An Entirely Too Brief History of the European Union

- Taken from Issue 6 of The Manchester Historian, published November, 2012. 

The history of European integration can be traced back to 1306, and the idea proposed by Pierre Dubois that European princes should form an assembly in order to attempt to secure a lasting European peace. 706 years later, much of the continent is tied, to some degree, to the European Union. How did this come to pass?

The role of the United Sates in encouraging European integration should be acknowledged. A strong, integrated Europe was essential to the U.S. because it was a hugely significant market for U.S. exports and an ideological buffer against the threat of Communism emanating from Eastern Europe. This recognition gave rise to The Truman Doctrine and the Marshall Plan, in which the aim was to promote, prosperity and free-market ideology. This brought with it the establishment of The Organisation for European Economic Co-operation (OEEC), comprised of the European countries who received Marshall Plan aid and the subsequent establishment of the European Payments Union (EPU), which brought with it a liberalisation of trade conditionality.

The next step toward European integration culminated in the establishment of the European Coal and Steel Community (ECSC) following the basis for the rationalisation of Europe's steel industry outlined by French Foreign Minister, Robert Schuman in 1950. For the first time, member states of the ECSC would be brought together under a supranational political authority. The ECSC was eventually ratified when France, Italy, The Netherlands, Luxembourg, Belgium and West Germany signed the Treaty of Paris in 1951.

Further attempts by the French government to widen the political integration of Europe, however, were met with opposition as plans for a European Defense Community (EDC) and a European Political Community were shelved in 1954, with European collective security organised through NATO instead. However, despite this defeat, 1957 saw the organisation of the Treaty of Rome between member states of the ECSC, which led to the establishment of the European Economic Community and European Atomic Energy Community (Euratom) following the recommendations of the Spaak Report.

The Treaty of Rome served for the basis of the widening of political integration. By 1967, the ECSC, EEC and Euratom were merged to create the European Communities - later named the European Community (EC) – after the Merger Treaty in Brussels. However there were also increasing intimations regarding the possibility of a European-wide monetary integration, which were influenced by fears over the stability of international finance and the need for Europe to secure its monetary future.

The 1970s and '80s saw the increasing influence of the EC and the common market in the European political and economic landscape, seeing its membership increase in 1973 with Denmark, Ireland and the United Kingdom; and following further enlargements to the ranks of the EC, the Maastricht Treaty was signed in 1992, paving the way for the establishment of the European Union (EU) and led to the establishment of a single European currency – the Euro – presided over by the European Central Bank. Further amendments to the Maastricht Treaty came in the form the Amsterdam (1999), Nice (2003) and Lisbon Treaties (2009) in which adjustments were made to the functioning and democratic legitimacy of the EU, accommodating Eastward expansion and enhancing individual citizenship rights.

Contemporary debate concerning the European Union is concerned with the stability of the euro zone's monetary integrity; specifically the health of European banks and European budget deficits. It is increasingly widely acknowledged that, in order to ensure the long-term health of the euro zone and its banks, that further European integration should take place in the form of a European banking union. The aim behind a banking union is to oversee a co-ordinated supervision and regulation of European banks and ensure that good financial practises are followed. The talks regarding this next stage of European integration are poised to begin in Brussels this December.  

- Michael John Cass @michaeljohncass

Towards a European Banking Union?

A small piece on the topic of European banking union, initially posted on my Sulia account.

It is increasingly widely acknowledged that a European banking union is essential to ensure the long term health of the eurozone and its banks.

Negotiations to this end will continue ahead of a meeting at the beginning of December in Brussels, in which member states are to agree on a banking union of sorts.

As is widely reported, much of the early stage discourse comes from states jostling for the best room for manoeuvre in regards to extent to which the European Central Bank would infringe over national central bank sovereignty; Germany for example seek to narrow the influence the ECB would have over its own banking system and that the size of its banking sector be matched by its influence over ECB directives.

Countries such as Denmark and Poland have sought to agree safeguards against decisions made by the solely single-currency ECB top committee. Britain on the other hand hopes to win strategic victories to ensure it doesn't remain too far on the euro zone's periphery; much debate over the summer regarded a 'two-speed Europe' in which the UK would potentially operate in a lower gear of influence as other states pressed onward for European integration.

In this, the problem of European banking union lies. States are wary of having their sovereignty infringed upon; yet increasingly economists are worried that the sovereignty of states with poor banking practices are holding back European recovery.

The numbers, however, according to a 'The Economist' source, are 'simply too big' to pursue a single deposit guarantee in which resources would be pooled in an ECB fund. Creditor countries are unlikely to be willing to set aside the sum it would take to create an insurance that would satisfy market confidence. It seems in this climate there is too much to lose, only uncertainties to gain.

Therein lies the factor which is likely to ultimately determine the success or failure of a banking union. Whilst countries scramble for safeguards, they are essentially negotiating to limit the power of the ECB to provide an effective regulatory and supervisory function over Europe's ailing banking sectors.

As 'The Economist' succinctly notes: 'Shortcuts that fudge questions of accountability and dodge a genuine pooling of risk make matters even worse.'

- Michael John Cass @michaeljohncass

China's Property Crisis, Leadership Change and Economic Growth

Updated from an article written earlier in the year on the economic indicator provided by China's faltering property boom. 

Harmonious Development?

There is a growing body of evidence to suggest that China's economy is beginning to slow down amid political changes. 'Harmonious development' could be facing its biggest challenges yet. only months after Wen Jiabao, China's now ex prime minister, set a growth target of just 7.5% for 2012 – 0.5% lower than the 8% annual growth figure; a figure which has only been compromised in 1998 and 1999 during the Asian financial crisis.

