European Union

The European Union (EU) is a political and economic entity consisting of 27 member states that share a common political ideology. In legal form, it is a complex hybrid structure with elements of federalism (such as the European Court of Justice and the European Parliament), intergovernmentalism (the Council of Ministers) and some characteristics of an international organsation (the European Commission represents the Union in certain international negotiations). It has grown from the six founding member states of the European Economic Community in 1957, through many accessions of new members &mdash; especially, in recent years, much of the former European Communist bloc.

Overview
The transition from the European Common Market of 1951 to the European Union of 2011 - that is summarised on the timelines subpage of this article - has involved a major deepening and widening of coooperation among the countries of Europe. Among the most recent of the moves toward the founders' objective of economic and political union was the creation by the Maastricht Treaty of an economic and monetary union, to form in 1999 what came to be knowm as the eurozone. Two of the existing members of the European Union (The United Kingdom and Denmark) were unwilling  at the time to accept the surrender of control over monetary policy that was required of eurozone members, but willingness to join the eurozone became a  condition of membership of the European Union for subsequent applicants. The Maastricht Treaty required all members of the European Union to relinquish a limited degree of control over their fiscal policies by abiding by agreed limits on their budget deficits and their public debt.

Rationale
Perceptions of the rationale for the European Union have differed among its participants. Its founders saw it as the foundation of a union of the peoples of Europe (see box), but some of its later participants have seen it solely as a union of the sovereign nations of Europe. Its member countries  have  not since  relinquished  control over their  defence and international policies, and  the progress  toward union that has been achieved has been predominately in the sphere of economic policy. In that sphere, however, every step in the Union's evolution has involved a further partial surrender of  its members' national sovereignty. The launch in 1988 of the Economic and  Monetary  Union was a step further than some of its members were willing to take at that  time. The further surrender of national sovereignty by the countries that did take that step included the total relinquishment of control over monetary policy,  and submission to agreed limits upon the exercise of fiscal policy. Member countries retained limited discretion over public expenditure and taxation, however, and in that respect  the integration of economic policy   has so far been incomplete.

The principal advantage of membership to a country has been seen as the unrestricted access that it provides to wider markets for its products. The adoption of a common currency as part of the Economic and Monetary Union was seen as further lowering  barriers to those markets by reducing transaction costs and eliminating exchange rate risks. It was generally accepted that there could be  offsetting  disadvantages arising from  loss of control over the domestic economy, but  most of the continent's governments  judged the balance to be positive. Some have since come to question that judgement because of the unsymmetrical impact of recent demand shocks upon the domestic economies of member countries.

Constitution
The term "european constitution" commonly refers to a document published in 2004, whose proposals have not been given formal effect because they have not received universal ratification. In the absence of an accepted codification, the constitution of the European Union consists of a collection of treaties, protocols, declarations  and regulations. Notwithstanding its lack of status, the document of 2004 provides a valuable summary of the existing position as perceived by its authors.

The conditions for membership of the Union are defined in the document in two clauses: Article I-58:  The Union shall be open to all European States which respect the values referred to in Article I-2, and are committed to promoting them; and, Article I-2: '' The Union is founded on the values of respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities. These values are common to the Member States in a society in which pluralism, non-discrimination, tolerance, justice, solidarity and equality between women and men prevail.'' Those joining after 1992 are also expected to meet the eurozone entry criteria.

Exclusive competence is ascribed to the Union as regards:
 * - the customs union, competition rules, monetary policy  (for  eurozone members),  conservation of marine biological resources, the common commercial policy, and certain (defined) categories of  international agreement.

Shared competence between the Union and member states is deemed to apply to:
 * - internal markets, specified aspects of social policy, economic, social and territorial cohesion, agriculture and fisheries, the environment, consumer protection, transport, trans-European networks, energy, freedom, security and justice, and  public health.

Most decisions by the Union's governing body are taken by a qualified majority,  defined as at least 55 per cent of the members of the Council(72 per cent for proposals from other than the Commission or the Union Minister of Foreign Affars), comprising at least fifteen of them and representing member states comprising at least 65 % of the population of the Union. Exceptions include decisions on foreign and defence policy, the Union budget, the admission of new members, emergency financial assistance to members and penalties for breaches of the Union's rules.

Structure
The principal institutions of the European Union are
 * The European Council Heads of State or Government of the Member States, together with its President and the President of the Commission (and the High Representative of the Union for Foreign Affairs and Security Policy if required.)
 * The Council of the European Union - the main decision-making body of the EU (ministers of the member states - foreign affairs, finance, social affairs, transport, agriculture, etc.).
 * The European Parliament - a directly-elected body that takes legislative decisions on some issues jointly with the Council of Ministers.
 * The European Commission - the driving force in proposing legislation (to Parliament and the Council), administering and implementing EU policies, enforcing EU law (jointly with the Court of Justice) and negotiating in the international arena.
 * The European Central Bank - executes the EU's monetary policy.
 * The European Court of Justice - the judicial authority of the European Union which reviews the legality of the acts of the institutions of the European Union, ensures that the Member States comply with obligations under the Treaties, and interprets European Union law at the request of the national courts and tribunals.

