Pierre Werner was an economist and a lawyer, a politician and a diplomat, a leading player in the building of a united Europe and, in particular, monetary integration. He was actively involved in building the Luxembourg we see today, a member of academic circles and at the forefront of economic, European and trans-Atlantic networks and a militant Catholic intellectual — in short, Pierre Werner was a man of many parts whose life spanned the 20th century.
When he made his debut in Luxembourg politics in the early 1950’s, Werner was associated from the very outset with the major issues relating to the building of Europe. The wrangling over the siting of the headquarters and the enshrinement of Luxembourg as one of the permanent capitals of the European institutions, the Luxembourg Compromise, the Werner Plan and the Werner Report. These contributions were very important in the development of the European Integration project. Being a reserved and modest man by nature, he always played down his own efforts and his personal involvement in events.
Although Werner was born in a small town in Northern France, his parents were from Luxembourg. From the outset, his upbringing was very “European” since his father spoke French and his mother German. He decided on a career in law and started his studies at the Cours Supérieurs de Luxembourg. He completed his law degree in Paris and went on to obtain a PhD in Law in Luxembourg.
Luxembourg was ruled at various times by many other European countries, among them France, Spain, Austria and even the Netherlands. Sometimes the country was sold or given away: its handy size, only 84km by 52km, made it easy to package as a gift to seal an alliance. Germany ignored Luxembourg’s pleas of neutrality and occupied it during both world wars.
Then economics took his fancy and at the outbreak of World War 2 he was working for a large bank in the Luxembourg capital, also called Luxembourg. With memories of the First World War still fresh in their minds, many people fled to safer places. Grand Duchess Charlotte, the head of the royal family, moved to Canada. Werner, just recently married, remained in the country.
The German occupation turned out to be worse than it had been in World War One. Many Luxembourgers were conscripted into the German army and Jews were sent to extermination camps. In 1944, Luxembourg was the setting for one of the biggest battles of the Second World War when the allied forces were nearly surrounded, suffered huge casualties, and came close to defeat in what became known as the Battle of the Bulge. The experience of war, the ravaged land, the humiliation of the people, the revenge that followed victory when German collaborators were executed; all of these things shaped Werner’s view of how Europe had to be changed for the betterment of its people.
When the war ended, Werner was given the task of setting up the Luxembourg banking control commission. Then, in 1949, he was appointed as a government adviser and soon after being elected into his country’s parliament in 1953, he became the Finance Minister of Luxembourg. Finally, from 1959 to 1974 and from 1979 to 1984, he was appointed as the President of the State of Luxembourg.
During the 1960’s and 1970’s, Werner was in close contact with Jean Monnet who, together with other European politicians, played an important part in the development of the European Community (Common Market), the forerunner of the European Union. It was during this time that Werner developed the “five-point action plan” (The Werner Plan) for European monetary integration, based on the creation of a European unit of account, consultation, fixed exchange rates between European currencies, and solidarity — internal and external.
In his memoirs, Werner wrote, “To awaken Europeans to the weakness and division of Europe became an intellectual obligation for me.”
In those idealistic days, no one seemed to question that the central aim of European unity was to prevent further war. Economic gain, though useful, was a secondary consideration. Later, Werner noted sadly, economic gain seemed to have become more important for the Union’s members and applicants. Luxembourg itself had become immensely rich, partly as a result of being a founder member of the EU.
While Werner is often considered to be the father of the euro, the euro’s real paternity is probably shared among the pioneers of what eventually became the European Union. A common currency for Europe was already hinted at in the Treaty signed in Rome in 1957.
In 1968, at a meeting of the Ministers of Finance of the six EC member states in Rotterdam, Werner again tried to promote interest in his “five-point action plan”. Here is a very good, detailed chronology of the basis of Werner’s economic and monetary thinking.
In December 1969, at the conclusion of a an EC summit meeting in The Hague, the EC Council was given the task of drawing up a detailed plan in respect of how an economic and monetary union could be accomplished. During the period January to March 1970, the Belgian, Luxembourg and FRG representatives on the EC Council presented their respective proposals on ways of making progress towards economic and monetary union by stages.
Then on 6 March 1970, Werner was requested to convene a group of experts who were given the task to investigate how such an economic and monetary union could be brought about and to come up with a recommendation for implementation. Werner would act as the chairman of this group (The Group).
The Group eventually published their final report on 8 October 1970. The report was titled “Report to the Council and the Commission on the realisation by stages of ECONOMIC AND MONETARY UNION in the Community” (The Werner Report). The report proposed to achieve economic and monetary union by 1980.
Werner became the most public advocate of the recommendations set out in the Report; more than that, a zealot. His European colleagues, who tended to be, in public at least, far less of a zealot than he was, were probably content that a plan that eventually led to the creation of the Euro should be called the Werner Report. Werner would get the credit and, if things went wrong, he could also get the blame.
Neither credit nor blame appeared to matter to Werner. What mattered was ending Europe’s terrible tribal wars. Economic problems in Germany had led to the Second World War, he said. Now economics would be the peacekeeper. In a speech in 1960, Werner had proposed a common currency for Europe to be called the “euror”, a name that was soon dropped, perhaps because it sounded too much like “error”.
It was noted in the Report that “the transfer of powers to the Community level from the national centres of decision raises a certain number of political problems. In this respect it is fitting to quote in particular the relationship between the centre of decision for economic policy and the Community system of central banks as well as that between the Community organs and the national authorities.”
The simple logic of Werner’s proposals presented the European political leaders of that time with a bit of a problem. Although there was a gradual acceptance of the idea of a common currency, the EC countries were not yet ready to be part of a grand federal state. And certainly not France who was only prepared to accept monetary co-operation at an intergovernmental level.
By 1973, in the midst of European and international monetary upheavals and the effects of the global recession of 1973, the Werner Report was quietly shelved, since the recommendations that it contained turned out to be too advanced for the level of economic and monetary integration prevailing at the time. Except that the substance of the Werner Report was not forgotten.
Many years later, in a recorded interview on the way the idea of a single currency evolved, Jacques Delors said: “It could be said that the overall philosophy behind what we proposed and even the structure of the Delors Report were very heavily influenced by the Werner Report….The Delors Committee’s report is a direct follow on from the Werner Committee’s report”.
In his memoirs, Delors wrote: “[In the report by the Delors Committee]…..we agreed on the three stages taken over from the Werner Report: stage one, devoted to enhancing co-ordination, from 1 July 1990; stage two, a transition stage on the way to the final stage, preparing the ground for what were ultimately to be the institutions for Economic and Monetary Union; and the last stage, at which the exchange rates between the currencies themselves and between them and the single currency would be laid down irrevocably.”
Werner was reported to have been “mildly surprised” that the Europeans had so meekly abandoned their proud currencies, the franc, mark, lira and so on, and accepted the euro. Perhaps, he suggested, they were weary of arguing. He said that he felt a bit weary himself. He had first suggested a common currency for Europe back in 1960, but had to wait for 39 years before it was launched as real notes and coins in 1999.
But while Europeans no longer fought each other, many other nations on other continents still did. Werner said there was a road to peace: gradual economic union leading to a single currency for the world. There may be quite a long wait before we see this happen.