Important Issues Facing The European Union Today Economics Essay

The European Union is an integration of European states that encompasses different histories, institutions, political systems and economies. At present the EU boasts 27 member countries with a combined population of over 500 million. The creation of a single currency, the euro, has led these citizens to depend heavily on the union for the success of their respective economies. Furthermore, many others nations out with EU jurisdiction rely on the EU for trade, finance and investment aid. Political historians such as Leonard (2005) have argued that the EU has been in a state of crisis since its inception. However, despite such problems, the EU has emerged as a strong, steady and powerful force in the global political arena.

The dawn of the 21st century has brought with it fresh challenges for the EU to address. Many of these issues were outlined by EU President Jose Manuel Barroso in a speech at the European Parliament in 2007. Barroso cited economic reforms, unemployment, social justice and climate change as being matters of pressing concern (2007). This essay serves to highlight these problems and explain why they are the most important issues facing the European Union today.

One of the major problems facing the EU is the ever increasing levels of unemployment affecting the majority of the member states. Barroso (2007) stated that close to 20 million EU citizens were classed as unemployed. More worryingly, Barroso stressed that many of those out of work were of a younger demographic. Modigliani (2005) warned that such rates of unemployment can lead to resources being wasted, a decline in output and thus a loss in savings and investment within the economy. Modigliani also hastened to add that unemployment levels can lead to complicated and long-standing social problems as individuals affected can grow despondent and discouraged by the lack of job opportunities. Therefore, unemployment is an important issue impinging on all of the EU states.

Bertola (2000) alluded to labour market participation rates, wage inequality, employment dispersion across EU regions and market performance as being the major causes of high unemployment levels within the EU. Labour market performance is guided by government and institutional policies in the EU which in turn control minimum wages, taxation and unemployment benefits. Room (2006) and Barroso (2007) argue that although there are many ways to reduce unemployment, such as wage differentiation and geographical mobility, such measures could alter the economic and political equilibrium currently in place in the EU. Additionally, Wallstrom (2007) is quick to point out that although the elimination of unemployment subsidies across the EU states would reduce unemployment levels, it would in consequence increase the poverty and crime rates thus leading to accelerated levels of social exclusion. As a result, these repercussions have raised alarming concerns for both public and politicians alike as the EU struggles to implement a programme of reform to address the situation. Access to the member states products, capital and labour resources could provide economic efficiency but the levels of regulation required would prove extremely hard to sustain.

In response to the growing problems with unemployment, the EU Commission has proposed some measures designed to tackle the issue. These include a revamp of the member states growth and job strategies as well as increasing investment on research and development. It is hoped that this in turn would lead to increased economic output and thus the creation of jobs in the process. However, Wallstrom (2007) argues this could prove a difficult task given the heterogeneous social and economic structures of the EU member states. Additionally, the collapse of the world economy in 2008 has lead to a global recession and has seen employment levels in the EU increase dramatically. The Employment in Europe Report (2009) estimated unemployment levels in Europe would break the10% mark in 2010 and would continue to rise.

The issue of climate change has come to the fore spectacularly in the 21st century and is another important issue facing the European Union. Changes in climate variations are occurring around the globe raising genuine concerns about the stability of the planets ecosystem. According to Schroter (2005) these deviations may have a direct affect on levels of food production and water supplies. For example, Berkhout (2005) noted harvest failure within a country can impact the price of certain food commodities in the EU due to imports. Brandt (2001) explains that these growing concerns lead to the implementation of the Kyoto Protocol – an environmentally friendly policy sanctioned via the United Nations Framework Convention on Climate Change designed to bring greenhouse gas emissions under control – in 1997.

