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The Maastricht Treaty, Economic and Monetary Union and the neo-realist research programme*

Published online by Cambridge University Press:  26 October 2009

Joseph M. Grieco
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Extract

With the Treaty on European Union, or the Maastricht Treaty, into force in November 1993, the member-states of the European Community (EC) appeared to be embarking on a far-reaching enterprise to enhance the authority of Community institutions. Continuing a process that had begun with the Single European Act (SEA), into force in 1987, Maastricht increased the powers of the European Parliament. It established mechanisms whereby EC countries were to seek to improve policy coordination in such diverse areas as social affairs, high technology, border controls, immigration, and anti-crime efforts. It committed the EC members to work toward the establishment of a common foreign and security policy. Most importantly, it laid out a path and timetable for qualified EC members to achieve Economic and Monetary Union (EMU) by the end of the 1990s.

Type
Research Article
Information
Review of International Studies , Volume 21 , Issue 1 , January 1995 , pp. 21 - 40
Copyright
Copyright © British International Studies Association 1995

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References

1 For the view that such efforts as the Single Market Programme constituted a dramatic revitalization of the EC, see Sandholtz, Wayne and Zysman, John, ‘1992: Recasting the European Bargain’, World Politics, 42 (1989), p. 95CrossRefGoogle Scholar; Hufbauer, Gary Clyde, ‘An Overview’, in Hufbauer, (ed.), Europe 1992: An American Perspective (Washington, 1990), pp. 5–7Google Scholar; Moravcsik, Andrew, ‘Negotiating the Single European Act: National Interests and Conventional Statecraft in the European Community’, International Organization, 45 (1991), p. 19CrossRefGoogle Scholar.

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9 In November 1992 there was a close preliminary vote on the Treaty in the British House of Commons, and Prime Minister John Major announced that he would delay a final vote until the Danes held another referendum in 1993. On 18 May 1993, by a vote of 56.8 per cent to 43.2 per cent, the Danes accepted the Treaty-albeit with ‘opt-outs’ on such key matters as EMU, Community defence, and a common immigration policy. Two days later, the British Parliament ratified the Treaty (with opt-outs on monetary matters and a common social policy) by a vote of 292 to 112.

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11 Wayne Sandholtz similarly frames his domestically-oriented theoretical analysis of EMU in terms of seeking to understand why the EC countries entered into negotiations that resulted in undertaking the effort to move toward a particular form of EMU; see Sandholtz, , ‘Choosing Union: Monetary Politics and Maastricht’, International Organization, 47 (1993), p. 2CrossRefGoogle Scholar. In the same vein, Beth Simmons demonstrates that analysis of the establishment of the Bank for International Settlements at the end of the 1920s yields important insights for international relations theory in spite of the fact that the Bank failed to prevent the onset of the Great Depression or to mitigate its effects; see Simmons, Beth A., ‘Why Innovate? Founding the Bank for International Settlements’, World Politics, 45 (1993), especially pp. 364CrossRefGoogle Scholar and 401.

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16 See International Monetary Fund, ‘Economic Integration in Western Europe: Policy Issues and Prospects’, in World Economic Outlook: May 1991 (Washington, 1991), pp. 97–8Google Scholar; see also ‘EMU: The End is Nigh’, The Economist, 28 September 1991, pp. 84, 86.

17 See ‘Draft Treaty on European Union’ (Brussels: Conf-UP-UEM 2017/91, 18 December 1991). For a helpful overview by the staff of the Bank of England of the EMU accord, see ‘The Maastricht Agreement on Economic and Monetary Union’, Bank of England Quarterly Bulletin, 32 (1992), pp. 64–8Google Scholar.

18 As an example of the diminished expectations regarding EMU after the collapse of the ERM, the spokesperson for economic policy of Germany's Social Democratic Party, Uwe Hens, suggested in early 1994 that the EMU timetable should be set back by ten years; see Marsh, David, ‘Maastricht Should be Put Off for 10 Years’, Financial Times, 29/30 January 1994, p. 2Google Scholar.

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27 On the realist notion of balancing, see Morgenthau, Hans, Politics Among Nations: The Struggle for Power and Peace, 2nd edn (New York, 1958), pp. 155–75Google Scholar; Aron, Raymond, Peace and War, trans. Howard, Richard and Fox, Annette Baker (Garden City, 1973), pp. 118–19Google Scholar, 121; and Waltz, Theory of International Politics, pp. 124–7. An amended version of the balancing argument takes into account threats as well as power assessments; see Walt, Stephen, The Origins of Alliances (Ithaca, 1987)Google Scholar; and Walt, , ‘Testing Theories of Alliance Formation: The Case of Southwest Asia’, International Organization, 42 (1988), pp. 275–316CrossRefGoogle Scholar.

