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The Establishment of the European Union

Out of the ashes of World War II, a new Europe emerged. Divided roughly between East and West, capitalism and communism this new Europe lasted just shy of 50 years, before the fall of the Berlin Wall set in motion a dizzying set of events. With the Soviet Union collapsing, yet another Europe was about to appear. On 1st November 1993, a new, united continent began to take shape. The age of the European Union had begun. 

Much has been said about the European Union since those heady days of the early 1990s. Britain’s seemingly never-ending departure – known by a word that I think just about every single British person is now sick to death of – Brexit – has shone a light more than ever on this grand union of countries. 

The European Union has been divisive from the outset, and if anything, age has only exacerbated these problems. It is a complex structure that governs laws, freedom of movement, borders, trade and much more. It is a topic that has a habit of rousing raw emotions in many, but it remains a stand-alone project. Visionary or disastrous – let’s take a look. 


Nowhere on Earth has such bloodshed been seen, than in Europe. The first half of the 20th Century saw wars on a previously unimaginable scale tear Europe apart. Except for a few countries who remained neutral during the world wars, the impact on almost every nation was horrific. 

Just in case you’re wondering about the neutral European countries: SWITZERLAND, DENMARK, SWEDEN AND MONACO remained out of World War I, while ANDORRA, IRELAND, PORTUGAL, SPAIN, SWEDEN, SWITZERLAND, LIECHTENSTEIN, AND THE VATICAN were neutral during World War II. I suppose it is hard to imagine the Pope with a machine gun, isn’t it? 

But before all of the 20th Century carnage, there had been a growing movement of European solidarity. Victor Hugo, who wrote Les Miserables, even went as far as to use the phrase, ‘the United States of Europe’ at the International Peace Congress held in Paris in 1849. 

Obviously, these ideals fell on death ears as the continent eventually collapsed into the largest war the world had ever known, with estimates of total deaths thought to be in the region of 17 million. 

Efforts to form some kind of consolatory system back-fired in catastrophic circumstances as 21 years after the end of the Great War, a new epic struggle began which would eclipse it. The second great conflict of the 20th Century led to between 70 and 85 million people around the world losing their lives – around 3% of the total global population. In terms of tragedy, nothing else has even come close.   


We’ve recently done a video on Megaprojects about the MARSHALL PLAN, a U.S led reconstruction plan to aid the shell-shocked and obliterated Europe. If you want more on the Marshall Plan then shoot over to that video, because we’ve got a lot to get through with the European Union. 

But in short, the Marshall Plan helped kick-start Europe’s rejuvenation – well, the western countries at least. Those nations that formed the Eastern Bloc (principally anything East of the Berlin wall) also received assistance of sorts from the Soviet Union, but it was hardly comparable.

Now, it’s important to remember that Europe had been pulled apart by extreme nationalism. Countries were eager to not make the same mistakes as had been made at the Treaty of Versailles, in which Germany was punished harshly for its role in the First World War, and which most agree led, at least in part, to World War II.

Almost as soon as the guns fell silent there was talk of a United Europe. One of the early supporters was none other than British Prime Minister Winston Churchill who gave a speech at the University of Zürich on 19th September 1946 in which the term ‘United States of Europe’ was again used.  

At the HAGUE CONGRESS in 1948 two fundamental structures were put in place which began the road to European Unity. These were the European Movement International, a lobbying association campaigning for better coordination in Europe and the College of Europe, based primarily in Bruges in Belgium, it was designed to educate and provide accommodation for Europe’s future leaders. 

These were small steps, but in 1949, the first major step was taken with the establishment of the Council of Europe. The ten founding members included: Belgium, Denmark, France, Ireland, Italy, Luxembourg, Netherlands, Norway, Sweden and the United Kingdom. The focus of the council was on human rights and democracy and didn’t really include anything on trade or economics. THE COUNCIL OF EUROPE still exists today and currently has 47 member states and is often seen as a stepping stone to European Union membership.  

Council of Europe, Strasbourg
Council of Europe, Strasbourg by High Contrast is under license CC-BY

While its aims were undoubtedly admirable, some countries wanted things taken even further when it came to trade issues. In 1952, the EUROPEAN COAL AND STEEL COMMUNITY was formed, consisting of Belgium, France, Italy, Luxembourg, the Netherlands, and West Germany, to regulate their industrial production, but also placing it under a centralised authority. This was the real first shot of what would go on to be the EU’s trade and free-market agreements.

