Monday, April 10, 2017

The European Union: Current Challenges and Future Prospects

The European Union (EU) is a unique partnership in which member states have pooled sovereignty in certain policy areas and harmonized laws on a wide range of economic and political issues. The EU is the latest stage in a process of European integration begun after World War II, initially by six Western European countries, to promote peace, security, and economic development. The EU currently consists of 28 member states, including the formerly communist countries of Central and Eastern Europe.

EU members share a customs union; a single market in which goods, services, people, and capital move freely (known as the “four freedoms”); a common trade policy; a common agricultural policy; and a common currency (the euro), which is used by 19 member states (collectively referred to as the “eurozone”). Twenty-two EU members participate in the Schengen area of free movement, in which individuals may travel without passport checks. In addition, the EU has taken steps to develop common foreign and security policies, has sought to build common internal security measures, and remains committed to enlargement, especially to the countries of the Western Balkans.

The EU is largely viewed as a cornerstone of European stability and prosperity. Currently, however, the EU faces a range of political and economic pressures, including slow growth and persistently high unemployment in many EU countries, as well as the rise of populist political parties, at least some of which harbor anti-EU or “euroskeptic” sentiments. Such factors are complicating the EU’s ability to deal with a multitude of internal and external challenges. Among the most prominent are

the June 2016 vote in the United Kingdom (UK) in favor of leaving the EU;

the Greek debt crisis and lingering concerns about the eurozone;

ongoing migrant and refugee flows;

a resurgent Russia; and

a heightened terrorism threat.

Amid these difficult issues, the future shape and character of the union are being increasingly questioned. Supporters of the European project worry that for the first time in its 60-year history, some aspects of integration could be stopped or reversed. Others contend that there is a chance that the multiple crises currently facing the EU could produce some beneficial EU reforms, encourage further political and economic integration, and ultimately transform the bloc into a more effective and cohesive entity.

Successive U.S. Administrations and many Members of Congress have long supported the European integration project, viewing it as crucial to European peace and security and as a way to foster strong U.S. allies and trading partners. The United States and the EU share a dynamic political partnership on an array of foreign policy issues, and U.S.-EU trade and investment relations are extensive and mutually beneficial. How the EU evolves in the years ahead may have significant strategic and economic repercussions for the United States. At the same time, EU leaders are concerned about indications that the Trump Administration could diverge from traditionally held U.S. views on European integration and the U.S.-EU partnership.

This report provides a brief history of the EU and the major challenges currently confronting the EU as an institution. It also discusses the potential implications both for the EU itself and for U.S.-EU relations.

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