The work of the Werner Committee 1
Whatever the case may be, Pierre Werner’s appointment as chairman was ratified by the Council on 6 March, and in that capacity he convened a preliminary meeting of the committee of experts in Luxembourg on 11 March 1970.
Of the fourteen official meetings of the Werner Group, nine were held in Luxembourg (consolidating its reputation as a permanent capital of the Communities 2), three in Brussels, 3 one in Paris, one in Rome 4 and one in Copenhagen, on the sidelines of the annual meeting of the IMF and the World Bank.
Preliminary meeting (Luxembourg, 11 March 1970)
The main purpose of the preliminary meeting of the Werner Committee was to approve the working method to be adopted and to set the deadline for reaching its conclusions.
It was established that the group would have a quorum for discussion if at least five of the seven members (the group’s secretary did not have voting rights) were present and that decisions would be taken by simple majority. ‘The group will do its best to present unanimous conclusions, but any member may ask for a minority opinion to be put forward.’
If required, experts could be called in to elucidate specific points. Each member of the committee could appoint an assistant of his choice, and secretarial services for the group were provided by the secretariat of the Monetary Committee. The group’s discussions were considered to be confidential and would only be minuted briefly.
The group decided to meet ‘at intervals such as to allow for a preliminary report to be delivered to the Council by the end of May and for its discussions to be concluded, if possible, by the end of July.’
At the first meeting, Mr Werner in the chair gave his colleagues a preliminary comparative overview of the discussions on monetary integration and the proposals put forward at the beginning of the year by the Belgian Government (the Snoy Plan), the German Government (the Schiller Plan), the Luxembourg Government (the first Werner Plan, also known as the five-point Luxembourg Plan) and the Commission (the second Barre Plan). 5 He set out what he felt should be the priority focus for their work, namely putting forward practical ideas and methods for achieving the short-, medium- and long-term objectives. He emphasised the need to take all avenues and experiences that might prove useful at the various stages into account, even if their usefulness was not apparent at the outset. He also called on his colleagues to draw up notes describing the measures they planned to take to achieve the final objective and to put them forward for discussion. 6
He also presented the preliminary documentation that the Commission had supplied to the committee. 7 Note that, to underpin the reflection and documentation of its representative on the Werner Committee, the Commission set up an inter-directorate working party on economic and monetary union 8 (based around DGII), which included the directors and secretary of the Monetary Committee. For reasons of efficacy, the private office of Commission Vice-President Raymond Barre was also involved in this working party and offered its support to the committee of experts, among other things for logistical and financial questions and matters of protocol. 9
The preliminary documentation mentioned above consisted of political and scientific papers, explanatory presentations about economic union and currency, ‘stage-by-stage’ plans which already existed and accounts of similar experiments in that area, articles and press releases. As the work went ahead, further material was added, to elucidate points of interest which came up in the course of discussion. Two major issues command attention in the documentation: the accession of the United Kingdom to the Communities and the establishment of a European Reserve Fund. On this latter point, the two main papers were drafted by Robert Triffin, including one which arose out of discussions in the Monnet Committee. 10 Through the whole period of the committee’s work, Pierre Werner and Robert Triffin, who knew each other and were working together long before 1970, 11 kept in close touch by way of dialogue and joint action, particularly thanks to the good offices of Jean Monnet. 12
First meeting (Luxembourg, 20 March 1970)
The chairman convened the inaugural meeting of the Werner Group on 20 March 1970 in Luxembourg City.
By way of preparation for this meeting, Raymond Barre, Vice-President of the Commission with responsibility for economic and monetary affairs, notified his colleagues ‘that it is likely that over the next few months and at least until the end of July, the ad hoc group will be meeting at least three times a month’, and requested that any governmental experts called in to assist the group should be treated in the same manner as the members of the group ‘in view of the very high level of those involved and the nature of the matters with which the group is dealing’. 13
The comparative overview, the target dates and the content of the various stages as set out in these notes, and the fact that they came first (dating from the preliminary meeting of the Werner Group on 6 March 1970), suggest to us that they were the inspiration behind the Commission’s paper (dated 18 March 1970), in which the comparative analysis adopts the same layout.
At the inaugural meeting, the members of the group introduced their deputies, whom they had each chosen and who took part in the work. They were Johnny Schmitz (from Luxembourg, assistant to Mr Werner, the chairman), Jacques Mertens de Wilmars (from Belgium, assistant to Baron Ansiaux, Chairman of the Committee of Governors of the Central Banks), Anthony Looijen (from the Netherlands, assistant to Gerard Brouwers, Chairman of the Conjunctural Policy Committee), Jean-Michel Bloch-Lainé (from France, assistant to Bernard Clappier, Chairman of the Monetary Committee), Hans Tietmeyer (from Germany, assistant to Johann Baptist Schöllhorn, Chairman of the Medium-Term Economic Policy Committee), Simone Palumbo (from Italy, assistant to Gaetano Stammati, Chairman of the Budgetary Policy Committee) and Jean-Claude Morel (assistant to Ugo Mosca, Director-General for Economic and Financial Affairs at the EEC).
At the first meeting, there was a first exchange of views on the main problems associated with setting up a plan by stages. Mr Werner, in the chair, made a detailed presentation and comparison of the various plans, measures and proposals for bringing about economic and monetary union (‘where there is a variety of monetary plans, there has to be a synthesis’), 14 laid down the priority areas for reflection (the final objective and the creation of the institutional structure), and set out the main target dates for the group’s work, including the final result, which, in the form of a report to the Council, was to be achieved by the end of July at the latest.
The description of the starting point did not raise any major debates. ‘[…] We weren’t starting from a blank canvas. Economic integration was already under way. […] The liberalisations that had already taken place were resulting in a degree of interdependence such that national imbalances were having an impact on the economic situations of the other partners. The final objective was economic and monetary union, in other words an area in which goods and services, people and capital could circulate freely and without distortion of competition. A union of this sort would involve the full and irreversible convertibility of national currencies and the elimination of exchange rate fluctuations.’ 15 Although the main objective was clear and all parties were in agreement on this, determining its exact details gave rise to bitter clashes between the ‘economists’ and the ‘monetarists’: 16 ‘from the outset, the German representative J. B. Schöllhorn, Chairman of the Medium-Term Economic Policy Committee, assisted by H. Tietmeyer, supported the position of the German Minister for Economic Affairs, Schiller, that prior convergence of economic policies was imperative. The Chairman of the Committee of Governors of the Central Banks, Baron Ansiaux (from the National Bank of Belgium), advocated the monetarist stance with a fervour that surprised me at the time. B. Clappier, Chairman of the Monetary Committee, assisted by J. M. Bloch-Lainé, supported Ansiaux’s position, as did G. Stammati, Chairman of the Budgetary Policy Committee. Brouwers, Chairman of the Conjunctural Policy Committee, was closer to Schöllhorn.’ 17
The discussions in the group bring out the fundamental thinking of its members as regards the objective to be attained, the means of getting there and the recommended timetable. Priority issues were the pooling of the Six’s reserves and the establishment of a Community central bank. Mr Werner’s promptings at the preliminary meeting therefore took the form of a decision. The Commission representative was given responsibility for drawing up a note ‘describing the final stage of the process of economic and monetary integration, with a reference to the part to be played, at that stage, by common reserves and, possibly, a Community central bank.’ 18 The other members, ‘each according to the area for which he is responsible in his capacity as chairman of one of the EEC Committees’, were to draft a note describing the steps each planned to take to achieve the final objective. The group agreed that the chairmen were not obliged to consult their respective committees on either the drafting of these notes or the subsequent work of the group.
All these documents were discussed at the meeting of the Werner Committee in Brussels on 7 April.
Second meeting (Brussels, 7 April 1970)
By the time of this meeting, the ad hoc group’s documentary collection was supplemented with a forward-study note dated 31 March 1970 (and forwarded to the Werner Committee the same day), entitled ‘L’état de l’Union économique et monétaire en 1978 à l’issue du plan par étapes’ [‘The state of economic and monetary union in 1978 following completion of the plan by stages’], drawn up by the inter-directorate working party. 19 It dealt with monetary solidarity (the irrevocable fixing of the parities between EEC currencies, abolition of any possibility of exchange-rate fluctuation around the parity relationship between EEC currencies, general use of a European unit of account, a European Reserve Fund), taxation (harmonisation of indirect taxation and limits on VAT-rate variation between countries to around 2–3 %, substantial rapprochement in the area of excise duties, commentaries on the advisability of extending forms of direct taxation), capital markets, economic policy in general, specific economic policies and monetary, budgetary, structural and salary policies.