If you’re wondering why coal and steel, it was for two key reasons. Firstly, both were enormous industries that would play a key role in future development and hence could make a considerable profit. Secondly, and much more honourable, coal and steel were both seen as vital for waging war. Advocates for the European Coal and Steel Community believed that by tieing each nations coal and steel industry together, it might help to prevent another outbreak of war. Sounds a little sentimental, and perhaps unrealistic to our pessimistic modern brains, but such was the devastation in 1945 that you can only admire this attempt to ensure long-term peace.  

If you’re starting to get confused, well, we’ve only just begun. There were numerous organisations, treaties, and collaborations which often worked in parallel to one another. This was not so much a linear system of improvement until the 1993 establishment of the EU, but rather a slightly scatter gunned approach as the continent tried numerous different methods, but generally all working towards a more united Europe. 

In 1957 the TREATY OF ROME led to the formation of the EUROPEAN ECONOMIC COMMUNITY (EEC), which included Belgium, France, Italy, Luxembourg, the Netherlands, and West Germany. The EEC led to the establishment of a customs union, which means no customs duties are paid on goods moving around the Union, and also spawned the European Atomic Energy Community (Euratom) to develop nuclear energy. 

So, if you’re still following along, we have the European Coal and Steel Community, the European Economic Community and the European Atomic Energy Community all up and running, and all pretty much working to build a stronger continent. It wasn’t until 1965 that somebody had the bright idea of merging these three organisations into one, now known as the EUROPEAN COMMUNITIES.

Over the next two decades, numerous nations joined the European Communities (Greenland even joined and then left, over disagreements about fishing regulations, while the Norwegian government agreed to join but was voted down by a referendum in the country). The last major change before the establishment of the EU came in 1985 with the SCHENGEN AGREEMENT, which would eventually abolish border checks throughout member countries – although it wouldn’t be fully implemented for another 10 years. 


The fall of the Berlin Wall in November 1991 was a momentous event that was felt the world over. As the USSR began to crumble and individual nations broke free it began to look like a united Europe might finally be on the cards. 

German Chancellor Helmut Kohl and French President François Mitterrand were considered two of the key players in the signing of the Maastricht Treaty on 7th February 1992 (though it came into effect the following year), which formed the EU, originally with just Germany, France, Italy, Netherlands, Belgium and Luxembourg. These were heady days with the first elections held in 1994 and the Schengen Agreement fully implemented in 1995. Excitement was in the air, a new Europe was taking shape. 

The EU has slowly expanded and in 1995, Austria, Finland, and Sweden joined. In 2004, the largest single intake saw Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia join the Union. In 2007, Bulgaria and Romania joined the EU, with Croatia becoming the 28th member in 2013. 


The political and decision-making system that the EU uses is a complex one, and one that has led to numerous disagreements over the years. 

EU laws can roughly be divided into two. Firstly, we have laws that are implemented without the need for each country to ratify them – known as regulations. The second, known as directives, specifically require national implementation measures. These are often seen as ‘goals’ that the EU countries agree to, but how each country gets there can be different. 

One example of an EU regulation is the common safeguard of goods imported into the EU. This regulation is the same wherever you are in Europe and individual countries have no say in it. 

An example of an EU directive was the consumer rights directive, which was designed to strengthen the rights of the consumer across Europe by removing hidden charges and costs. The EU set out a goal and it was up to each country to work towards it in their own way.  

It might sound like a single entity, but the European Union is made up of seven main decision-making bodies: 

  • The European Council – This is focused on the political directions and priorities of the EU. Heads of government meet at summits typically held every quarter to discuss all things EU related and come to some sort of consensus on the direction they want things to go. That sounds a little simplistic I know, and I’m certain it’s never quite that easy.  
  • THE EUROPEAN COMMISSION – Once a consensus has been reached by the European Council, the European Commission turns it into a legislative proposal. In fact, this is the only institution within the EU that can propose legislation.
  • THE COUNCIL OF THE EUROPEAN UNION – This council brings together ministers from member states within a specific government department. Transportation, sport or education for example. Approval is needed by this council before any proposal can enter law.  
  • THE EUROPEAN PARLIAMENT – The parliament includes 705 elected representatives from the EU members. Like the Council of the EU, it has the power to amend, approve or reject Commission proposals. 
  • The COURT OF JUSTICE OF THE EUROPEAN UNION – The role of the court of justice is to ensure the uniform application of EU law and to resolve any disputes that arise between the members. 
  • The European Central Bank – Unsurprisingly, the European Central Bank is directly responsible for financial stability with the EU. 
  • The EUROPEAN COURT OF AUDITORS – This rather dour sounding department investigates improper financial management, both within countries themselves and stemming from the use of EU funds. 


