Part 1a – Economic and Monetary Union: the birth of a grand idea

By the middle of the 20th Century, and in the space of only 21 years, Greater Europe had experienced another devastating conflict that took millions of lives and shattered much of the infrastructure of many countries.

Despite some half-hearted and misguided efforts after “The Great War” or “the war to end all wars” in order to prevent another major war, the Second World War was a repeat of the First, but only worse. Man’s ability to use technology to create weapons of war to kill and destroy, knew no bounds.

It was against this backdrop, that Europe was slowly picking up the pieces as 1946 began. Perhaps more so than at any other time and on any other continent, a driving force was developing in Europe to unite the major European powers in such a way that war would never be contemplated again or even be possible.

The idea of a grand federal Europe was not a new concept. This idea had already been born shortly after the First World War. Various political figures in France and Germany had touched upon the idea of a “United States of Europe”.

During the Paris peace conference of 1919, Loucheur acted as chief economic adviser to the French prime minister Clemenceau. Drawing on the lessons of trying to integrate France’s military production during the war, he urged that the key to peace would be to integrate the economies of France and Germany, particularly those industries central to waging war, coal and steel.

In 1924, Sir Max Waechter, a German-born British industrialist, published “How To Abolish War: The United States of Europe”, in which he independently proposed that the way to European federation could lie through establishing a customs union or ‘common market’, not least because this would be the only way for Europe to continue competing economically with America and, before long, Japan. He founded a European Unity League to advance his ideas, but this made little impact.

Loucheur’s ideas made a strong impression on another Frenchman, Jean_Monnet, who went on to become an accomplished administrator in the French government.

Monnet became a government official during the First World War and,  during this time, he immediately demonstrated his abilities in governmental affairs. Then, after the war, Monnet was appointed as Deputy Secretary General of the League of Nations. During that time he became a close colleague of Arthur Salter, a British civil servant, politician and political scientist and who was the head of the economic and financial section.

Salter had similar ideas to Loucheur and Monnet and he published a number of books and papers on his theories. In an essay entitled “The United States of Europe”, he drew on the model of how Germany had been politically united in the nineteenth century, through establishing a Zollverein, a “common market” that raised its funding through a common tariff on all imported goods. In other essays, Salter proposed ideas whose primary aim was to achieve currency stabilization.

Both Monnet and Salter proposed that the “United States of Europe” would need to be governed by un-elected technocrats like themselves. They both had two controversial ideas in common: no single nation state in any type of grouping of nations should have the power of veto (they believed that this veto power had destroyed the League of Nations) and they were against consulting the wishes of the people in elections with regard to important national matters.

In 1923, Monnet left politics and became involved in business affairs and international finance. However in 1938, the French government again called upon his services and Monnet became involved in various government projects in support of the war effort.

During a meeting of the provisional French government in exile on 5 August 1943, Monnet produced a memorandum, in which he stated:

“There will be no peace in Europe if the States are reconstituted on the basis of national sovereignty, with all that that entails in terms of prestige politics and economic protectionism. If the nations of Europe once again adopt defensive positions, huge armies will once again be necessary. Under the future peace treaty, some nations will be allowed to re-arm; others will not. That was tried in 1919; we all know the result. Alliances will be sealed between European nations; we all know what they are worth. The weight of military spending will prevent or delay social reform. Fear will once more be the dominant factor in European reconstruction.

The countries of Europe are too small to guarantee their peoples the prosperity that modern conditions make possible and consequently necessary. They need larger markets. It is also important that they do not devote a substantial share of their resources to maintaining supposedly ‘key’ industries to meet the requirements of national defence, industries which are rendered obligatory by the form that States take, with their ‘national sovereignty’ and protectionist reflexes, such as we saw before 1939.

Prosperity for the States of Europe and the social developments that must go with it will only be possible if they form a federation or a ‘European entity’ that makes them into a common economic unit.”

