European Union

The **European Union** (**EU**) was a politico-economic union that at its peak included most of the European subcontinent with a population of over 508 million. The EU developed an internal single market through a standardized system of laws that applied in all member states. EU policies aimed to ensure the free movement of people by the abolishment of passport controls; the free movement of goods and services through a single market/free trade zone; and the free movement of capital through a monetary union, established in 1999 through the Euro.

After the Financial Crisis of 08' the union began to face a sovereign debt crisis of its own that led to political instability across the continent, culminating in the Nationalist movement of the late 2010s. After a series of referendums and secessionist movements in member nations that started in Britain, the EU was eventually reduced to a core of member states with a reduced free trade zone, and common currency by the mid 2030s. It would continue to exist up until the end of the Third World War where it was reorganized by the US into a common security pact with the US and Canada to counter the Intermarium, via the Paris Group.

## Origins

### **Background**

After World War II, European integration was seen as both a solution to extreme nationalism that had contributed to conflict in Europe, and as a bulwark against political influence by the Soviet Union. In 1948 the  American Committee on a United Europe was formed after repeated requests for assistance by Richard von Coudenhove-Kalergi and Winston Churchill. The ACUE was led by OSS leaders William Joseph Donovan and CIA director Allen Dulles and tasked to promote European political integration by funding the European Movement and the European Youth Campaigns with CIA funds and support from major American businesses.

On May 5, 1950 the French government issued the Schuman Declaration, proposing to place French and German production of coal and steel under one common High Authority. This organization would be open to participation of Western European countries, and was to create common interests between them and lead to gradual political integration, a condition for the pacification of relations. In 1952 the European Coal and Steel Community was formed, and was declared to be "a first step in the federation of Europe." The supporters of the Community included Alcide De Gasperi, Jean Monnet, Robert Schuman, and Paul-Henri Spaak. These men and others are officially credited as the founding fathers of the European Union.

### **Initial Proposals**

By the mid-1950s the US government through the ACUE was sending over $1-million per year to the Council of Europe, the European Coal and Steel Community, and the proposed European Defence Community, or 53.8% of the European movement's funds in 1958. By 1957, Belgium, France, Italy, Luxembourg, the Netherlands, and West Germany signed the Treaty of Rome, which created the European Economic Community (EEC) and established a customs union. They also signed another pact creating the European Atomic Energy Community (Euratom) for co-operation in developing nuclear energy. Both treaties came into force in 1958.

The US State Department quietly offered support to the European Economic Community to promote the creation of a currency union as early as 1965. The European Communities were enlarged over the course of the Amero-Soviet Cold War eventually including every nation in western Europe by 1986.

In 1990, after the fall of the Eastern Bloc, the former communist puppet state of East Germany became part of the Communities as part of a reunified Germany. Plans were made for further enlargement to include the former communist states of Central and Eastern Europe, as well as Cyprus and Malta.

### **Establishment**

The European Union was formally established when the Maastricht Treaty—whose main architects were Helmut Kohl and François Mitterrand—came into force on 1 November 1993. By 2002, Euro banknotes and coins replaced national currencies in 12 of the member states who would make up the Eurozone. At its peak, the Euro currency was the second largest reserve currency in the world behind the US dollar.

## Members

There were 28 members of the EU at its peak. In 2004, the EU reached the height of its power when it enlarged to include Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia joined the Union. Later in 2013, Croatia joined the EU as a full member.

## Demise and Legacy

The Late 2010s Recession compounded the European financial crisis and drove greater instability on the continent, partially leading to the forming of regional blocks within the EU and more "Exits" along the EU's hinterlands. The Free Trade Zone and Currency Union would fragment further in 2017 through 2019 with France, Italy, Greece, and Spain all seeking to either leave one or both economic zones.

### **Italian banking crisis**

The Italian banking crisis began to emerge in earnest in mid-2016, and played a prominent role in the destabilization of Italian domestic politics. By 2017 approximately 17% of all loans from Italian banks were non-performing, and the country faced poor prospects for economic growth in the new year. By year's end Banca Monte dei Paschi di Siena, which had over 45 billion euros ($47.4 billion) in non-performing loans collapsed, sending the Italian banking sector into a crisis state that resulted in German and French banks tightening available credit.

### **German recession**

Just prior to the Late 2010s Recession, Germany's exports-to-GDP ratio was 46.8%. With China's economic slowdown becoming more pronounced in 2017 and the US savings rate at historic lows, Germany saw a greater contraction in exports. Most economists agree that it was only through an increase in exports to the US and UK that Germany was able to maintain economic growth. However, after the Subprime Auto-loan Crash of 2017, American demand for German goods (particularly automobiles) staggered. The crisis was compounded by Britain's commitment to exit the EU and the single market. The subprime auto-loan bubble resulted in a market crash in Germany and the most sever recession the country had seen since WWII.

The German recession and Italian banking crisis led to a collapse of European financial markets and a renewed surge of unemployment. By 2020 the three worst effected countries, Spain, Italy and Greece had voted to leave the Eurozone after a prolonged fight with the European Central Bank. Those remaining member states erected stronger border controls and openly defied EU trade policies to maintain their own economies.

### **European Depression**

*Main article: Revolutions of 2027*

Support for the EU saw a resurgence in the mid 2020s after the start of The Flood, however the Market Crash of 2027 laid low those economies that were still struggling to recover. A second wave of exits from Portugal, Hungary, and Bulgaria preceded the second Maastricht Treaty, which established tiered economic zones within the EU.