Sunday, April 6, 2014

2014 Germany Trip - The confusion behind EU, Schengen and Euro

Location: Germany

Itinerary and full experience of my visit to Germany can be accessed through the link below:


When I was researching for my Europe travel, I was confounded by the terms of European Union, Schengen areas and Eurozone. It has always been my thought that these are the same areas, whereas reading from the Internet, I realized how wrong I am. And I realize that most of Malaysians and Singaporeans, especially those who had never been to Europe, were as ignorant as I was.

Maybe it would be better to start by introducing Europe as a whole.


Europe

Most countries in Europe are familiar to most, such as England, Germany and France (those are countries I simply chose offhand). And then there are some that are not so familiar to most, like Malta, Estonia and Moldova. There are even some that most do not know they fall under the European group, which would include Kazakhstan, Georgia and Cyprus.

By reading the last few nations, one would have questioned their own understanding of the term "Europe", just as I had in the past. Geographers conventionally mark European continent to be bounded by large water bodies to the north (Arctic Ocean), west (Atlantic Ocean) and south (Mediterranean sea), by the Urals, Ural River and Caspian Sea to the far east, and Caucasus Mountains and Black Sea to the south-east.

Satellite image of the Caucasus Mountains, straddling across from Caspian Sea in the east to the Black Sea in the west (image taken from Wikipedia).

Certain countries are included in the description more by sociocultural relations than by geographical reasons. Cyprus is closer to Asia Minor than Europe, but they are culturally and politically close to Europe such that they are considered part of it. Malta is closer to North Africa, and has been considered part of it for centuries. Iceland is closer to Greenland, thus by association to North America. It would be interesting to note that part of Russia, including the Moscow region, is part of Europe, making the nation one which crossed into both continents, just as Kazakhstan, Turkey, Georgia and Azerbaijan are.

European Union

And with the understanding that the boundaries of Europe as much a political definition as it is a geographical one, it makes sense that the relationship between European nations evolved into the way it is today. The evolution began after World War II, when extreme nationalism which spawned the likes of Nazi and Fascism caused widespread damage to the continent in the form of the war. Leaders of major victorious nations formed unions such as European Steel and Coal Community in 1952, trying to pool resources together and avoid the future possibility of war.

The evolution of European Union after World War II, marked by milestones of different treaties and the involvement of the member states (image taken from Wikipedia).

The signing of the Treaty of Rome in 1957 further strengthened this community with the formation of European Economic Community (EEC) for customs union and European Atomic Energy Community (Euratom) for cooperation in nuclear energy development. These three communities were later managed under a single institution through the 1967 Merger Treaty, forming then as European Communities (EC). This became the predecessor to the European Union (EU).

Further evolution and expansion of membership saw the joining of more countries within the continent, and the fall of Soviet Union and the Eastern bloc aided in this. The 1993 Maastricht Treaty became the treaty which formally formed the EU from its predecessor. It has to date 28 members, with Croatia joining as its latest member on 1 July 2013.

The gist of it is that EU is a political and economic union, with supranational institutions and intergovernmental negotiated decisions negotiated by governments. All EU members so far lies within the conventional boundaries of Europe, but the same is not true for the way around. It would be interesting to note that Switzerland, though firmly lying within the European continent and surrounded by EU nations, is itself not one of the member. So is the case for Norway, Liechtenstein and Iceland.

To the simple traveller, the definition of European Union and the involvement of your visiting country in it has very little impact, and this knowledge is at most to satisfy the general curiosity. The other two terms, Schengen area and Eurozone, would have a much higher impact.

Schengen Area

For collectors of passport stamps, there is nothing cooler than seeing the little book get filled up with colourful stamps of different geometry when you are entering and leaving a country. The Schengen Agreement turned out to be a woe to them, but a boon to those international business travellers or travellers who would not want to waste time passing customs check when crossing border.

The Schengen Area is an area where member countries involved within the Schengen Agreement have abolished passport and any other form of border control between their common borders, working as a single country for international travel purposes. One could enter Germany and leave at Spain with a paired set of passport stamps and with no border checks at all for the journey in between as long as the traveller pass through Schengen area.

