GLOBAL FINANCE

currency, the euro, offers opportunities for economies of scale within
the EU, leveling prices and driving them downwards. Deregulation has
radically reduced the price of telephone calls, while state-owned firms,
such as German and Italian railways, are preparing for privatization.
Inefficient companies are unlikely to survive for long.

THE EUROPEAN UNION: ENLARGEMENT

In the post-war ruins of continental Europe, industrialized coun-
tries were faced with the problem of how to rebuild their ravaged
economies. In 1952, seven years after the end of WWII, France, West
Germany, Italy, Belgium, Holland, and Luxembourg formed the Euro-
pean Coal and Steel Community (ECSC) to promote free trade between
its members in what were then vital resources. It was hugely successful,
and in 1958, following the 1957 Treaty of Rome, a far more ambitious
project, the European Economic Community (EEC), now known as the
European Union (EU), was formed with the intention of abolishing all
barriers to the movement of goods, capital, and people between its
member countries. This ``customs union'' is to be followed eventually
by ``economic union,'' entailing a complete harmonization of member
states' economic policies.

In 1973, the six member group expanded to nine with the admission

of Denmark, the UK, and Eire. Greece, Spain, and Portugal joined
during the 1980s and Austria, Finland, and Sweden joined in 1995. The
Maastricht Treaty, signed in 1992, is regarded as a major step towards
closer political and economic union between EU members. Achieving
further integration has not been an easy matter because member states
are very diverse in terms of population size, unemployment levels,
living standards, industrial structures, and so on. For instance, while
the UK has the second largest population, it has the lowest proportion
of agricultural workers, the third largest GDP but only the tenth largest
GDP per capita and the slowest growth rate since 1960.

Following the collapse of the Soviet Bloc in 1989, the EU promised

to welcome Eastern Europe into the union as a final end to the Cold
War. Progress has been slow, however, because of practical problems of
integration. The EU's motives for enlargement are not naЁive if the East
had been abandoned to chaos, ``the very idea of European integration