In response to promptings by the chairman at the inaugural meeting, Gerard Brouwers, Chairman of the EEC’s Conjunctural Policy Committee, drafted this confidential document entitled ‘La méthode de réalisation d’une union économique et monétaire, vue dans l’optique de la politique conjoncturelle’ (‘The method for the achievement of an economic and monetary union from the perspective of conjunctural policy’), 20 which he submitted to the other members of the Werner Committee on 3 April. This document did not aim to look at the question from every angle but to indicate the main priorities with regard to the establishment of a homogeneous common market for which short-term economic policy would serve as an instrument for optimum, balanced growth. 21 The main points of this note can be summarised as follows. If a Community of growth and stability were to be established, it was vital for the Community’s objectives to be clearly defined. To this end, a prior consultation procedure was deemed to be appropriate. This should contain a ‘system of indicators’ that would be able to identify points of divergence, delays and exceptions and would be accompanied by appropriate instruments for analysis, notably in the areas of statistics and forecasting. The countries would be able to agree on the creation of political instruments for direct action by means of specific legislation 22 or practices directly linked to the economic climate as part of a comprehensive structural policy. 23 All short-term economic policy instruments had to be harmonised, including budgetary policy instruments (the main matter at hand was the short-term economic impact of the volume of deficits and their financing) and monetary policy instruments. As progress continued to be achieved in policy harmonisation, the possibility that Community policy might be exercised by a central authority would take shape, and it was at this stage that national responsibilities in the area of short-term economic policy would be transferred to the Community, with considerable repercussions at institutional level. 24 Once the process of harmonisation had been concluded, the economic union could be completed by a monetary union. 25
The Chairman of the Medium-term Economic Policy Committee, Johann Baptist Schöllhorn, 26 submitted in turn to the ad hoc group, for discussion on 7 April, a document entitled ‘Wirtschaftsunion als Grundlage der Währungsunion’ [‘Economic union as a basis for monetary union’], 27 the title of which — stressing the primacy of economic union — was in fact a summary of the German view of the question. The Commission representative, Ugo Mosca, then tabled a document focusing on the first stage of a plan by stages and stressing the part to be played by capital markets. 28
In line with the concerns he had expressed as early as 11 March on the imminent accession of the United Kingdom, Mr Werner asked the Commission representative to look into the questions arising from setting up economic and monetary union with Community enlargement in prospect. A study 29 was drawn up and was distributed to the members of the group at the meeting of 7 April 1970. This document focused in particular on the implications of British accession for the coordination of economic policies, the capital market and taxation. The study looked in detail at the role of the pound sterling, 30 the strengthening of monetary solidarity and the consequences if the United Kingdom were to take part in the mechanisms of monetary cooperation, as well as the European Reserve Fund. 31
As the intellectual disagreements between monetarists and economists in the Werner Group grew more and more acrimonious, 32 and out of a concern to hammer out a common Benelux position, 33 Werner marshalled the political forces around the Belgian Finance Minister Jean-Charles Snoy et d’Oppuers and Baron Hubert Ansiaux, Governor of the National Bank of Belgium (and also a member of the committee of experts in his capacity as Chairman of the Committee of Governors of the Central Banks). It was in this context that the Finance Ministers and the Governors of the Central Banks of the three countries met in Brussels on 2 April 1970, on the invitation of Belgium, which was holding the presidency of the EC Council of Ministers at that time. The discussions focused on how the final objective of economic and monetary union should be defined, and what resources should be put into getting there, especially as regards monetary and credit policy, budgetary and fiscal policy, the integration of the capital markets, and in terms of institutions. 34 Issues raised also included the strengthening of monetary solidarity, the consequences of possible participation by the United Kingdom in the mechanisms of monetary cooperation, and the impact of the pound sterling on the European Reserve Fund.
Despite the efforts of all involved, the desired aim was only partially achieved. The Belgians and Luxembourgers shared the monetarist view of France, while the Dutch sided clearly with the German economists. This meant that there could be no agreement. On the other hand, the meeting was an opportunity for the Belgians to assert their position as supporters of the idea of setting up a currency equalisation fund, to offset the floating rates which were increasingly applied. 35 Even though the Dutch Minister Witteveen thought the priorities lay in other areas (he was concerned about the majority votes which would be taken in a monetary organisation and which would affect the Member States’ credit policy), 36 the Governor of the National Bank of the Netherlands, Zijlstra, shared the Belgian view, believing that a fund of that kind would be a way of making the currencies of the Six more independent from the dollar.
At the meeting on 7 April, the discussions between economists and monetarists were set off and stimulated largely by the tabling of the German paper with its calls for economic and budgetary harmonisation. Chairing the session, Pierre Werner — who appreciated the Germans’ views in principle but saw them as ‘too severe and not measured enough’ 37 — moved the discussion in another direction by launching, as a counter-proposal, the idea of the exchange stabilisation fund which was backed by Baron Ansiaux. The discussions 38 also focused on how the final objective of economic and monetary union should be defined, and what resources should be put into getting there, especially as regards monetary and credit policy, budgetary and fiscal policy, the integration of the capital markets, and in terms of institutions.
In line with the proposal he had made at the preliminary meeting, and as a way of organising the committee’s work in the future, the chairman proposed that an open-ended summary be drawn up, summarising the ideas set out in the various documents or verbally in the group. This summary — drafted by the chair with the assistance of the secretariat — would be tabled at the next meeting. The proposal was accepted and the group’s next three meetings were scheduled for 30 April in Rome and 14 and 20 May in Luxembourg.
Third meeting (Rome, 30 April 1970)
Rome hosted the third meeting of the Werner Group, following approaches by the Italian member, Gaetano Stammati, Chairman of the Budgetary Policy Committee. His request to the European Commission sparked off a great deal of discussion in the Secretariat-General, which, as it was in charge of the logistics of the ad hoc group, had to put in a great deal of effort. 39 Considering what was on the agenda, the preparations for this meeting had been very lively.
As the ideas, aims and strategies of Mr Werner and Baron Ansiaux were in line with each other and they knew each other well thanks to regular political and personal contact, they worked together on the questions relating to the exchange stabilisation fund and the reserve fund. The Luxembourg monetary plan submitted in February 1970 — based on the arguments Pierre Werner had published and developed since 1962 — allowed for mutual assistance to be incorporated, from stage one, into the international monetary relations system by partly assigning to it special drawing rights (SDRs) 40 from the various Member States and managing them on a Community basis. It would, he thought, be the first step towards the establishment of a reserve fund and this would give practical support for the medium-term monetary assistance which would shortly be decided upon.
Baron Ansiaux was gradually won over to the Luxembourg view and, at the meeting on 7 April 1970, came forward as the standard-bearer of an exchange stabilisation fund. On 22 April he sent Pierre Werner, at the latter’s request and on the letterhead of the National Bank of Belgium, a note on the ‘legal and technical aspects of a pooling of special drawing rights’, 41 particularly since ‘there had been a proposal in The Hague that the EEC countries should pool a part of their special drawing rights to support the creation of a medium-term credit fund’. 42 The Belgian document refers to SDR transfer operations between the EEC partners. Two days later, Baron Ansiaux responded to another request from Pierre Werner and sent him a confidential technical note ‘setting out the functioning and the merits of a European exchange equalisation fund’ 43 and highlighting the difficulties associated with stabilising the exchange rates between Community currencies. This document was debated at the Werner Group meeting on 14 May 1970 and amended as a result. The conclusions which emerged from it were included in the final report. 44
At the same time as his exchanges with Baron Ansiaux, the chair and the secretariat of the ad hoc group set about drafting a route map for the plan by stages. 45 It identified the starting point and defined the final objective and the requisite and desirable steps — in terms of economic policy, monetary solidarity and institution-building — to be taken to get there. Alongside this summary there was a list of the specific planned measures — especially for the first stage, which was regarded as having started — in accordance with medium-term Community regulations and directives. The document was sent to the members of the group on 22 April 1970 as preparation for the Rome meeting. 46
The Werner Group continued with its work in select committee form and in a confidential atmosphere. The media, which had given wide coverage to the Hague Summit and the appointment of Pierre Werner to head the group, fell silent, particularly since the committee of experts was sparing in the information it disclosed to the outside world. 47 However, the questions raised by the plan by stages aroused some degree of creative and participatory enthusiasm, which swelled when the final report was being written and continued after it had been published. Pride of place went to the Deutscher Gewerkschaftsbund, which, ‘being prepared to shoulder its share of the responsibility by taking part in the democratic decisions which the establishment of an economic and monetary union involves […] drew up a proposal for a plan by stages’, 48 which it submitted to the President of the European Commission, Jean Rey, on 20 March 1970, the very day that the Werner Group started holding its official meetings. This viewpoint was a valuable addition to the compendium of documents supplied to the group of experts.
In its proposal, the Confederation of German Trade Unions considered that ‘the objective of economic and monetary union is to bring about a sustainable enhancement in the material and moral well-being of the Community, which would help strengthen Europe’s economic and political position […] This objective can only be achieved through constant growth, full employment and stability and must go hand-in-hand with action to offset regional and social disparities’. 49 The first stage involved creating the requisite conditions at the national level for economic and monetary union, starting with action to examine, harmonise and, where necessary, create new social and economic policy instruments in the Member States. To establish what progress had been made, the Member States’ governments were to draw up and publish national economic reports every year. Then the national projections and planned measures would have to be harmonised between the Member States. In the second stage the requisite conditions for economic and monetary union had to be created at the Community level, and in the third stage it was expected to be completed. The social aspect therefore stood out as a particular focus of interest in the building up of economic and monetary union, something of which the Werner Committee was aware, as the plan by stages was to demonstrate.
Academic and university circles in Europe and the United States were very interested in the Werner Group’s work, especially since, as well as working out practical solutions, it produced theoretical definitions relating to economic and monetary union. When the Commission representative attended a seminar on the optimum monetary zone in Madrid at the beginning of February 1970, he was asked to give the university teachers there, especially those from the United States, information about the various plans for building economic and monetary union by stages and to supply them with the relevant documents. There were more than a dozen requests, but in the end only those from Prof. Triffin and Prof. Machlup 50 were met. The other requests were met later through the good offices of the directorate of the Commission. 51
Following the meeting on 30 April 1970, the group adopted, as its report to the Council, ‘a model including a description of the present situation, the finishing line and the principles to be followed in carrying out the plan by stages,’ 52 and decided — at least for the purposes of this report — to confine itself to a definition of the first stage, containing the steps which should be taken in various fields.
