Order Code RS21757
Updated March 7, 2005
CRS Report for Congress
Received through the CRS Web
The European Union in 2005 and Beyond
Kristin Archick
Specialist in European Affairs
Foreign Affairs, Defense, and Trade Division
Summary
The European Union (EU) experienced significant changes in 2004 as it enlarged
from 15 to 25 members and continued work on a new constitutional treaty to institute
internal reforms and further EU political integration. In 2005, the EU is expected to
build on these efforts and seek to implement several recent foreign policy and defense
initiatives. This report describes the current status of the EU’s “constitution,” EU
enlargement, the EU’s evolving foreign and defense policies, and possible implications
for U.S.-EU relations. It will be updated as events warrant. For more information, see
CRS Report RS21372, The European Union: Questions and Answers.
The EU’s “Constitution”
Background. The European Union (EU) is a treaty-based, institutional framework
that defines and manages political and economic cooperation among its 25 member states
(Austria, Belgium, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France,
Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the
Netherlands, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, and the United
Kingdom). In July 2003, European officials finished work on a draft “constitution” that
merges the EU’s four existing treaties into a single document and lays out new proposals
for institutional reform. The draft constitutional treaty was produced by the 105-member
Convention on the Future of Europe, which had been charged with overhauling the EU’s
institutions and decision-making processes to enable an enlarged EU to function
effectively. The Convention also sought to boost the EU’s visibility on the world stage
and to enhance the Union’s democratic legitimacy.
In October 2003, the EU convened an Intergovernmental Conference (IGC) to debate
the proposals in the draft “constitution” and to codify any alterations of the EU’s
structures and functions in a new treaty. EU leaders had originally hoped to finalize the
new constitutional treaty at their December 2003 summit in Brussels but were unable to
do so because of a dispute over simplifying the EU’s current, complex system of
Qualified Majority Voting (QMV); Spain and Poland feared that the proposed double
majority system would decrease their influence because it would give members with
bigger populations an advantage.
Congressional Research Service ˜ The Library of Congress

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Current Status. After a number of compromises, EU leaders succeeded in
finalizing a new “constitution” of over 300 pages in June 2004; they officially signed it
in October 2004. Major innovations and alterations to the EU’s governing institutions
include abolishing the EU’s rotating presidency in favor of a single individual with longer
tenure; creating a new EU foreign minister position that will combine the roles of the
High Representative for the Common Foreign and Security Policy and the External
Relations Commissioner; increasing the European Parliament’s powers by extending its
decision-making rights to additional policy areas; and decreasing the size of the
Commission in 2014. As for decision-making, EU leaders agreed to revamp QMV;
beginning in 2009, QMV decisions will require 55% of member states (compromising at
least 15 of them) representing at least 65% of the EU’s population. Spain and Poland
insisted that a blocking minority must consist of at least four countries to prevent France,
Germany, and the U.K. from blocking measures without input from other member states.
In the defense field, EU leaders approved a “mutual assistance clause” that has been
likened to NATO’s Article 5 defense guarantee; “structured cooperation” to permit a
smaller group of members to cooperate more closely on military issues; and a European
Armaments, Research, and Military Capabilities Agency to promote procurement
harmonization and greater interoperability. The U.K. and other states, such as the
Netherlands and Poland, had initially strongly opposed the French-German-backed
proposals for the “mutual assistance clause” and “structured cooperation.” They had
worried that both could weaken NATO and the transatlantic link. The U.K. reportedly
acquiesced on both of these provisions, however, after securing some revisions. The
“mutual assistance clause” now includes stronger language reiterating that NATO remains
the foundation of collective defense for those EU members that are also NATO allies.
“Structured cooperation” activities have reportedly been refocused mostly on efforts to
boost military capabilities rather than on conducting operations.
