What led to the European Union's creation?

Has it been a
success or more a failure? What factors have caused the
present Eurozone Crisis? Is it a "Euro Crisis" as well?
Argue and defend your reasoning.
The European Union (EU) was formed in 1 st November, 1993 in the result of
Maastricht Treaty. It was purely economics and political union between 28
European countries and leading common economics, social and security
policies. which makes its own strategies regarding the members
parsimonies, societies, laws and to some level security1.
The European Union is the result of sequence of efforts to assimilate Europe
since World War II. At the end of the war, numerous wester Europe countries
required closer socio economic and political stalemates to accomplish
economic progress and martial security and to endorse long-lasting
understanding between France and Germany. 2 After, 1951, six of the leader
countries contracted the contract of Paris, thus, in 1952, establishing the
European Coal and Steel Community (ESCE). Throughout the Cold War with
six nations, with the determination to joining the whole of western Europe,
the main goal of its was to formulate a combined market system all around
Europe as a source of providing solidity to the marks and stopping
detachment between the combined societies. Similarly, a succession of
supplementary international agreements and treaty revisions bases large on
this model led ultimately to the formation of the European Union. If we
deeply analyze the factors which led the formation of European union, it
1Wilde, Robert. "The History of the European Union." European History Expert, June 24,
2016.

2Gabel, Mathew J. "European Union (EU)." European Organization, July 07, 2016.

involved: Political threat and pressure, and the arrangement of politician and
elites.
On the Systemic Level: As the risk of the soviet to Europe, the matter of
the habitation of Germany in Europe, as well as the cold War occasioned to
the instinct to exertion together and formulate associations. Additional
outward compression was attached by the US who preferred the France and
Germany reimbursement.
On the Individual Level: Another very significant influence was the
characters who were moderately alert of the circumstance that mutually
organizations and assimilation were all significant for the preservation of
peace in Europe. The personnel included Robert Schuman (French Prime
Minister),

Konrad

Adenauer

(German

Chancellor),

and

Jean

Monnet

(Economist and Diplomat). Whereas France maintained keeping Germany

under check, occupied Germany needed to get over the shame of losing the
war and regain more sovereignty. As the Germany and France were uncertain
because every resources positioned on the France and Germany coastline
were beneath the administration of the high-up. The tenacity of this
agreement will return some authority return to Germany to make it further
pertinent in Europe at the equal time assistance to French industries. This
was one very shrewd diplomatically calculated move.3

3 Danzig, Jon. "Why was the EU formed? Was it more of a political project or an economic
project?" Campaigning journalist and film maker., October 15, 2014.

During 2007, European Union economies, on the apparent, looked to be

doing moderately well with helpful economic progress and short inflation.
Public debt was frequently high, but (away from each other from Greece) it is
seemed to be accomplished supposing positive tendency in economic
growth. Still, the international credit chewed numerous things: Simply, EUs
economics model is a Ponzi scheme, sponsored by the nobody but
perpetually growing debt because of increase in the interest means of the
debts i.e. debts are always bigger than the money in circulation. 4 As with this
system, new money has to be supplement frequently to keep all the ball in
the air, cumulative the amount in exchange by constantly mounting the
economy, or in the lack of growth, print more currency. Further, banks
obligate too much currency from the source of capital markets and advanced
too much money to public, countries and professionals that could not payoff
these advances when the economy turned into recession. 5 The debtors
defaulted, leading the banks to near insolvency which dumped various
nations

economies.

Europe

countries

especially

southern

are

in

unembellished slump with unemployment in the twenty percent range.

Moreover, highly operational debts previous crunches. Impaired by ageing
population in may European countries. Recession instigating harsh increasing
4 W. Seay, Global Financial History ECON 491: Virginia Commonwealth
University, Summer 2016
5 W. Seay. The Importance And Misconceptions about GDP. Econ 491:
Virginia Commonwealth University, Summer 2016

in budget deficit, credit crunch causes losses for commercial banks and
investors much more cautious and fearful of default in all types of debts, the
southern European economies uncompetitive (higher labor costs) but cannot
diminish to reestablish competitiveness.6 This reasons worse growth and
lower taxes incomings in Europe, no lender of last resort (in USA and UK)
marks market tense of carrying Eurozone Debts, no appropriate bail-out of a
country, and risk of defaulter lead towards bond yields. But this make it
much more expensive to pay interest on debts and the budget deficits that is
almost 3% of their GDP. That is, the difference between what a government
spends.