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30 See Tavlas, George S., ‘International Currencies: The Rise of the Deutsche Mark’, Finance and Development, 27 (1990), p. 37Google Scholar. For a helpful and balanced assessment of the importance of Germany in the EMS, see Gros and Thygesen, European Monetary Integration, pp. 136–50.

31 Kramer, Steven, ‘The French Question’, The Washington Quarterly, 14 (1991), p. 86CrossRefGoogle Scholar.

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33 As another sign that France is not likely to balance the United States, the head of the Foreign Affairs Commission of the French National Assembly said in an interview in July 1991 that, with the United States now the world's only superpower, the construction of a stronger Europe ‘has never been more necessary to defend the liberty of France’. See Amalric, Jacques, ‘Un entretien avec M. Michel Vauzelle’, Le Monde, 18 July 1992, p. 2Google Scholar.

34 See Nelson, Mark N., ‘EC Finance Aides Make Progress Against Obstacles to Currency Plan’, Wall Street Journal, 13 May 1991, p. A10Google Scholar; Marsh, David, ‘Bundesbank Warns Over Speed of Move to Single Currency’, Financial Times, 12 June 1991, p. 1Google Scholar; Lazare, Françoise, ‘Les piétinements de l'Europe monétaire’, Le Monde, 13 June 1991Google Scholar; Buchan, David, ‘Germany Ready to Accept Two-Speed Monetary Union’, Financial Times, 1 August 1991, p. 1Google Scholar; and Marsh, David, ‘Germany Gets the Monetary Jitters’, Financial Times, 6 August 1991, p. 16Google Scholar.

35 Sandholtz and Zysman, ‘Recasting’; also Moravcsik, ‘Single European Act’ and Cameron, ‘The 1992 Initiative’, pp. 56–9.

36 Sandholtz, ‘Choosing Union’, pp. 5–10, 23–5.

37 See Sandholtz and Zysman, ‘Recasting’, pp. 107–20; Hoffman, Stanley, ‘The European Community and 1992’, Foreign Affairs, 68 (1989), pp. 27–47CrossRefGoogle Scholar; and Moravcsik, ‘Single European Act’, pp. 46–7.

38 On the possible connection between financial liberalization and the need for closer institutionalized coordination in the monetary area, see Tommaso Padoa-Schioppa, ‘Financial and Monetary Integration in Europe: 1990, 1992, and Beyond’, Group of Thirty Occasional Papers, No. 28 (1990), especially pp. 21–3. As Sandholtz reports, EC officials have frequently pointed to the need to develop a path toward EMU in functional terms; see Sandholtz, ‘Choosing Union’, pp. 19–20.

39 See Axelrod, Robert, The Evolution of Cooperation (New York, 1984)Google Scholar; Axelrod, Robert and Keohane, Robert O., ‘Achieving Cooperation Under Anarchy’, World Politics 38 (1985), pp. 226–54CrossRefGoogle Scholar; Keohane, Robert, After Hegemony: Cooperation and Discord in the World Political Economy (Princeton, 1984)Google Scholar; Lipson, Charles, ‘International Cooperation in Economic and Security Affairs’, World Politics, 37 (1984), pp. 1–23CrossRefGoogle Scholar; and Stein, Arthur, ‘Coordination and Collaboration: Regimes in an Anarchic World’, in Krasner, Stephen D., (ed.), International Regimes (Ithaca, 1983), pp. 115–40Google Scholar.

40 Lakatos, ‘Falsification’, pp. 132–8.

41 Garrett offers a similar critique of the treatment by functional theories of the qualified-majority rules established by the Single European Act: see Garrett, ‘International Cooperation and Institutional Choice’, p. 541.

42 For discussions of the two UK proposals, see Ungerer et al., EMS: Developments and Perspectives, pp. 43–4; and Dowd, Kevin, ‘Evaluating the Hard ECU’, World Economy, 14 (1991), pp. 215–25CrossRefGoogle Scholar.

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44 On the two directives, see Ungerer et al., EMS: Developments and Perspectives, pp. 32–3.

45 Even those who are sympathetic to the functional argument find that the timing of EC financial liberalization and the initiation of EMU negotiations do not correspond well to neo-functionalist expectations; see Sandholtz, ‘Choosing Union’, p. 21.

46 See Ungerer et al., EMS: Developments and Perspectives, pp. 53–4; this is also noted in Cameron, ‘1992 Initiative’, pp. 46–7.

47 Ungerer et al., EMS: Developments and Perspectives, pp. 21–22; also see, for example, de Grauwe, Paul, ‘International Trade and Economic Growth in the European Monetary System’, European Economic Review, 31 (1987), pp. 389–98CrossRefGoogle Scholar; and Giavazzi, Franceso and Giovannini, Alberto, Limiting Exchange Rate Flexibility: The European Monetary System (Cambridge, MA, 1989), pp. 50Google Scholar, 55, 60; and Gros and Thygesen, European Monetary Integration, pp. 101–4.

