A NEW EUROPE ON NEW YEAR'S DAY?
Nearly 21 years ago, on January 1, 1958, the European Economic Community was officially launched, tying together the fortunes of continental Europe's most important and economically-advanced powers — West Germany, France, Italy and the Benelux nations. On another New Year's Day, this time in 1973, the Community was enlarged to nine member states with the addition of Great Britain, Ireland, and Denmark.
Now at the next turn of the calendar, on January 1, 1979, Europe is poised upon "the most important monetary initiative in its history," according to the respected British news weekly, The Economist (Sept. 23, 1978 issue).
On that date, chances are very good at the moment that the new European Monetary System (EMS) will be put into operation. West Germany's Chancellor Helmut Schmidt and French President Giscard d'Estaing — two very close friends who converse with each other in colloquial English-are determined that the EMS plan will begin on time. A majority of Community countries is expected to endorse the plan at a summit meeting in early December.
The details of the EMS were covered in the October-November issue of The PLAIN TRUTH, but briefly they entail keeping the various national currencies tied together within close tolerances in a kind of "super-snake" arrangement. Backing up the arrangement will be a pool of gold, and national currency reserves (including Eurodollars) estimated at roughly $32 billion. In another two years time, plans are that a full-blown and larger European Monetary Fund (EMF) will come into operation, along the lines of, and probably competitive with the U.S. dominated IMF (International Monetary Fund).
Settlements between the EMS members will be denominated in a closed pseudo-currency, the ECU (European Currency Unit). Many believe the ECU will eventually become a genuine European currency. But that probably will have to await greater harmonization of monetary and economic policies among the member states, to say nothing of significantly greater relinquishing of national sovereignty.
Not all participants in the EMS plans are happy with its progress so far, most notably the British. In fact it appears unlikely that Britain will join up at the start. The British government says it won't make up its mind until the Brussels summit, but it has already "leaked" to the press its grave reservations about EMS. Specifically it objects to being forced into what it views as a straightjacket of fiscal restraints. It fears that by having to bind its currency into a tight arrangement with the essentially non-inflationary deutchmark, its economy will cool off ("deflate") too rapidly, threatening industrial output and jobs — and, of course, risking loss of power by the ruling Labor Party. Many laborites are ice-cold toward the Common Market anyway.
While the British are debating both across and within party lines-similar to the time wasting national referendum in 1975 on whether to stay in the Common Market — the Germans and French are rushing ahead with EMS. Thus, if or when Britain does join, it will have had only marginal influence on its structure. "If we muff this one," remarked a columnist in the London Times of November 14, "as we muffed the inception of the EEC in the late 1950s we could find ourselves once more standing on the platform while the European train moves off."
Meanwhile, the train is at the station, loading up, so to speak. "The political will is unmistakable" says one German "official. "The system will start January 1." Whether the train stops in London seems immaterial at the moment. But it appears that it will pick up an enthusiatic passenger in Dublin. The Irish government is fully supportive of the EMS plan. The Irish pound, presently tied to the British unit, IS already under pressure to rise and will do so whenever the link is cut. While. it won't be easy for small countries to abide with the stiff EMS rules, the Germans, according to the above London Times account, "are apparently prepared to underwrite Irish membership." (German industrial and property investments in the Irish Republic are substantial.)
"Spirit of Charlemagne" A largely overlooked (in the U.S. press) "mini-summit" between Schmidt and Giscard helped pave the way toward the EMS. After the Bremen conference last July at which time Schmidt urged a green light on the system, EMS fell on rough times. Proposals and compromises between the strong and the weak nations were offered.
Schmidt and Giscard finally took all the differing ideas in hand in September, went off by themselves, ironed everything out, and produced the EMS structure as it now stands. Where they conferred in their exclusive mini-summit is as significant as the result they achieved. The two leaders met in the West German town near the French border known as Aachen to the Germans. The French prefer to call it Aix-la-Chapelle. Reports Maclean's, the Canadian newsweekly:
"The choice of the ancient Alpine border town as the site for a summit tet-a-tet between France's President Valery Giscard d'Estaing and German Chancellor Helmut Schmidt did not go unnoticed.
"There, on the spot where Charlemagne once presided over his united European empire, the two close friends and former finance min1sters hammered out the technical framework for a new European Community currency system which will create an independent 'stable European monetary zone' that is scheduled to go into effect next January, cutting the community's ties to the vacillating American dollar."
The West German daily, Hannoversche Allegemeine, on September 18 added: "Helmut Schmidt deliberately chose Aachen as the venue: Aachen, the city of Charlemagne, an emperor whom both Germans and French claim as their own. It was the first Franco-German summit concerned almost entirely with a European project, the European Monetary System, which is the brainchild of Giscard and Schmidt and an outstanding political achievement."
At Aachen, the two leaders, appropriately enough, visited Charlemagne's tomb. Equally significant, at one of their conferences, Giscard invoked "the spirit of Charlemagne which has blown through this summit." At least they went to the right place to get the "inspiration" they needed.
— Gene H. Hogberg, News Bureau