In 1944, Monnet became the Commissioner-General of the French National Planning Board, a position he would hold until 1952 and he took charge of the industrial modernisation and development program aimed at reviving the French economy and rebuilding the country after the war. He prepared a document entitled the “Plan de Modernisation et d’Equipment”, which focused particularly on the coal and steel industry, at the time considered to be the key sector of the economy and essential for reconstruction. Monnet looked at France’s economic problems from an international perspective. He saw the Ruhr as the foundation of Germany’s power, which France would have to control if it were to become the leader of European industry. During the period 1945 to 1950, the various proposals that came from the Board became collectively known as the “Monnet Plans“.

Robert_Schuman was born in Luxembourg and after completing his law studies in various German universities, he settled in Metz in the Lorraine district. Due to conflicts and the shifting nature of politics from the beginning of the 1600’s up until 1945, this region endured many changes over that period. Schuman was a citizen of Germany until 1918 and then, when Lorraine was returned to France after the First World War, he assumed French citizenship. In this context, Schuman had first-hand experience of the political consequences of armed conflict and he had a good understanding of the nature of Franco-German disagreements in the Ruhr and Saar regions.

When the Second World War began, Schuman was a junior minister in the French government. During the war, he remained in France and was involved with the French Resistance. In 1945, Schuman resumed his involvement with national politics and from 1947 to 1948, he was the head of the French government (known as the President of the Council of Ministers and generally shortened to President of the Council; what we know today as the Prime Minister). He then held the position of Foreign Minister from 1948 to 1952.

The constant rivalry between France and West Germany over the Ruhr and Saar regions had always meant that a constant tension or threat of war existed between the two countries. Schuman anxiously searched for a solution to this seemingly never ending problem and had for that reason made a thorough study of the history of Alsace-Lorraine. He realized that the motive for war had often been the desire to possess Lorraine’s raw materials for the steel and war industry. After the Second World War, the German regions of the Saar and the Ruhr adjacent to Alsace-Lorraine, fell within the French Occupied Zone. This implied further tensions between France and West Germany.

Schuman acknowledged that this tension should be ended in order to obtain a ‘permanent’ peace and that, for this reason, the Franco-German coal and steel problem needed to be solved. He envisioned its solution in a policy of reconciliation and co-operation followed by a process of European unification. The fact that Schuman had the capability and opportunity to put his plan into effect and that he was familiar with and appreciated both the French and the German cultures were other important assets to incarnate his vision.

Konrad_Adenauer,  who became the first Chancellor of the Federal Republic of Germany, described Schuman as “a wise and good man, a statesman, a great Frenchman and a great European. I am happy that I can call him a friend.” In a letter to Schuman after a visit of Charles de Gaulle to Germany, Adenauer said that he considered Schuman to have played a crucial part in cultivating a friendship between France and Germany.

David Heilbron Price, an expert in Schuman’s lifetime, philosophy and thoughts on Europe, comments on Schuman:

“What he did not learn from the suffering of his family in wars, he knew from his own consuming interest in history, economics and his openness to people. The politics of the coal and steel industry, its commerce, its technology, its trade union problems, capitalism and communism were Schuman’s bread and butter as a deputy. Schuman brought something else to this problem [of solving the cause of Franco-German war] that eludes most modern analyses. It was his erudite learning and interest in philosophy and theology and the causes of war. Without that the European Union would not have succeeded in its goal to eliminate war in western Europe.”

As the situation in Europe slowly returned back to normal after the end of the war, there remained on-going dis­agreements among Britain, the USSR and the USA, the “Big Three”, over three main issues; war reparations, control over the industries of the Ruhr and German sovereignty. At time went by, negotiations between the three countries were getting nowhere and, to make matters worse, the spread of communism among the Central and Eastern European countries had become a real threat.

Then in early 1947, the US Secretary of State George Marshall directed a team of officials to advise on a new strategy for the political & economic support of Western Europe. As a consequence, on 5 June 1947, Marshall announced the creation of the “The Marshall Plan“. The Marshall Plan was to be a US financial assistance programme to assist the Western European countries to recover and re-establish their devastated economies.

Even before the Marshall Plan was announced, in February 1947, France made a formal request that a proper body be set up to manage the West German industries in the Ruhr region and to control the distribution of production. The motivation for the French demand was that they wanted greater control over Germany’s coal and steel production in the Ruhr in order to be able to divert part of the production to aid French industrial reconstruction.

