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What is Maastricht Treaty

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The Maastricht Treaty concluded in 1993 in the city of Maastricht in the Netherlands, laid the groundwork for the establishment of a European body with a long-standing economic and political force that could survive any external challenge than at any other point in the world.

Some scholars claim that the treaty was concluded to preserve economic peace in Europe and to avert another World War.

The Agreement, according to Europa (2007), came about as a product of the dissolution of Communism in Eastern Europe and the reunification of Germany. It has prompted European leaders to feel that they ought to reassert themselves on the world stage. Internally, there was also a belief that the time was correct to build on the progress achieved by the Single European Act by introducing further changes (Europa, 2007).

In order to apply for membership of the Union, two sets of conditions, alluded to as integration and stabilisation parameters, must be fulfilled by prospective applicants in their respective economies, and the accomplishment would guarantee that the European Union achieves and retains an optical monetary region in line with Euro Economics (2009).

What is Maastricht Treaty

Inflation was high on the convergence and stabilization agenda, as candidates were expected to be no more than 1.5% over the lowest three members of the union. This success allows all participants to follow comparable monetary policies and avoids the creation of asymmetric shocks within the financial operating framework (Euro Economics, 2009).

In terms of the deficit, the Maastricht Treaty allows prospective Member States to incur a cap of 3% of their GDP while, according to Euro Economics, the debt burden was below 60% of the Gross Development Product (2009).

The deficit established was more for political purposes rather than economic, because it was deemed that the European Union was desirous of being perceived as a deficit bias entity by the wider global community.

      And the reality that there was a debt ceiling based on the incoming member state GDP, most accepted members, according to Euro Economic (2009, were not able to achieve the standard , but were admitted if they are able to show that they had good debt management practices in place, and are constantly reducing the debt load.

    Similarly, any prospective Member State that has been able to good exchange rate management over a two year period by use of mechanism developed by its central bank would be admitted under the Maastricht Treaty Provisions according to Euro Economics (2009).

    The practice was essential for the Union, because all monetary policies of countries entering had to meet the same operating guidelines in order to have the same exchange rate throughout, and be able to have common benefits during external or internal trading agreements (Euro Economics).

    In terms of interest rate, each country had to be at or below the 3% level, in order to ensure consistency in the economic conditions in all Member States according to Euro Economics (2009). 

    The creation of the Maastricht Treaty or the Treaty of the European Union presented an opportunity for political integration of the continent according to Europa (2007), by facilitating the erection of three vital pillars, namely the European Community (E U), The Common Foreign and Security Policy (CFSP), and the judiciary arm that handles policing and criminal matters (JHA).

    Signatories to the treaty automatically operates as a governing entity for the region and acknowledges that citizens of any country are recognized and treated as European Citizen with representation in European Parliament, and are entitled to use of a common currency in  any area or location of choice (Europa, 2007).

    It was obvious from the very beginning of the treaty being established in 1993, that the intent went beyond economical issues around a common market for all Member States, in that five political objectives were instituted in the provisions of the document. These objectives were, to strengthen   the legitimacy of institutions using democratic means, establishing an economic and monetary union, developing the social dimensions of the Community, as well as the creation of a foreign and security policy (Europa 2007).

    Once legitimacy has been established through referendums from each Member State, the governing body of the union becomes the authoritative source for all decisions and policy formulations of the entire region, and can enforce all rules by way of a Court of Justice, where fines and punishment for breaches becomes automatic.

    Excellent proactive thinking during the drafting of the instruments of the Maastricht Treaty can be identified, by the fact that not only was the Member States bonded economically, but the nature of the legislative structures established, guaranteed efficiency in operations, securing of provisions for benefits intra regionally, and the erection of trade barriers against external trading parties, seeking to exploit the regions labor and natural resources.

    Trade activities under the provisions of the treaty were to be monitored continuously b, and where breaches are detected, fines and other punitive punishments are rendered by the judicial arm of the Union, namely the JHA.

According to Europa (2007), the European Communities within the European Union was made up of the European Community, the European Coal and Steel Community (ECSC), and Euratom and functions in a domain which enforces sovereignty in all Member States.

Operationally, proposals will be made by the European Commission, adopted by the European Parliament and the Council, and then effectively monitored by the Justice arm of the Union to ensure adherence (Europa 2007).

    The Common Foreign and Security Policy (CFSP), is the arm of the Union under which the dictates of the Maastricht Treaty, allows members to take joint actions in the realm of foreign policy. According to Europa (2007), the effectiveness of the intergovernmental decision making within this pillar of the structure, depends significantly on unanimity, because the Commission, Parliament, and the Court of Justice has no jurisdictional rights to operate in this realm (Europa, 2007).

