It Is Broken. Can It Be Fixed? A Look at the European Union's ...

Paper Presented at the 30 th Annual European Studies Conference
At the University of Nebraska at Omaha
October 6-8, 2005
Introduction
In 1992, the European Union (EU), formerly the European Community, adopted the
Treaty on European Union (TEU), more commonly known as the Maastricht Treaty, in honor of
the Dutch city where it was adopted. Perhaps the most significant aspect of the TEU was the
adoption of the three-stage process for completion of the European Monetary Union (EMU). In
actuality, Stage I was already in existence, as it called for the free movement of capital within the
EU and for closer monetary and economic cooperation between the EU member states and their
central banks. Both of these had occurred with the completion of the Single Market at the
beginning of 1992. In addition, Stage I adopted a time-line for the implementation of Stages II
and III to guide the member states toward completion of EMU. Significantly, the TEU spelled
out in Article 121, the requirements necessary for member states to be eligible to enter Stage III.
These requirements became known as the convergence criteria:
• Price stability: an average inflation rate not exceeding by more than 1.5 percent
that of the three best-performing member states.
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