Then in November 1947, perhaps mis-interpreting the French demands, the British and Americans established the “Bizone”. This was a quasi-German administration in the Ruhr region set up to manage the Ruhr coal and steel industry. This move prompted increased and vigorous protests from the French government.

In January 1948, the British and US authorities in Germany proposed that West Germany must move towards full self-government, based initially on the German-run Bizone economic council and with a second chamber consisting of representatives of the Länder.

This proposal was the subject of the “Six-Power Conference on Germany” held in London in February 1948. The countries represented were France, Britain, the USA and the Benelux countries. There was no consensus on the plan and no final decisions could be reached. The conference reconvened again in London in late April and the British and the Americans tried once more to persuade the French to agree to their plan to set up a provisional German government and to facilitate the re-integration of West Germany back into Western Europe. Eventually the French and the Benelux countries agreed in return for concessions on the control of the Ruhr and Saar regions.

On 7 June 1948, the London con­ference issued its final recommendations. The Western powers authorized the presidents of the German Lander, the provincial assemblies, to convene a constituent assembly in the three Western occupied zones and to draw up a constitution for a federal German state. Western military forces would remain in Germany until “the peace of Europe is secure,” and prohibitions were imposed on any future German army to guarantee that Germany could never again become an aggressor. The new West German state would slowly be eco­nomically integrated into Western Europe beginning with the establishment of a Ruhr authority under joint Allied international control.

Finally, in April 1949, the International Ruhr Authority (IRA) was officially established. Control of the Ruhr would be done by an authority composed of representatives from France, Britain, the USA, the Netherlands, Belgium, Luxembourg and West Germany. However, the German representatives would initially be chosen, and their votes exercised, by the occupying Powers concerned.

By that time, official French policy supported the principle of European unity and integration. The French believed that the best way to control a resurgent Germany was to include West Germany in a new European Community structure. Schuman and his French Ministry of Foreign Affairs were to play a big and important part towards achieving this goal.

In 1949, Schuman traveled to the USA and spoke before the United Nations General Assembly about creating a supranational European Community. Schuman had a vision for a united and prosperous Europe (Schuman’s Europe) and was convinced that a supranational structure would lay the foundations of lasting peace between the member states. In order to further this aim, Schuman also had several meetings with Adenauer, Alcide_de_Gasperi, the Prime Minister of Italy, and Dean Acheson, the US Secretary of State.

A supranational union is a type of multinational political union where negotiated power is delegated to a higher authority by governments of member states. A supranational union is different to a confederation or federation. A confederation is an union of fully self-governing states that co-operate on certain common interests and a federation is a single state with a union of partially self-governing states or regions under the central (federal) government.

In September 1949, the Federal Republic of Germany (FRG) formally came into being and its first first Chancellor was Konrad Adenauer. One of Adenauer’s main goals was to regain his country’s sovereignty, free of any international oversight and to end the occupation of West Germany. Although the Basic Law gave full legislative, executive, and judicial powers to the new FRG and its Länder, certain powers were still reserved for the occupying authorities. The Occupation Statute, drawn up in April 1949 by the foreign ministers of the Four Powers, gave the occupation authorities the right to supervise the new state’s foreign policy, trade, and civil aviation, as well as the right, under special circumstances, to assume complete control over their own occupation zones.

In conformity with the Petersberg Agreement of November 1949 with the Western Allies, the FRG subsequently became a full member of the International Ruhr Authority and was granted the right to establish consular relations with foreign countries. Furthermore, the dismantling of German industrial plants in the Ruhr area was largely stopped, and Germany was allowed to again build merchant ships. The winning of these important concessions was Adenauer’s first major success as chancellor.

Despite all of these seemingly positive changes, the French remained suspicious and fearful of the new West Germany. Firstly, they had severe doubts whether any of the agreements went far enough to give them security against a resurgence of German military power. Secondly, they were afraid that the USSR might react menacingly if the agreements were accepted. In that case, and despite US military forces remaining in West Germany and pledged not to be withdrawn without prior consultation, France felt that there was an inadequate guarantee that the USA would come to France’s aid in the event of Soviet aggression.

