Post-World War II political-economic developments gave birth to new ideas and concepts regarding regional and international 1) economic cooperation, 2) trade and 3) political alliances. One of the results of these political-economic developments, in Western Europe, was European Union. The European Union is a product of several political-economic developments, which occurred gradually over the last six decades. However, after the collapse of the Soviet Union, new economic and political realities formed that offered opportunities of unique nature. These realities facilitated the birth of the European Union, which objective was to form such political-economic zone, which would 1) create shared a pool of opportunities, 2) increase capacity to exploit economic opportunities and3) permit free trade that benefited all (Ricardian concept). The birth of the European Union was an extraordinary event, with great economic relevance on both regional and international levels. The issuance of common currency, the Euro, reduced the influence of mighty Dollar and creation of the Central European Bank allowed member states to address their economic challenges and exploit their economic opportunities. (Note: Central European Bank is based on the principles, which are adhered by Germany’s Central bank. It does not strive to reduce unemployment and increase economic growth, but rather it focuses on stable prices).
From the systematic scrutiny, of the history of the European Union, we learn that after World War II, Western Europe got tired of wars and it was petrified of the Soviet Union. Also, because of the war in Europe, the economy of the continent destroyed completely. These economic conditions compelled the countries of the continent, especially in Western Europe, to enhance economic and political cooperation. Various agreements were signed between the Western European countries to increase economic activity in the region. The increase in the economic activity led to better political relations. For instance, during the period of economic growth, from 1960 to 69, Western European countries decided to conduct tariff-free trade with the European countries. This decision was facilitated by the Treaty of Rome, which created the European Economic Community (1957). We must acknowledge that in post-World War II period, the relation between the state and individuals changed drastically, which is quite apparent from the constitution of the European Union. The constitution strongly influences economic and political realities of the European Union, which by the concepts of and conclusions drawn by John Baylis, in his book The Globalization of World Politics (Baylis et al., 2011). In fact, John Baylis gives more credit to political developments, in contrast to economic developments, which seems little unfair, as the systematic study of history suggests that economic developments usually yield political realities. One such example is Industrial Revolution, which gave birth to new political-economic realities. However, John Baylis says, “For realists, the state is the main actor and sovereignty is its distinguishing trait. Within this territorial space, sovereignty means that the state has supreme authority to make and enforce laws. This is the basis of the unwritten contract between individuals and the state.”
The European Union offered various economic and corporate opportunities in the member states. It was not only the collective pool of resources and tariff-free trade, which European Union offered, but also the European Central Bank devised monetary policies, which aimed to improve economic structure and growth, of member states. For instance, European Central bank devised a special policy for Small Medium Enterprises (SMEs), as Small Medium Enterprises constitute 80% of total firms/enterprises, of the European Union. The shared pool of opportunities played a vital role in not only expanding economies of member states, but also in improving the quality of their economies. Other than the economy, policies and laws, of the European Union, were essential in changing the political structure. For instance, Human Rights Act, of 1998, strongly influences law and policies about citizens of a member state. To understand the size of influence, we must recognise that the Human Rights Act came into force, in the United Kingdom, in October 2000, two (2) years after its birth. Therefore, we can claim that formation of European Union produced opportunities of both economic and political nature; thus, it influenced the member states both economically and politically. Member States, of the European Union, faced various kinds of challenges, since becoming a member of the European Union. In the early days, the challenges were mostly political-economic and of a trivial nature. However, as the Great Recession started, political, economic challenges, for European member states, intensified dramatically. One of the major challenges was Greece. Many member states were of the view that taking responsibility for an irresponsible state would cost them heavily during the recession. Greece politically divided European Union and caused major frictions.
