Single Market, Maastricht and the Euro

The sixteen years after 1986 turned the Community into the Union. A programme to remove the remaining barriers to trade was finished on schedule. A treaty signed in a Dutch city gave the project its present name and set a course for a single currency. The path was not smooth: voters in two countries nearly or actually rejected the treaty, and a currency crisis pushed the UK out of the exchange-rate system it had joined. This chapter follows those years, ending with euro notes and coins appearing in people's pockets in 2002. Dates and figures are given from general knowledge and flagged where they should be checked.

Delors and the Single Market

When Jacques Delors, a French former finance minister, became president of the Commission in 1985, he was determined to end the sense of drift described in Chapter 3. He backed a Commission white paper that listed around 300 measures needed to complete a genuine single market by the end of 1992 (check the figure and the name of the commissioner who drew it up). The idea was simple. Tariffs between members had gone, but goods, services, workers and money still faced other barriers: differing technical rules, customs paperwork, national monopolies and professional qualifications that other countries did not recognise.

• Mutual recognition. A principle drawn from a 1979 court case (known as Cassis de Dijon): a product legally sold in one member state should in general be allowed in the others, unless a country can show a strong reason to block it (check the case and its date). It avoided agreeing one rule for every product.
• Harmonised standards. Where a common rule was truly needed, such as safety, one standard was agreed for the whole market.
• Majority voting. To avoid every measure being blocked by a veto, many single-market decisions were moved to qualified majority voting (European Politics Fundamentals 4).

The Single European Act

These changes needed a treaty. The Single European Act was signed in 1986 and came into force in 1987 (check). It was the first major revision of the Treaty of Rome. It set the end of 1992 as the target for the single market, extended majority voting, and gave the Parliament a larger part in legislation (check). It also marked the point at which the Luxembourg Compromise (Chapter 3) faded in practice, although it was never formally abolished.

The Maastricht Treaty

The fall of the Berlin Wall in 1989 and German reunification in 1990 changed the political situation. Leaders, notably the French president and the German chancellor, wanted to tie a larger Germany firmly into Europe (check the reasoning), and found a way in a project already under discussion: economic and monetary union.

The Treaty on European Union was signed in Maastricht in the Netherlands in February 1992 and came into force in November 1993 (check). It is usually called the Maastricht Treaty.

• A new name. The "European Union" was created as an umbrella over the existing Communities and two new areas of cooperation: foreign and security policy, and justice and home affairs (check the structure).
• European citizenship. Every national of a member state also became a citizen of the Union, with the right to live in other member states, vote in local elections there and receive consular help (check).
• A timetable for a single currency. Economic and monetary union would proceed in stages, with criteria that countries had to meet to join (check the criteria in Exercise 3).
• More Parliament. The treaty extended the Parliament's role again, in a procedure that later became co-decision (European Politics Fundamentals 6).

The Voters Push Back

Maastricht was the first treaty that truly provoked public argument. The rules for approval required either parliamentary votes or referendums depending on the country.

The Exchange-Rate Crisis of 1992

Before the euro, member currencies were loosely tied together in the exchange rate mechanism of the European Monetary System (Chapter 3). In September 1992 speculators bet heavily against the pound and the Italian lira, and both left the mechanism, an event called "Black Wednesday" in Britain (check). The crisis embarrassed supporters of fixed exchange rates, and it was one of the arguments for a single currency: with no national currencies there would be nothing to speculate against. It was also an argument, for sceptics, that tying economies together can be dangerous. The episode is another case where the evidence can be read in two directions.

Towards the Euro

• Convergence. To join, countries had to meet criteria on inflation, government debt and deficits, interest rates and exchange-rate stability (check the exact limits). A Stability and Growth Pact of 1997 was meant to keep public finances in order afterwards (check).
• The central bank. The European Central Bank, based in Frankfurt, began work in 1998 (check).
• The launch, 1 January 1999. Eleven countries adopted the euro as their currency for accounting and electronic payments, with exchange rates fixed between their old currencies (check the list). The UK, Denmark and Sweden stayed out, and Greece joined shortly afterwards (check the date).
• Notes and coins, 2002. From 1 January 2002 euro notes and coins replaced the old national ones in twelve countries, in one of the largest currency changes in history (check the number of countries).

Enlargement and Reform in the Same Years

Alongside this, Austria, Finland and Sweden joined in 1995, taking the membership to fifteen. Norway's voters again refused to join (check). Two further treaties, signed at Amsterdam in 1997 and Nice in 2001, adjusted institutions and voting in preparation for the large enlargement of the east (check), which is taken up in Chapter 6.

Exercises

Next chapter: Borders, Schengen & Free Movement, which turns from currency to the freedom of people to cross borders, live and study abroad.