Membership
To the 6 founder members in 1951, 1 was added in 1981, 2 in 1986, 4  in 1995, 10 more in 2004 and a further 2 in 2007  - (see the lists on the timelines subpage)

The 27 member countries are:
 * Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland,  France,  Germany,  Greece, Hungary, Ireland, Italy, Latvia,  Lithuania,  Luxembourg,  Malta,  Netherlands, Poland, Portugal,  Romania, Slovakia,  Slovenia,  Spain,  Sweden, and the United Kingdom.

The candidate countries are:
 * Croatia, The former Yugoslav Republic of Macedonia, Turkey and Iceland.

Potential candidates are:
 * Albania, Bosnia and Herzegovina,  Kosovo under UN Security Council Resolution 1244, Montenegro, and  Serbia.

Following the signing of the Maastricht Treaty in 1992, 11 European Union members became members of the Eurozone. They were:
 * Belgium, Germany, Ireland, Spain, France, Italy, Luxembourg, the Netherlands, Austria, Portugal and Finland,
 * Greece joined in 2001, Slovenia in 2007, Cyprus and Malta in 2008 and Slovakia in 2009.

Agriculture
The protection of the community's agricultural industry from overseas competition by a "Common Agricultural Policy" was among the principle objectives of the founders of the Europeam Common Market (as set out in article 39 of the Treaty of Rome), and it is even now  the most costly of the activities of the Union, accounting for about 40 per cent of its annual budget . Its principal instruments are price support payments, export subsidies and taxes on agricultural imports. The subsidies were initially production-related  but since 2003  they have  decoupled from production levels and made dependent on animal welfare and environmental protection. Its principal recipients in 2006 were France  (20%),  Spain (13%), Germany  (13%), and Italy  (11%)

Competition
European competition policy is administered directly by the Competition Diectorate of the European Commission

Economic and Monetary Policy
Member countries of the eurozone have adopted a common monetary policy determined by the European Central Bank. The remit given to the Bank  assigns overriding importance to price stability,  but  also required it "without prejudice to the objective of price stability"  to "support the general economic policies in the Community" including a  "high level of employment" and "sustainable and non-inflationary growth". Member countries of the European Union that are not members of the Eurozone are free to conduct their own monetary policy. The fiscal policies of all European Union member countries are conducted independently but they are required to keep within the limits on [[public debt and budget deficit stipulated in the Stability and Growth Pact.

Other policy areas
There are also departments of the European Commission that develop policy on climate action, communication, culture, employment, energy, environment,foreign affairs, health, justice, science and technology, transport and tourism.

Recent developments
The economies of all member countries suffered major downturns during the Great Recession of 2007-10 (as described on the Addendum subpage of the article on that subject). One effect of the recession was to reduce revenues from taxation and increase public expenditure, as a result of which  there were increases in member countries' budget deficits and public debt, and  multiple breaches of the limits required by the Stability and Growth Pact. Particular concern developed in early 2010 concerning the fiscal sustainability of the economies of the "PIIGS" countries (Portugal, Ireland, Italy, Greece and Spain) following rating downgrades by the credit rating agencies (their problems are described in the article on the eurozone crisis). In May 2010, a €500 billion European financial stabilisation mechanism was established, enabling  member states in difficulties  to get loans from the European Central Bank (subject to the adoption of measures to restore  fiscal sustainability) and the Bank launched a securities market programme, designed to calm the bond market. During 2010, the governments of Greece and Ireland  decided that, without help,  they  would not be able to continue to  finance their budget deficits,  and they sought - and received - loans from other European governments. Those loans failed to reassure potential investors, and in November  and December of  2010  the  international bond market  forced  further increases in  interest rates on   the  governments of all five governments (including  those of Portugal, Spain and Italy,  because of fears of contagion from Greece and Ireland).

Prospects
By December 2010, there was widespread uncertainty about future prospects for the eurozone and beyond. There were doubts about the willingness of European governments to provide further financial support to the five "PIIGS" governments, and speculation that financing difficulties might spread to affect other governments. Some commentators considered it inevitable that one or other of the PIIGS governments would default on, or restructure, its loans, and other commentators forecast departures from the eurozone by governments wishing  to escape its  restraints. There were even those who envisaged wholesale departures, leading to a collapse of the common currency - an outcome that would impose substantial losses upon countries with investments in euro-denominated securities, and could threaten the stability of the international financial system.

Further crisis prevention measures were under consideration in December 2010. The leaders of Frances and German were again calling for further moves toward political integration, and the two governments announced that they would  jointly table structural answers to the eurozone crisis "in the first weeks of the new year".