"Political Aspects of European Monetary Integration After WW II"

Ungerer, Horst. (1995) "Political Aspects of European Monetary Integration After WW II". In: UNSPECIFIED, Charleston, South Carolina. (Unpublished)

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Abstract

It is nearly impossible to fully understand the developments and problems of European economic and monetary integration without examining its historical and political background. European monetary integration has at times been propelled, at times been hindered by political motives and developments. Political motivations were already of great importance for the first stage of European economic and monetary integration in the framework of the OEEC and the European Payments Union in the forties and fifties. Even more for the creation of the European Communities (ECSC, EURATOM, EEC) in the fifties. However, considerations of national sovereignty and diverse if not conflicting concepts of economic and monetary policy priorities resulted in the virtual exclusion of economic and monetary policies from any serious attempts of coordination and harmonization. The completion of the EEC customs union and the monetary crises in the late sixties led to a major effort in economic and monetary policy integration culminating in the Werner Plan of 1970. The only result of these efforts was the "snake" which, while in the end shrinking to not much more than a DM zone, provided some framework for monetary cooperation. and The economic difficulties of the seventies on a European and global scale but also the desire to boost the political momentum behind European integration led to the EMS. Political considerations played an important role not only in reviving the process toward Economic and Monetary Union which led to the Delors Report but also in the specific design of the provisions of the Maastricht Treaty and in the premature notion of the EMS as a de facto monetary union. Contrary to many expectations, the EMS crises in 1992 and 1993 did not lead to an abandonment of the objectives of the Maastricht Treaty but resulted in efforts - for political as well as economic reasons - to salvage the EMS and to continue with efforts aimed at economic convergence for the core of the EMS countries. Strong adherence to national sovereignty, insufficient economic convergence, and difficulties in agreeing on meaningful elements of political union undermined until now attempts to create EMU. The substitution of national currencies - powerful symbols of national sovereignty and achievements - by an untested European currency requires progress in the mentioned areas.

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