Beyond deus ex machina: Rethinking the EMS creation, 1974-1979
The traditional story of European monetary cooperation in the 1970s following the abandonment of the Werner Plan in 1974, most often told in textbooks but also in the specialised literature, can be summarised along the following lines. In late 1977, following four years of stagnation, Roy Jenkins, President of the European Commission, had the controversial idea to call for a European Monetary Union (EMU); this revived the debate about EMU in the European Economic Community (EEC); the German Chancellor Helmut Schmidt, upset by the dollar’s fall, then adopted this theme and, once the French government had been re-appointed following the March 1978 general elections, he presented his plan in close cooperation with his French counterpart Valéry Giscard d’Estaing at the Copenhagen European Council of April 1978. A few months later, the French and German leaders set out the terms of the European Monetary System (EMS) in the so-called Bremen Annex attached to the conclusions of the July 1978 Bremen European Council; the EMS negotiations over the details of the scheme lasted until the Brussels European Council in December of that same year, when the EMS was agreed upon. The EMS eventually entered into force in March 1979 following a last-minute French obstruction due to their request for the reform of an obscure technical aspect – the Monetary Compensatory Amounts (MCAs) – of the CAP’s functioning. Overall, the EMS appears a deus ex machina of European monetary cooperation: after years of stagnation, the EMS would have suddenly appeared and would have been swiftly negotiated. It would have provided an EEC answer to the so far intractable problem of European monetary instability thanks to the intervention of the divine “fathers of Europe,” who this time were Jenkins, Giscard and Schmidt.
There is, admittedly, some truth in that traditional version – and, as said above, not all the EMS literature tells it like that. Yet not only would each of these events, taken separately, deserve some qualification, but also, most importantly, the link between them is misleading. Indeed, the underlying assumption of such a periodisation – that is, an almost exclusive focus on the creation of the EMS in 1978, and on three politicians – is that the EMS negotiations alone form a coherent and autonomous whole. And this is highly misleading in that it downplays the influence of other, mid- to long-term trends preceding and underlying the EMS creation, and also tends to reinforce a sort of European integration mythology surrounding the EMS inception. This traditional reading therefore gives a retrospective simplification of what has been an uncertain, protracted monetary cooperation, and thereby overestimates the originality of the EMS (earlier, ill-fated plans, suggested similar ideas) and downplays the role of other actors and phenomena (notably transnational), as well as other motivations (notably those which cannot be reduced to “material interests”) in this story. In short, the EMS in the history of European monetary cooperation of the mid- to late 1970s plays the role of the deus ex machina in Greek tragedy: a previously intractable problem is suddenly solved due to a divine intervention – but at the expense of the story’s internal logic.
What this chapter stresses, by contrast, is the internal logic of that story. It will suggest that a long monetary brainstorming, from the abandonment of the Werner Plan to the Schmidt plan of early 1978 aroused the emergence of a number of themes – policy against the dollar, symmetry of interventions, role of a currency unit in the exchange rate mechanism – which would come back (instead of suddenly appearing), during the EMS negotiations. This chapter will therefore try to present a different way of seeing the creation of the EMS, and thereby underline some perennial themes of the European monetary cooperation story. In doing so, this chapter focuses on a detailed study of the post-Werner, pre-EMS attempts at furthering European monetary cooperation, instead of focusing only on the year of 1978, however fascinating and revealing it may be. It is based on an extensive multi-archival, multilateral research, from Britain, France, Germany, and the EEC. It will be divided in three steps, dealing in turn with the proposals sketched, the actors involved, and the motivations at play in the creation of the EMS. It will first present a couple of ideas, central to the EMS negotiations, which had been in fact introduced a few years earlier in a couple of failed initiatives. Second it will try to explain that the European monetary cooperation story of the mid- to late 1970s should not be reduced only to the doings of “great men,” but should also take into account more profound (and more contingent) political processes such as transnational policy learning and the emergence of the European Council in the EEC’s institutional set-up. Finally, it will stress that European monetary cooperation during that period cannot be described as a story of mere “material interests”: pro-Europeanism, new economic ideas and power politics also played a crucial role. Taken together, the three parts of this chapter will not only comment on the role of individual actors, but also most importantly qualify the place of the EMS in the overall story of European monetary cooperation by stressing the continuities, and longer-term processes.
