Thirty-five years ago today, a man named Jean Monnet passed away in northern France while writing his memoirs. Though few among us know his name, his legacy as the father of the modern eurozone deserves remembrance.
At the end of his long life, Monnet described his birthplace as a “brandy town [where] one did one thing, slowly and with concentration.” That could have served as a motto for the singular purpose of his own life: but also the familiar story of path dependency. The cultivation and marketing of a grand plan that would bring lasting peace to Europe.
The method that guided him throughout his long life put a premium on the careful sequencing of innovations in economic policy so as to make irreversible the overall process of political integration. Unlike Monnet, however, the leaders responsible for the adoption of the euro in the 1990s failed to ensure that the necessary political conditions and institutions were in place, thus making the current troubles of the European Union all but inevitable.
As President Shimon Peres of Israel noted, In an interview with Strobe Talbott – “Monnet’s vision was political, but his means were economic. A political vision inevitably generates opposition, so a pragmatic visionary must dress it up in a way that stresses its economic advantage.”
“Who do you see as the greatest Frenchman?” Without waiting for Peres’s reply,‘No. I think Jean Monnet’s greater than Napoleon. Why? Because Napoleon left after him a tomb while ..Monnet left a cradle in which a new, peaceful Europe was born.”;Peres.
Jean Monnet’s idea was to move by consensus, by an intelligent perseverance on the other members of the European Union.- Javier Solana
Former foreign policy chief of the European Union
The relevance today of this historical figure is all the more striking in the light of his idiosyncratic career. Monnet spent much of his life as a private citizen. He never held elective office or a ministerial post. He was an effective advocate, who used his carefully cultivated mellifluous speaking voice and forensic skills to good effect in interviews and declarations. But it was primarily from behind the scenes that he influenced generations of major actors on the world stage: in his youth, Georges Clemenceau, Arthur Balfour, Neville Chamberlain, Winston Churchill, and Franklin Roosevelt; in his middle years, Dean Acheson, Konrad Adenauer, and John F. Kennedy; in old age, Willy Brandt, Helmut Schmidt, and Shimon Peres.
At crucial moments and on vital issues, these leaders and others took his counsel and adopted his ideas as their own.
Monnet —a key figure in the transformation of the concept of statehood itself. Modernization, he believed, was more than the exploitation of new technologies to improve industry, transportation, and communication; it also meant adjusting to the ways in which individual nations were joined by an ever-thickening skein of economic transactions, increasingly unobstructed by physical distance and national boundaries. Truly modern nations needed to learn how to retain their independence where they must, while making a virtue of their interdependence where they could.
Monnet’s principal task in 1940 and the early months of 1941 was to urge President Roosevelt to come to the aid of Britain, and to pave the way for America’s entry into the war. Keynes believed that Monnet’s arguments were particularly effective with FDR.
EVEN IN THE DARK HOURS when the Axis dominated most of the Continent, Monnet was thinking ahead about how to break the cycle of total war followed by a false peace. In 1943, he declared at a meeting of the French government-in-exile in Algiers,
“There will be no peace in Europe if the states are reconstituted on the basis of national sovereignty…. The countries of Europe are too small to guarantee their peoples the necessary prosperity and social development. The European states must constitute themselves into a federation.”
There are few instances in history when a single statement of prescription and prophecy would so soon come to pass, and fewer still when the prophet himself would be a major agent in making that happen.
Two years later, after Germany and its allies surrendered, Monnet had his chance to begin the process of realizing his vision, though he got off to a rather uncertain start. As commissioner-general of the French National Planning Board, Monnet advised de Gaulle, the president of the provisional government, on how to reconstruct the French economy.
One obvious means was to tap into Germany’s industrial potential, much of which was still intact. The sweeping recommendations he proposed are collectively known as the Monnet Plan.
Its most conspicuous feature—the expropriation of coal from German mines in the Ruhr and Saar areas to fire the furnaces of French steel factories—was euphemistically called l’Engrenage (The Transmission). In addition to hastening the recovery of France, it inhibited Germany’s ability to rearm, a measure that was intended to be both punitive and preemptive.
Jean Monnet’s life’s work, on innovations in economic policy and political integration, inspired the introduction of the euro 15 years after his death. It’s also the subject of the latest Brookings Essay by Brookings President Strobe Talbott.
In promoting that belief, Monnet revised for the better the consequences of a seminal event in European history: the Peace of Westphalia of 1648. That treaty, which ended the Thirty Years War, attenuated the sway of the Holy Roman Empire over subsidiary domains that were roughly unified by shared language and culture while separated by borders approximating those on the map today.
The term scholars later assigned to these autonomous territories was “nation-states.”
The hyphen suggested that nationality and statehood were closely aligned. There was an element of willful delusion in the concept. Monnet’s own homeland is a case in point. France is often cited as the archetypal Westphalian nation-state, but it also illustrates the elusiveness of the construct. Centuries of conquest and accretion fused Normandy, Brittany, and Gascony, which had been distinct and often combative nations until they were suppressed and absorbed into France.
The Treaty of Westphalia also ceded to France most of Alsace on the west bank of the Rhine. The local élites—notably including Charles de Gaulle’s ancestors—learned French, while the common folk continued to speak German. As a result, for the next 300 years Alsace, and later its neighbor Lorraine, would be a source of tension between France and Germany and, on several occasions, a casus belli.
Westphalia brought nationalism to the surface in two troublesome forms: secessionism within nations and animosity between them. In both cases, the result was often political violence, which Monnet regarded as the ultimate evil.