48 On the importance of rules for international cooperation, see Kratochwil, Friedrich and Ruggie, John Gerard, ‘International Organization: The State of the Art on the Art of the State’, International Organization, 40 (1986), 753–76CrossRefGoogle Scholar. On the importance of voice within organizations, see Hirschman, Albert O., Exit, Voice, and Loyalty: Responses to Declines in Firms, Organizations, and States (Cambridge, MA, 1970)Google Scholar.

49 The question of effective voice is often a matter of special importance to weaker partners within military alliances; on this, see Schroeder, Paul W., ‘Alliances, 1815–1945; Weapons of Power and Tools of Management’, in Knorr, Klaus (ed.), Historical Dimensions of National Security Problems (Lawrence, 1976), pp. 227–62Google Scholar.

50 In this regard it should be stressed that the idea that institutionalization has served as a post-war strategy by which France has sought to limit and channel German power was articulated in early post-war realist thinking about European economic cooperation, that is, in Hans Morgenthau's discussion of the European Coal and Steel Community in the second (1958) edition of his Politics Among Nations, pp. 497–8, and his discussion of the European Communities in the third (1966) edition, pp. 531–4. Similar arguments are provided in historical analyses of early post-war European economic cooperation; for example, see Hogan, Michael, The Marshall Plan: America, Britain, and the Reconstruction of Western Europe, 1947–1952 (Cambridge, 1987), especially p. 64CrossRefGoogle Scholar; and Gillingham, John, Coal, Steel, and the Rebirth of Europe, 1945–1955: The Germans and the French From Ruhr Conflict to European Community (Cambridge, 1991), pp. 174CrossRefGoogle Scholar, 364–6.

51 Grieco, Joseph M., ‘State Interests and International Rule Trajectories: A Neorealist Interpretation of the Maastricht Treaty and Economic and Monetary Union in Europe’, to appear in Security Studies 4, Special Issue no. 1 (Spring 1995)Google Scholar, and in Frankel, Benjamin (ed.), Realism: Restatements and Renewal (London, 1995)Google Scholar.

52 This point is made repeatedly in Ludlow, Making of the EMS; also see Gros and Thygesen, European Monetary Integration, p. 47.

53 de Cecco, Marcello, ‘The EMS and Other International Monetary Regimes Compared’, in Ferri, Piero (ed.), Prospects for the European Monetary System (New York, 1990), p. 26Google Scholar.

54 Giavazzi and Giovannini, Limiting Exchange Rate Flexibility, p. 195. For additional evidence of German domination of the EMS, see Artus, R. et al., ‘Transmission of U.S. Monetary Policy to Europe and Asymmetry in the European Monetary System’, European Economic Review, 35 (1991)CrossRefGoogle Scholar; and Smeets, Heinz-Dieter, ‘Does Germany Dominate the EMS?’, Journal of Common Market Studies, 29 (1990), pp. 37–52CrossRefGoogle Scholar.

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56 As Alogoskoufis and Martin suggest, while Europe as a whole faced tighter external constraints on its capacity to use macroeconomic policy instruments to counter unemployment than was true of the United States during the 1980s, it was the aversion of German authorities to inflation and current account deficits that ‘may well have been the ultimate external constraint on European unemployment’. See Alogoskoufis and Martin, ‘External Constraints on European Unemployment’, pp. 157–8.

57 See Ungerer et al., EMS: Developments and Perspectives, p. 10; and Giavazzi and Giovannini, Limiting Exchange Rate Flexibility, pp. 75, 82.

58 See ‘Protocol on the Statute of the European System of Central Banks and of the European Central Bank’, Article 10, p. 204, and Article 7, p. 203.

59 See ‘France's Road to Euro-Union’, Financial Times, 13 May 1992, p. 16.

60 See Dowd, ‘Evaluating the Hard ECU’, pp. 221–2.

61 See Ivo Dawnay and Robert Graham, ‘Major Calls for ERM Reform’, Financial Times, 19/20 September 1992, p. 1, and Philip Stephens and Alison Smith, ‘Major Prepared to Defer Debate on ERM Reform’, Financial Times, 5 October 1992, p. 1; also see ‘Some Are More EMU Than Others’, The Economist, 3 October 1992, pp. 81–2.

62 See, for example, Gourevitch, Peter, Politics in Hard Times: Comparative Responses to International Economic Crises (Ithaca, 1986)Google Scholar.

63 This assumes that the EC countries retain their long-held view that the full development of a true single market in the Community requires some form of joint float against the dollar and other major currencies; for the argument that this consensus is likely to remain robust, see Thygesen, Niels, ‘Towards Monetary Union in Europe-Reform of the EMS in the Perspective of Monetary Union’, Journal of Common Market Studies, 31 (1993), pp. 450–1CrossRefGoogle Scholar.