Next Steps. The new EU treaty must now be ratified by all member states. This
process will likely take a year or more to complete; thus, the treaty would probably not
take effect until 2006 at the earliest. Some members, including the U.K., France,
Denmark, Ireland, and Poland will hold public referenda on the treaty’s ratification. Voter
rejection would cause further delays because parts of the treaty would probably have to
be renegotiated. The difficulties in concluding the new treaty and potential ratification
problems have sparked renewed discussion of a “two-speed” EU, in which a vanguard of
member states would drive further integration.1
EU Enlargement
With the end of the Cold War, the European Union has sought to extend the political
and economic benefits of membership to central and eastern Europe. Ten states —
Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland,
Slovakia, and Slovenia — joined the EU on May 1, 2004. Publicly, most EU officials are
enthusiastic about enlargement. They view it as solidifying a Europe “whole and free,”
1 Judy Dempsey, “Support for Two-Speed Europe Gathers Momentum,” Financial Times, Dec.
15, 2003. For more information on the EU’s constitutional treaty, see CRS Report RS21618, The
European Union’s “Constitution.”

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claim it will further open markets in the east, and hope that ongoing growth in eastern
Europe will help jumpstart economic growth in the west. Others note that the enlarged
EU still faces several challenges as it seeks to integrate the 10 new members, whose
combined economic weight remains relatively small. Many new members need to
complete reforms in areas ranging from food safety to public administration. Enlargement
will necessitate a redirection of structural funds for development projects within the EU
from older members, such as Spain and Italy, to newer and more needy countries like
Poland. It will also be several years before most new EU members are deemed ready to
join the EU’s open borders system or the EU’s single currency, the euro.
Bulgaria and Romania concluded accession negotiations in December 2004 and hope
to be able to join the EU in 2007. Also in December 2004, the EU announced it would
begin accession talks with Turkey in October 2005, provided that Turkey continues to
make progress on democratic and human rights reforms and extends its customs union to
the EU’s 10 new members, including Cyprus. Turkey’s membership talks are likely to
take at least a decade to complete; the EU asserts that the “shared objective of the
negotiations is accession” but has cautioned that it is an “open-ended process, the
outcome of which cannot be guaranteed.” All of the western Balkan states also harbor EU
aspirations in the longer term. In June 2004, the EU named Croatia as another candidate
and hopes to begin accession talks with Croatia as soon as Croatia is deemed in full
compliance with the International Criminal Tribunal for Yugoslavia. Macedonia
submitted its membership application in March 2004.2
A New European Parliament and European Commission
Elections for a new European Parliament (EP) with 732 members were held on June
10-13, 2004. The EP has seven political groups, which are based on ideology rather than
nationality or political party, plus some “non-attached” members. The center-right
European People’s Party retained its position as the largest political group in the EP.
Voter turnout, however, was very low throughout the newly enlarged EU (just over 45%),
and euro-skeptic parties made significant gains, especially in the U.K. In July 2004, the
EP elected a Spanish socialist, Josep Borrell, as EP President for the next 30 months.
A new European Commission also took office in 2004 amid considerable
controversy. After a contentious debate, member states in June 2004 named former
Portuguese Prime Minister José Manuel Durão Barroso as the successor to outgoing
Commission president Romano Prodi. The other Commissioners were nominated by the
member states; all of them, including Barroso, were subject to approval of the European
Parliament, which has the power to accept or reject a newly-proposed Commission as a
whole. In October 2004, some Members of the EP threatened to veto the new
Commission because they objected to its proposed composition. Barroso was forced to
revamp his team in order to ensure parliamentary approval. The new Commission took
office on November 22, three weeks after it was originally scheduled to have started
work; it has one Commissioner from each of the EU’s 25 member states.
2 For more information, see CRS Report RS21344, European Union Enlargement.

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Evolving EU Foreign and Defense Policies
The New EU Security Strategy. Over the past decade, the EU has sought to
forge a Common Foreign and Security Policy (CFSP) to help boost its weight in world
affairs and match its growing economic clout. As part of this process, EU foreign
ministers in May 2003 tasked the EU’s High Representative for CFSP, Javier Solana, with
developing an EU security strategy to identify common security interests and joint policy
responses. Some member states had resisted setting out a common EU strategy for years,
fearing it could constrain their national policies; but observers suggest that the internal EU
rift over Iraq gave impetus to this project as a way to help avoid similar internecine
disputes in the future. In December 2003, the EU approved the final version of its first-
ever security strategy, “A Secure Europe in a Better World.” It outlines five key global
threats confronting the EU — terrorism, weapons proliferation, regional conflicts, failed
states, and organized crime — and a range of tools, primarily diplomatic and economic,
for tackling them. In particular, it emphasizes the importance of conflict prevention and
multilateral solutions. The security strategy also calls on the EU to promote stability in
the European “neighborhood,” which includes the Balkans and the EU’s new eastern
border after enlargement, as well as the southern Mediterranean and the Middle East.