The exit, of Britain from the European Union, has various causes; however, there are few causes, which we can classify as major causes. These reasons are considered the prime reasons for Britain’s exit from the European Union and these are the reasons, which compelled Britain voters to opt for Brexit. One of the three prime reasons was the economy. Most of the voters, who voted in favour of Brexit, believed that the European Union was a dysfunctional economic entity. This opinion formed because 1) not only European Union failed to predict a major economic crisis, but also 2) it failed to address primary economic concerns, such as massive unemployment in Southern Europe, which was around 20%. Also, most of Europe had a stagnant economy and only a few countries, such as Germany, had low unemployment high economic growth. It was argued that staying part of such stagnant organisation would bleed Britain slowly. The second reason is a political reason, which is directly related to the concept of sovereignty that has been discussed in detail by John Baylis in the book. Heywood too, in his book Global Politics, discusses this concept in detail (Heywood, 2014). He asserts that as the concept of sovereignty evolves, for a state, so does its international relations. For British people, it was very difficult to accept compromises on sovereignty, which became a factor in voting against the United Kingdom’s membership of the European Union. The issue of sovereignty was also directly associated with the economic policy; Britain’s economic policy was in contradiction to the overall economic policy of the European Union (mistrust and fear).
The gathered evidence allows us to conjecture, quite accurately, regarding the future of the European Union, after Brexit. It is evident that the primary reason for the creation of the European Union was to achieve collective and individual economic objectives and goals. For instance, in the early days, of the European Union, member countries benefitted from free trade and the single currency (Euro). However, European Central Bank, which is based on the model of Germany’s Central Bank, failed to address primary economic issues such as unemployment. It kept its focus on inflation and through that, it aimed to realise major economic challenges. Also, it discouraged countries, which took financial aid from the European Central bank, from exercising fiscal options. The nationals of member states considered this discouragement as an undermining of sovereignty. One such example is Greece, which was compelled to observe the austerity policy when the IMF and European Central Bank offered monetary assistance (Saeed, 2017). Such decisions yielded political rifts and frustrated member states, which were in dire need of monetary assistance to end political-economic crisis (Polychroniou, 2017). The political structure of the European Union is very effective (theoretically); however, in reality, it is not as efficient as it seems to be. We infer this because European Union failed to address major issues, such as immigration, effectively, which not only fractured the very structure of the institution but also has put a huge question mark on is survival. For instance, citizens and member states are both represented directly in the European Parliament; however, such a system fails to address issues such as unemployment, immigration and relations with Russia (Hix & Hoylan, 2011). The significance, of the European Union, is because of its ability to produce economic opportunities and address economic challenges. If it fails to protect and effectively manage a major economic crisis, then the confidence of member states, of the European Union, will start to shake dramatically. Another issue, of the European Union, is that it intends to impose its political decisions on member states. European countries are fiercely independent and very sensitive regarding sovereignty. The decision, regarding immigration, about Syrian Refugees, was highly controversial, which caused a political rift. Many member states did not agree with the immigration policy as some of the governments believed that such decision would affect their political ratings and standings in their respective countries.
It is concluded that in the short-run, the European Union will survive; however, in the long run, its chances to survive as an effective and a major global institution and organisation are slim. It is because protectionism has re-surfaced and theory of trade has become very controversial. In fact, since the sub-prime mortgage crisis, neo-classical economics is under fire, which is why free-trade and economic concepts/practices related to it are about to evaporate gradually. If this happens then, the European Union will find it quite difficult to survive.
References
Baylis, J., Smith, S. & Owens, P., 2011. Chapter 1,4 and 26. In The Globalization of World Politics. 5th ed. Oxford and New York: Oxford University Press.
Heywood, A., 2014. Chapters 2,4,5 and 20. In Global Politics. 2nd ed. Oxford and New York: Palgrave Macmillan.
Hix, S. & Hoylan, B., 2011. The Political System of the European Union. Basingstoke: Palgrave Macmillan.
Polychroniou, C.J., 2017. After Brexit and Catalonia, what will become of the EU? [Online] Available at: https://www.aljazeera.com/indepth/opinion/brexit-catalonia-eu-171117161450262.html [Accessed 5 April 2018].
Saeed, S., 2017. European Central Bank Confirms Greece Bailout Deal. [Online] Available at: https://www.politico.eu/article/greece-agrees-to-new-bailout-deal/ [Accessed 5 April 2018].
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