1 - Introduction: European integration

Summary

The idea of creating a borderless Europe, while preserving the cultural independence of the individual countries or regions, is centuries old. In recent history, the first moves towards political European integration date back to the early twentieth century, but the First World War put paid to any ideas of integration and left Europe divided. It was not until after the Second World War that the first serious attempt at European integration took place. The United States, in particular, strongly encouraged and supported economic and political integration in Europe, as a strong Europe provided a buffer to Soviet ambitions during the Cold War. The American European Recovery Program, also known as the Marshall Plan, made a considerable financial and political contribution to integration in the western part of Europe and included cooperation between the formerly hostile countries.

A formal alliance between the main continental European countries became concrete in 1951 (in force 1952) with the foundation of the European Coal and Steel Community, signatories to which were Belgium, the Federal Republic of Germany, France, Italy, Luxembourg and the Netherlands. These six countries also founded the European Atomic Energy Community, including Euratom, as a joint international organization in 1957 (in force since 1958).

In 1957 (in force 1958) the Treaty of Rome, the treaty establishing the European Economic Community (EEC) was agreed. The main focus of this agreement was on the stepwise reduction of customs duties between the member states and the common organization of agriculture. The customs union decided in the Treaty of Rome came into force in 1968. A further step towards integration took place in 1967 when the three previous agreements were merged to form the European Community (EC). These integration steps were accompanied by the expansion of the Community with the accession of new member states.

At the monetary level, in the 1950s and 1960s, European integration took place under the umbrella of the Bretton Woods system signed in 1944 and established in 1946. The system implemented fixed exchange rates, which could only be changed by agreement of the member states. The US dollar became the world's reserve currency. The International Monetary Fund (IMF) and the World Bank were founded as the Bretton Woods’ institutions.