By the end of 1949, despite the apparent progress that was being made at the various meetings and conferences, Franco-German relations were not improving. Severe doubts remained in France over the continued and rapid re-construction of West Germany, aided by the Marshall Plan of the USA, and there remained the on-going friction between Germany and France over the Ruhr and Saar regions. Finding satisfactory and lasting solutions to the Ruhr and Saar issues were proving to be elusive. In addition, political tensions were increasing generally in Europe due to the “cold war” that was rapidly developing between the Soviet Union and the West. A further complication was the diverse perceptions of French and American political influence in Europe and what this could mean for the future. Taken as a whole, the future peaceful co-existence of the two countries was in jeopardy. The French government were acutely aware that some action needed to be taken to improve their relationship with the FRG.

Eventually things came to a head in early 1950. The USA effectively issued an ultimatum to France. Either the French must sort out the problems before 11 May 1950 or the USA would be forced to impose a solution on all parties. Monnet’s Planning Board was given the task of drafting the French solution. Monnet and his colleagues quickly came to the conclusion that a fundamentally different approach was now required to tackle the Franco-German-European issue.

Monnet had observed the successive failures of the OEEC and the Council of Europe to achieve headway with a bid to give Europe a supranational government and realised that proposing the idea of a full European federation at that stage was still premature. On the one hand, the West Germans would hardly consider any plan that would impact upon their objective of gaining full sovereignty. On the other hand, the French had just recovered their power and prestige in Europe and would soundly reject any idea of a federation. Adenauer was very receptive to any move that would allow the FRG to integrate back into Western Europe and might be favourably disposed if he was offered a suitable “stepping stone”. Therefore the committee focused on proposing a more limited response to the problem, but one that would obtain an immediate positive acceptance from the parties involved. Here is Monnet’s explanation of the background that supported this proposal:

“….It proposes that Franco-German production of coal and steel as a whole be placed under a common High Authority, within the framework of an organisation open to the participation of the other countries of Europe. The pooling of coal and steel production should immediately provide for the setting up of common foundations for economic development as a first step in the federation of Europe and will change the destinies of those regions which have long been devoted to the manufacture of munitions of war, of which they have been the most constant victims.”

The details of the final plan were jointly prepared by Monnet and two members of his committee, Pierre Uri and Etienne Hirsch, Paul Reuter, the legal adviser at the Foreign Ministry and Schuman’s chef-de-Cabinet, Bernard Clappier.

Only certain crucial politicians were informed of the project prior to its official announcement. Among these were the French Minister of Defence and the French Minister of Justice, who both favoured a policy of reconciliation and were highly respected within the government. Schuman also sent an envoy, Robert Mischlich, to Bonn to inform Adenauer of the proposed Declaration and to ask for his approval, as Schuman did not want to launch the plan before being absolutely certain of German acceptance. Adenauer had long since come to the realisation that for the FRG to regain its place as an equal partner in Western Europe, positive and good relations were going to be required between the FRG and France, the strongest European power in Western Europe at that time.

On 9 May 1950, at a special press conference held at the French Ministry of Foreign Affairs and only after receiving Adenauer’s consent, Schuman made the Declaration public. This announcement became commonly known as the “Schuman Declaration” and it laid down the basis for the formation of the European Coal and Steel Community (ECSC). On 10 August 1950, Schuman explained the background and substance of the establishment of the ECSC to the “Council of Europe“.

Shortly after the announcement of the “Schuman Declaration”, Monnet and a special committee were then given the task of drafting how the ECSC would function and be organised.  It was intended that the new Community body would replace the existing IRA and therefore the scope of the ECSC was extended to include Italy, Belgium, Luxembourg and the Netherlands, in addition to France and the FRG.

Advertisements

About Peter Smith

A "foot-soldier" in the wider Post Capitalism Movement. First task - keep spreading the words of change, hope & inspiration.
This entry was posted in The History of the European EMU and tagged , , , , , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s