For the organisation of its work, the group decided ‘to delegate the writing of a draft report to the assistants […] who will meet on 6 and 8 May under the chairmanship of Mr Mertens de Wilmars’ 53 Jacques Mertens de Wilmars, an economist and professor at the Université Catholique de Louvain and economic adviser to the National Bank of Belgium, was close to Baron Ansiaux, whom he assisted in the Werner Group.
Fourth and fifth meetings (Luxembourg, 14 May and 20 May 1970)
On the agenda for the fourth meeting was a further exchange of views on economic and monetary union. The deputies’ group was expected to supply a draft report as a basis for reflection so that a final document could be drawn up by July to meet the deadline set at the outset.
The experts’ group 54 met for this purpose, as planned, in Brussels on 6 and 8 May, with support from the Commission’s Directorate for Economic and Financial Affairs, whose Director-General Ugo Mosca was also a full member of the Werner Group. The Pierre Werner family archives mention a ‘Draft Report to the Council and the Commission’ in the form of a ‘Plan by stages for the establishment of economic and monetary union’, dated 11 May 1970, which was submitted to the Werner Group secretariat by Jacques Mertens de Wilmars. In a covering letter sent with this confidential document, Mertens de Wilmars pointed out that ‘the experts have not heard decisions being taken on certain issues of principle which remain open, even though the text of their draft includes proposals and solutions relating to those issues’. The sensitive subjects included the transfer of responsibility from the national to the Community level without engendering lasting tension, medium-term conjunctural policy, the necessity for the main decisions on monetary and credit policy to be taken in common, and real decision-making power being given to the Community bodies. The group concluded that the establishment of economic and monetary union must be embarked on in an evolving, gradual manner, building on the measures already adopted to enhance the coordination of economic policies and monetary cooperation. It should be noted that, while aware of the need for economic and monetary policies to be developed centrally (even if the decision-making power remained in the hands of the existing structures), the Werner Committee stated straight away that it was not in a position to make proposals regarding political structures. 55
The two plenary sittings of the Werner Committee held in Luxembourg on 14 and 20 May were undoubtedly the occasion for hard-fought discussions and arguments. There are no minutes, even summary minutes, of them in the archives. In his memoirs, Werner tells us that ‘after five working meetings studded with arguments, not to say incidents of various kinds, we are nevertheless managing to put forward a summary view of the questions raised, in the form of an interim report to the Governments.’ 56 If we put all these elements together, one theory could be that when the interim report was being written, there were such confrontations going on within the group that it was impossible to reach any unanimous conclusions. This means that a fundamental principle of the group — and one adopted at the outset of its work — was breached. The reason why there were no minutes may, therefore, be not so much that there was negligence on the part of the secretariat but the profound differences of opinion among the members. Mediation by Mr Werner from the chair would then have played a decisive part in putting the different factions back together. At the end of the fifth meeting, agreement was reached on the text of the interim report 57 and it was sent to the Finance Ministers and the Presidents of the Council and the Commission on 22 May 1970.
The German version of the interim report caused yet more friction: in a dispatch to the secretary of the Werner Group, Hans Tietmeyer, on behalf of State Secretary Schöllhorn, ‘draws attention to the fact that the German text […] is not in keeping with the decisions the Werner Group took in Luxembourg. On a proposed amendment put forward by Director-General Mosca, the group agreed on the following text: “These transfers of responsibility represent a process of fundamental political importance, entailing the gradual development of political cooperation in the various fields.” The text given in the present document (“these transfers of responsibility entail the gradual development of political cooperation in the various fields”) is a considerable weakening of the originally agreed wording. Mr Schöllhorn is very concerned that the political character of economic and monetary union should be clearly and unequivocally stated.’ 58
Further work by the Werner Group
On 29 May 1970, the Finance Ministers met in Venice, under the chairmanship of Valéry Giscard d’Estaing, to debate the aims of economic and monetary union. The governors of the central banks of the Six, the Chairman of the Monetary Committee, Bernard Clappier, and the Chairman of the Committee of Alternates of the ‘Group of Ten’, 59 Rinaldo Ossola, 60 were also invited to attend.
The agenda for the first day of this session of the Council of Ministers included multi-year projections for the Community budgets, 61 the use of budgetary policy as an instrument for short-term economic policy, 62 and the need for a push towards fiscal harmonisation. 63 A special section was devoted to the issues arising from the question of monetary integration in the Community and international monetary aspects. 64
On the second day, discussions focused on the interim report. 65 Pierre Werner gave a summary account of the conclusions reached by the group of experts, identifying the points on which members agreed and disagreed and the questions which required further discussion. The debates were lively and threw up contradictions but led to no decisions as to the priorities for economic and monetary union. 66 Karl Schiller noted the fundamental political importance of the planned process and emphasised the need for further reflection on the transfer of responsibilities to the Community bodies. With regard to institutional aspects, he suggested ‘a body [that would be] given responsibility for short-term economic policy and a body tasked with the central preparation of decisions in the monetary field. The latter body should be federal in nature and should be given a large degree of autonomy from political authorities.’ 67 Schiller was against setting up the exchange stabilisation fund during the first stage and against reducing the margins for fluctuation, seeing this as premature. France, represented by Giscard d’Estaing, emphasised that the political architecture of economic and monetary union was a question of perspective, and that therefore a body with federal-type responsibilities was a matter for the final stage and it was not yet appropriate to go any further. It was important to concentrate on the first stage, in which he believed that ‘economic convergence was not a prerequisite for monetary progress’. 68 Belgian Minister Snoy et d’Oppuers took the same view. He also shared the French opinion on the implementation of an exchange stabilisation fund during the first stage. In his address, the Dutch representative (Mr Drees speaking on behalf of Minister Witteveen) turned his attention to a question raised by the Werner Group’s interim report. Should six currencies or one single currency be envisaged? He believed that retaining six national currencies involved a degree of risk. ‘A currency always reflects the confidence we have in a government responsible for managing economic and monetary policy. […] For the final stage of economic and monetary union, a single currency should be planned. On the other hand, there could be several national banks within a “federal reserve” system, but this must be independent from the governments.’ 69
Exchange arrangements were the area which sparked off the most discussions. Pierre Werner gave his views on the economic implications of the various exchange systems, such as the impact of reducing the margins for fluctuation on interest rates. Baron Snoy et d’Oppuers stressed that the report must set out the economic consequences of a special monetary regime for the Six. Valéry Giscard d’Estaing wanted the technical conditions which would have to be brought about if such a regime were to be implemented to be clearly defined. Minister Colombo and Governor Zijlstra both proposed that the group, working with the Committee of Governors, should consider whether the stabilisation fund could not be replaced, as a first step, by greater cooperation between the central banks as regards their intervening on the exchange markets. Baron Snoy et d’Oppuers emphasised the need to consider both the advantages and drawbacks of an exchange stabilisation fund. This idea took shape a few days later, in the form of a common strategy worked out by Mr Werner and Baron Snoy et d’Oppuers according to which the task of delivering technical opinions on the monetary problems under consideration would be delegated to the Committee of Governors of the Central Banks (we will come back to this point later). Lastly, Raymond Barre gave the Commission’s view on what was expected of this new period of reflection. The Werner Group would have to make it clear that there were three levels which needed to be reached one after the other: concerted policy by the central banks in this field and in terms of their interventions on the foreign exchange markets, followed by the use of Community currencies in intra-Community settlements (and a preliminary cut in margins) and, lastly, the setting up of an exchange stabilisation fund.
Summarising the conclusions of the meeting, the Italian Minister Emilio Colombo firstly noted that general agreement had been reached on a large number of suggestions formulated by the Werner Committee. The ultimate aims of economic and monetary union as identified in the interim report were considered to have been accepted. In this gradual process, there would be specific objectives for each stage, the first of which — lasting three years — would involve specific, stringent goals in the areas of coordination of economic policy and monetary aspects. These processes had to be carried out in parallel. There were no longer any differences of opinion with regard to the fundamental options concerning the need for a coordinated budgetary policy, quantitative objectives for a medium-term economic policy, coordination of short-term economic policy and consultation with both sides of industry (the ‘social partners’) to determine an income policy. Concerning this matter, it was noted that the related consultation procedures would have to be made more precise and more stringent.
At the end of the Venice session, the Council of Ministers approved the interim report and reached the unanimous conclusion that the group should continue its work with a view to reaching the requisite agreement on the issues in dispute and make further progress on the questions on which there was consensus. The ministers asked the Werner Group to determine the obligations of the Member States in coordinating economic policies to reach convergence in economic development. The aims and instruments that would enable the integration programme to be achieved should be set out in as much detail as possible. It was important to analyse whether these instruments could be created on the basis of the existing treaty or whether it had to be amended. The results of this reflection were to be set out in a final report
Emilio Colombo proposed that the structure of the final report should be better defined and the specific targets and instruments of the monetary integration programme be more clearly stated. Pierre Werner suggested a series of ‘warning lights’, 70 to give the alert when sensitive situations arose in that area. Regarding monetary and budgetary policy, the Governor of the National Bank of the Netherlands supported precise criteria for the adoption of a budgetary stance (structure, main areas, deficit and financing), and Werner also wanted to enlist the skills of G. Stammati, B. Clappier and Baron Ansiaux in defining them. J. Zijlstra then proposed making a more thorough study of ways of harmonising monetary policy instruments. Werner suggested that the report should include proposals for the harmonisation of monetary and credit policy. Although the ministers were in agreement on many common conclusions, there were still differences of opinion, notably regarding the creation of an exchange equalisation fund prior to a common reserve fund. Nevertheless, it seemed essential to improve coordination of the policies of intervention by the central banks on the exchange market.
