European Union (EU)

European Union (EU)

European Union (EU)


  • The European Union is a group of 27 countries that operate as a cohesive economic and political block.
  • 19 of these countries use EURO as their official currency. 9 EU members (Bulgaria, Croatia, Czech Republic, Denmark, Hungary, Poland, Romania, Sweden, and the United Kingdom) do not use the euro.
  • The EU grew out of a desire to form a single European political entity to end centuries of warfare among European countries that culminated with World War II and decimated much of the continent. The European integration was seen as a¬†cure to the excessive nationalism¬†which had devastated the continent.
  • The European union has developed an internal single market through a standardized system of laws that apply in all member states in matters, where members have agreed to act as one.

How the European Union was Formed?

  • In 1946 at the University of Zurich, Switzerland,¬†Winston Churchill¬†went further and advocated the¬†emergence of a United States of Europe.
  • In 1952,¬†the European Coal and Steel Community (ECSC)¬†was founded under¬†the Treaty of Paris (1951)¬†by 6 countries called¬†Six¬†(Belgium, France, Germany, Italy, Luxembourg, and the Netherlands) to renounce part of their sovereignty by placing their coal and steel production in a common market, under it.
  • European Court of Justice¬†(called “Court of Justice of the European Communities” until 2009) was also¬†established in 1952 under the Paris Treaty.
  • European Atomic Energy Community¬†(EAEC or Euratom) is an international organization established by the¬†Euratom Treaty (1957)¬†with the original purpose of creating a specialist market for nuclear power in Europe, by developing nuclear energy and distributing it to its member states while selling the surplus to non-member states.
    It has the same members as the European Union and is governed by the European Commission (EC) and Council, operating under the jurisdiction of the European Court of Justice.
  • European Economic Community (EEC)¬†was created by the¬†Treaty of Rome (1957). The Community’s initial aim was to bring about economic integration, including a common market and customs union, among its founding members (Six).
    It ceased to exist by the Lisbon Treaty of 2007 and its activities were incorporated in the EU.
  • Merger Treaty (1965, Brussels)¬†in which an agreement was reached to merge the three communities (ECSC, EAEC, and EEC) under a single set of institutions, creating the¬†European Communities (ECs).
    The Commission and Council of the EEC were to take over the responsibilities of its counterparts (ECSC, EAEC) in other organisations.
  • The ECs initially expanded in 1973 when Denmark, Ireland, and the United Kingdom became members. Greece joined in 1981, and Portugal and Spain followed in 1986.
  • Schengen Agreement (1985)¬†paved the way for the creation of open borders¬†without passport controls¬†between most member states. It was effective in 1995.
  • Single European Act (1986):¬†enacted by the European Community that committed its member countries to a timetable for their economic merger and the establishment of a single European currency and common foreign and domestic policies.
  • The Maastricht Treaty 1992¬†(also called the¬†Treaty on European Union) was signed on 7 February 1992 by the members of the European Community in Maastricht, Netherlands to further European integration. It received a¬†great push with the end of the Cold War.
    • European Communities (ECSC, EAEC, and EEC) incorporated as¬†the European Union.
    • European citizenship¬†was created, allowing citizens to reside in and move freely between Member States.
    • A common foreign and security policy was established.
    • Closer cooperation between police and the judiciary in criminal matters was agreed.
    • It paved the way for the creation of a single European currency ‚Ästthe euro. It was the culmination of several decades of debate on increasing economic cooperation in Europe.
    • It established the¬†European Central Bank¬†(ECB).
    • It enabled people¬†to run for local office and for¬†European Parliament elections¬†in the EU country they lived in.
  • A monetary union¬†was established in 1999 and came into full force in 2002 and is composed of 19 EU member states that use the euro currency. These are Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Portugal, Slovakia, Slovenia, and Spain.
  • In 2002,¬†the Treaty of Paris (1951) expired & the ECSC ceased to exist¬†and its activities were fully absorbed by the European Community (EEC).
  • The Treaty of Lisbon 2007:
    • European Community (now composed only of EEC, and EAEC, as ECSC already ceased in 2002) was ceased and its activities were incorporated into EU.
    • EAEC is the only remaining community organization legally distinct from the European Union (EU), but has the same membership, and is governed by many of the EU’s institutions.


  • Promote peace, values, and the well-being of all citizens of the European Union.
  • Offer freedom, security, and justice without internal borders.
  • Sustainable development is based on balanced economic growth and price stability.
  • a highly competitive market economy with full employment and social progress.
  • and environmental protection Combat social exclusion and discrimination.
  • Promote scientific and technological progress.
  • Enhance economic, social, and territorial cohesion.
  • and solidarity among EU countries.
  • Respect its rich cultural and linguistic diversity.
  • Establish an economic and monetary union whose currency is the Euro.

EU’s Governance Structure

European Council:

  • It is a collective body that defines the European Union’s overall political direction and priorities.
  • It comprises of the¬†heads of state or government of the EU member states,¬†along with the¬†President of the European Council and the President of the European Commission.
  • The¬†High Representative of the Union for Foreign Affairs and Security Policy¬†also takes part in its meetings.
  • Established as an informal summit in 1975, the European Council was formalized as an institution in 2009 upon the entry into force of the Treaty of Lisbon.
  • The decisions of its summits are¬†adopted by consensus.

