Europe, the European Union, the Euro Area  and their Peoples

There is a lot of misunderstanding  about what these names really stand for.

There is the continent of Europe with  its 41 nations (Russia, by the way, being one of them)

Then the European Union with its 28 European member states, and 7 possible future member states
Finally the Euro Area with 19 of the EU member states.

When the British speak about Europe they usually mean the European Union, and quite often people think that the European Union and the Euro Area are the same. But they are not.

It is mostly specialists that write about the EU from the  point of view of their discipline.
What I try is to give my layman's view of what the European Union and Euro Area means to me. A personal non specialist view of the various sides of the European Union An interested amateur.

For years I have been wondering if there exists a consistent vision at all on the future of the European Union.

In Brussels I see a kind of expansion urge with only a view for geographical situation and even that taken very broadly.
Whether these prospective new member states fit in the economic structure of the European Union, which has for its objective the acceptance of the euro by all member states, or even in the cultural  structure of the EU seems not to be taken into consideration at all.
I wonder why this issue has never been discussed.
For when I consider this I am faced with doubt if the European Monetary (and Economic) Union, the EMU,  can ever be given real shape.
How can the conditions be created which are essential  for the formation of such a all embracing Euro Union.
Maybe my doubts are justified maybe not. But I am afraid there is an image of an "ever closer union" but only in the sense of management, not content.

In the financial management of countries Central Banks have assumed an ever stronger directional role. This is also the case in the European Union an even more intensively in the Euro Area.

From time to time it even seems to me that Central Banks treat the people like a kind of instrument to keep the State on the right track.
To that effect they play about with interest rates, create money to secure for their State the best possible position in that world of other States.
The people are their pawns which have to provide the ammunition. Production at the lowest possible price. The fight for price stability. If it works the people profit too, if not they have to pay the price.
A precarious balance between the stability of the State and the prosperity of the people.
As is apparent in Japan, the USA and China the Central Banks are walking the tightrope of exchange rates and interest rates with the  great danger of compensating deficits with loans not to fall off.

In the European Union and the euro area, however,  the situation is far more complex than in those countries.

The European Union consists of two sections , the Euro Area and the non-euro countries, the result of a fatal decision to introduce the euro as the only EU currency before the EU was ready for it. Before it had grown out into a political union with a fully empowered parliament and a normal government and, if needed, a ceremonial president. For at the time that was unthinkable. But hasty decisions rarely bear fruit. For at this moment it is close to being even more unthinkable.

The non-euro group is made up of member states fully independent with their own Central Banks which guard their price stability, print their own traditional currencies, so determine the monetary policy.

With their parliaments and governments fixing the budgets, taxes, expenditure, the fiscal policy, the two can be brought in harmony.
They are only obliged to keep their debts and deficits within certain limits, in theory that is.
So they find themselves in the same situation as Japan, the  USA and China.
But in the future, as soon as they meet the conditions for entry into the Euro Area they will have to join the euro group , the vanguard of the European Monetary Union, as laid down in the EU Treaties.
These conditions are mainly a budget deficit of 3% or lower and a public debt of 60% or less both of the Gross Domestic Product.
But  for reasons that will be clear from the table showing the financial situation of the Euro Area member states they are not very keen to join.

The Euro Area group, the vanguard, consists of member states which have already accepted the official currency of the European Union, the euro. They share one Central Bank, the ECB, European Central Bank.

The ECB is responsible for the monetary policy of the euro area as a whole, guarding the Price Stability of the euro area member states, the money printing and establishing the banking interest rate.
But each Euro member state retains its own parliament and government that determine  its own budget, taxation and expenditure and public debt with the provision that the budget deficit is limited to 3% and public debt to 60% both of the Gross Domestic Product.
In the euro area there is consequently a central monetary policy combined with  19 different fiscal policies. A hybrid situation which causes more and more tension among the Euro member states.
For a construction like this might be sensible if this central monetary policy were suitable for  all nineteen Euro member states, so if they constituted an Optimal Currency Area, an OCA.
Unfortunately that is not the case and will most probably not be.
Germany e.g. in order to function optimally would need a completely different monetary policy than Portugal.
For Germany a totally different exchange rate for the euro would be beneficial than for Portugal.
For Portugal the euro is too expensive, for Germany it is alright.
The European Central Bank cannot serve both and must make choices.
The result is that the financial stability of the euro area member states differs considerably as you can see from this table.

financial stability of the Euro member states.