In preparation for this meeting, Pierre Werner had several conversations with Jean Monnet. The first was about the monetary individualisation of the European Community. Monnet was asked to use his good offices to consult the Director of the IMF, Pierre-Paul Schweitzer. The IMF had no objections to Europe adopting a common or even single currency. The two men then held lengthy discussions on the exchange stabilisation fund and the influences that needed to be harnessed for this to become a reality. On this topic, Monnet made a point of recommending Pierre Werner ‘not to rush the decision on the exchange stabilisation fund too much, because there would not be unanimity on the question. His concern doubtless echoed that manifested by Willy Brandt, whom he advised me to contact when the time was ripe.’ 71 Monnet’s counsel of moderation was very probably prompted by the heated discussions that had taken place at the last two meetings of the Werner Group, during which the chairman of the group and the Chairman of the Committee of Governors of the Central Banks had been particularly voluble on the subject of the exchange stabilisation fund.
Discussion of economic and monetary union was the main item on the agenda for the Council of Ministers, which met in Luxembourg on 8 and 9 June and approved a continuation of the work on the basis of the interim report. ‘The discussion as such did not lead to anything new, except that the Dutch minister, Mr Witteveen, carried Mr Schiller’s position further by making further demands on the institutional front.’ 72 A primary aim was the establishment of economic and monetary union within ten years (from 1 January 1971). ‘With a view to getting its decisions implemented and in order to obtain a definition, as quickly as possible, of certain institutional and technical aspects of the agreements reached, the Council called on the ad hoc group chaired by Mr Werner to submit its final report to it at the beginning of September 1970. It made clear what its remit was by instructing it, in particular, to draw up, in specific terms, practical arrangements for the first stage.’ 73
Pierre Werner set out the work involved in the plan by stages and the content of the interim report, and went on to stress the need for further discussion of the issues. In his handwritten notes for the speech, 74 continuing along the lines already laid down in Venice, Werner said he believed there should be six priority subject areas for these further discussions. These were additional study of the institutional aspects, and the devising and setting up of effective instruments — obligations combined with sanctions — for the coordination of short- and medium-term economic policy. ‘Limited, specific proposals as to budgetary policy’ would have to be worked out, and further thought given to deficit financing and the effects of a policy of general liquidity on the economic system. Another area was the overall harmonisation of monetary policy and credit policy instruments. As far as exchange regulations were concerned, he specifically made provision for ‘consulting the governors’. He also recommended ‘examining all the existing funds’ (in this connection the name of Triffin, and his definition, were noted). We do not know whether Pierre Werner stuck to the same order of subjects in his speech as in his notes, but all the proposals in them appeared in the Council’s decision on continuing the work of the group. It also stipulated that the views of the Committee of Governors of the Central Banks on specific monetary problems should be sought.
The Venice meeting probably led to further informal discussions between the members of the committee, the Finance Ministers and the Vice-President of the Commission, Raymond Barre. In Pierre Werner’s private papers we found a document with no letterhead, date or signature entitled ‘Travaux supplémentaires du groupe ad hoc “plan par étapes” à la suite de la conférence des ministres des Finances de Venise’ [‘Further work of the ad hoc “plan by stages” group following the Venice conference of Finance Ministers’) 75 — with handwritten comments by Pierre Werner. These notes refer to proposals on the main lines of action (on which, in all probability, there was general agreement) and say who made them. Specific points of view are also highlighted. It emerges from this that four main lines for further progress were worked out: the institutional field, 76 stepping up the coordination of economic policies, 77 budgetary and monetary policy and exchange arrangements.
This document was probably the outcome of direct collaboration between Pierre Werner and the secretary of the ‘plan by stages’ committee, Georges Morelli, who not only managed all the information and documentation but also took part in all the meetings relating to the work of the group (meetings of ministers, meetings of various committees of experts, the inter-directorate working party at the Commission, etc.). The proposals were expanded and, together with practical measures, appeared some time later in the route map for further discussions in the Werner Group.
The contribution Pierre Werner made to defining how the work was to continue was a significant one. Because of his authority as group chairman and his know-how in the area of negotiations, the group’s proposals were taken up by various decision-making bodies (Finance Ministers and the Council of Ministers) and translated into official decisions. A telling example is the special involvement of the Committee of Governors of the Central Banks in the group’s work. 78 As it had been fairly obvious since 22 May that the group would be carrying on with its work, Pierre Werner continued to explore ways to move forward and the arguments to be worked on and carried on a constant, often confidential dialogue with Baron Ansiaux. Their exchange of letters between 3 and 12 June shows that the two men, confident of the vital part the Committee of Governors could play in setting up the exchange stabilisation fund, put together a cunning strategy. Pierre Werner asked Baron Ansiaux to draft a proposal for a letter which the chairman of the ad hoc group (Werner) would send to the Chairman of the Committee of Governors of the Central Banks (Ansiaux) asking the committee to deliver opinions on several matters. The letter was about the exchange arrangements — in particular, a shrinking of the margins between the currencies of the Common Market countries; the advantages and disadvantages of an exchange stabilisation fund in the first stage; and consideration of what should be accomplished during the first stage in order to tighten up monetary policies. There was an effective intellectual complicity between the two men and they shared the same view on the exchange stabilisation fund. Within the group, collaboration between them had already produced results in terms of steering the discussions: in April 1970 Baron Ansiaux, at Pierre Werner’s request, put forward his thoughts on the functioning of an exchange equalisation fund, a favourite topic of his, and on SDRs.
As the Council Decision of 9 June 1970 recommended seeking the opinion of the Committee of Governors of the Central Banks, three days later Pierre Werner, in line with the strategy he had worked out with Ansiaux, sent a letter to the Chairman of the Committee of Governors asking for its opinion on certain technical and economic aspects of the setting up of a special exchange system for the Community. The previous day, through diplomatic channels, Pierre Werner had received comments from Bernard Clappier, Chairman of the Monetary Committee, supplying him with further details regarding technical procedures and the consequences of reducing the margins for fluctuation, and on the questions surrounding the exchange stabilisation fund. 79
On 16 June, Baron Ansiaux sent Pierre Werner a reply undertaking to supply an opinion by 15 July, focusing ‘on the advisability of harmonising monetary policy instruments and effectively tightening up the Member States’ monetary policies’. 80 The detailed study on the measures to be adopted, on the other hand, was postponed until the last three months of the year (1970), to be carried out as and when the information available would make it possible to reach specific conclusions. This was a prudent approach. Baron Ansiaux at once set about convening the committee of experts, 81 which held its inaugural meeting on 25 June 1970. After holding five other meetings, 82 the committee delivered its opinion.
Sixth meeting (Luxembourg, 24 June 1970)
With the backing of the mandate given to him by the Council Decision of 9 June, Pierre Werner convened the sixth meeting of the group, which was held in Luxembourg on 24 June 1970. At the beginning of the sitting, he told his colleagues that they needed to continue with their work, to return to problems which had been left unresolved in the interim report and supply the additional information requested. In the ensuing discussion, the argument between economists and monetarists broke out again. J-B. Schöllhorn, sticking to his earlier position, repeated that the group must focus its efforts on economic policy coordination. G. Brouwers endorsed this view. On the monetarists’ side, B. Clappier and H. Ansiaux played an active part while G. Stammati stayed more in the background. The debate was open and passionate, with Pierre Werner tending to side with the monetarists, 83 although he abided by the chairman’s obligation to remain balanced and by the need to push for a ‘parallel movement’ approach to economic and monetary progress. To give them an opportunity to explain and argue their shared point of view, the Dutch and German members, working together with the Commission representative and the group secretariat, were asked to draw up a note setting out ‘the ideas which might be put forward with regard to tightening up the procedures for economic policy coordination’. 84 The Dutch member was also responsible for submitting a note on the kind of institutional problems that would appear at the final stage of economic and monetary union.
To put the finishing touches to the interim report, of which a first draft had been requested for the end of August, the group’s working timetable made provision for the following four meetings: 7 July 1970 in Paris, 27 July and 11 September in Luxembourg and 25 September in Copenhagen, at the Annual Meeting of the Governors of the International Monetary Fund. 85
Pierre Werner carried on his informal dialogue with Baron Ansiaux, who was incidentally very close to Robert Triffin, and tried to find a path to appeasement in a dispute which was becoming increasingly heated. The German position, which was supported by the Dutch representative, was becoming more entrenched and thereby jeopardising hopes of a consensus and final agreement. Ansiaux wrote to Triffin on 23 June 1970, with a copy to Pierre Werner. In his letter he asked Triffin to exercise his good offices. Baron Ansiaux was sorry that ‘[his] initiatives are not meeting only with approval; our German and Dutch friends, in particular, are fiercely opposed to them. They say that nothing can be accomplished in the monetary area until complete convergence in economic policies has been achieved.’ 86 He then went on to summarise the nub of his position, arguing for ‘progress in parallel, which can be accomplished in both the monetary and the economic fields, and that parallel progress on the monetary question will support that which must be made in the economic field.’ 87 As regards the exchange stabilisation fund, Ansiaux asked Triffin to help him ‘[...] by getting the Germans to accept the idea; once the Dutch are isolated, they will surrender in the end, although they will be very difficult in the negotiations.’ 88 We also learn from the letter that Jean Monnet had also been asked to give his backing for this position, but that he did not do so. ‘Jean Monnet never brought out his paper and he said nothing to the Germans at all.’ 89
Robert Triffin sent his reflections on the interim report directly to Pierre Werner in a document entitled ‘Vers l’union économique et monétaire de la Communauté’ [‘Towards economic and monetary union in the Community’]. This document, in which the principle and the spirit of ‘parallel movement’ were fully shared, left its mark on the subsequent work of the Werner Committee, which made this principle the backbone of the final report.
