European Union

The European Union (EU) is the largest regional organization in the world, comprises twenty-five member states, and forms the world's largest economy. The EU performs both economic and political activities. These are primarily based around the operation of a single market and the management of interstate relations through a variety of supranational institutional structures. Tensions concerning the political direction of the EU persist.

The EU began life as the European Economic Community (EEC), which was established under the Treaty of Rome in 1957. Initially containing six members, a series of expansions increased the number of member states to fifteen by 1995. Ten new members (known as “accession states”) were admitted to the EU in May 2004, and a further expansion is planned for 2007. The EU itself came into being in 1993 following the ratification of the Maastricht Treaty. Its various processes and functions have recently been formalized in the creation of an EU constitution. This was signed by the leaders of all EU states in November 2004 but to date still has to be ratified. High levels of popular discontent with the constitution, including rejections in French and Dutch referenda, mean that it has an uncertain future.

The EU performs a range of economic and political functions. Its economic activities are principally based around the management of a single market. A long-standing goal of many European states, the drive toward establishing a single market began in earnest with the Single European Act of 1986 and was largely completed by 1992. This established a common customs union with a common external tariff, set up common agricultural and fisheries policies, permitted the free movement of capital, and allowed the relatively free movement of labor, subject to certain national restrictions.

The regulation of the single market involves coordinating the economic activities of member states. Primarily, this focuses on the harmonization of trading and consumer standards. In January 1999, twelve member states also took the historic step of adopting a single currency (the euro) as the final step toward complete economic integration. Management of the single currency is undertaken by the European Central Bank, based in Frankfurt, which sets common interest rates for all economies within the Eurozone. Efforts to extend the euro, however, have been undermined by the relatively poor economic performance of many EU states in recent years. Moreover, successive governments of the United Kingdom, the most economically developed member state to remain outside the Eurozone, have remained skeptical about the prospects for joining the single currency.

The political activities of the EU have progressively increased since its inception, largely in response to the process of economic integration. Some of the key political functions of the EU concern the issues of social welfare, regional development, health and safety, and the promotion of human and civic rights. The key political institutions of the EU are the European Parliament, comprising directly elected representatives from each member state; the European Commission, which provides the EU with a civil service headed by nationally appointed commissioners; and the Council of Ministers, which brings together ministerial representatives from each member state. A European Court of Justice also provides an overarching legal jurisdiction across the EU.

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