European Union Essay Example | Topics and Well Written Essays - 3250 words

European Union - Essay Example According to Templeton, the economic impetus behind the euro project can be traced from the relatively poor performance of the European economies over the past twenty years or more (8). Templeton states that Europe has, for a long time, suffered from relatively weak economic growth, persistently high unemployment and weak economic growth (8). In fact, a term, Eurosclerosis, has been coined to describe the dismal performance of the European economy which became more pronounced in the 1980s. In order to correct these problems, European policy making in the last fifteen years emphasized in launching two significant projects: (1) the single European market, with the free movement of goods, labor, services and capital , and (2) the euro project, the plan for European Economic and Monetary Union (EMU). Chabot pointed out that it is a common misconception that the euro, [or more generally, the European Union] is primarily an economic project (37). In fact, Chabot asserts that the project is intensely a political one that has been entangled in the history of Europe for many years. In short, the project has evolved as an essential step toward the ultimate goal of â€Å"ever closer† political integration first planned in the 1958 Treaty of Rome, and that the language of the subsequent treaties makes it clear that the euro’s introduction is based far more than economic pros and cons (Chabot 37-38). Former Germany Chancellor Helmut Kohl viewed that euro’s economic benefits are only secondary.... Chabot pointed out that it is a common misconception that the euro, [or more generally, the European Union] is primarily an economic project (37). In fact, Chabot asserts that the project is intensely a political one that has been entangled in the history of Europe for many years. In short, the project has evolved as an essential step toward the ultimate goal of "ever closer" political integration first planned in the 1958 Treaty of Rome, and that the language of the subsequent treaties makes it clear that the euro's introduction is based far more than economic pros and cons (Chabot 37-38). Former Germany Chancellor Helmut Kohl viewed that euro's economic benefits are only secondary and emphasizing instead that "the unification project is the best insurance against a relapse of national egoism, chauvinism and violent conflict" (qtd. in Chabot 38). Chabot continues on that the legacy of two world wars plays a crucial role in the process of European integration (38). Benefits of a Monetary Union In his book, Economics of Monetary Union, Paul De Grauwe asserted that whereas the costs of a common currency have much to do with the macroeconomic management of a country, the benefits are mostly situated at the microeconomic level (60). Eliminating the costs of exchanging one currency into another is certainly the most visible and easily the most quantifiable) gain from a monetary union (De Grauwe 60). The European Commission estimates that the gains derived from the elimination of transaction costs fall between 13 and 20 billion euros per year, one-quarter to one-half of 1% of the Community GDP (qtd. in De Grauwe 60). De Grauwe argues