Growth rate forecasts have often been conservative, with many of them easily surpassed, with average GDP growth rates averaging at 10% in the years 1978-2004. However, in his penultimate speech as prime minister March 5^th of this year, Mr. Wen spoke of 'new problems' that threatened Chinese growth. These include rising consumer prices and the emergence of what some have called a 'property bubble', characterised by a tripling in average Chinese house prices in the years 2005-2009.

Property Bubble

Since Chinese citizens were first permitted to own their own properties in the 1990s, there has been a marked property boom, instigated by financial and monetary policy de-regulation, allowing for ease of speculation and investment. Chinese investors, attracted by the promise of large returns flocked in their droves to the real estate market.

The housing boom China has experienced holds many similarities to that of the West's, which was sent crashing and stagnating post-2007 amid 'reckless credit expansion, huge trade deficits and asset bubbles'. Investors began buying up housing contracts from contractors whilst anticipating a continuing rise in prices, but once supply significantly outstripped demand, the bubble was sure to burst, sending house prices spiralling. On average, one billion square metres of real estate were built during the bubble's peak years, three-hundred million more than the amount needed to accommodate new owners, not counting those who would potentially inhabit the several million already vacant units.

A sizeable portion of Chinese GDP growth had included the successes of real estate investors and the booming prices real estate commanded. However, as the real estate market becomes less attractive to investors, who are expected to see losses of as much as ~30% on their investments if entered back onto the market, Professor Patrick Chovanec expects that if property investment plateaus, as much as 2.6% of real GDP growth could be subtracted from annual growth; a 10% fall in could see GDP growth fall to 5.3%.

Professor Chovanec's predictions are worrying for a country desperate to avoid repeating Japan's asset bubble burst of the '90s, however his observations show a -9.1% drop in overall property investment versus figures from last year (May 2011 vs. April 2012). Chovanec's observations denote a contraction of one of China's main sources of GDP growth; a contraction that threatens to worsen as 2012 sees a marked decline land sales and foreign investment in Chinese property development.

Wen Jiabao's admission of 'new problems' that threaten Chinese future growth, point to an uncertain future for Chinese policy-makers. These uncertainties will have to be balanced and managed by Xi Jingping the party's new general secretary as of November 15^th. He has the unenviable task of foreseeing China's continued economic growth, keeping a semblance of social stability and managing the rising influences of interest groups which hold an increasingly high stake in the continuing growth of the Chinese economy.

Global Outlook

However, despite its slowdown due in part to aforementioned indicators, many hold that China will continue to be the fastest growing of the large industrial economies this year. The economic outlook in the West is decidedly bleak in comparison. On the same day Xi Jingping was unveiled as general secretary, it was announced that the euro zone debt crisis had pulled the area into its second recession since 2009 in Q3. Mario Draghi, President of the European Central Bank, meanwhile maintains that the ECB are keeping a watchful eye over euro zone countries as inflation is carefully monitored and expected to remain at 2% throughout 2012.

- Michael John Cass @michaeljohncass

Dr. Pierre Fuller, Interviewed.

This piece was originally written as a draft for The University of Manchester's student-run History department magazine The Manchester Historian. 

Dr. Pierre Fuller, newly-appointed East Asian Historian took his time out to speak to me about his research, finding work in a foreign country and a Toilet General. 

Dr. Fuller, once a student of Literature & Theology, describes the influence behind his interest in East Asia as “the part of the world that was furthest from what I knew.” This inherent curiosity that guided Dr. Fuller's early career motivations led him to spend, in his words, “a good chunk of my twenties wandering around, really, trying different things”, even trying his hand at the underground film scene. However, it wasn't until a young Dr. Fuller pitched up in China with the objective “to try my hand at freelance journalism” that his interest in East Asia became a professional occupation. Fuller's reasoning behind this shows savvy decision-making: “The idea was to go to a part of the world that was somewhat under-reported, in other words a part of the world where a news room would be excited to get news copy.” Now, of course, China is anything but under-reported, but Dr. Fuller was somewhat ahead of the curve in this instance. “I got some contacts in a few newsrooms around the world, mainly in Tokyo at the Japan Times, and wrote stories from China, using an interpreter because I had no Chinese at the time (sic)."

How can Manchester History students (and History students in general) learn from Dr. Fuller's foray into journalism? For Fuller, it's about “the ability to manage an uncomfortable environment and find a story; what a newspaper wants to read.” According to Fuller, his experience in journalism helped open up fellowship opportunities “for people who can demonstrate an ability to put out academic work that you can put out there for the wider public”, his journalistic portfolio clearly assisted him in this, and he was able to say “Hey, I’m gonna take this degree beyond the academic world”.

Dr. Fuller's current research focus is humanitarianism in China, specifically “disasters in the 20^th Century and try to figure out how communities were responding to ecological crises, famines and things like that”. He doesn't want his work to become a “sort of dry dissertation aimed at the academic community”, however. Fuller's aim is to turn his research “into something that can actually sit on a bookshelf and that people are willing to throw some pounds at.” So, what's his angle? “One particular story I’m thinking of going after is one about a Warlord character, who today is called a ‘Toilet General’ in popular Chinese parlance”, he says, “Literally the ‘Toilet General’ is what this guy is called because he famously carried around a portable toilet on the field of battle for whatever bizarre reason.” At this point I'm thinking Dr. Fuller sounds a bit 'potty', but he assures me that historical figures such as Martin Luther and Lyndon Baines Johnson shared the warlord's curious habit. If historical quirks of that nature are your cup of tea, be sure to look out for Dr. Pierre Fuller's work in future. Hopefully more than just toilet reading material.

- Michael John Cass @michaeljohncass