    Under the Maastricht Treaty, the establishment of the JHA or the Justice Home Affairs body, within the structure, serves to offer on an intergovernmental basis, high levels of protection for the citizens of Member States in areas of freedom, justice and security, according to Europa (2007).

    In an effort to ensure the economy of each Member State develops the same foundationally, the treaty has made provision for the establishment of Community Policies in the trans- European networks, industrial policy, consumer protection, youth, culture and education, and vocational training, according to Europa, 2007).

    Conformance to these polices by Member States will ensure the Union develops along the same lines and achieve the political and economic status that prevails throughout the region as a whole,

    The flow of money is critical to the success of the Union, and under the rulings of the treaty the efficient functioning of the EMU becomes vitally necessary.  In a gradual implementation strategy process, the monetary policies of the Union, under the Maastricht Treaty were to be effected.

      The first stage, according to Europa (2007) provides for liberalization of capital movements in 1990, this was to be followed by the convergence of Member States economic policy four years later, and in the final stage, there are to be the creation of single currency and a Central European Bank in 1999, according to Europa (2007).  

    Incidentally after two years Great Britain and Denmark has not become participants in the third stage of the process due to special provisions within the treaty according to Europa (2007).

    Delors (1994) believes the treaty when it was signed had set the stage for the achievement of a threefold objective which would allow the Union to successfully meet the challenges ahead.

    These objectives were, the need to deepen the solidarity of the European Union without depriving Member States of their history, traditions, and cultures, the need to achieve a reinforcement of the European Identity on the international stage, and to effect a furtherance of the development of democratic and efficient functioning of the European Communities, so that task assigned can be accomplished in near citizen like manner (Delores, 1999).   

    The principles of Subsidiarity , which according to Delores (1994), acts that can only be taken in so far as the goals of the planned measures cannot be reached by the Member States, and will better administered at the Union level, where the objectives are broader, will prove valuable in enhancing the process towards desired goals and objectives (Delores, 1994).

    Democracy will also be strengthened, according to Professor Delores (1994), by the increasing power of participation of the European Parliament in the decision making process of the Union, and the protection of the citizens rights during administration of the laws of the treaty (Delores, 1994).

     A major provision of the treaty was that which relates to the European Economic Community. According to Delors (1994), every person holding the nationality of Member State shall be deemed a citizen of the Union, and shall have the right to move and reside unhindered in any area of the community so desired. This according to Delors (1994) is regardless of the economic status of the individual.

    Other rights include voting, standing in municipal and parliamentary elections, the right to petition the European Parliament, to make applications to the Ombudsman, protection by the diplomatic or consular authorities in third countries where representations are lacking(Delors, J.  1994).

    In terms of the economic development of the Union, Article 8e of the treaty makes provision clearly for the Commission establish under a review process for enactment, to report to the Parliament, the Council, and the Economic Social Committee, every three years after 1993, on the development of the union, and based on the report which should include recommendations, provisions shall be made for these recommendations to be implemented after due process has been observed between governing entities (Delores, J. 1994).

    This will ensure continuous improvement in all the functional areas of the treaty as it relates to the economy of the region on a whole. Changes will therefore reflect the democracy that exists within, in that all member States will be entitled to the benefits in terms of technology. health, productivity, and any other measures instituted, based on the evaluations done by the Committee.

    Budgetary discipline was highly implicit in the second stage of the implementation of the monetary policy of the Union by the EMU, Article 101 emphasized that there shall be no direct financing of any public entity deficits by the Nations Central Banks, even in cases of overdraft,, different types of credit facility, or the \purchase of debt instrument, unless they are in fulfillment of the fiscal policies of the European Union Banque De France (2005).

This policy greatly reduces the occurrence of financial mismanagement throughout the Union and the non-conformance to the convergences and stability criteria by those responsible for maintaining the economic standards, established under the treaty.

    Article number102 under the treaty was also contributory to the budgetary discipline required, in that that it points to the prohibition of management of public entities to have privileged access to financial institutions, according to Banque De France (2005).

      Prohibitions of this nature severely limits the opportunity for managers to seek even short term remedy for their financial deficits , and allows greater prudence in fiscal management due the absence of loopholes that may attract inefficient operators of certain entities.

Article 103 of the treaty inferred in its no bailout clause that no Member State or Community leader can be liable nor can assume the commitments of any other Member State, according to Banque De France (2005). This ruling was enforceable across the entire intergovernmental institutions, and serve to exact strong fiduciary responsibility, as well as vital fiscal discipline within all operating financial institutions.

    The Maastricht Treaty imposes integration upon the European continent in such a way that it requires citizens of individual countries in their distinct national setting to shift loyalties, expectations, and political activities towards a new center, which demands or possess legal jurisdictional authority over them, according to Haas (1968).