Some commentators have criticized the EU’s security strategy as being too vague
and lacking in detail. EU officials counter that it merely represents the first step in
developing a more comprehensive security strategy and that work will now begin on
specific policies for implementation. Others contend that the new security strategy is
weak because it does not clearly identify the possible use of force as an option for
confronting threats posed by terrorism or weapons of mass destruction (WMD). EU
leaders dismiss this criticism, however, pointing out that the security strategy
acknowledges that military means may be needed to deal with certain threats.3
Countering WMD. Following the war with Iraq, the EU adopted a common policy
on WMD in June 2003. The EU’s “Declaration on Non Proliferation of Weapons of Mass
Destruction” recognizes WMD proliferation as a growing international threat, and the risk
that terrorists may acquire WMD. The Declaration sets out a range of diplomatic tools
for tackling WMD proliferation, including strengthening multilateral forums such as the
International Atomic Energy Agency (IAEA), and improving export controls. However,
this WMD policy also sanctions the use of “coercive measures” as a last resort. In
December 2003, the EU approved a “Strategy Against Proliferation of Weapons of Mass
Destruction” that further elaborates on the June Declaration. These WMD documents are
separate from the EU’s overarching security strategy, but are viewed as implementing
mechanisms for the portions of the security strategy related to WMD.4
3 Borut Grgic, “A Strategy with No Muscle,” International Herald Tribune, Dec. 13, 2003. For
the text of the EU security strategy, see [http://ue.eu.int/uedocs/cmsUpload/78367.pdf].
4 For the text of the June 2003 Declaration on Non Proliferation of Weapons of Mass Destruction
see Annex II in the Thessaloniki Presidency Conclusions [http://ue.eu.int/ueDocs/cms_Data/docs/
pressData/en/ec/76279.pdf]; the June 2003 Declaration was also accompanied by a set of Basic
Principles and an Action Plan against WMD proliferation. For the text of the December 2003
Strategy Against Proliferation of Weapons of Mass Destruction, see [http://ue.eu.int/uedocs/cms
Upload/st15708.en03.pdf].

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European Security and Defense Policy (ESDP) and EU-NATO Relations.
Since 1999, the EU has sought to develop a defense identity outside of NATO to provide
a military backbone for CFSP and to give itself more options for dealing with
international crises. This project, known as ESDP, has led to the creation of a 60,000-
strong rapid reaction force, three defense decision-making bodies, and ties to NATO
intended to ensure close links between the two organizations and prevent a wasteful
duplication of NATO resources or structures. The EU insists that ESDP is not aimed at
usurping NATO’s collective defense role and most EU NATO allies, led by the U.K., say
that EU efforts to enhance military capabilities should complement those of the Alliance.
As part of ongoing efforts to further develop ESDP, the EU adopted in December
2003 a new agreement on enhancing the EU’s military planning capabilities. This
agreement represents a compromise negotiated by the U.K., France, and Germany, and
stems from the desire of France and some other countries to forge a more autonomous
European defense arm. The compromise entails:
! Establishing a British-proposed EU planning cell at NATO headquarters
(SHAPE) to help coordinate “Berlin Plus” missions, or those EU
missions conducted using NATO assets.
! Adding a new, small cell with the capacity for operational planning to the
existing EU Military Staff — which currently provides early warning and
strategic planning — to conduct possible EU missions without recourse
to NATO assets.
! Inviting NATO to station liaison officers at the EU Military Staff to help
ensure transparency and close coordination between NATO and the EU.
