EMU Takes Off

The most profound and significant event since the fall of the Berlin Wall is about to break onto the world scene. It will change the whole framework of existing global political, economic and financial cooperation.

The European Commission has recommended that 11 of the 15 member nations of the European Union (EU) join together in monetary union next year. This will unite 300 million consumers in an economy exceeding the U.S. in size and dwarfing Japan. Behind closed doors in their steel-frameworked, concrete and glass-clad headquarters in Brussels, Belgium, Eurocrats are busy refining their assessment of the 11 candidate nations. Those nations selected to proceed will immediately begin to prepare for the adoption of a single European currency. Then, on January 1, 1999, they will commence phasing in that currency over a three year period to replace their own national means of exchange.

What is EMU?

Economic and Monetary Union (EMU), as defined by the committee convened by Jacques Delors in 1989 to initiate the process, is the permanent locking of exchange rates between EU members, as a forerunner to replacing their individual national currencies by a single European currency. In February 1992, EU nations signed the Maastricht Treaty, which defined, as its central plank, the goal of full Monetary Union of member nations.

As early as October 1958, Shirley Williams wrote: “The ultimate goal is the complete economic and political unification of the six countries. It may take a long time; but just as the makers of the Coal and Steel Community understood that they could never completely control coal and steel until the rest of the economies of the six were also integrated, so the founders of the European Economic Community appreciate that they cannot stop at any arbitrary point. In the end, even that integration of policies that the Rome Treaty fails to mention—like monetary policy, the creation of credit and the setting of exchange rates—is bound to come about” (European Journal, Nov. 1997).

EMU is thus part of a program drawn up over 40 years ago. Monetary union is but a means to an end—the fiscal means to achieving the goal of political union—a federation of European nation-states—in fact, a European empire.

Economic and Monetary Union (EMU), which has spawned the single currency unit, the euro, took on renewed meaning to candidate nations as 1997 drew to a close. At issue was their final opportunity to join the first round of nations selected to join in full monetary union. Annual budgetary performance for 1997 was the criterion for acceptance into candidacy for monetary union.

Britain was clearly, by her proven economic performance, qualified to join. She has chosen not to proceed at this time. Ironically, those nations which were the prime driving force behind EMU had the greatest difficulty in matching their budgetary performance to the “convergence criteria” set by the EU for candidacy.

Germany was caught in a bind with escalating unemployment and difficulty restructuring her welfare-based economy, combined with a huge transfer of capital from former West Germany to former East Germany to underwrite development and infrastructure programs. She tried to fudge her 1997 budgetary figures with an attempt to revalue her gold bullion stocks. The Bundesbank stepped in and stalled the process. By dint of some creative accounting, Germany managed to present annual performance figures to the EU sufficient to match the convergence criteria.

France, also bedeviled by escalating unemployment and economic restructuring costs, opted to finance her way out of embarrassment by the transfer of superannuation funds to government coffers. Italy decided to scheme her way into candidacy by imposing a special “euro-tax,” which is to be withdrawn in 1999.

On May 2-3, at a summit meeting of EU nations in Brussels, the candidates approved by the Union to be the first to proceed to full monetary union will be announced. Their present national currencies will be phased out over the following three years. The price of goods and services, bank accounts, debts, and all currency transactions will be measured in euros.

It is estimated that the conversion costs for member nations will be around $50 billion. This involves changing everything from computer systems to price tags. The latest, final changeover to the single currency, following the phase-in process when the euro will run side by side with local currencies, is slated for July 1, 2002.

Why EMU?

Why would such a motley, disparate group of nations as those comprising the European Union aspire to monetary union? Doing so sacrifices sovereignty over their individual fiscal policies and controls to a single European currency controlled by a single central European bank. From the beginning, there was division even over the name for the new currency unit. Both leading EU nations, France and Germany, bickered over this point. The name ECU was considered, only to be rejected by Germany as being “too French.” The French rejected the term “Euro-Mark” as “too German.” They compromised on the innocuous “euro.”

The objective of European Monetary Union is clearly political. It is the singular mechanism which will force the completion of the single market process, begun with the first links forged via the European Steel and Coal Community founded in 1951. “European history since 1945 is told as a story of unification: difficult, delayed, suffering reverses, but nonetheless progressing. This is the grand narrative taught to millions of European schoolchildren and accepted by central and east European politicians when they speak of rejoining ‘a uniting Europe.’ That narrative’s next chapter is even now being written by a leading German historian, Dr. Helmut Kohl. Its millennial culmination is to be achieved on January 1, 1999, with a monetary union that will, it is argued, irreversibly bind together some of the leading states of Europe” (Timothy Garton Ash, Foreign Affairs, vol. 77, no. 2, emphasis mine).