Seventh meeting (Paris, 7 July 1970)
On the sidelines of the Finance Ministers’ meeting, the Werner Group met in Paris on 7 July.
On 3 July, the Chairman of the Budgetary Policy Committee, Gaetano Stammati, at the chairman’s request, drew up a note on stepping up the coordination of economic policy and proposed to submit it at the meeting. At the same time, the note drafted by the Germans and Dutch, in collaboration with the Commission member and the group secretariat, was produced. Focusing on increased coordination of economic policies, it pointed to the fundamental part which must be played by two Community bodies: the Council of Ministers for Economic Affairs and the Committee of Governors of the Central Banks.
These two documents were the focus of discussion at the meeting of the ad hoc committee. In his oral presentation, Stammati enlarged on some of the subjects covered in his written note, particularly taxation. So as to have available to it complete, detailed papers on the matter under discussion, the group asked for the original note to be expanded and for additional information to be supplied in relation to the coordination of budgetary policies, ‘particularly as regards the degree of fiscal harmonisation which should be planned for at the various stages in the establishment of economic and monetary union and in drawing up the calendar for work on budgetary issues.’ 90 The note by the Dutch representative on institutional aspects was not discussed, probably for lack of time. These three documents were therefore placed on the agenda for the group’s next meeting, which was scheduled for 27 July 1970 in Luxembourg.
Pierre Werner took advantage of being in Paris to have private meetings with Jean Monnet on two occasions, on 7 and 9 July, if we are to believe a note of telephone conversations and a handwritten slip of paper by Pierre Werner. 91 We do not know what was said, but it is highly likely that the two men discussed how to exert influence — especially on the Germans and the Dutch — to make sure that the work of the group produced an outcome.
Eighth meeting (Luxembourg, 27 July 1970)
At the eighth meeting, held in Luxembourg on 27 July, the group continued with its exchange of views on various points to be covered in its final report. G. Brouwers put forward for discussion a paper on the institutional aspects which also dealt with transfers of sovereignty from the second stage of the plan onwards. 92 Monetary union, as defined in the interim report, 93 inevitably implied the transfer of powers in some areas from national bodies to Community bodies, one of whose main responsibilities was the efficient management of short-term economic policy. As a result, and with regard to the requirements of the final stage, a high degree of harmonisation of short-term economic policy instruments in the Member States had to be established from the first stage. Two bodies seemed essential for the effective management of short-term economic policy. The first was a central policy body that could have a decisive influence on the deflationary and inflationary effects of national budgets and would govern the access of national authorities to the Community’s capital market. 94 A common central bank was then to be created and would be given responsibility, in the Community, for issuing banknotes, for credit policy, for managing official currency reserves and for maintaining the external value of the currency. 95 Given that the implementation of such a system would require significant changes being made to the Community institutional structure, new treaty provisions would be needed. 96
G. Stammati, and the secretariat, presented their respective rewritten notes. The group ‘debated in detail the practical arrangements for a harmonisation of short-term, budgetary and medium-term policies. A great deal more material was added to this chapter in the course of laborious discussions.’ 97
Having regard to the documents already drafted and the remarks made in the course of the discussions, the group considered that a preliminary draft report to the Council could be written. ‘This report, which will retain the structure of the interim report, will nevertheless leave open those points which are to be the subject of the report by the Committee of Governors of the Central Banks and of the note drawn up by Mr Ansiaux and Mr Clappier.’ 98 The group secretariat was instructed to draw up the preliminary draft and submit it at the next meeting, which was scheduled to be held in Luxembourg in two stages: 10 September, in the afternoon, and 11 September all day.
The secretariat of the ‘plan by stages’ group, urged on by G. Morelli, moved very fast and on the day after the eighth meeting, 28 July 1970, drew up a provisional version of the preliminary draft report. 99 This version was reworked in a select committee consisting of U. Mosca, H. Tietmeyer, A. Looijen and J-M. Bloch-Lainé. 100 ‘Leaving Part VI vague and drawing up […] no conclusions was deliberate, the point being to leave room for manoeuvre in discussions on the monetary mechanisms.’ 101 The document was immediately forwarded to Mr Werner as chairman and then submitted to the group by official dispatch on 27 August, so that the substance of it could be debated at the meeting on 10 September.
On 4 August, Pierre Werner received another document. Baron Ansiaux sent him a personal letter containing the report which the experts from the central banks had drawn up for the Committee of Governors. Ansiaux told him that ‘it [the Committee of Governors] will adopt the opinion you have asked it for at the meeting on 12 September next, so that you can have it before you before the meeting your committee is holding in Copenhagen.’ 102 The reason for the very confidential nature of this letter — this time the addressee was Pierre Werner as Minister for Finance and not as Prime Minister (the holder of that post was subject to additional administrative constraints as regards the processing of mail) — was that it was an internal working document of the Committee of Governors which had to remain confidential until it was published or officially forwarded. This document 103 — subsequently approved by the Committee of Governors and included in a special section of the final report — was dated 1 August 1970.
Ninth meeting (Luxembourg, 10 and 11 September 1970)
The Werner Group held its ninth session on 10 and 11 September in Luxembourg. The agenda included consideration of the main lines of the preliminary draft report drawn up by the secretariat. Baron Ansiaux, with Bernard Clappier, drafted a note containing proposals regarding the points to be included in the final report on domestic monetary policy. The note stressed the need for setting quantitative and operational criteria in each of the Member States, taking account of the differences between their economic and banking structures, for the desired short- and medium-term development of the liquidity supply. It also covered the setting up, during the first stage, of a practical programme of measures that it would be desirable to take to harmonise monetary policy instruments applying to banks and credit institutions, in order to cut down on the problems caused by the opportunities available to banks to sidestep the constraints of monetary policy. It also stipulated that central banks should be able to use the instrument of regulating the net position of banks (setting limits on asset/liability positions, etc.).
Following discussion of these subjects and, in particular, the points made in the Ansiaux–Clappier document, it was agreed that the secretariat should draw up a new draft report incorporating them. It was to be discussed in Copenhagen on 23 and 24 September 1970.
Tenth meeting (Copenhagen, 23 and 24 September 1970)
The annual meeting of the International Monetary Fund and the World Bank in Copenhagen (19–26 September) provided a setting for the tenth meeting of the Werner Group, which was held in two parts, as the previous one had been. Two archive documents, however, show that at least one extra meeting was held on 25 September 1970. 104 The fact that the technical preparation was taken on and the entire cost borne by the Federal Ministry of Economic Affairs and the German Embassy in Copenhagen suggests to us that the meeting in question had been requested by Germany 105 and that, after the debates and discussions which took place, and after confidential mediation on various occasions, a way was found to reach a compromise with the Germans and very probably with the Dutch too, so that the group was able to adopt a common position. No minutes of this meeting seem to have been produced, and given our theory on the way in which the Werner Committee reported on its tense meetings, 106 we can draw the conclusion that it was probably marked by disagreements and dissensions.
Priority in the debates in plenary session was given to the report from the Committee of Governors of the Central Banks and to defining the content of the final chapters of the report, which had still to be written. ‘The Committee of Governors supplied a technical report which was valuable later, but for the moment it remained very cautious as regards political initiatives.’ 107
The IMF meeting and the many associated protocol occasions gave the members of the Werner Group and the Finance Ministers of the Six opportunities for informal conversations with their American colleagues and other international officials and experts, and thus for sounding out their views and eliciting their comments on various aspects of the plan by stages. Pierre Werner’s private diaries mention two meetings with the Chairman of the IMF, whom he had already consulted on Europe’s monetary identity through Jean Monnet, and talks with the Chairman of the Federal Reserve Board of the United States, Arthur Burns. Pierre Werner, though, was regularly in contact with the federal and political authorities in the United States. His good relations with financial circles across the Atlantic and with Luxembourg bankers who were especially active in the United States, and his cordial relations with the US Ambassadors in Luxembourg, all gave him opportunities for compiling the information he was interested in for the international dimension which the plan by stages entailed. 108
The group agreed to meet in Luxembourg on 7 October 1970, on which date the secretariat was to draw up a final draft report.
Eleventh meeting (Luxembourg, 7 October 1970)
At the end of the meeting on 11 September, the group secretariat, led by Georges Morelli, set to work on writing the draft report, incorporating the structure and the subject matter decided on during the discussions. A first rough outline was dated 14 September 109 and a second 18 September 1970, 110 but these documents changed over time. This happened firstly with the contribution by H. Tietmeyer, A. Loijen and J-M. Bloch-Lainé, who had also intervened during the drafting of the interim draft report and who this time met in select committee on 17 September 1970. 111 The alternate members of the group also met on two occasions on 29 September 1970, in Brussels, under J. Mertens de Wilmars. 112 Pierre Werner was sent the working versions of the draft final report as they came out, and made suggestions and amendments on them which the group secretariat gradually incorporated.
