Theeconomic sanctions imposed by the victors of WWI differedsignificantly from the sanctions imposed by the allies during WWII.After the WWI, the central powers were slapped with heavy sanctions,which included stripping substantial territories from the losers.This led to the collapse of the Ottoman, Austria-Hungarian, Germanyas well as the Russian Empire. Germany was also forced to take fullresponsibility for the war and therefore, the country would be liablefor material damage resulting from the war.
TheWWI losers faced military sanctions, including limitations onammunition and the number of active men in service. For example, thesanctions only allowed German y to have 100,000 personnel in themilitary. Moreover, the country was only allowed to own navy vesselsweighing not more than 100,000 tons. The defeated nations were alsorequired to either pay war reparations in kind or cash. The sanctionsrestricted the free movement of capital across European borders aswell as hampered normal trade in goods and services. Moreover, peoplecould no longer move freely across borders.
TheWWI sanctions targeted nations within and outside Europe. The US andBritain imposed several oil embargoes of Spain to force the countryto remain neutral during the war. The sanctions were meant todiscourage German spies from operation in Spain. During the war, theUS imposed oil embargoes on Japan and disrupted the supply ofAmerican metals to Japan. It also embossed aviation and gasolineembargoes to cripple the Japanese navy. However, after the war, thefocus of Allied countries was on the reconstruction of warringeconomies rather than punishing the offenders during the war. TheUSSR responded to the WWI by rallying its large troops to fight theGermans. The Soviets rallied around Nicholas II as an indication ofpatriotism. During WWII, the majority of the Soviet participation wasin the Eastern front. Churchill and Roosevelt planned a two-front warto bring down the stubborn Germans.
Theeconomies of Italy, France, Germany and Britain have very differentpolitical systems. The British embrace a parliamentary system ofgovernment. The Prime Minister is in charge of the government, whilethe queen, although ceremonial, still exercises some politicalinfluences. France has a structure similar to an elective monarchy.The president holds all powers and the French people do not elect aparliament. In Germany, the president heads the state, although it issimply a ceremonial position. The Chancellor heads the government, anequivalent position to that of the British prime minister. In Italy,the president who is the head of the state heads the politicalsystem. There are two chambers of the Italian parliament, which areresponsible for electing the president. The president has the powerto appoint the prime minister, who exercises executive powers.
Europeanintegration began with the establishment of the Organization forEuropean Economic Cooperation in 1948 under the Marshall plan. Thisled to the creation of the European Coal and Steel Community (ECSC)in 1952 to facilitate the free movement of iron ore and coal. In1955, Belgium launched the Messina conference to take intoconsideration France’s interest in economic integration. The treatyof Rome was later approved in 1958 as a response to the Suez Crisis.In 1977, the British proposed the creation of a larger free tradearea in Europe with the EEC as a participant. The UK, Norway, Denmarkand Sweden formed the European Free Trade Association (EFTA) andlater joined the European community in 1973. In 1986, a singleEuropean act was signed leading to the creation of a single Europeanmarket.
TheEuropean Union faces the following challenges:
Europe’s large economies such as France and Italy are struggling, thus slowing down regional activities.
There is a high rate of unemployment in the region, thus slowing down productivity and economic development.
The UK recently voted itself out of the European Union. The UK was among the most influential members of the Union thus bringing to doubt the strength of the Union.
Europe faces an aging population as well as aging infrastructures such as roads and railways.
Immigration continues to be a destabilizing factor in Europe, especially considering the recent wave of Syrian refugees.
There is widespread economic disparities in Europe, thus resulting in social tensions because of perceptions of unequal treatment.
Thegreat depression had significant effects on the economic, social andpolitical systems in Europe. Industrial production in Europeancountries such as Britain and Germany decline dramatically, leadingto reduced trading activities. The gross domestic product (GDP) ofmost European countries fell by significant proportions. By 1928,most of the European economies including Germany had slipped into adowntown. Politically, the depression led to the initiation ofpolitical changes in Europe. Europeans were desperate forrevolutionary leaders to save them from the effect of the depression.There was a rapid rise of the right-wing undemocratic forces inEurope. In Germany, the right wing extremists took advantage of thevolatile economic conditions in the country. This led to the rise ofautocratic leaders such as Hitler.
Socially,Europeans suffered from widespread unemployment. Poverty levels wereat a very high level, therefore creating conflicts between millionsof workers who could not get any gainful employment. Many peoplelost their homes since they were unable to service their house loans.There was a great feeling of social inequality in many countries. Thetensions arising from the great depression spread beyond communitiesand involve countries in Europe. This later gave birth to the WWII.
Severalinternal and external factors have influenced economic development inEurope over the last three decades. The growth of international tradefollowing the integration of Europe has played a central role in theregion’s development. The continent has enjoyed comparative costadvantages from specializations in production. This has enhanced thetotal factor productivity of the region. The growth of trade hasenabled European firms to utilize the benefits of economies of scale,thus leading to high profitability.
Advancementsin technology across Europe have spearheaded rapid economicdevelopment. Modern technologies in manufacturing and agriculturehave led to increased profitability and efficiencies in terms of costreductions. For example, the widespread application of computers inorganizations has reduced the cost of labor in Europe by aiding inareas such as computer-aided design. Further advancements incommunication technology such as the internet has increasedproductivity in the region.
Migrationhas also had a significant effect on development in Europe. First,the increased rate of European immigration in countries such as theNetherlands, the UK, France and Germany has reduced the cost of laborin Europe. Over the last three decades, immigrations in Europe havecontributed to gains in human capital as well as knowledgespillovers. Skilled workers from Asia and Africa have influenced therate of economic development in Europe through spearheadingtechnological innovations.
Internally,Europe has experienced the development of strong institutions underthe European Union. These institutions have influenced economicdevelopment through the facilitation of trade and specializedactivities in industries such as Finance. Institutions such as theEuropean Commercial Bank have been at the center of policyformulation with the aim of maintaining the stability of the region.
Severalweaknesses stand between the unification of the north and the south.First, there are huge cultural differences between the north and thesouth. Some of the differences are influenced by different weatherpatterns, while some are traditional differences. This poses a greatchallenge to the integration process.
Thereare significant differences in the economic indicators between thenorth and the south. These differences bring about stereotypes andperceptions that may impede the integration of the region. Moreover,economic disparities between the regions result to suspicionespecially among the less affluent southern states.
Anotherweakness has been the subject of a European common currency. Manycountries in southern Europe have been reluctant to commit themselvesto the common currency and other economic integration resolutions.The south have adopted a constant opposition of the Northern agenda.The parties in the two regions have often had major disagreements oncentral integration issues.