Westphalia also perpetrated the fallacy of absolute national sovereignty. Even in the 17th century, and much more in the 20th, borders were porous; nations’ economies were intertwined, their populations intermixed, and their fates bound together, for good and ill
Monnet believed that the ideal way to correct both these flaws in the Westphalian system was federalism, a layered system of governance whereby authorities at various levels have responsibility for those issues in which they have the most legitimacy and competence.
In Monnet’s view, American federalism proved itself during the 1930s as the best system of governance for countering the depredations of the Great Depression. The New World offered the Old World a model for its own future in another respect as well: the United States was the opposite of a Westphalian nation-state (France for the French, Germany for the Germans)
Monnet’s Federalism was a European concept going back centuries. It usually operated within individual states, where power and responsibility were distributed among local, provincial, and national levels of government. Monnet, however, wanted to elevate it to being the basis for a federated Europe. It was a radical, distant goal, which he helped make possible through the practical, iterative steps he prescribed during his lifetime.
The place to start, he believed, was in the spheres of finance and commerce, particularly in mineral resources, where independence and sovereignty are most contingent, and where interdependence is most beneficial and comes most naturally to all parties.
Because Monnet concentrated on this aspect of the endeavor, he came to be regarded as an economist – and arguably one of the most important of the 20th century, along with his contemporary John Maynard Keynes. Yet he had no formal training in the dismal science.
MONNET’S TRANSITION to what would become his life’s work occurred in the summer of 1914, shortly before the guns of August shattered the grand illusion that global interdependence would keep the major powers from ever again going to war. On his way home from London he learned, during a stop at the Poitiers railway station, that Germany had declared war on Russia and begun moving troops into Luxembourg, and France was mobilizing. With the help of a family friend, Monnet went straight to the top of the French government to volunteer his services. Premier René Viviani was so impressed that he authorized the 25-year-old to negotiate the terms of an agreement between France and Britain to coordinate their production of armaments. Within three years, Monnet was helping Étienne Clémentel, the French minister of commerce and industry, to develop a proposal for a post-war “new economic order” based on Franco-British cooperation but open to other European countries as well.The allies rejected that proposal at Versailles, but by then Monnet had patrons at the highest levels in Paris and London. When the League of Nations was established in 1919, they arranged for him to become its deputy secretary-general.
At the core of Monnet’s driving passion—the integration of Europe—was his hope for national economies to mesh in a web over Europe more powerfulthan national hatreds that had brought the continent to war; Strobe Talbott interviewed by Steven R. Weisman:
Monnet had long feared that the interwar period would be just that—a respite between global conflagrations. Like Keynes, he came to view the “war guilt” clause in the Versailles Treaty, which demanded reparations in the form of payments and transfers of property and equipment from Germany, to be a mistake. It was based, he believed, on “discrimination,” a violation of the core principle that “equality is absolutely essential in relations between nations, as it is between people.” For Monnet, this was not just an ethical principle but a pragmatic one.
He helped several Central European countries stabilize their currencies and advised Chiang Kai-shek on how to upgrade the Chinese railway system. Operating in a private capacity, Monnet had found a way to promote the integration of national economies as a basis for international commerce and peace.
MONEY IS AN INSTRUMENT OF GOVERNANCE as well as commerce. It enables citizens to participate in the economic life of their societies while reminding them where political authority resides and where their loyalties belong. So it has been since ancient times, when visages of Nebuchadnezzar and Caesar were stamped on the coins of their realms, and so it is today. In almost all 195 countries on Earth, the change in people’s pockets and the banknotes in their wallets are an assertion of national sovereignty.
But today there is an exception to that general principle: the euro, which is the common currencyof 18 of the member states of the European Union. The eurozone puts them in the vanguard of the greatest experiment in regional cooperation the world has ever known.
However, that venture has had a rough five years. In the wake of the global financial and economic meltdown in 2008, the euro has become economically disruptive and politically divisive, pitting the states of northern and southern Europe against each other.
The crisis is not over, but Chancellor Angela Merkel of Germany, President François Hollande of France, and their fellow heads of government and state are determined to keep the eurozone intact. They are reinforcing accords on national budgets, spending, and financial regulation, pushing ahead with a banking union, and tackling unemployment.
In taking those and other remedial measures, today’s European leaders, like their predecessors in the middle of the last century, are heeding the wisdom of Jean Monnet. He died 35 years ago, long before the euro went into circulation. Still, he would have understood the purpose that monetary union is meant to serve:
binding up the wounds of the most bloodstained continent in modern history and turning it into a zone of peace, prosperity, democracy, and global clout, animated by common values and governed by common policies and institutions. That is the European Project. As its master architect, Monnet would also have understood the mistakes, dilemmas, and dangers that threaten the project now.
The biggest challenge for both Member States and the EU institutions is now to ensure stability in the euro area. There are signs of greater levels of stability, opportunity to focus on what Europe’s economy really needs. All Member States have committed to a common growth strategy the Europe 2020 Agenda — as a comprehensive response to the challenges the EU is facing.
These needs require long-term financing. Ensuring our economy and our financial sector – including banks and institutional investors such as insurers and pension funds – are capable of funding long-term investments is an important but complex task. One main lesson of the crisis is that appropriate regulation and supervision of the financial sector is necessary to restore financial stability and confidence in the markets. The EU has been pursuing a comprehensive programme of financial reform in this context, complementing broader fiscal and economic reform.
February was a good month for the eurozone, the group of 18 countries that have adopted the euro as their currency, with Markit’s monthly Eurozone Composite Purchasing Managers’ Index—a measure of the economic health of the manufacturing sector—coming in at 53.3, beating a preliminary estimate of 52.7. (Any number above 50 indicates expansion.) The figures indicate more eurozone grow by about 0.5 percent in the first quarter of 2014—the highest growth numbers in three years.