Garton Ash reflects on a comment by former mayor of Stuttgart, Manfred Rommel: “There is no alternative to a united Europe.” Rommel’s view is strengthened by fellow Teutons, German President Roman Herzog, Chancellor Helmut Kohl, and even former Chancellor Helmut Schmidt, who all have said, “If the Euro does not come, there will be war in Europe.” In fact it is Germany’s political leaders who have spoken out loudest in support of EMU. Why?

Majority opinion in Germany, in public circles, seems overwhelmingly against monetary union. France voted in a referendum and by only 1.5 percentage points passed the vote in favor of monetary union. Denmark voted no to EMU. The British and Norwegian economies are doing extremely well outside monetary union with the EU. So why the forced march towards EMU?

Controlling Germany

Deep in the psyche of European nations is a fear of an excessively powerful Germany. France has made it clear that binding Germany into political, economic and social union with Europe is seen by her as a means of controlling the historic expansion of German power.

Helmut Kohl has publicly supported this thesis on numerous occasions. Yet in promoting monetary union, Kohl is, in the midst of a crucial election year, ignoring the German electorate, which has said in numerous opinion polls that it favors its beloved deutschemark over the euro. Why? Timothy Garton Ash points out, “In Berlin, we are witnessing the extraordinary architectural reconstruction of the grandiose capital of a historic nation-state. Yet at the same time, Germany’s political leaders, above all Helmut Kohl, are pressing ahead with all their considerable might to surrender that vital component of national sovereignty—and, particularly in the contemporary German case, also of identity—which is the national currency. There is a startling contradiction between, so to speak, the architecture in Berlin and the rhetoric in Bonn” (ibid.).

Yet as that quintessential Europhile, Jacques Delors, once said, “Our community is the fruit not only of history and necessity but of political will.” It is political will that is triumphing over reason in the forced march toward European Monetary Union! It is political will that is riding roughshod over the stated desires of the German electorate. It is political will that is destined to triumph over all opposition to force monetary union in the Europe created by the treaties of Rome, Maastricht and Amsterdam!

The Cement that Binds

EU Trade Commissioner Sir Leon Brittan has stated that “a single currency is the cement that binds our economies together.” Although there has been a history of attempts at economic, customs and trading unions through past centuries in Europe, there exists no historical precedent for the current EMU process. As we have previously stated, the end-goal of monetary union is political union—a federation of European nation-states. Why is it so crucial to European Union that member nations submit to monetary union?

Writing for Spectator magazine, Charles Moore, editor of the Daily Telegraph in London refers us to the Bible, specifically the words of Jesus Christ: “Tell us therefore, What thinkest thou? Is it lawful to give tribute unto Caesar, or not? But Jesus perceived their wickedness, and said, Why tempt ye me, ye hypocrites? Show me the tribute money. And they brought unto him a penny. And he saith unto them, Whose is this image and superscription? They say unto him, Caesar’s. Then saith he unto them, Render therefore unto Caesar the things which are Caesar’s; and unto God the things that are God’s” (Matt. 22:17-21).

Commenting on Christ’s exposition on the monetary affairs of state, Moore declares, “From biblical times, sovereign authority and money went together. Jesus appears to assume that it could not be otherwise.” So what is the significance of this observation in relation to EMU? “The coin proclaims and represents Caesar—the legal authority under which a nation lives. It is because people accept the authority that they accept the coin and attribute value to it. This is a physical demonstration of a vital fact—that politics and economics are inextricably linked” (Spectator, March 7, 1998).

This linkage will happen on “Conversion Weekend,” at the end of this year. It will happen to all those nations which are to be identified at the forthcoming May summit. Those nations will then proceed as the first wave to be bound thus into monetary union with each other. They will then fall under the untrammeled control of the European Central Bank (ECB), based in Frankfurt, Germany.

As Brussels Commissioner for Economic Affairs Yves Thibault de Gilguy recently declared in a speech delivered in London, “For the first time since the fall of the Roman Empire, Europe will have a single currency.”

The ECB is Caesar!