    This new imposition will always generate a new political community that will superimpose itself on the existing  one according to Haas (1968), but will lack the uniqueness that will enable it to operate as a distinct and separate entity form that of each Member State (Haas, 1968).

    The integration process from a European perspectives will be seen when a look is taken at the Union internationally, as a region, within the global political economy, as a policymaking entity, and as a situationally generic phenomenon, that cannot be anything except itself with its history firmly rooted in the manifestation of its attributes (Rosamond, B. 2000).

The European Union from an analytical perspective seems more in line as an entity with transactionalism and functionalism integration theories rather than with the concepts associate with federalism. This is because of the reality that it is under Functionalism, according to Dinan (2000), the integration of these states were because of a common need for the technocratic management of economic resources and social policies, and this gave way for the formation of international agencies like the EC, the JHA, and the CFSP (Dinan, 2000).

Transactionalism applies to stable societies functioning as institutions under which the Member States either maintain their independent legal identities or establish an administrative merger, according to Rosamond (2000), and the sense of community in this scenario becomes a feature of the degree of contact between States (Rosamond, B. 2000).

Federalism, on the other side, allows federalists to set up a tiny nucleus of non-conformists who tend to find out that national states must surrender their sovereignty because they are incapable of ensuring the constitutional and economic welfare of their people (Spinella, A. 1972).

    The provisions of the Maastricht Treaty was largely economic and political, in that convergence and stability criteria were established and prospective members had to meet the standards before gaining admission, Admission gave members financial and political status , as well as protection against external organizations that may be seeking to exploit the human and natural resources within the union.

     Under Federalism, citizens would find it difficult to petition the body equivalent to the European Parliament, or stand in municipal or parliamentary elections without attention being given their economic and political status. They would also have difficulty successfully  making to an authoritative source like the Ombudsman, due to the fact that the inherent political strategies was that priorities were given to the state over the individual on a continuous basis.

   Theories like Neo-Functionalism, Neo-Realism, and Constructivism are not applicable to the European perspective due to that these are new and emerging concepts, and the Maastricht Treaty was written more than a decade ago, and the thinking of the drafter were more in line with that era.

Neo-Functionalism according to Rosamond (2000) creates high authority across the integration process, and this incurs functional pressure in the related economic sectors of the geographic zones that it operates in. Consequently there will be a gradual tangling of the economy, and the efficiency, productivity, financial prudence, and consumer protection desired under the Maastricht Treaty would be difficult to achieve.

    The disunity and insecurity created by Neo-Functionalism would prove opportunities for external parties to exploit the situation, which may exacerbate to the point of dissolutions or revolutions, by political means to bring about changes that would be meaningful to the general population.

      Neo –Realism according to Rosamond (2000) is an international system that characterizes anarchy, and is composed of units or member states that are formally and functionally equal. This implies that corporation is a critical ingredient for successful distribution of equity as well as to attain adequate protection from external forces in the environment.

    Should survival mode may psychologically dominate the thinking of each unit, and prevail over the desire to cooperate, high levels of chaos in the economic and political system may result. Results of this nature contravene the virtues desired by the drafters of the Maastricht Treaty in the deliberations for the prosperity and stability of the nations that compose the European Nation.

    Constructivism, according to Ruggie (1998) infers that the building blocks on international reality are ideational as well as material. Ruggi (2008), insist that this is a fairly new concept and has not acquired the relevance needed to apply it to the dictates of the Maastricht Treaty of 1993 time line (Ruggie, A, 1998).

        According to Fernandez (2010), theories of integration undergo 5 phases, namely early integration which encompass federalism, functionalism and transactionalism in the 1920-1950 era, early neo- functionalism versus Inter-Governmentalism (1950-1970), recent Neo – Functionalism versus liberal Inter-Governmentalism (1980-1990), the middle approaches, and the new institutional, constructivism, critical perspectives, and normative theory of the 1990’s (Fernandez, 2010).

       Fernandez stressed that the key proposals regarding the Early Neo-Functionalism were, (a) the integration was a two process involving natural actors and supranational institutions, (b) the process is generated by strategic non state actors, (c) integration on low powers creates functional powers, and (d) the supranational institutions are autonomous rather than controlled, and are the engines of the integration process (Fernandez, M.  2010). 

    This theory speaks to the European Union formed by the Maastricht Treaty, in that it facilitates integration by working with all Member States under the policies established. Low political involvement would generate economic pressure especially for the new entrants and smaller nations in the Union, and the three pillars established at the outset of the organization are really the engine of the integration process (Fernandez, 2010).

