Suchergebnisse

Early in 1978 the Federal German Chancellor, Helmut Schmidt, decided to propose the creation in Europe of a zone of monetary stability. He was offended by the neglect of the United States dollar by the administration of President Carter and by the effect on German competitiveness. He resented the pressure brought to bear on the German Government by countries such as the USA and the UK. They, unable to manage their own economies successfully, were seeking relief from their problems in the expansion of the German economy. This, he considered, would be inflationary. Germany's enormous reserves and its current account surplus were evidence of successful economic management. The USA and the UK should try to emulate Germany, not attempt to persuade it to become a 'locomotive' and thereby follow their primrose path. The zone of monetary stability in Europe was to be his answer to American neglect and American pressure. How exactly it would fulfil the role of an answer was never explained. But politics has its own rationale not always fit for frank exposition. The zone would be created by the linking of European exchange rates in a fixed but adjustable relationship. If, as expected, the yoking of weaker currencies acted as lead in the Deutschmark's balloon and thereby safeguarded German competitiveness, that would be a bonus, for the Chancellor if not for the Bundesbank. The now defunct Bretton Woods system had had the same objective of monetary stability and, indeed, had succeeded in it for many years. One of the surviving Bretton Woods institutions was the International Monetary Fund (IMF). In the same way the European zone of monetary stability would have its Fund, a European Monetary Fund (EMF), equipped with reserves subscribed by member states. Its activities would no doubt resemble those of the IMF, strengthening the resolve of governments in embracing the paths of economic prudence, thereby helping to calm markets when they turned against one currency or another. No doubt it would also, like the IMF, give governments advice which would not always be welcome.

These days, the institutions of the European Community, and especially the Commission, are criticised for being, if anything, too effective and for submerging the sovereignty of member states in the interests of a concept of European union not universally shared. In the late 1970s the perceived problem was very different. The economic crisis following the breakdown of Bretton Woods and the oil price hike had caused a resurgence of nationalism within the Community and the reemergence of barriers to trade. '[S]ince about 1973, trade integration among the original six members has largely stagnated, as new market barriers outweighed new liberalising action, and economic growth was cut in half.'2 The one recent achievement, the European Monetary System (EMS), had been largely created outside the machinery of the Treaty of Rome. There was resentment within the Community at its failure to protect member states against the onset of crisis or to help them to find a way out of it. There was resentment at the way in which, at a time of crisis, France, Germany and the UK tended to ignore the Community, and their obligations under the Treaty of Rome, and to enter into consultations with the USA and Japan about matters which affected all member states.

Discusses the difficulties that lie in the way of moves towards
monetary union in the European Community: convergence criteria,
attitudes towards various forms of possible political union, German
unification, the location and independence of an independent European
Central Bank, "cohesion" provisions in the Maastricht
Treaty, and the Delors Budget.