FROM THE ARCHIVES:Denmark's rejection of the Maastricht Treaty (the foundation stone of the euro) during the Irish referendum campaign on the same treaty caused consternation among "Yes" supporters. In his column, Garret FitzGerald explained why the euro was essential to avoid German political and economic dominance of Europe.
IF THE Irish electorate were to follow the Danes in voting against the ratification of the Maastricht Treaty, the cumulative destabilising effect of two such setbacks could have a fatal effect on the future development of European integration. For in such an unstable situation the German government could come under irresistible pressure from public opinion to renegotiate the binding commitment in the Maastricht Treaty to the achievement of Economic and Monetary Union, involving the creation of a single European currency by 1999 at latest.
This commitment is of immense importance to the other western European states – and to none more so than Ireland with its high level of unemployment and pressing need for economic growth. For, as we have seen during the past couple of years, a German government whose economic decisions are determined solely by internal German pressures can exert an unintentionally malign influence on economic growth throughout the rest of the continent. Thus in the period since 1989 domestic pressures have forced the German government to finance the unification of Germany primarily without significant recourse to increased taxation – and the pressure this has imposed on German interest rates has forced interest rates throughout the rest of Europe to remain well above the level required by the domestic economic needs of most of the other EC states.
By contrast, if German economic policy in this period had been determined jointly by that country together with its partners through the kind of joint decision-making mechanism provided for in the Maastricht Treaty, a more balanced approach to the financing of German reunification would have emerged that would not have such a negative, distorting effect upon the rest of us.
This development ensured a strong sense of urgency about the ratification of the treaty – all the more so because, in the final weeks before the treaty was agreed in Maastricht last December, German public opinion was moving emotionally against the treaty.
I doubt if this belated popular German reaction was attributable solely to a sophisticated recognition of the constraints the treaty would in future impose on German economic policy. It has, indeed, been suggested that it reflected more of an emotional reaction against the proposed replacement of the beloved deutschmark by the proposed new “Ecu”. [...] One thing is clear. The member governments, ours included, will not easily give up on Maastricht: too much is at stake in this EU project.