Now, before we go on to the European Union budget and where it all goes, there is the small matter of the Euro. On 1st January 1999, the Euro was adopted by 11 countries, since then another 8 members have chosen the Euro as their national currency. The idea was to maximise efficiency, promote growth, stability, and economic integration in Europe. 

The other side of that coin – pardon the pun there – is that it has sometimes created a rigid monetary policy which has not allowed individual countries, who may be experiencing specific problems not seen in other members, to control their own inflation and interest rates. 

This became evident after the 2008 recession when several countries required an EU bailout after their economies went into a tailspin. The restrictions placed on Greece after their second bailout was seen by many as draconian and led many to wonder whether the EU as a whole would be able to continue in the same way.   


I’m sure you won’t be surprised to hear that finance is often a sticky subject within the EU. Every seven years a budget is agreed by the member states. This is a decision that has to be met unanimously by the leaders of each nation, so you can imagine this often takes some time. Each country pays into a pot every year, some of that goes on administration but much of it goes on projects throughout the EU, and also some outside. 

But not every country pays the same, and not everybody receives the same. Let’s start with contributions. If we look at 2018, Germany, as the largest economy, contributed 20.78% of the total EU budget. France was second with 15.58% and the UK third with 11.88%. Each nation pays the same 2% of its national income, hence richer countries pay more than poorer countries.  

On the other side, you have countries that are receiving more money than they are putting in. In 2018, Poland’s difference was €11.5 billion, with Hungary on €5 billion and Greece on €3.2 billion. 

Now to some that will sound like the most absurd deal you can imagine, but the budget doesn’t tell the whole story. While poorer countries receive more money from the EU, richer countries, and their strong national economies, benefit significantly more by being in the single European market. To emphasise this point, while Germany puts in vastly more than it takes out, a study found that single market participation has raised the average German income by €1000 each year.       


If we take a look at the 2014 EU budget which came to €135.5 billion, almost 40% of it was spent on agriculture and fisheries. Much of this goes on subsidies for farmers, sometimes as much as half of their total income. That might sound ridiculous, but the truth is that much of modern farming is just not profitable and the EU, and indeed many countries around the world, choose to support their farmers through additional payments. 

The development of poorer areas is the second largest sector and in 2014, €54bn – 39% of the total – was spent on it. €31 billion was spent on regional development, which often included roads, railways, education and health programs. €13bn was distributed to the 15 poorest members of the EU and the remaining €8 billion was distributed among all of the members.   

Research, education and innovation received the third-largest slice of the pie with €12billion. The overall aim is to boost the EU’s competitiveness, economic growth and job creation. 

Nobody ever likes talking about administration fees, but it’s only fair to include it. The 2014 budget set aside €8 billion for administration. That may sound like an extraordinarily high number, but with 55,000 employees and the seven EU bodies, you can see how the money is spent quickly. 


London Brexit pro-EU protest March 25 2017
London Brexit pro-EU protest March 25 2017 by Ilovetheeu is licensed under CC-BY-SA

In 2016 the British people voted in a referendum on the nation’s involvement with the EU. 52% of voters chose to leave, which began the long, drawn-out – and still not complete – divorce between Britain and the EU.  

Ask any British person about this particular time in the country and they are likely to look at you with a sense of weary shellshock. It was not a pleasant time as the great debate over whether Britain should take a leading role in a stronger Europe or cut ties and go it alone became nasty.

The results of the referendum set off alarm bells around Europe, with some assuming other countries might choose to try and do the same. That hasn’t happened. If anything, the stronger economies, Germany, France, Italy, Holland and Spain all seem to have doubled-down on their commitment to a project, and an ideal that began after the hellish bloodshed of World War II. 

The world, in general, has been caught up in a wave of nationalism in recent years – the kind of which the EU was formed to prevent. The Union is far from being a perfect organisation but when you look at what has been built in just 75 years, it is quite extraordinary.  

While Britain is seemingly zigzagging without a clear direction to go now, the EU, relatively speaking, remains quite strong. As China continues to grow in power and Europe becomes sandwiched between two superpowers, it makes sense to stick together and build a stronger union. There will always be arguments over fishing rights, budgets and bureaucracy but it’s important to remember what the European Union stands for. 

The EU motto is United in diversity and there is probably nowhere on the planet with such diversity so close together. A land where the most brutal acts of war ever committed took place, a bond of cooperation and friendship has emerged. Out of the ashes of destruction, a better has Europe risen.  

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