In current situation, a number of political and economics influences are

paying to the current indecision surrounding the forthcoming of the European
Union. To changing degree, they are also challenging the legitimacy and
structure of the European Union. In 2008-09, global recession and the
Eurozone debts crisis significantly affected European economics decreeing
growth and increasing unemployment which posing risk to Europeans
Economics and Banking system. High unemployment and dissatisfied public
has created economics disparity within the European union which has also
generated tension and contributed towards policy divisions among member

6 The U.S. Labor Department, U.S. Employment Growth Report, Summer

2013.
7 Paul Krugman, End This Depression Now, New York, 2012, p.48.

states. Many EU countries have seen a rise in support for populist nationalist,
antiestablishment political parties.8 There Parties are often termed as
Eurosceptic. Many analysts suggest that a strong engine has been lacking
over the past few years in EU. Although German Chancellor has played a
main role in responding to the Eurozone Crisis. Against the political and
economic breakdown, the European Union is grappling with several major
challenging. Many observers contend that the breadth and difficulty of these
multiple issues are unprecedented. The onset of the Greek debt crises in late
2009 and its subsequent contagion to other Eurozone members sparked
concerns about the fundamental structure and viability of the Eurozone9.
In this context, the failure of Euro came after just over a few decades since
the introduction of Euro. This was not accident, barely it was inevitable
consequence of imposing a single currency on a very heterogeneous group
of countries as the result of mismanagement of bureaucracy. The adverse
economics consequence of the euro includes the sovereign debt crises in
several European countries. The fragile condition of major European Banks,
high levels of unemployment across the Eurozone, and the large trade
deficits that now plague most Eurozone countries. The political goal of
creating a harmonious Europe has also failed. France and Germany have
dictated painful austerity measurement in Greece and Italy as a condition of
8 Ibid., p.62
9 European Commission, European Economic Forecast Autumn 2015, Institutional Paper
#11, November 2015;International Monetary Fund, The Refugee Surge in Europe: Economic
Challenges, January 2016

their financial help. Further, economist pointed to the adverse effects that a
single currency would have on the economics of Europe. Single currencies
require all the countries in the monetary union to have the same monetary
policy and same basic interest rate. A single currency also means a fixed
exchange rate within the monetary union and the same exchange rate
relative to all other currencies, even when individual countries in the
monetary union would benefit from changes in relative values. Therefore,
euro would lead to greater fluctuations in output and employment, a much
slower adjustment to declines in aggregate demand and persistence trade
imbalance between Europe and the rest of the world. Indeed, all these
negative outcomes have occurred in the recent years10.
Further, as discussed earlier that a common monetary policy involves a
common interest rate for the whole Eurozone area but higher interest rate
was not suitable for some countries like Greece, Portugal and Italy. Similarly,
as the border was open for all countries and currency was also common for
all Eurozone countries but the culture, language, and capital were still
barriers. The national debts of all countries was not similar and country was
to struggle to attract enough buyers of national debts. This is a growing
problem for many Mediterranean counties like Spain. Due to currency crises
the was less incentive for countries to implement structural reform and fiscal

10 Martin Feldstein, The Failure of the Euro, The Foreign Affairs, February,
2012.

responsibilities, hence, low benefit gains from very low bond yield on its
debts because of unsecured by rest of Europe.11
Finally, the euro area is on the verge of tipping into its third recession in six
years. Europes economy has plenty of big underlying weakness, form poor
demographic to heavy debts and sclerotic labor markets. But it has made
enormous policy mistakes. France, Italy and Germany have all eschewed
growth enhancing structural reforms. The euro zone is particularly vulnerable
to deflation. The truth is that the European Union is poorly equipped to
handle the stresses and strains of the euro crisis, not because of its
economics shortcomings but because of its incomplete political and
economic development. The euro is a unique experiment in monetary
governance without a government. The challenges of the Greek crisis reveal
the disastrous costs of attempting to substitute economics orthodoxy for
effective political authority12.

11 The Economist, Deflation in the euro zone is all too close and extremely
dangerous, The euro zone, October, 25th, 2014.
12 Kathleen McNamara, The euro is an experiment in making a currency
without a government. Thats why its in trouble, Monkey Cage, June 28,
2015.