The 25th anniversary of the fall of the Berlin Wall is on Sunday, Nov. 9. The fall of the wall quickly led to the reunification of East and West Germany, after 45 years apart.
But what many people don’t know is that as the Soviet Union lost control over daniast Germany, a series of political events meant that the construction of the euro accelerated dramatically.
Records held by the Margaret Thatcher Foundation show just how rattled other European leaders were. The text below is a memorandum of a conversation between Thatcher and French President Francois Mitterrand, produced by British government staff:
The sudden prospect of reunification had delivered a sort of mental shock to the Germans. Its effect had been to turn them once again into the ‘bad’ Germans they used to be. They were behaving with a certain brutality and concentrating on reunification to the exclusion of everything else…
He had said to them that no doubt Germany could if it wished achieve reunification, bring Austria into the European Community and even regain other territories which it had lost as a result of the war. They might make even more ground than had Hitler.
These attitudes seem astonishing in hindsight. We now think of the collapse of communism as a joyful occasion, but the French president genuinely thought it could spark off another war with Germany.
In the end, Mitterrand realised that reunification was not really optional: but that the quick integration of Germany into a shared monetary system would blunt any lingering nationalism that a large, strong Germany might have.
West German chancellor Helmut Kohl had been dragging his feet on negations for what was then the European Monetary Union, the fore-runner of the eurozone. David Marsh, a former FT correspondent, reckons they were close to collapse in his book on the euro: “strains over German and European unity between Kohl and Mitterrand nearly reached breaking point in autumn 1989.”
France’s acceptance of reunification happened in exchange for the speedier adoption of a single currency. Here’s what Hubert Vedrine, one of Mitterrand’s policy advisers, said about the negotiations ten years later:
The President knew to grasp the opportunity, at the end of 1989, to obtain a commitment from Kohl… Six months later, it would have been too late: no French President would have been in a position any longer to obtain from a German Chancellor the commitment to introduce the common currency
Peter Caldwell and Robert Shandley’s book on German reunification says that at the very least, the fall of the wall hugely accelerated the euro’s development:
A consensus has emerged that German unification made EMU inevitable… German unification did not cause Maastricht but instead accelerated the German government’s tilt towards EMU… the German government saw the utility of surrendering the deutschmark and its role as hegemon provided that it could act as the architect of the new monetary system.
And that’s basically what happened. The Bundesbank, more than any other monetary authority in Europe, built the culture of the new European Central Bank. That’s part of the reason that the ECB is now behind the curve seemingly all the time. In 1998, future German chancellor Gerhard Schroeder said bringing in the euro too quickly would cause it to resemble a “sickly, premature baby”. And when the crisis came, it did.
Without the fall of the Berlin wall, West Germany may not have ever consented to the EMU (or the eurozone). The project would have got underway much later, and taken a much longer period of time, or never happened at all. No EMU, no eurozone, no euro crisis.
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