European Parliament: 

  • It is the only parliamentary institution of the European Union (EU) that is¬†directly elected by EU citizens¬†aged 18 years or older. Together with the¬†Council of the European Union¬†(also known as the ‘Council’), it exercises the¬†legislative function¬†of the European Union.
  • European Parliament does not possess as much legislative power as its member countries‚Äô parliaments do.

Council of the European Union: 

  • It is part of the essentially bicameral EU legislature (the other legislative body being the European Parliament) and¬†represents the executive governments (ministers) of the EU’s member states.
  • In the Council, government ministers from each EU country meet to discuss, amend, and adopt laws, and coordinate policies. The ministers have the authority to commit their governments to the actions agreed on in the meetings.

European Commission (EC): 

  • It is an¬†executive body of the European Union,¬†responsible for proposing legislation, implementing decisions, upholding the EU treaties, and managing the day-to-day business of the EU.
  • The Commission operates as a cabinet government, with 27 members of the Commission. There is one member per member state.¬†These members are proposed by member countries¬†and European Parliament gives final approval on them.
  • One of the 27 members is the¬†Commission President¬†proposed by the European Council and elected by the European Parliament.
  • The Commission is divided into departments known as¬†Directorates-General (DGs)¬†that can be likened to departments or ministries is¬†headed by a director-general who is responsible to a commissioner.
  • High Representative (HR) of the Union for Foreign Affairs and Security Policy¬†is appointed by the European Council by voting and The President of the EC must be in agreement with the decision. HR is charged with shaping and carrying out the EU’s foreign, security, and defence policies.

European Court of Auditors (ECA): 

  • It investigates the proper management of finances within both the EU entities and EU funding provided to its member states.
  • It can refer unresolved issues to the European Court of Justice to arbitrate on any alleged irregularities.
  • ECA members are appointed by the Council, after consulting the Parliament, for renewable 6-year terms.

The Court of Justice of the European Union (CJEU): 

  • It interprets EU law to make sure it is applied in the same way in all EU countries, and settles legal disputes between national governments and EU institutions.
  • Can also be approached by individuals, companies, or organizations to take action against an EU institution if they feel their rights are infringed under the EU system.
  • Each¬†judge¬†and¬†advocate¬†general is¬†appointed jointly by national governments¬†(member country).
  • It is located in Luxembourg.

The European Central Bank (ECB): 

  • It is the central bank for the euro and administers monetary policy within the Eurozone, which comprises 19 member states of the¬† European Union.
  • Governing Council ‚Äď It is the main decision-making body of the ECB. It consists of the Executive Board plus the¬†governors of the national central banks¬†from eurozone countries.
  • Executive Board ‚Äď It handles the day-to-day running of the ECB. It consists of the ECB President and Vice-President and 4 other members appointed by national governments of euro zone countries.
  • Sets the interest rates¬†at which it lends to commercial banks in the eurozone, thus controlling money supply and inflation.
  • Authorises production of euro banknotes by eurozone countries.
  • Ensures the safety and soundness of the European banking system.
  • It is located in Frankfurt (Germany).

The European system of financial supervision (ESFS):

It was introduced in 2010. It consists of:

  • The European Systemic Risk Board (ESRB)
  • 3 European Supervisory Authorities (ESAs)
    • the European Banking Authority (EBA)
    • the European Securities and Markets Authority (ESMA)
    • the European Insurance and Occupational Pensions Authority (EIOPA)

Functions of the European Union (EU):

  • European Union‚Äôs law and regulations are meant to create a cohesive economic entity of its countries, so that¬†goods can flow freely across the borders¬†of its member nations, without tariffs, with the ease of one currency, and the creation of one enlarged labor pool, which creates a¬†more efficient distribution and use of labor.
  • There is a pooling of financial resources so that member nations can be “bailed out” or lent money for investment.
  • Union’s expectations in areas such as¬†human rights and the environment¬†have¬†political implications¬†for member countries. The union can exact a heavy political cost such as severe cutbacks and an austerity budget on its members as a condition of giving aid.
  • This is a¬†great experiment,¬†really, in cooperation amongst nations, who wish to be¬†economically unified, ceding as little political¬†and national power as possible.
  • Trade:
    • Free trade among its members was one of the EU’s founding principles. This is possible thanks to the single market. Beyond its borders, the¬†EU is also committed to liberalizing world trade.
    • The European Union is the largest trade block in the world. It is the world’s biggest exporter of manufactured goods and services, and the biggest import market for over 100 countries.
  • Humanitarian aid:
    • The EU is committed to helping victims of man-made and natural disasters worldwide and supports over 120 million people each year.
    • EU and its constituent countries are the world’s leading donors of humanitarian aid.
  • Diplomacy and security: The EU plays an important role in diplomacy and works to foster stability, security and prosperity, democracy, fundamental freedoms, and the rule of law at the international level.

Related Links:

Eurasian Economic Union (EAEU)International Criminal Court (ICC)
World Trade Organization (WTO)India ‚Äď EFTA Trade Relations