Private Sector Involvement in the Euro Private Sector Involvement in the Euro traces the activities of two non-governmental organizations: the Association for the Monetary Union of Europe (AMUE) and its parent organization, the Committee for the Monetary Union of Europe. These groups have helped to pave the way to the euro both by working on its realization and for its general acceptance. This book investigates the role the private sector played in the creation of the euro and discusses key issues such as whether there was an alternative to the single currency and if Europe’s citizens had a voice in the construction of the EMU. This fresh look at how the EMU came about challenges a number of well- established integration theories. It shows that European integration is not only the work of governments and supranational institutions but the result of more subtle processes involving the emerging European civil society. The model on the power of ideas suggested in this book is applied to the work and impact of the two NGOs but has explanatory power for the process of European integration which goes well beyond the limits of this empirical study. This book will interest students, researchers, and policy makers with an inter- est in Europe and its monetary union. Stefan Collignon is Professor of European Political Economy at the London School of Economics and Political Science. He was previously Director of Research and Communication at the Association for the Monetary Union of Europe. Daniela Schwarzer is a Journalist at the Financial Times Deutschland and a part-time lecturer at the Freie Universität Berlin. Routledge advances in European politics 1 Russian Messianism Third Rome, revolution, communism and after Peter J.S. Duncan 2 European Integration and the Postmodern Condition Governance, democracy, identity Peter van Ham 3 Nationalism in Italian Politics The stories of the Northern League, 1980–2000 Damian Tambini 4 Uncertain Europe Building a new European security order Edited by Graham Timmins and Martin Smith 5 Widening the European Union The politics of institutional change and reform Edited by Bernard Steunenberg 6 Institutional Challenges in the European Union Edited by Madeleine Hosli, Adrian van Deemen and Mika Widgrén 7 Europe Unbound Enlarging and reshaping the boundaries of the European Union Edited by Jan Zielonka 8 Ethnic Cleansing in the Balkans Nationalism and the destruction of tradition Cathie Carmichael 9 Democracy and Enlargement in Post-Communist Europe The democratisation of the general public in fifteen Central and Eastern European countries, 1991–1998 Christian W. Haerpfer 10 Private Sector Involvement in the Euro The power of ideas Stefan Collignon and Daniela Schwarzer Private Sector Involvement in the Euro The power of ideas Stefan Collignon and Daniela Schwarzer First published 2003 by Routledge 11 New Fetter Lane, London EC4P 4EE Simultaneously published in the USA and Canada by Routledge 29 West 35th Street, New York, NY 10001 Routledge is an imprint of the Taylor & Francis Group This edition published in the Taylor & Francis e-Library, 2003. © 2003 Stefan Collignon and Daniela Schwarzer (www.StefanCollignon.de) All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data Collignon, Stefan, 1951– Private sector involvement in the euro: the power of ideas / Stefan Collignon and Daniela Schwarzer. p. cm. Includes bibliographical references and index. 1. Economic and Monetary Union. 2. Euro. 3. Monetary unions– European Union countries. 4. Monetary policy–European Union countries. 5. Non-governmental organizations. I. Schwarzer, Daniela. II. Title. HG925 .C6563 2002 332.4Ј94–dc21 2002068225 ISBN 0-203-22217-2 Master e-book ISBN ISBN 0-203-27660-4 (Adobe eReader Format) ISBN 0-415-30175-0 (Print Edition) Money has not been generated by law. In its origin it is a social, and not a state-institution. Sanction by the authority of the state is a notion alien to it. On the other hand, however, by state recognition and state regulation, this social institution of money has been perfected and adjusted to the manifold and varying needs of an evolving commerce, just as customary rights have been perfected and adjusted by statute law. Karl Menger1 La force des idées simples exprimées tout uniment et répétées de la même façon invariable. Cela désarme au moins la méfiance, qui est la source principale des malentendus. Jean Monnet2 1 Karl Menger, On the origin of money. Economic Journal 2, June 1892. 