Relationship map between different nations in Europe.

Although the agreement was signed back in 1985, the elimination of border for travelling purposes only happen in 1995. It was independent from the EU thus not all EU members are part of the Schengen Agreement. It currently consists of 26 states, 4 of which are not part of EU, namely Switzerland, Liechtenstein, Norway and Iceland. 22 of the 28 EU members are part of it, with United Kingdom and Ireland having no intention to join while Bulgaria, Romania, Croatia and Cyprus obliged to eventually join the area soon.

Microstates such as Vatican City, San Marino and Monaco are considered de facto within the area as they have no border control with the immediate surrounding Schengen countries (Vatican City and San Marino to Italy, Monaco to France) although they have never signed the agreement itself.

Just for the curious, the name of the area came from a place in Luxembourg, where the agreement was signed.

Eurozone

And the list got smaller in Eurozone, which controls the Euro currency which you are holding for purchases in the involved member states. While Schengen area involves border control, Eurozone is an area where member states are part of an economic and monetary union, with the Euro (€) as their common currency and sole legal tender.


Euro banknotes - not all EU and Schengen areas use Euro as their currency, but it is safe to say that most famous travel nations adopted this as their sole currency (image taken from Wikipedia).

There are 18 member states in Eurozone which are within EU as well and 4 microstates (Vatican, San Marino, Monaco, Andorra). Countries outside of the EU can adopt the Euro as their currency as well, like Kosovo and Montenegro.

If one goes through the list of European countries and their involvement in the above three agreements, some interesting facts began to emerge, which may be of importance to the traveller planning cross-country trips across Europe. Switzerland for example is surrounded by EU member states and Euro users, yet itself not part of it although it is a Schengen area. This means travelling from Germany to Switzerland by plane will not need to stop for border check, but you will need to exchange into the local currency of Swiss Franc.

Nations in Europe using Euro since its inception in 1999 (dark blue) and those which adopted it at a later date (light blue). The ones in dark brown are still using other currencies (image taken from Wikipedia).

An interesting compilation which may be useful to travellers is done below. European countries which are member of EU,  but not a Schengen Area and not in Eurozone (need border check and does not use Euro) include:

  • Bulgaria (currency: Bulgarian lev)
  • Croatia (currency: Croatian kuna)
  • Romania (currency: Romanian leu)
  • United Kingdom (currency: British Pound)

European countries which are within Schengen Area but not in Eurozone (no need border check but does not use Euro) include:

  • Czech Republic (EU) (currency: Czech koruna)
  • Denmark (EU) (currency: Danish krone)
  • Hungary (EU) (currency: Hungarian forint)
  • Lithuania (EU) (currency: Lithuanian litas)
  • Poland (EU) (currency: Polish zloty)
  • Sweden (EU) (currency: Swedish krona)
  • Liechtenstein (non-EU) (currency: Swiss franc)
  • Norway (non-EU) (currency: Norwegian krone)
  • Switzerland (non-EU) (currency: Swiss franc)
  • Iceland (non-EU) (currency: Icelandic krona)

Armed with the above sharing, readers could now travel with ease between various European nations without looking like a fool while trying to figure out whether a border check is required or whether the country is using Euro.

An interactive Euler diagram showing the relationship between various European nations (image taken from Wikipedia).
European Free Trade Association Agreement with EU to mint euros Schengen Area European Economic Area Central European Free Trade Agreement Council of Europe European Union Eurozone European Union Customs Union Customs Union of Belarus, Kazakhstan, and Russia Switzerland Iceland Liechtenstein Norway Kosovo (UNMIK) Albania Bosnia and Herzegovina Macedonia Montenegro Serbia Moldova GUAM Ukraine Azerbaijan Georgia Kazakhstan Belarus Russia Armenia Vatican City San Marino Monaco Andorra Turkey Croatia Bulgaria United Kingdom Romania Czech Republic Denmark Hungary Lithuania Poland Sweden Cyprus Ireland Austria Belgium Estonia Finland France Germany Greece Italy Luxembourg Latvia Malta Netherlands Portugal Slovakia Slovenia Spain








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