can be divided on their response to political issues, but their lack of a central government means that separate states maintain separate economies with only a common currency and market to bolster them. This means that individual countries have the power to threaten the stability of the euro; individual US states do not. I'm unsure of how, or if, the EU can overcome this problem. Currently, the euro is holding together, but in the long term, several countries are threatening it due to mismanagement of their economies.

Currently, I suspect China is going to dominate economically and eventually they're going to use this to leverage political power. They have little internal dissent and if an economic policy is counter-productive, their single party system means they can change it with the stroke of a pen. Note that I'm not endorsing the Chinese goverment — I don't like their record on human rights — but they have a political strength that neither the EU nor the US possess.
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