Integration and Disintegration Before 1945

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The developments of the Cold War put the first serious pressure on several countries to develop a new policy of European cooperation. Political elites began diverging around a wholly new political cleavage about European institutions-building. Some of the streams of thought was: Realist analysis, confederal strategies and community strategies.

11. De Gaulle’s vision about the Federal Europe (The Empty Chair Crisis and the Elysee Treaty)

Part of the federation would be France, the Benelux countries, some version of a detached German Rhineland, Great Britain, but later when France got excluded from the Yalta and Potsdam conference, he complained about Britain, Eastern Europe would not belong to his Federal Europe “because of its different rivers”, but the South belonged to this core Europe. About the Empty Cahir Crissis, De Gaulle withdrew France’s highest representative to the EEC. And The Elysee Treaty, after the collapse of Fouchet-plan, de Gaulle revived the idea of Franco-German union.

12. Achievements before and after the Hague Summit

The completion of the customs union in July 1968

the initial success of the CAP

the resignation of De Gaulle, Pompidou lifted the long-standing veto on British entry into the EC

13. The British membership and the regional policy

A Gallup poll in 1970 revealed that only 19 percent approved the membership.

The UK did not hold a referendum on joining the Community

A referendum was held on continuing British membership in the EC in 1975.

Regional policy

One of the deepening aims of the Hague Summit had been the creation of regional policy

The aim is to reduce economic imbalances within the Community

Moves toward EMU by 1980 could increase the disadvantages of backward regions.

Britain’s dissatisfaction with the EU budget and the hope that expenditure on backward regions would improve Britain’s budget position.

- The breakdown of the Bretton Woods

In 1960, there was a dollar crisis because the United States had run large balance of payments deficits in the late 1950s.

- Japanese and European surpluses

- 1964: U.K.

- 1969: France devaluation, Germany revaluation

By the late 1960s the foreign dollar liabilities were much larger than the U.S. gold stock.

The pressures culminated in August 1971, when President Nixon declared the dollar to be inconvertible and provided a close to the Bretton Woods era of fixed exchange rates and convertible currencies.

The Bretton Woods system worked well through the 1950s and part of the 1960s.

In 1960, there was a dollar crisis because the United States had run large balance of payments deficits in the late 1950s.

By the late 1960s the foreign dollar liabilities were much larger than the U.S. gold stock.

The pressures culminated in August 1971, when President Nixon declared the dollar to be inconvertible and provided a close to the Bretton Woods era of fixed exchange rates and convertible currencies.

- The details of the Werner plan

The Werner group submitted its final report in October 1970.

It envisaged the achievement of full economic and monetary union within ten years according to a plan in several stages.

The Werner Report proposed reaching the EMU in 3 stages:

- Stage 1 beginning in 1971 and lasting 3 years would achieve concentration of national macroeconomic policies

- Stage 2 would create a European monetary fund, which would evolve into a European Central Bank

- Stage 3 would involve the irrevocable fixing of exchange rates and would begin 1980.

- Economic conditions of the 70s (stagflation, slower growth, the German model)

About the economic conditions of the 70s It`s possible to realize that the Consumption and investment slowed down everywhere, the world economy was thrown into recession and stagnation.

The current account balances of oil-importing countries worsened. There was a slower growth, In the first time in the postwar period, output slowed down, Unemployment reached record highs and there was Inflation.

Towards the end of the 70s it was clear German crisis had been more successful than that of the other leading European countries. The German model served as their main example

- The European Monetary System – 1979

The EMS originally included eight members: Belgium, Denmark, France, Germany, Ireland, Italy, Luxembourg, and the Netherlands.

Afterwards Spain, Britain and Portugal

The EMS introduced

- The European Exchange Rate Mechanism I (ERM I) to reduce exchange rate variability among the EMS countries

- The changes in EMS currencies were forced to be within an interval of +/– 2.25 percent

- A few members were able to negotiate bands of +/-/6%.

The ECU (European Currency of Unit) was a weighted average of the participating currencies. A pool of common foreign reserves .

- The EMS crisis – 1992-1993

The main figure waS George Soros, a Hungarian refugee turned American entrepreneur,

He founded his Quantum Fund in 1969.

The pressures within the EMS led to a massive speculative attack on the EMS fixed parities

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