2 Jean Monnet. Mémoires. Paris: Fayard, 1976. Contents Illustrations xi Acknowledgements xiii Abbreviations xv 1 Introduction: public consensus and EMU 1 Grasping actors beyond the state 5 Lobbies and civil society in the EU 5 Private-sector agency 6 An epistemic community for EMU 8 Research on EMU: state of the art 12 Liberal intergovernmentalism 12 Neo-functionalism 15 Models of preference formation 16 Constructivism 18 Consensus and the construction of social reality 21 Explaining the integration process: epistemological foundations 21 Desires and preferences 22 Institutions as social facts 24 Explaining the integration process: preference formation and consensus 25 How epistemic communities create consensus 27 The plan of the book 28 2 Foundations 30 The origins of the Giscard–Schmidt Committee (CMUE) 30 A window of opportunity 32 Learning from Jean Monnet 35 A joint Grand Strategy 37 An equilibrium model for European integration 38 viii Contents The balance of power strategy 40 Institutions for monetary stability 41 The Committee’s ideas and activities 41 Promoting the Ecu 44 Historic flashback: France, Germany, and the demise of Bretton Woods 49 The weaknesses of bloc floating 52 The Association for the Monetary Union of Europe (AMUE) 53 The need for dialogue with the private sector 53 Gathering support 54 Structures and objectives 57 3 A common or a single currency? 61 Hopes and doubts about the Ecu 61 Business and the Ecu 61 Educating the private sector 63 First scepticism towards the Ecu 63 The need for a political approach 65 Delors’ ambivalence 66 New stability in the EMS 66 Economic reasons for monetary integration 66 Balladur’s and Genscher’s memorandum 67 The Delors Report 68 An independent European Central Bank 69 Rejecting a parallel currency 72 The private sector and the Delors Report 74 One market, one money 75 A strategy for the Ecu 77 Early business views on EMU 77 Obstacles to using the Ecu 78 A British counter-proposal 79 The study 81 The AMUE’s message 83 A question of credibility 84 The Strateg y’s reception 86 Geostrategic accelerations 87 Interrogations 88 Giscard’s doubts 88 The UK’s hard Ecu proposal 90 Political sensitivities 92 Contents ix 4 The crises and the Phoenix 94 The Maastricht Treaty 94 Pre-structuring the negotiations 94 Setting a date in the Treaty 95 Who will ratify? 101 The Danish referendum 104 The French referendum 105 Linking with the CNPF 106 Ratification in Italy 109 Pushing practical preparations 110 The external consequences of the single currency 111 Central and Eastern Europe 113 The European Monetary System in crisis 114 A short history of the EMS 114 The Danish credibility shock 118 The German unification shock 119 The dollar shock 120 The demise of the hard EMS 120 EMU’s loss of credibility 122 Reinforced political commitment 123 The problem with the United Kingdom 125 Ups and downs for the AMUE 126 Reporting to the European Parliament 127 Preparing the changeover 129 Two reports frame the issue 130 An expert group on the transition scenario 132 The Commission’s strategic re-launch 133 The Green Book’s scenarios 134 Pinning down the transition scenario in Madrid 137 Launching communication on the single currency 140 The Phoenix flies – into a new storm 142 5 Campaigning for EMU 144 The populist temptation 144 European populism 145 Structural transformations and populist ideology 147 The single market and new populism 148 Economic and political criticism of EMU 153 The AMUE’s communication strategy 155 German dissensus over EMU 159 The nature of scepticism in the German public 160 x Contents The Social Democrats’ problem with monetary union 162 Training members of the European Parliament 163 Social-democratic arguments for the euro 165 The Kohl government and the CDU 168 Convergence and dissent in Europe 170 Eccezionalismo Italiano 170 Italian adjustment 173 The leap 175 The Stability and Growth Pact 178 Three per cent is 3.0 180 French–German dissent 181 Mediating across the borders 182 The Sustainability report 182 Broad public campaigns 184 Helping companies change over to the euro 186 The need for further integration 192 Epilogue 194 Annexe 1 Introduction 199 Annexe 2 The crises and the Phoenix 205 Annexe 3 Campaigning for EMU 207 Annexe 4 List of interviewees 209 Annexe 5 List of expert groups 211 Annexe 6 List of former AMUE board members 215 Notes 217 Bibliography 242 Name index 253 Subject index 261 Illustrations Figures 2.1 Membership in the AMUE 59 4.1 Short-term interest rate differentials to Germany 116 4.2 ERM exchange rates in crisis 121 4.3 Membership fees received by the AMUE, 1987–2001 128 5.1 Relative gross value added