This article was written on June 24, 2016, just a day after the Brexit vote.
The world is watching with a great interest to see if Britain will leave the European Union (EU), and topics similar to this have been surfacing every now and then from the time the EU was formed. Here's an attempt to present what's happening for those who may want to understand this complicated stuff in simple words (hopefully).
- Approximately 50 countries form a part of Europe
- Its the second smallest continent by surface area (2% of earth, 7% of land)
- Russia is the largest country in Europe, both by area and population, and Vatican city the smallest
- Europe has roughly 11% of world population (~740 million)
- Union of 28 countries primarily in Europe that have decided to have close coordination among themselves. The EU has 7 decision making bodies - European Parliament (legislature), European Council (impetus & direction), Council of the EU (legislature), European Commission (executive), Court of Justice of the EU (judiciary), European Central Bank (ECB), and Court of Auditors. These institution were established around 1958 when the European Community was being created.
- EU has ~7.5% of world population but generates ~24% of the world's GDP (nominal, 2014).
- 26/28 countries have a very high human development index.
- EU won the Nobel peace prize in 2012.
- Total area of EU countries is 4.4m sqkm (approximately 32% more than India).
- UK is a part of EU
Eurozone or Euro Area
- A monetary union of 19 of the 28 European Union (EU) member states that have the Euro (€) as their common currency
Who are these 19 countries that have EUR as their currency?
- Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Portugal, Slovakia, Slovenia, and Spain.
Who are the 9 countries of the EU that do NOT have EUR as their currency?
- Bulgaria- Bulgarian lev, Croatia - Croatian kun, Czech Republic - Czech koruna, Denmark - Danish krone, Hungary - Hungarian forint, Poland - Polish złoty, Romania - Fourth Romanian leu, Sweden - Swedish krona, United Kingdom - Pound sterling
Now, UK wants to exit the European Union for several reasons, which are very well discussed by several people across the world. The reasons stated include political reasons, economy related reasons, immigration related reasons, reasons relating to UK's contribution to EU bailout packages that is an additional burden, and so on. But it is also more about the British identity that the people in UK are proud of and do not want to get off it in the process of making themselves an European, rather than a Britisher. Its perhaps the same with people across the world. I'd always want to be an Indian first, and Asian or some other association next. It is evident that people are not very happy with some rules that are imposed on them for being a part of the EU. Like some say, this is an Independence day in the making for England. But, it will have a long journey to move up the economic ladder, for there's a huge concentration in London, and the country needs to significantly grow inwards as it cuts its reliance on the EU.
While the 2016 vote has turned in favor of exiting the EU, it is merely a referendum, and the final call will be taken by the British Government. The whole process of exiting from the EU will take about 2 years or more, as there will be several negotiations before the exit happens. After UK's exit, it will be Germany, France and Italy that will mostly be heading the EU. Interestingly, Russia, Turkey and Switzerland, which are among the top 10 economies by GDP in Europe are not a part of the EU.
It is a tough task to run the EU as there is this big difficulty of having a different political parties running these countries, some countries having a different currency, and some countries that are part of the EU just because of the bailout packages they receive. Greece was almost of the EU a couple of years ago, until it was helped with some bailout. Countries want to be more free now, and do not want to be told by unions about what has to be done. Even Scotland wanted to leave the United Kingdom last year, but it was convinced to stay.
While we can not really say at this point of time whether it is for good or bad, no matter how big an expert you are, we will have to wait and see how things work out. The biggest fear in the world today is that this shouldn't set an example to other EU countries to exit. If that happens, and if EU collapses, we will have a whole new world of economics in place, and by the time we all understand, we may go through a lot of difficult phases.
In the longer run, no matter who leaves or joins, everything falls in place. After all, human needs and desires are too strong to be curtailed by such moves. People will continue to live, eat, buy, go to school/college, fall in love, get married, have children, get them educated, buy groceries, wear clothes, watch movies, run around to make their lives better. Life goes on.