On 7 October, the day before the Council of Ministers was to meet, the group met in Luxembourg to put the finishing touches to the report and approve it. It was not an easy task, and the fact that there are no minutes or other documents reporting what happened at the sitting proves that the discussions were heated, as they had been at the rowdy fourth and fifth sittings. Clearly, the focus of the arguments was the establishment of an exchange stabilisation fund. The rigid attitude to this displayed by the Germans, and possibly by other members, was not encouraging when it came to finding a compromise solution. In his memoirs, Pierre Werner tells us that ‘[…] Schöllhorn insisted that we propose the establishment of the stabilisation fund only during the second stage, before which in any case the matter had to be given detailed consideration. At the risk of jeopardising the unanimity of the group, I felt that I had to take a tougher stand. I was certain that a plan which made no provision for any innovation on the monetary front in the first three years, and involved nothing but pushing forward procedures for harmonising economic and budgetary policies without any monetary incentives to support it, would very probably become bogged down in interminable discussions at the Community level. […] What is more, Raymond Barre’s proposals called for a new financial facility. The plan, to which the members of the group proposed to attach my name, could not simply disregard my earlier initiatives in that area. I therefore very firmly called for the fund to be created in the first stage. My point of view was supported by Ansiaux and Clappier. There was still fierce opposition, nevertheless. In the end, after heated debates, everyone did their bit to avoid a failure, and I secured a compromise which was accepted unanimously.’ 113
So, after seven months of work, discussions, arguments, horse-trading and reversals, the final report 114 was approved. On 8 October 1970, as chairman of the group, Pierre Werner officially presented the plan for the achievement by stages of economic and monetary union in the Community to the Council of Ministers’ meeting in Luxembourg. ‘I had managed to avoid a report that was fragmented by differences of opinion on important points. The price of this unanimity was a rigour in our thinking that we might have feared would hinder the implementation of the plan. […] Soon the Community would be exposed to monetary upheavals that would have an impact on the priorities as we had envisaged them.’ 115
In its first edition, officially submitted to the Council of Ministers and to the EC Commission on 15 October 1970, this document bore the subheading ‘Werner Report’, which the members of the committee of experts had unanimously decided to give it as a tribute to their chairman. 116 Some days later, when the official report was sent to the European Parliament by the Commission of the European Communities, this heading was omitted, and was subsequently systematically forgotten. We do not know why this happened, but we might imagine that the Commission — which, through its DGII, was in charge of the technical secretariat of the Werner Committee — had something to do with it. The words spoken a few weeks later by Commission Vice-President Raymond Barre are particularly enlightening: ‘I would like to restate […] that it is not reports, plans or statements of intent that count, but decisions. […] And that is the responsibility of the Commission and the Council.’ 117
On 26 October 1970, the Council of Foreign Ministers met in Luxembourg to take official delivery of the report on the achievement of economic and monetary union in the Community. Pierre Werner, chairman of the committee of experts but also host of the meeting in his capacity as Prime Minister of Luxembourg, launched discussions with a brief, tightly-worded statement. Looking back over the way the process of reflection in the ad hoc group had evolved, Pierre Werner highlighted the legitimacy of the conclusions in the interim report, which had been approved by the EC Council of Ministers at its session of 8 and 9 June 1970, as well as the efforts the experts had put into going more thoroughly into certain specific questions. The closing words of Pierre Werner’s statement provide, perhaps, the best key to a reading of the aim in view: ‘I am happy to note that on all these aspects we forged a unanimous collective view. Of course these joint replies do not reflect all the individual preferences of the members of the group. But we do think that having looked at the question from all sides, at long sessions where we compared a range of ideas, we have succeeded in giving shape to the wish for proceeding in parallel on the measures to be taken in the economic and financial fields. What we aspired to do was, once and for all, to break the vicious circle consisting of setting prior economic and political conditions. We have tried to draw a line midway between the view that monetary union is the crowning glory of European integration and the view that would turn it into the virtually all-powerful engine driving integration. I think the proposals are in line with the existing treaties, and that they do, precisely, ensure that the objectives of the treaties will be achieved in full. Thus for stage one we can go a great deal of the way without amending the treaties. However, there must be a strong political will backing up this process all the time that it is being put into effect.’ 118
2 See chapter 5, ‘The implementation of the Werner Report’.
3 The Belgian capital was an obvious setting for the meetings, as it was a permanent capital of the Community institutions and Belgium held the Presidency of the Council of the EEC in the first half of 1970.
4 At the express request of the Italian Finance Minister, who wished ‘to demonstrate clearly Italy’s commitment to the path of economic and monetary union’ and to reassert Rome’s place among the active players in moves towards European integration. Documents in the archives show that satisfying this political request put the Commission under a great deal of stress from a logistical viewpoint. Pierre Werner family archives: European Commission, Secretariat-General, Request for authorisation to hold a meeting outside Brussels, pursuant to Note No. S/01875/64 of 26 June 1964 from the Executive Secretariat, 13 April 1970, 3083
5 See subsections 1.3.1, ‘The first and second Barre Plans’, and 1.3.3, ‘Monetary plans drawn up by Belgium, Germany and Luxembourg (January–February 1970)’.
6 These are the handwritten notes Pierre Werner made when preparing for the opening of the Werner Group’s discussions. The document contains various remarks on the Snoy Plan, the Schiller Plan and the first Barre Plan (submitted respectively by Belgium, Germany and the Commission at the meeting of Finance Ministers on 24 February 1970), which therefore influenced Pierre Werner’s own stance. This note, which can be dated to between 25 February and 10 March 1970, was also the basis for his speech inaugurating the Werner Committee’s work. Pierre Werner family archives, ref. 047. (Document consulted on 10 October 2012.)
7 List drawn up by the Directorate-General for Economic and Financial Affairs, Commission of the EC, dated 29 January 1970. (Document consulted on 10 October 2012.)
8 Set up by the Note of the EC Commission No 700225 of 26.01.1970.
9 The Pierre Werner family archives show that the terms of engagement for the experts sitting on the ad hoc committee (full members, alternates and associated specialists) in terms of remuneration and protocol were secured by a proposal made by Commission Vice-President Raymond Barre to the Commission. Source: Ref. II-DG/AM.1f/13.III.1970, p. 0029, Historical Archives of the Commission, Brussels
10 The Action Committee for the United States of Europe (also known as the Monnet Committee), founded on 13 October 1955 by Jean Monnet, assembled trade union and political forces in the six Community countries (representing over 10 million unionised workers). The committee held its first session in Paris on 18 January 1956. Its overriding objective was to help bring the treaties for the Common Market and Euratom to a successful conclusion. The treaties signed in Rome on 25 March 1957 were voted by the six parliaments in the same year.
11 We reached this conclusion as a result of our researches into the Pierre Werner family archives, particularly as regards the papers in the cases marked ref. PW 036, entitled ‘1962–1971. La monnaie de compte. L’unité de compte. Le dollar comme monnaie de réserve’ [1962–1971. The currency of account. The unit of account. The dollar as a reserve currency]; PW 046, entitled ‘L’intégration monétaire de l’Europe 1962–1969’ [The monetary integration of Europe 1962–1969]; PW 047, entitled ‘Groupe Werner: Antécédents, préparatifs et réunions 1968–1970’ [Werner Group: Antecedents, preparations and meetings 1968–1970]; PW 048, entitled ‘Intégration monétaire de l’Europe. Le Plan Werner: 1970’ [Monetary integration of Europe. The Werner Plan: 1970]; and PW 054, entitled ‘1972–1973. Union économique et monétaire. Fonds européen de coopération monétaire’ [1972–1973. Economic and monetary union. European monetary cooperation fund].
12 Ibid. ref. PW 036, PW 047 and PW 048.
13 Letter from Raymond Barre to the Members of the Commission dated 13 March 1970. Source: Ref. II-DG/AM.1f/13.III.1970, p. 0029, Historical Archives of the Commission, Brussels. In this request, Raymond Barre refers both to aspects of protocol and also remuneration of the experts, for whom a derogation to the Commission regulation was applied.
14 Werner, Pierre, Itinéraires luxembourgeois et européens. Évolutions et souvenirs: 1945–1985, 2 volumes, Éditions Saint-Paul, Luxembourg, 1992, Volume 2, p. 122
15 Ibid., p. 126
16 This point is dealt with in detail in section 3.4, ‘Economists v. monetarists — agreements and clashes in the drafting of the Werner Report’.
18 Draft minutes of the first meeting of the ad hoc ‘plan by stages’ group, 20 March 1970, European Communities, secretariat of the ‘plan by stages’ group, Brussels, 31 March 1970, ORII/22/70-F. In the Pierre Werner family archives. (Document consulted on 10 October 2012.)
19 This was the inter-directorate working party on economic and monetary union created by the Note of the Commission No 700225 of 26.01.1970, with the aim of consolidating the documentation provided to the Commission’s representative on the Werner Committee. On 18 March 1970, the working party submitted a document to the Werner Committee comparing the four plans by stages for an economic and monetary union which had been published in February 1970 by the German, Belgian and Luxembourg Governments and the Commission.
20 Brouwers, Gerard, ‘La méthode de réalisation d’une union économique et monétaire, vue dans l’optique de la politique conjoncturelle’ [The method for the achievement of an economic and monetary union from the perspective of conjunctural policy], 6.477/II/70-F, Brussels, 3 April 1970. In the Pierre Werner family archives, ref. 048. (Document consulted on 10 October 2012.)
21 The common aims in the area of growth and development were specifically mentioned in the Proposals from the Commission to the Council concerning the third programme for medium-term economic policy, Commission of the European Communities, COM 189/70.
22 In this area, the package of legislation on stability implemented by Germany on 8 June 1967, known as the Stabilitätgesetz (‘Gesetz zur Förderung der Stabilität und des Wachstums der Wirtschaft’, or Law for the Promotion of Stability and Growth), was taken as a basis.
23 This recommendation was based on the budgetary philosophy in the Netherlands, whereby action in the fields of both expenditure and taxation would serve either to moderate or to incentivise, according to changing economic circumstances, and would be part of a comprehensive structural policy.
24 The author of the document, Gerard Brouwers, noted that ‘this did not necessarily mean that everything had to be centralised and applied in a uniform manner, but it had to be the case for the essential elements of budgetary policy, etc.’, as well as for monetary and income policy.