“If the Maastricht Treaty means what it says then Caesar is the ECB, which becomes the only truly supranational institution of the European Community” (ibid.). Under the Maastricht Treaty, the ECB is mandated to do whatever it considers necessary to maintain price stability, and no one can prevent it from doing what it wants! In other words, the European Central Bank, which comes officially into being on July 1 this year, becomes the supreme authority over all nations locked into the EMU, and it is answerable to no other power! Unelected, faceless bankers in Frankfurt will have the power to dictate fiscal and economic policy to EMU nations which may throw millions into unemployment! As Charles Moore exclaims, “The idea that a rich foreign banker is making you poor or jobless is explosive!” (ibid.).

It follows then, that the chief executive of the ECB must be a man capable of wielding such unfettered power in a manner which, though his policies may prove unpopular within member nations, nevertheless is able to back up and enforce such policies within those member nations. Who will this person be?

Once again the European Union’s mixture of iron and miry clay (Dan. 2:33) has produced a struggle for mastery of the ECB within the EU. The most obvious disagreement, yet again, is between the EU’s dominant partners—France and Germany. France wants EMU because of its firm belief that this will give it more control than it presently has over Germanic power. Germany wants EMU to further its own ends of retaining and developing German dominance in European affairs. One of these two nations must lose the battle for control of the ECB. We believe it will not be Germany. Once Germany gains control of the ECB and installs her own hand-picked candidate as chief executive, she will once again have the power to dictate the affairs of Europe.

Germany’s prior experiences wielding such political power have proven catastrophic for Europe!

Under the influence of Britain’s parliamentary democracy and American constitutional democracy, the world has generally come to believe that democracy is the best system of government that man has devised. What is happening in Europe is manifestly undemocratic. The economic government that dominates EMU will have been chosen by no electorate and will be answerable to no one! Yet the nation-states which will comprise EMU are, in the main, open, liberal democracies. The potential for conflict in such a situation is glaringly apparent.

EMU and the U.S.

Across the Atlantic from EU headquarters in Brussels, little is known of the profound impact which the euro is about to have on the dollar. For the first time since the dollar overtook sterling as the world’s dominant currency, it will have a real competitor! Fred Bergsten, director of the Institute for International Economics, believes that “as much as $1 trillion of international investment may shift from dollars to euros” (Foreign Affairs, vol. 76, no. 4).

Mr. Bergsten foresees a “bipolar currency regime dominated by Europe and the U.S., with Japan as a junior partner,” replacing the dollar-centered system that has prevailed globally since the close of World War II. Economically, the EU has already outstripped the U.S., accounting for 31 percent of world output of goods and 20 percent of world trade, as compared to the U.S. with 27 percent of global production and 18 percent of world trade.

Of most concern to the U.S. will be its vulnerable external economic position, which will continue to contribute to doubts, internationally, about the dollar’s future stability. At present, net foreign debt in the U.S. exceeds $1 trillion, rising by between 15 and 20 percent annually. Contrast this with the EU, which is vastly superior to the U.S. in balancing its international assets, and has shown modest surpluses in its international accounts over recent years.

The potential for a euro being driven upwards and a dollar downwards would seem obvious. But America has yet to wake up to the potential threat to its economic stability which will stare it in the face on January 1, 1999!

Essentially, we may be witness to the reality of one man, the chief executive of the European Central Bank, dictating policy on the global economy! No longer will the U.S. be dominant. Fred Bergsten predicts a capital flight of between $500 billion to $1 trillion from dollars to ECUs once EMU is enacted. Protectionist pressures, or trade war, would seem inevitable under such a scenario. As the enlightened Burgsten opines, “The ECB is likely to out-Fed and out-Bundesbank its most distinguishable role models” (ibid.).

The End Result

1998 is a crucial year for Germany. “Germans have rarely been so nervous about the future. They do not know what is going to happen to their mark, savings, pensions or Chancellor of the past 15 years” (Roger Boyes, Times, Feb. 23, 1998, emphasis mine). Those who really know Germany, her people, and the national psyche of this talented, aggressive, clever, powerful population, know that a nervous Germany is a dangerous Germany.

Commenting on the future of Europe in relation to German domination, Italian journalist Luigi Barzini offers this view: “There cannot be a really united Europe without a common currency and a common foreign policy, but above all, a common defense policy. This, in the twentieth century, means nuclear weapons and space defenses. It entails a tangle of insoluble political problems among the member nations and the superpowers. But the principal obstacle is the German problem…. The future is in the laps of the gods. It will probably be decided, once again, by Germany’s decisions. And Germany is, as it always was, a mutable, Proteuslike, unpredictable country,particularly dangerous when it is unhappy” (The Europeans, p. 267, emphasis mine).

