History And Euro Future

The headlines are filled daily with the latest news from Europe and the continuing confusion and peregrinations of discussion regarding the debt crisis and the Eurozone’s commitment to the Euro.   Will this 20 years experiment endure for the long haul?  The answer to that question is fraught with economic implications for the US as well as Europe.

All the way back to the ’60’s the first intimations about a joint European union of either political or economic fabric has been bandied about and discussed.  The Western European countries were at the forefront of these discussions for the obvious reason that the Cold War was in full bloom and all of Eastern European was under the thumb of the Soviets.   NATO was part of the glue composition holding Europe together during this time even with the withdrawal of France under DeGaulle.   That organization grew out of geopolitical strategic thinking on the part of Europe to protect itself and allow itself to prosper in the post-War era without having to submit to the influence or domination of the Soviets. 

Then came the dramatic events of 1989.  Virtually all of Eastern Europe threw off the shackles of Moscow during that year even though there full fruition of the uprisings weren’t realized until 1990.  Poland, Hungary, Czechoslovakia, Romania, Estonia, Latvia, and Lithuania all became independent entities during the time frame.   East Germany was the linchpin to the final breaking of the bonds of domination and the most important ultimately.   Germany had been split into two countries since the War as was Berlin itself.  Wariness over a rising Germany had been the focus of the creation of NATO in the first place with a subtext to thwart the Soviets initially until the Soviets became the real bugaboo a few years later. (After the Berlin Airlift of 1948)  As these new countries emerged from the shadow of the Soviets concern arose on how to integrate them into European society and gave a boost to those who had long advocated a European union of economies if not political union.  Step one was to deal with Germany because it was the giant among the others as it had been for over 150 years in Europe.  Great Britain and France in particular were cautious about the re-unification of Germany.  Europeans remember their history much longer than we do and they still had vivid memories of two World Wars in the minds of their populations and especially the leaders of 1990; they had lived through at least WWII and some even WWI.   The War had ended in Europe in 1945 but there had never been a final resolution of Germany’s borders and Allied control of German areas especially Berlin since the War.  The US, France, Great Britain and the Soviets finally met in September of 1990 and worked out the final details to solidify those borders and bring the last major issue of the War to a close.  They all agreed to withdraw their troops from Berlin by Oct. 31 of 1990 and from most other areas of the now to be unified Germany and all its borders were at last settled.

The next year the European nations including some of the new ones met at Maastricht in the Netherlands to negotiate the economic union with the Euro.  It came after the settlement of the major geopolitical strategy of the major players had been satisfied with the German question resolved.   The implementation of the Euro was final for almost another decade.   The switch was made then as they all cashed in the local currencies and were given Euros in exchange that was the new medium of trade and debt settlement throughout the participating countries.  It was Germany that mostly caused the immediate inclusion of Italy in the pact.  The Germans thought they would be a moderating influence on the power of Great Britain and France.  One of the reasons that it took so many years to implement the Euro was the pain the former West Germany would have to suffer bringing into the fold the East Germans.  The East Germans were the Appalachians of Europe at that time.  It was poor, dark and had an incredibly inefficient economy due to the central planning control of the Communists for decades.  The Germans ended up paying out 1.2 trillion Euros equivalent to the East Germans in that rebuilding of one German state.  One wonders how they afforded that even today.

So the Eurozone was born in the mind of some economists and Pan-European thinkers decades ago but the mid wife to its actual creation was the geopolitical long view of what to finally do with Germany after the Soviets were ejected.  Without resolving the German question it is hard to imagine how an effective Euro would have ever been created.  The current situation reminds one of the the Ben Franklin comment when asked what the Constitutional Congress had done and he replied that we’ve given you a Republic if you can keep it.  The European have an economic union if they can keep it but that requires everyone be willing to follow the same rules for fiscal and debt policy.  Whether that union will endure is an open question at the moment.  Some of the members from the northern areas may well decide to secede and create their own free trade zone and leave the others to their own devices.  The Netherlands was one of the earliest proponents of the Eurozone because of its long-term view of history being between Germany and France.  Now the Netherlands has a very vocal and apparently growing voice to undo the treaty made in their native city of Maastricht.

Don’t be like BO and show a lack of understanding and appreciation of European history.  Remember the Great Britain is a reference to Northern Ireland, Wales, Scotland and England.  The United Kingdom is England, Scotland and Wales; and England is England.   www.olcranky.wordpress.com

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