25 Monetary union would involve a further transfer to Community level of responsibilities in the area of short-term economic policy. Should the monetary aspect be implemented more quickly, ‘or even imposed as a matter of course’, the transfer of some monetary responsibilities to the Community could occur more rapidly. Measures to be considered in this field were a narrowing of the current exchange margins, the adoption of fixed exchange rates and/or the creation of a Community reserve fund. Given the fact that the narrowing of exchange margins would not improve the possibility of harmonising short-term economic policies, the early adoption of completely fixed exchange rates would be reasonable.
26 He was also State Secretary in the German Federal Ministry of Economic Affairs, but was a member of the Werner Committee in his capacity as Chairman of the Medium-Term Economic Policy Committee.
27 French translation ‘L’union économique comme fondement de l’union monétaire’. Bonn, 2 April 1970. (Document consulted on 10 October 2012.)
28 ‘Suggestions concernant la première étape du plan par étapes, en matière de marchés des capitaux’ [Suggestions regarding the first stage of the plan by stages, as regards the capital markets], European Commission, Directorate-General for Economic and Financial Affairs, II-C-2/MS.gs/31.03.1970, Brussels, 1 April 1970. In the Pierre Werner family archives, ref. 047. The document provides for ‘the establishment of a special group attached to the Monetary Committee responsible for conducting regular exchanges of information and consultations on trends in the capital markets and for launching action to coordinate Member States’ policies in respect of them’.
29 Note on ‘The establishment of Economic and Monetary Union with Community enlargement in prospect’, European Commission, Interdepartmental Group, Brussels, 28 April 1970. Historical Archives of the European Commission, BAC 375/1999 578, Vol. 2, pp. 0181–0191
30 In the monetary debates that focused on enlargement, the role of the pound sterling was a major concern. How would this currency — which was both a reserve currency and a national currency — develop during the period between the United Kingdom’s accession to the Common Market and the introduction of a single European currency? The main danger came from the fact that sterling’s nature as a reserve currency could have a negative impact on its role as a national currency and introduce exogenous, sometimes artificial, parameters for a common or single currency. The considerable balances in sterling held by central banks, companies and individuals in countries in the sterling area other than the United Kingdom, the exchange rate guarantee enjoyed by assets in this currency and the high interest rate applied in the London financial market (considered to be Europe’s leading financial centre) had enabled the pound sterling to retain its role as a reserve currency despite its devaluation in 1967. By the end of 1970, cracks had reappeared in the British balance of payments, despite its strong recovery in 1969. This fluctuating short-term development hinted at the transitory nature of some factors that had led to its recovery. The shaky balance of payments, the policy of restraint, the lack of productive investments and slow growth in the face of increasing demand all conspired to create a vicious circle that had a negative impact on the balance of payments. It seemed increasingly clear that if Britain’s position in terms of exports had not improved by the time it joined the Community, the Community’s monetary assistance mechanisms would be incapable of fully absorbing the shocks generated by the existence of balances in sterling.
31 For the Six it was essential that British accession went hand in hand with a stabilisation of sterling’s role as a reserve currency. This was because, with its future common currency, the Community (including the United Kingdom) was to contribute to the stability of the international monetary system. Such a consolidation process implied the gradual elimination of support measures for the pound sterling (mentioned previously) and the establishment of a more balanced relationship between the United Kingdom’s monetary reserves and its short-term debt obligations. To meet the need for additional international reserves, it was envisaged that reserves be created independently of gold resources or reserve currencies. To this end, the creation of special drawing rights (SDRs) within the IMF seemed a sensible solution. Debates on the role and future of the pound sterling could not be separated from the question of the other reserve currency, the US dollar, especially in the context of a Eurocurrency market under constant development, in which Eurodollars had a significant role to play.
32 Given their different thinking on monetary matters, German economists and French monetarists held opposing views on the supposed incompatibility between the objective of creating a European currency unit and its link to the Bretton Woods system, a system of fixed parities against the dollar. The economists advocated an alignment of European fiscal and monetary policies before exchange rates were fixed. The monetarists argued for parity convergence first, which would the cause the Member States to adopt the appropriate policies. In Werner, Pierre, Itinéraires, Vol. 2, p. 124. See also section 3.4, ‘Economists v. monetarists — agreements and clashes in the drafting of the Werner Report’.
33 The Benelux Economic Union (Belgium, Netherlands, Luxembourg) was established by the Hague Treaty (which was signed on 3 February 1958 and came into force on 1 November 1960) for an initial period of 50 years. It aimed to widen and deepen economic cooperation between the three countries, particularly by enabling them to adopt a common policy in the financial and social fields. A new treaty, signed on 17 June 2008 in The Hague, replaced the economic union by the Benelux Union. In addition to pursuing cooperation between the Benelux countries as a laboratory for Europe, the new Benelux Treaty also offers the Benelux the possibility of extending cross-border cooperation by concluding agreements with other states or regional country groupings, or with neighbouring regions or entities. The Benelux has therefore been a pioneer in strengthening European cooperation. Some fields of cooperation that were launched by the 1958 treaty proved so successful that their application was extended to the European level. This is particularly the case for the free movement of persons and the internal market (economic union). The signing of the Treaty establishing the Belgium-Luxembourg Economic Union on 25 July 1921 can be considered as the forerunner of the Benelux, particularly because this treaty removed economic borders and linked the two countries’ currencies by a fixed parity.
34 See ‘Report of the Chief Treasurer of the Netherlands Ministry of Finance (Willem Drees Junior) on the Conversations with the Belgians and Luxembourgers on the Monetary Union on 7 April 1970’, Archive of the Cabinet of the Prime Minister (02.03.01), inv. no. 8864. National Archives of the Netherlands (The Hague). Reproduced in Dierikx, Marc (Ed), Common Fate. Common Future. A Documentary History of Monetary and Financial Cooperation, 1947–1974, CVCE- Huygens ING, The Hague, 2012, pp. 150–155.
35 An exploration of the private archives of the Pierre Werner family reveals that on 22 April 1970, Baron Hubert Ansiaux submitted a note to the committee of experts entitled Aspects juridiques et techniques d’une mise en commun des droits de tirage spéciaux (Legal and technical aspects of a pooling of special drawing rights) in which he discussed SDR transfer operations between the EEC partners. Two days later, he responded to another request from Pierre Werner and sent him a confidential technical note ‘setting out the modus operandi and the merits of a European exchange equalisation fund’. These two documents were analysed at the meeting of 7 April 1970. (Document consulted on 10 October 2012.)
36 See Werner, Pierre, Itinéraires, Vol. 2, p. 124.
38 Verbatim of statements by Mr Ansiaux and Mr Clappier. Meeting of the ad hoc group on the plan by stages, 7 April 1970. Brussels, 10 April 1970, confidential, ref. ORII/28/70F. In the Pierre Werner family archives, ref. 048.
39 Request for authorisation to hold a meeting outside Brussels, pursuant to the Executive Secretariat’s Note No. S/01875/64 of 26 June 1964. European Commission, Secretariat-General, 13 April 1970, No 3083. In the Pierre Werner family archives. The outcome of the debate was decided by Raymond Barre, who gave the authorisation, mindful of the wish of the Italian member that ‘these meetings, attended by high-level personalities, should be held successively in each of the Community Member States’.
40 Special drawing rights (SDRs) are an international monetary instrument created by the IMF in 1969 to supplement the official reserves of member states. SDRs, or ‘paper gold’, are credits that countries with balance of trade surpluses can ‘draw’ from countries with trade deficits. SDRs are allocated to member countries in proportion to their IMF quota.
41 Letter of 22 April 1970 from the Governor of the National Bank of Belgium, Baron Hubert Ansiaux, to Pierre Werner, President of the Luxembourg Government, with an annex on the ‘Legal and technical aspects of a pooling of special drawing rights’. In the Pierre Werner family archives.
42 Ibid., p. 3
43 Letter of 24 April 1970 from the Governor of the National Bank of Belgium, Baron Hubert Ansiaux, to Pierre Werner, President of the Luxembourg Government, with a confidential annex on a European exchange equalisation fund. In the Pierre Werner family archives. (Document consulted on 10 October 2012.)
44 ‘Report to the Council and the Commission on the realisation by stages of economic and monetary union in the Community (Werner Report)’, Luxembourg, 8 October 1970, document L 6.956/II/70-D, in Official Journal of the European Communities C 136, Supplement to Bulletin 11/1970, Luxembourg, 11 November 1970. (Document consulted on 10 October 2012.)
45 Working document (for members’ eyes only), Secretariat of the ‘plan by stages’ group, Brussels, 21 April 1970. Historical Archives of the European Commission, BAC 375/1999 578, Vol. 2, pp. 0168–0180. (Document consulted on 10 October 2012.)
46 Ibid., p. 0166
47 See section 4.6, ‘The Werner Report in the international media of the time’.
48 Deutscher Gewerkschaftsbund, Bundesvorstand, ‘Vorschlag für einen Stufenplan zur Errichtung einer Wirschafts- und Währungsunion in der Europäischen Wirtschaftsgemeinschaft’ [Confederation of German Trade Unions, Federal Bureau, ‘Proposal for a plan by stages for economic and monetary union in the European Economic Community’], Düsseldorf, 20 March 1970, Historical Archives of the European Commission BAC 375/1999 575, Vol. 1, pp. 0059–0067. The distribution list annexed to the document shows that it was also sent to the Federal Chancellor, the Federal Ministries of Economic Affairs and Foreign Affairs, the German representative to the EEC, as well as to the European Confederation of Free Trade Unions and the national trade unions belonging to it. The trade union channel was a way of spreading an interest in questions relating to economic and monetary union in several European countries, among the widest possible range of trade union and professional circles. The European Confederation of Free Trade Unions, for example, also drew up a paper setting out its own views on the establishment of economic and monetary union by stages and submitted it to the President of the Commission, Jean Rey, on 15 May 1970.