As the table shows the Euro Area member states are a motley crowd. Percentages of public debt vary widely but are nearly all over the 60% limit, there are hardly any budget surpluses and too many deficits over de 3% limit. Average unemployment is high (though today diminished to 10.4 percent), growth in some countries negligible and generally low so that public debt will get even worse.

Of course these data are not up to date, as is usual. But the final 2015 data will not show any great progress.
But the financial aspect is only one side. The welfare of the population is another. Unemployment, poverty, mimimum wage, Gross Domestic Product Per Person, these are the things that matter to the people.

First of all unemployment.

table showing unemployment in non-EU member states and euro area states

This table shows the unemployment in the  EU, euro area and at the far right  as an extra Norway and Iceland, two non-EU states.

Ideally it should be a straight line at about 5%. On the contrary it varies from 24,5% in Greece, a bailout state to 4,5% in Germany. The average in the euro area has gone down to 10.4%, still far too high.

unemployment compared between non-euro are and euro area

Funnily enough the unemployment in the euro area  (shaded red) is higher than in the total EU (shaded blue), a strange thing, the euro area being the vanguard, to be followed by the other states that have not yet met the conditions for entry into the euro area. At the same time a warning. Why is the euro area lagging behind. It should be ahead.

poverty table

This table shows the level of poverty in the EU with Norway, Iceland and Switzerland added as a comparison. They show the lowest level of poverty.Green circles indicate states where poverty has decreased since last year, red circles indicate an increase.

Here, too, differences between 45% poverty and in other states  just a few percent. The differendes between the eastern and southern states of the EU and the northern ones strike the eye.

But even in Germany and in the UK there is an increase.

minimum wages

One more indication of the oversized differences between the EU economies is represented by the minimum wages. There are countries where no minimum wage has been set and countries where wages are paid lower than the official minimum ones. Non-EU contries are indicated by a lighter shade of yellow. In this table too I see the grave difference between easterly, southerly and northern states reflected.

Finally a table with the Gross Domestic Product Per Person

This table also contains the data of prospective member states and the EFTA states together with the EU member states

The GDP PP roughly shows the total income of a state calculated per inhabitant. This gives a good insight in the economic achievement of each country and the differences among them. Here I see the vast gap between east, south and north.
When I peruse these tables on unemployment, poverty, differences in minimum wage, and GDP Per Person a number of question crop up.

How could it be feasible to bring together all these countries with their fundamental differences in poverty, unemployment, income and economic potential in one great European Monetary Union.

For that is one of the aims of the European Union, as Mr Juncker again said the other day when discussing the Cameron proposals on the British position in the EU.
Denmark and Great Britain excepted all EU member states must introduce the euro when they meet the requirements. Then the EU and euro area will be synonymous with Britain and Denmark as a kind of strange appendix.
And these differences are still strongly in evidence twenty years after the EMU was decided on. They have not diminished in those twenty years, have even made bailouts for four member states necessary with not much of a success.
The efforts to get the euro member states into line with a rigid Growth and Stability Mechanism,  made even grimmer by later amplifications and   forcing member states  into austerity by lowering wages, cutting back expenditure and reforms of labour laws and bureaucracy have evidently failed and have occasioned a growing demand for greater flexibility and looser deficit and debt concessions.
Bailouts and a European Stability Mechanism to support member states in liquidity difficulties have mainly led to still greater debt far above the limits set.
This leads to the conclusion that a further integration of the euro area and later the whole of the EU with the euro as the only currency can only be achieved if a levelling system of structural money transfers is agreed upon. A redistribution of the total GDP of the euro area and later EU among the member states. The argument in favour of this is the money transfers of North Italy to South Italy and Flanders to the French speaking eastern region.

The argument that a more or less similar construction is found in the USA does not hold water.

In the USA labour mobility is unrestricted and feasible because there is one universal language and identical educational certificates. This has in fact led to a vast  mobility of labour over great distances.
But the EU counts 24 official languages and a vast multitude of different educational systems and certificates. That constitutes a extensive brake on labour mobility.
There is no inclination at all of  deciding on one common European language nor of adopting a common educational system.
Even the European Parliament has to meet in two different member states in order not to have to make a choice.

The underlying cause is the refusal of member states to relinquish their own identity and that,  if their governments should be willing to do so, they would estrange their own population.

Even now there is a strong and fast growth of nationalist parties which resist any further integration, transfer of power to Brussels. On the contrary they demand a return of power to the national parliaments. A clear reaction to the inclination of Brussels to enlarge its power.

Europe, it is true, is united in the wish for free trade, free movement of goods, services and inhabitants.

But most certainly not by a desire to transfer ever more political power to a central EU government.