In the summer of 2003, a heat wave engulfed much of Europe resulting in record temperatures being recorded. Beniston (2004) stated that the heat wave bore a resemblance to the type of temperatures anticipated by the end of the 21 century. Beniston (2004) concluded that due to an enhanced atmospheric concentration of greenhouse gas, summer temperatures could be expected to increase by 4 degrees celsius on average. According to Christiansen & Wettestad (2003), the EU generates one of the highest levels of greenhouse gas emissions and accounts for 25% of the world’s production. Brandt (2001) states the EU expects that there will be a 0.8% increase in CO2 emissions annually. Furthermore, the EU faces additional problems with its failure to persuade its members to adopt the carbon tax due to the many rules and regulations incorporated in the policy (Christiansen & Wettestad, 2003).

The use of fossil fuels is another factor that leads to global warming and can have a detrimental long term affect on the climate. Kruger & Pizer (2004) cite that increased emission levels due to the development of the transport sector have led to further issues for the EU to address. These substantial growths in emission output can have a direct impact on allowance prices if the EU attempted to meet Kyoto Protocol targets by using offset purchases.

The growing carbon market is another area of concern for the European Union. Howse & Eliason (2008) argue that it is crucial levels of carbon footprint are monitored in order to reduce emissions in the air. According to Kruger et al. (2007) the European Union launched an emissions trading program in 2005 with the aim of meeting the Kyoto Protocol targets for tackling climate change. However, the complexity of the European Union Emissions Trading System (EU ETS) is causing the member states to experience various political and economic challenges as they attempt to meet the targets set by the Kyoto Protocol.

Howse & Eliason (2008) cite that an investigation carried out by the Financial Times concluded that a number of companies operating within EU boundaries receive unjust carbon credits and that this is causing an unfair subsidy distribution in EU states. Howse & Eliason, (2008) claim this is an issue because the results do not coincide with emissions reduction. Therefore, the EU needs to devise strategies to regulate such outcomes.

The issue of security is another obstacle facing the European Union. Kicinger (2004) writes that external threats to security present far greater problems than those posed internally. To put it simply, this is because these threats cannot be predicted. One such threat is terrorism. Wallstrom (2007) argues that although Europe’s policy of passport-free travel is beneficial for business and tourism, it allows cross-border terrorists and criminals freedom of access within the member states. Terrorism is a major issue because innocent people’s lives are at stake. Schilder & Hauschild (2004) note that EU states are also used as a base to plan and devise terrorist attacks. These criminals deploy state of the art resources, have well maintained networks and are capable of resorting to horrific levels of violence. Kicinger (2004) writes that Al Qaeda – an Islamist fundamental group formed in the late 1980’s and renowned for its terrorist activities – housed logistical cells in the EU member states of the United Kingdom, Germany, Italy and Spain. Therefore, the concentrated effort of the EU to tackle such problems is crucial.

Another security concern for the EU is the technological advancements in modern arms. This puts the current security measures in place by the EU in question. Flow of trade and investment within the European states has given rise to the prosperity of the EU’s inhabitants. However, in spite of the advantages that free trade has brought, it has also heightened the threat of internal terrorism. Europe is now a playground for organised crime and is rife with drug trafficking, illegal immigrants and prostitution (Schilder & Hauschild, 2004).

Cross-border and neighboring threats also add to the security concerns of the European Union. Disputes in Kashmir and the Korean Peninsula as detailed by Schilder & Hauschild (2004) affected the EU member states both directly and indirectly. The European Union Commission has pledged to combat the security threat and via foreign policy and crisis management initiatives have made provisions for security. According to Barroso (2007), these include securing borders with member states and with international countries more effectively. Moreover, the EU is attempting to forge policies and agreements with their transatlantic partners in order to minimise any threats posed to security although this is proving a difficult task to achieve.

In conclusion, since its formation in 1993, the European Union has served to address a great number of important issues. These issues are not solely confined to the borders of EU but are commonly dealt with throughout the world. This essay has highlighted the EU’s growing problems with unemployment levels, focused on the pearls of climate change and has detailed the threat of terrorism to the EU’s stability. These are just a few of the important issues facing the European Union today.