Don't Forget Lessons of 1990

by Terence Roth

Wall Street Journal
December 15, 2010

The European Union summit beginning Thursday will again focus on technicalities of bailout plans and maybe even the birth of the euro bond. To hold the EU together, what they might do instead is revisit 1990 and the raw political origins of today's euro.

German Chancellor Helmut Kohl early that year had a problem. East Germany's utter collapse had made reunification inevitable and Germany's neighbors were anxious about a new German political and economic supremacy.

Then European Commission President Jacques Delors openly backed a united Germany and wanted payback in the form of Bonn's promise to speed more integration. French President Francois Mitterrand, then Mr. Kohl's co-equal on the European stage, pressed him to take the next step to full monetary union in what was clearly understood as the quid pro quo.

Germany's chancellor also was negotiating with the former allied powers Britain, France, the U.S. and the Soviet Union to get their blessing. Mr. Kohl saw integrating Germany deeper into the EU, even at the cost of the deutsche mark, would show that his Germany would in no way resemble the Germany of the first half of the 20th century.

Germany's central bank, the Bundesbank, warned loudly against a monetary union without solidifying political and fiscal union first. One senior Bundesbanker had then likened the project to building the roof of a house before its walls.

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