 Such a reading can be found in D. DINAN, Europe Recast. A History of European Union, (London: Boulder, 2004), 173-174, P. GERBET, La construction de l’Europe, (Paris: Imprimerienationale, 1999), 351, E. APEL, European Monetary Integration, 1958-2002, (Abingdon: Routledge, 1998), A. DE SAINT-PÉRIER, ‘Valéry Giscard d’Estaing, la France et l’Europe monétaire de 1974 à 1981. La persévérance récompensée,’ (unpublished PhD thesis, Paris IV, 2008), J. GILLINGHAM, European Integration 1950-2003. Superstate or New Market Economy?, (Cambridge: Cambridge University Press, 2003), 134, B. OLIVI, L’Europa difficile. Storia politica dell’integrazione europea 1948-2000, (Bologna: Il Mulino, 2001), 181-183, 189-197; M. WAECHTER, Helmut Schmidt und Valéry Giscard d’Estaing. Auf der Suche nach Stabilität in der Krise der 70er Jahre (Bremen: Edition Temmen, 2011).
 Logical exceptions to this rule are Ungerer’s comprehensive survey of European monetary plans (H. UNGERER, A concise history of European monetary integration: from EPU to EMU, (Westport, Conn.: Quorum Books, 1997) and Tsoukalis’ work on early monetary integration, published before the inception of the EMS (L.TSOUKALIS, The Politics and Economics of European Monetary Integration, (London: George Allen &Unwin Ltd, 1977)); as well as K. DYSON, Elusive Union. The Process of Economic and Monetary Union in Europe, (London: Longman, 1994). Peter Ludlow’s detailed study of the EMS negotiations falls into both categories, since it focuses mainly on the year of 1978, but does mention the ill-fated proposals of the years 1974-1977 and cursorily suggests their influence over the EMS negotiations, which is an exception compared to the rest of the EMS literature. See P. LUDLOW, The Making of the European Monetary System. A case study of the politics of the European Community, (London: Butterworth Scientific, 1982). Marsh also mentions some of the ill-fated earlier plans, but focuses more on high politics, see D. MARSH, The Euro. The politics of the new global currency, (London: Yale University Press, 2009), 71-88.
 Research for this chapter includes archival material from the European Commission, the Council of Ministers, the Émile Noël papers, various French archives (Giscard d’Estaing papers, Secrétariat général du Comité Interministériel à la Coopération économique européenne (SGCI), Ministère des Affaires Étrangères, Ministère des Finances, Banque de France), German archives (Helmut-Schmidt-Archiv, Auswärtiges Amt, Bundesarchiv Koblenz, Bundesbank Archiv) and British archives (The National Archives, The Bank of England Archive). On the more specific role of Schmidt in the creation of the EMS, see Guido Thiemeyer’s contribution in this volume as well as G. THIEMEYER, ‘Helmut Schmidt und die Gründung des EuropäischesWährungssystems 1973-1979’ in F. KNIPPING and M. SCHÖNWALD (eds.), Aufbruch zum Europa der zweiten Generation. Die europäische Einigung 1969-1984, (Trier: Wissenschaftlicher Verlag Trier, 2004), 245-268; H. SOELL, Helmut Schmidt, 1969 bis heute. Macht und Verantwortung, (München: Deutsche Verlags-Anstalt 2008), 691-694; on Giscard’s role, see Michèle Weinachter, Valéry Giscard d’Estaing et l’Allemagne: le double rêve inachevé, (Paris: Harmattan, 2004), DE SAINT-PÉRIER, ‘Valéry Giscard d’Estaing, la France et l’Europe monétaire de 1974 à 1981’; on the role of the Commission and its internal divisions, see MOURLON-DRUOL, A Europe Made of Money, chapter 5 in particular.