Washington and European Monetary Union

By Olshausen, Michael | Contemporary Review, February 1998 | Go to article overview

Washington and European Monetary Union


Olshausen, Michael, Contemporary Review


When the chief economist of the Deutsche Bank, Dr. Norbert Walter, wants 'enlightened discourse' on European Monetary Union (EMU) he travels, he says, to the United Kingdom. If he wants to 'fight religious wars,' he stays at home. When he wants to 'help people prepare,' he travels to Spain or Italy. More complicated are the periodic visits to the United States, particularly to Washington, by the key, continental proponents of EMU, for their visits have a fervour that seems unconvincingly explained by consultation, the most evident purpose. Clearly, the United States has to be consulted. American policy-makers cannot be taken unaware by agendas covertly embedded in the EMU project (the 'experiment,' former Under Secretary of the Treasury for Monetary Affairs C. Fred Bergsten called it). Serviceable relations between monetary policy-makers in Europe and the American Federal Reserve, Treasury, and Congress, and, particularly during the transition to the euro, an accommodative, US official rhetoric are going to become increasingly important. Rash or uncoordinated moves to, for example, redenominate world asset prices in euros could easily provoke calls in Congress for retaliation. Given vigorously contested global markets, this would better be avoided. That said, the proselyting ardour shown publicly by the EMU's advocates during their Washington sojourns - Dr. Walter is a self-described EMU 'missionary' - inviting as it does American forays into criticism of the project, contrasts rather overmuch with the diplomacy required for the consultation needed.

Before the euro can circulate or be traded, all of the currency project's legal and administrative mechanisms will have to have been realized, in detail. This, in rum, implies an on-going vulnerability, in the hiatus between plans and realizations. Yet, Europe's EMU advocates are relieved from having to enact a missionary role in the United States, as they are not relieved among the unconverted in Europe. Unlike the Europeans, Americans have not normally had to be persuaded of the benefits of political union since the late 18th century - even many southerners were mostly ambivalent secessionists in the 1860s. A de facto central bank - the centralized Board of Governors of the Federal Reserve - managing a unitary currency has not been debatable in America since its creation in 1913. Why, then, do the EMU's advocates declare their vision here so vehemently? To expand Walter's apt metaphor, they are like the members of one missionary order lingering for a time and for the benefit such contact brings among the members of a different missionary order, institutionally distinct from it but belonging to the same, universal, economic faith, and nowhere more concentrated than in Washington. Here, among 'co-religionists', they pursue, as they can pursue only in the American capital, a social-psychological purpose critical to their mission.

The apocalyptic title - 'EMU or Neotribalism in Europe?' - of Walter's presentation at The Johns Hopkins University's American Institute for Contemporary German Studies (AICGS) in April, 1997, suggested in itself doctrinal preoccupation. EMU, explained the missionary-economist, was to be a 'reinsurance programme' - a means for diluting risk - for there was a tendency in Europe - Austria's Haider, France's Le Pen, Britain's Goldsmith were its 'signs on the wall' ('do not paint the devil on the wall,' Germans warn, or else he'll come) - to renationalize policy. Recourse to national pride, however, led ineluctably to mistrust, distrust, envy, protectionism, and, implicitly, to war. Today's known and tested leadership must therefore constrain tomorrow's unknown, untested, and, it therefore seemed, unpredictable leadership from taking difference and converting it via pride into warfare - the conversion, evidently, was predictable; difference never could function progressively - by effacing difference forever through EMU. That real tribal regimes involved highly distinctive groupings in self-stabilizing coexistence was an anthropological recognition dissonant, it appeared, with missionary purpose. …

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