It has been a long time in the making, but scheduled plans have marked
January 1, 2002 as the date that the new Euro currency banknotes and coins will
be introduced in Europe. July 1, 2002 is the designated day that the changeover
to a monetary union will be complete. The discussion as to the risks and
benefits of this monetary union has been all the talk around the world. This
union will have vast and far-reaching effects that will touch not only the
countries in the union, but the entire world. There will be a dramatic and
radical economic change in Europe. All national currencies will disappear and
there will be only one money, the European Currency Unit or ECU. Europe’s
economy was in shambles after the end of World War II. They had invested a lot
of money and resources to financing the war. In 1948, The United States
Secretary of State George C. Marshall, suggested that the United States should
assist Europe in their rebuilding, restructuring, and reconstruction. Offering
U.S. capital, resources, and cooperation to the countries of Europe would
accomplish this. This was known as the Marshall Plan. This plan was very
successful right out of the gates. In just two years Europe was ahead in
industrial production (up one hundred and thirty-eight percent) from its last
year of peace before the war (Ball pg.138). The United States continued to work
with and assist Europe and in 1957, the Treaty of Rome was signed. This created
the European Community (EC), or as it is otherwise known as The European
Economic Community (EEC).
The premise behind this union was that if the countries of Europe were liked
and dependent on each other financially, there would be less of a chance of them
going to war again with each other. The European Community began with just six
members. They were Belgium, Germany, France, Italy, Luxembourg, and the
Netherlands. Following afterwards were the countries of Denmark, Ireland, United
Kingdom, Greece, Portugal, and Spain. In 1995, Austria, Finland, and Sweden
became members. All together, to this day, there are fifteen members in the EC.
The purpose of the European Union was to improve cooperation between countries
and remove, or at least reduce, trade and labor market barriers. In a sense,
they want to create an entity very similiar to the U.S. in the fact that
Americans enjoy relatively free movement of people, money, and goods. The
headquarters of EU were established in Brussels. Here the EC Commission is
responsible for many things such as labor, transportation, trade…etc. This is
very similar to the United States Cabinet (Ball pg.139). A council of ministers
was set up to be the policy-setting body for the EU. The Prime ministers of each
country meet to establish policy, which will be enforced by the commissioners.
The European Parliament was established as a governing body for the European
Union. Voters in each member country elect its members. It operates as a system
of checks and balances for the European Commission. It has the power to throw
out all the commissioners or veto the entire EU budget. It was limited however,
because in the previous powers it was all or nothing.
They could not veto parts of the budget or eliminate certain commissioners.
In 1987 the Single European Act gave the European Parliament some power to amend
the legislation drafted by the European Commission. The EU Court of Justices was
established to regulate and decide any cases that arise under the Treaty of
Rome. Its power is growing because of the high volume of cases it handles and
the authority it has over the courts of the member countries. European Union has
definitely become a force in world international trade. It is the largest import
and export market in the world. It is second in the world to the U.S. in GDP. It
also accounts for twenty percent of world trade (Ball pg.139). The people of
Europe feel that monetary union is the true key to becoming a powerful, strong,
economic union. Europeans long for an environment similar to the United States
where there are little or no barriers to trade or movement of labor. Many people
feel that monetary union is the only way to achieve this. Many government
officials and academics have attempted proposals to move beyond monetary
cooperation to monetary unification. The countries of Europe had started
monetary cooperation in 1950 when the European payments union was established.
It was designed to multilateralize trade and payments within Western Europe and
provide a framework for achieving currency convertibility. (Kenen, pg.3).