    Recent Neo-functionalism evaluations and critiques points to, a re-emergence in reactions to the SEA, acceptance of the theory seems more suitable for explaining why there should be a re-launch of European integration. Critics says the style of operation is similar to the 1950/1960 era but the formulations are different, and there were new debates with inter-governmentalists,  who likened what they are seeing as comparative to constructivism , according to Fernandez (2010).

    Neo-Functional /Supranational governance theory embrace three elements namely the development of a transactional society for pushing European level rules, exhibition of responsibility for autonomous supranational organization with the capacity to pursue integrative agenda, according to Fernandez (2010).

    It was noted that the presence of the EC rule makes it easy for this theory to achieve collective and transactional gain, and its effectiveness will enable the role of the law to exert both internal and external influence when conducting (Fernandez, 2010).

      The key propositions behind the theory of Liberal Intergovernmentalism according to Fernandez, is that it proposes a three stage theory of integration, namely national interest formation, interstate bargaining , and delegation of sovereignty to all EU Institutions. The theory allows individualistic behavior, and embrace agency behaving in executing duties across its domain. Logics and rationality in decision making according to Fernandez (2010) to ensure the ideal behavior patterns would manifest across the Union.

    The institution under this theory according to Fernandez (2010) would be perceived as passive and controlled and often would see itself a facilitating entity for Member States to pursue their task in climates that are appropriate for them.

    A negative attribute that prevails in the execution of its theories, is the fact that many of the decisions made are too historically aligned, and this may retard rather than help the advancement of the associated states (Fernandez, 2010).

        Evaluations and critiques of the liberal intergovernmentalism by Fernandez (2010), reveals that was extremely influential in European Integration Studies, it explains far more than it actually achieves, has a shallow, conception of domestic policies, focus on historical performances that causes it to make narrow decisions, has been critized and praised for being too simplistic, provides means for expounding activism, and has been interpreted as a two game analogy which many regard as till being too simplistic (Fernandez, 2010).

    The theory of Intergovernmentalism according to Fernandez (2010) is seen as a classical IR which is a direct opposite view from liberal idealism. Basically the thinkers behind this theory focus o the primacy of state power, and its associated interest, the status of balance of power, rather than on the individual. The virtues espoused by the theorist are also contrary to the theories associated with federalism, functionalism, and non-functionalism, and is motivated by its intergovernmental role in the European integration process. (Fernandez, 2010)

     The fact that this theory is contrary to those more closely identified with the Maastricht treaty from inception, points to an evolving process, that may warrants Union to  review its present document to see where changes in keeping with the present theories can be made, so that it can maintain relevance in the eyes of the population.

    Despite the criticisms leveled at the Neo-functional theory for example, it is still regarded by many as having a deterministic element, has plausible explanations for the legality of integration and the SEWA, as well as a powerful approach to the UE challenges.

    The presence of as much as twelve different theories regarding the European Integration process since the signing of the Maastricht Treaty was signed may be a worrying sign for the future existence and relevance of the treaty, in that should thinkers behind any of these theories are influential enough to gain political power within the Union, they may be able collectively to impose views that are seen as unacceptable in the present.

    These views may affect the attitude of the leaders of the regulating bodies towards member states, and should any change be made in the area of financial accountability, maintenance accounting standards that affects the debt, interest rate, and the prohibitions against public leaders have privilege access to Union owned financial entities, then years of good economic prosperity and security may disappear.

Reference

  • Banque De France (2005) The Maastricht Treaty banquedefrance.fr/glseurosys/telechar/…/maastricht_treaty.pdf , 06/15/11
  • Delores, J. (1994) The Maastricht Treaty dur.ac.wk/resources/ibru/publications/fullbsbi-4_delors.pdf , 06/15/11
  • Dinan, D. (2000). Encyclopedia of European Union, Boulder, London p.245
  • Europa (2007). Treaty of Maastricht or European Union europa.eu/legislationsummaries/economicandmonetaryaffairs/institution_economic_framework , 06/15/11
  • Fernandez, M. (2010). Theories of European Integration  http://www.svet.lu.se/uploads/kurser/ht2010/resurser/ht2010_STVP11_svet-mje_2.pdf, 06/16/11
  • Haas, E.B. (1968) The Uniting of Europe 1950-1957 Stanford, Stanford UPS, p.16
  • Rosamond, B. (2000). Theories of European Integration Hounds Mill McMillan, New York, NY P pp.14-17    
  • Ruggie, A. (1998).Constructing World Polity, Essays on International Institutionalization, Routledge, New York, NY  33
  • Spinella, A. (1972). The Growth of European Movements Since The Second World War in Mark Hodges Integration  Harmonds Work Penguin 68

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