Challenge of Enlargement
The Molotov-Ribbentrop Treaty, a treaty of nonaggression between Germany and the Soviet Union, signed in Moscow in August 23, 1939 included the Soviet annexation of Latvia, Lithuania and Estonia. On the 50th anniversary in August 23, 1989, the Baltic States joined hands in a human chain stretching 600 kilometers from the foot of the limestone hills of Toompea in Tallinn, Estonia to the Gediminas Tower in Vilnius, Lithuania, Crossing the river Riga on its way to the banks of the river Daugava in Latvia. It was called the Baltic Way and it represented the yearning of the people for independence and a better life. On September 6, 1991 the Soviet Union fulfilled that wish of the Baltic people by recognizing their Independence. (Eglitis, 2008)
Across the Atlantic, in the present day, the collapse of a global housing market, which peaked in the U.S. in 2006, caused the values of securities tied to real estate pricing to plummet, collapsing financial institutions globally (PRI's This American Life, 2009). Bank bail outs by national governments became a norm. Questions regarding bank solvency, declines in credit availability, and damaged investor confidence also had an impact on global stock markets. It is now considered by many economists to be the worst financial crisis since the Great Depression of the 1930s. (Reuters, 2009)
In Europe, Latvia is the only Baltic nation to receive bailout money in order to avoid bankruptcy. When the deal totaling 7.5 billion euro’s with the EU, IMF and other lenders was signed. Its economy experienced the deepest economic contraction since independence 20 years ago, as they were especially vulnerable to the global financial crises.
This global recession has shown major flaws within the European Union and differences between the Eastern and Western Europe. These differences exist in three areas, the social, political and economic. Socially, Eastern Europe can be characterized by high degrees of lawlessness, poverty and social exclusion that make it difficult for these nations to maintain a level on par with that of their European counterparts. Economically, the restrictions imposed onto EU member states by the Maastricht treaty, like the relinquishment of their respective fiscal and monetary authority, the reduction of debts, lowering public spending and limiting inflation has been seen as a good thing but proven difficult to deal with. Politically, Eastern Europe has a plethora of problems from bureaucratic cronyism, the rise of
Politically, there history is plagued by the legacy of the Communism and the Soviet Union.
After of the creation of the single internal European market, it became obvious that having each nation keep their currency with all their diverse and wildly fluctuating values as a nuisance, inefficient and unsustainable for further progress and cooperation within Europe. The greatest achievement of European integration was the...