Some observers criticize the British for agreeing to this deal, accusing U.K. Prime
Minister Blair of bowing to French demands for a more independent ESDP to help
burnish his European credentials following the rift with Paris and Berlin over Iraq. U.K.
officials are keen to point out that the deal considerably scales back the original April
2003 proposal by France, Germany, Belgium, and Luxembourg to create a European
military headquarters, planning staff, and armaments agency. They claim that language
in the agreement reaffirms NATO as Europe’s preeminent security organization, and
stress that the EU cell will “not be a standing headquarters.” Although Washington
grudgingly approved this compromise, some U.S. officials still fear that the new EU
planning cell of 20 to 30 officers may be the first step in driving the transatlantic alliance
apart. They believe this small cell will grow over time into a larger staff, which could
duplicate NATO structures.5 The EU is working to implement its new planning cell and
is collaborating with NATO to establish the EU cell at SHAPE and to finalize the NATO
liaison arrangements.
In 2004, the EU also agreed to enhance its rapid reaction capabilities by creating 13
battle groups — of 1,500 troops each — able to deploy to trouble spots, especially in
Africa, within 15 days. The EU has set 2007 as the deadline for these battle groups to be
fully operational. They will likely be employed mostly as spearhead forces that would
seek to “prepare the ground” for larger, follow-on peacekeeping operations.
5 “Straw Defends Joint Euro Force,” BBC News, Nov. 29, 2003; Judy Dempsey, “NATO Split
over Separate Brussels Military Planning Unit,” Financial Times, Dec. 1, 2003.

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U.S.-EU Relations
Since the end of major combat operations in Iraq, many European officials have
sought to mend fences with the United States. EU leaders have continually stressed the
fundamental importance of close U.S.-European ties and sought to portray the EU as a
reliable partner. U.S. officials reportedly welcomed the EU’s WMD doctrine, asserting
that it marked a “new realism” in the EU.6 At the June 2004 U.S.-EU summit in Ireland,
both sides sought to portray the transatlantic dispute over Iraq as being firmly behind them
and stressed the value of the U.S.-EU partnership.
The Bush Administration says that it will make improving transatlantic relations —
in both the EU and NATO — a priority in its second term. Europeans have welcomed
these efforts, and responded positively to the recent European trips in February 2005 by
President Bush and Secretary of State Rice. Many believe they have gone a long way
toward improving the atmospherics of the relationship, but transatlantic tensions have not
disappeared and resolving differences will require a sustained political commitment from
both sides. The next regular U.S.-EU summit will be held in May or June 2005.
Over the next several months, EU officials will likely continue to engage with the
United States on the greater Middle East and various “homeland security” issues, such as
U.S. visa waivers for citizens of new EU member states and U.S. requirements for air
marshals on transatlantic flights. The EU’s takeover of the NATO-led peacekeeping force
in Bosnia in December 2004 will be closely watched as a significant test for the NATO-
EU relationship. The potential lifting of the EU’s arms embargo on China, which
Washington strongly opposes, also figures prominently on the U.S.-EU agenda. In
addition, several trade disputes persist. These include aircraft subsidies, beef hormones,
genetically-modified foods, U.S. anti-dumping practices, and exemptions in U.S. export
tax legislation that leave tax breaks in place for contracts already signed on certain heavy
goods.
As the EU continues to evolve, some U.S. analysts worry that a larger, potentially
more confident EU may seek to rival the United States and could weaken the transatlantic
link. They also contend that a more unified EU would likely lessen Washington’s
leverage on individual members and could complicate U.S. efforts to rally support for its
initiatives in institutions such as the United Nations or NATO. Others suggest that an EU
able to “speak with one voice” — especially on foreign policy and defense matters —
would be a more credible, capable partner for the United States in managing global
challenges and could shoulder a greater degree of the security burden, both within and
outside of Europe. During President Bush’s February 2005 visit to the EU’s institutions
in Brussels, he asserted that “the United States wants the European project to succeed”
and that a strong Europe is in U.S. interests.7
6 Judy Dempsey, “U.S. Arms Talks Test Realism in EU Relations,” Financial Times, June 23,
2003.
7 See the transcript of the press conference following the meeting of EU heads of state and
government and President Bush, February 22, 2005, available on the EU’s website
[http://europa.eu.int/comm/press_room/presspacks/us20050222/transcript.pdf].

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