Already we see Gerhard Schroeder, Lower Saxony’s prime minister, becoming the natural Social Democrat challenger to Helmut Kohl as chancellor. Will the Social Democratic Party (SDP) take the helm in Germany over the Christian Democrats (CDU) in this year’s German elections? Watch September for the results. Will old German bullying tactics railroad the decision on who will take the chief executive’s post at the European Central Bank? Watch July for this decision. What of the startling rise in youthful neo-fascism in Germany over the past year, now spreading its cancer eastward through Austria and the Czech Republic? How will the transfer of administration from Bonn to Berlin affect the collective mind of the German peoples? Government of the nation from this ancient capital has promoted would-be Caesars intent on ruling all of Europe and even the world in the past. Will the increasing army of youthful unemployed, particularly in Eastern Germany, continue their embrace of Nazism? How will Germany handle its increasing frustration with immigrant workers in the face of continuing escalation of national unemployment?

Traditionally, Germany has turned to a strong, charismatic leader when such tensions create a state of national nervousness. Will another Caesar arise from the Fatherland to put the imprint of his visage on the ECU? “Those few men in history who believed that they could be the European Caesar have left millions of corpses scattered across our continent” (Charles More, op.cit).

Once monetary union is achieved, the EU will turn to face the most crucial clause in the Maastricht Treaty, the implementation of which will give the Union the military might to exert considerable international force. The minds which pull the strings behind the scene as the Euro-combine merges together its mixture of iron and miry clay have been careful to reserve this sensitive matter until last. For it first required that Germany be seen as a trusted ally of the West, a dramatic reversal of her role for much of modern history.

It is Article J1 of the Treaty on European Union which will take on the greatest importance following EMU. This article of the Treaty flowed from a resolution by its fifteen signatories “reinforcing the European identity and its independence in order to promote peace, security and progress in Europe and the world.” It states:

This is perhaps the most dangerous clause of all contained in the Treaty on European Union! It is this clause within the Maastricht Treaty, daughter of the old Pact of Rome, that spawned the European Union, which the EU leaders will use to legitimize their creation of a powerful combined military force that will startle the world with the ferocity of its future “peace keeping” missions!

The lessons of history already dictate the style of leadership which will follow in the wake of EMU. As Timothy Garton Ash observes, the only occasions when Europe was able to sustain supreme order over its historic violent disorder was by the imposition of “hegemonic order that itself was always built on the use of force and the denial of national and democratic aspirations within the constitutive empires or spheres of influence” (op. cit., emphasis mine).

EMU denies national and democratic aspirations of its member nations. Such aspirations are precluded under the willful hand-over of the sovereignty of EMU member nations to central European control manifested by the ECB. The force that has been applied in the past to enmesh, hold together and protect past European Federations (the Holy Roman Empire in its various configurations since Charlemagne) is military might, significantly Germanic military might! Historically, this Germanic military strength has been linked with a strong religious power—the Roman Catholic Church.

Recently, the Vatican attempted an apology for its benign neglect of the Jewish Holocaust. Yet the Holy See went to great pains to ensure that Pope Pius XII, the ruling pope during the holocaust period, gained a clean slate. Why? It was Pius XII who declared in a pontifical exhortation on February 10, 1952 that “the whole world must be rebuilt from its foundations!”

It was Pius XII who claimed in his Christmas message of 1944 that world peace could only come through an organization which “will be vested…with supreme authority and power to smother… aggression.”

The proof of secular history and the more sure word of biblical prophecy all declare that a Vatican-dominated, German-led Euro-combine will promulgate article J1 of the Maastricht Treaty, enforcing EU will not only on member nations, but most significantly on those nations outside the Union.

How will all this affect you? Continue to read the pages of this magazine and watch! (I Thes. 5:6; II Tim. 4:5). Watch EMU’s impact on the global economy. Watch the EU rapidly move to implement a common foreign and security policy. Watch the Vatican—and watch Germany!

“We need a new vision,” said German President Roman Herzog in a recent interview (Washington Post, Feb. 17, 1998). “Visions are nothing but strategies for action. The one we had helped us rise from the ruins of World War II to build a social market economy for the prosperity of all. Our political elites need to get out of the trenches of dogma and decide society’s course for the 21st century. We must take the lead, not stumble behind.