50 Fritz Machlup (1902–1983) was an Austrian economist who played an important part in the development of the economic sciences (the methodology, theory and policy aspects). A student of Friedrich von Wieser and Ludwig von Mises, he gained his doctorate in 1925 on the subject of Die Goldkernwahrung (The Gold Exchange Standard). As an academic in Austria, Machlup published a book in 1927 on the adoption of the gold exchange standard in Europe, two important articles on the effects of German war reparations payments, and an important book on the stock market and capital formation in 1931. Machlup left for the United States on a Rockefeller fellowship and taught at Harvard, Columbia and Stanford Universities. He firstly worked on the industrial economy and then moved on to the international monetary economy. In 1963, he formed an organisation of academics, known as the Bellagio Group, to study this problem, develop an academic consensus and offer practical solutions. His success in this venture attracted the attention of governments and central bankers and resulted in the publication of numerous books and articles on the international currency crisis and its solution. Robert Triffin dubbed him ‘the unquestioned intellectual leader and mentor of our vain efforts to reform the crumbling international monetary system’. The Nobel Committee listed his name several times as a candidate for the Prize, although he was never awarded it.
51 Historical Archives of the Commission of the EEC, Brussels, and Pierre Werner family archives, ref. PW 048.
52 Draft minutes of the first meeting of the ad hoc ‘plan by stages’ group. European Communities, secretariat of the ‘plan by stages’ group, Brussels, 30 April 1970, ref. ORII/22/70-F, 6 May 1970. Historical Archives of the European Commission, BAC 375/1999 578. In the Pierre Werner family archives, ref. PW 048. (Document consulted on 10 October 2012.)
54 The members of the group were Mr Mertens de Wilmars, economic adviser of the National Bank of Belgium, Mr Bloch-Lainé, Ministry of Economic and Financial Affairs (Paris), Mr Tietmeyer, Federal Ministry of Economic Affairs (Bonn), Mr Palumbo, Ministry of the Treasury, (Rome), Mr Schmitz, government adviser in the Ministry of Finance (Luxembourg), Mr Looijen, Ministry of Finance (The Hague), Mr Rey, National Bank of Belgium, Mr Jamar, National Bank of Belgium, Mr Mosca, Director-General for Economic and Financial Affairs, Mr Morel, head of division in the Directorate-General for Economic and Financial Affairs, and Mr Morelli, Secretary of the ‘plan by stages’ group.
55 The subsequent criticism of the final Werner Report for its failure to offer a detailed analysis of the architecture of the Community institutions was therefore unjustified, given that the Werner Group had removed this matter from the scope of its reflections from the outset.
56 Werner, Pierre, Itinéraires, Vol. 2, p. 125
57 See subsection 3.1, ‘The interim report’.
58 Telex from Mr Tietmeyer to the secretariat of the Werner Group, sent at 7 p.m. on 25 May 1970, concerning the interim report (doc. 9.504). In the Pierre Werner family archives, ref. PW 048. (Document consulted on 10 October 2012.)
59 In the terms of a public communiqué issued on 2 October 1963, the ministers and governors of the central banks of the ten countries participating in the General Arrangements to Borrow within the IMF — namely: 1) the United States of America, 2) the United Kingdom, 3) France, 4) Italy, 5) Japan, 6) Canada, 7) the Netherlands, 8) Belgium, 9) the Deutsche Bundesbank and 10) the Sveriges Riksbank — while attached to the principles of stability of exchange rates and of the price of gold, deemed it useful to undertake a thorough examination of the prospects with regard to the workings of the international monetary system and its probable liquidity needs for the future. They tasked their alternates to carry out this analysis and asked them to submit any practical suggestions resulting from their research. The alternates met several times and established close relations with the IMF, the OECD and the Bank for International Settlements (BIS). At their meeting in Paris on 15 and 16 June 1964, they drafted an initial report for the attention of the ministers and governors (the ‘Roosa report’). On 1 August 1964, on the basis of this report, the ministerial declaration of the Group of Ten was adopted. This recognised the need for multilateral monitoring of the ways and means used to fund balance of payment imbalances, and approved the establishment by the alternates of the ministers and governors of a study group to examine the various proposals for the creation of new reserve instruments, by the intermediary of the IMF or otherwise. This marked the official establishment of the Committee of Alternates of the Group of Ten.
60 Rinaldo Ossola (1913–1990) completed studies at Bocconi University, Milan, and the London School of Economics. He was Chairman of the Group of Ten, Director-General of the Banca d’Italia (1975–1976) and Italian Minister for Foreign Trade (1976–1979). In 1964, he chaired a group of experts whose work led to the creation of SDRs. The group was named after its chairman and the report became known as the ‘Ossola report’. See also above.
61 This subject was introduced by a study conducted by the EEC Budgetary Policy Committee, chaired by Gaetano Stammati, who presented the key elements of this document to the ministers.
62 This question, raised by the presentation by Mr Möller from Germany, which focused on the instruments available to Germany to respond to changing economic conditions by means of budgetary policy, sparked lively debates. The contributions by the various ministers indicated that the instruments available to national administrations in this area differed from one country to the next and were often highly insufficient. In this context, particular attention was paid to the budgetary policy of Italy, which was facing a significant public sector deficit. The ministers stressed the need to respect the imperatives of a prudent budgetary policy. These discussions highlighted an interesting general trend: monetary instruments alone should not be used to monitor the development of economic conditions; on the contrary, budgetary and fiscal instruments should also be largely used for this purpose.
63 On this point, the European Commission, in an address by Hans von der Groeben, presented the broad outline of a three-stage action plan to eliminate fiscal disparities between Member States, which was imperative if a true economic union was to be established. The disparities that needed to be eliminated mainly concerned turnover taxation (the first step had already been taken with the gradual adoption of VAT in the six Community countries), excise duties and corporate taxation. The aims for the year 1978 were the harmonisation of both structures and VAT rates, the establishment of a unified, non-discriminatory capital market and a high degree of harmonisation of corporate taxation.
64 Based on a study on the flexibility of fluctuation margins conducted by the Committee of Alternates of the Group of Ten and presented by the committee chairman, Rinaldo Ossola.
65 As a preamble to the presentation of the conclusions of the interim report, Ministers Snoy et d’Oppuers (Belgium), Schiller (Germany) and Werner (Luxembourg) presented the plans on economic and monetary union that their respective countries had proposed before the ad hoc group began its work and Raymond Barre summarised the European Commission’s view on the matter. See also: Cable from the Italian Foreign Ministry to the Italian Permanent Representation to the EEC on the conclusions of the meeting of EEC Finance Ministers to discuss the Werner Report (Rome, 2 June 1970). Source: Foreign Ministry, Italian Diplomatic Historical Archives, Telegramma in partenza, No 10210/02.06.1970, Vol. 30/1970-1971 (Telegramma ordinario. In partenza. Politica economica e monetaria.).
66 Draft minutes of the 35th conference of the Finance Ministers of the Commission of the European Communities, held in Venice on 29 and 30 May 1970, confidential. Commission of the European Communities, Directorate-General for Economic and Financial Affairs, ref. ORII/57/70-F, Brussels, 5 June 1970. Historical Archives of the European Commission. (Document consulted on 10 October 2012.)
67 Ibid., p. 4
68 Ibid., p. 5
69 Ibid., p. 6
70 This expression was coined by Gerard Brouwers, Chairman of the Conjunctural Policy Committee, in his note entitled ‘La méthode de réalisation d’une union économique et monétaire, vue dans l’optique de la politique conjoncturelle’ [The method for the achievement of an economic and monetary union from the perspective of conjunctural policy], which he submitted to the other members of the Werner Committee on 3 April 1970. (Document consulted on 10 October 2012.)
71 Werner, Pierre, Itinéraires, Vol. 2, p. 126
72 Ibid., p. 128
73 Communiqué drawn up by the Belgian Presidency at the end of the meeting of the Council of Ministers, Luxembourg, 8–9 June 1970. In the Pierre Werner family archives, ref. PW 048. See also: Cable from the Italian Permanent Representation to the EEC to the Italian Foreign Ministry on extending the work of the Werner Committee (Brussels, 10 June 1970). Source: Foreign Ministry, Italian Diplomatic Historical Archives, Telegramma in arrivo, No 23395/10.06.1970, Vol. 29/1970 (Telegramma ordinario. In arrivo. Economia/Politica/Stampa.).
74 Handwritten note by Pierre Werner for his speech at the EEC Council of Ministers, Luxembourg, 8–9 June 1970. In the Pierre Werner family archives, ref. PW 047. (Document consulted on 10 October 2012.)
75 Pierre Werner family archives, ref. PW 047. See also: Cable from the Italian Foreign Ministry to the Italian Permanent Representation to the EEC on the conclusions of the meeting of EEC Finance Ministers to discuss the Werner Report (Rome, 2 June 1970). Source: Foreign Ministry, Italian Diplomatic Historical Archives, Telegramma in partenza, No 10210/02.06.1970, Vol. 30/1970-1971 (Telegramma ordinario. In partenza. Politica economica e monetaria.).
76 The shared view that more work should be done on the aspects relating to the institutions, summarised by Mr Werner in the chair, was influenced by the Schiller Plan (published on 12 February 1970), which recommended describing the powers of the bodies responsible, at a point beyond the first stage, for short-term economic policy on the one hand and monetary policy on the other.
77 Pierre Werner was keen to involve J-B. Schöllhorn and G. Brouwers, whose inflexible economist’s views were known, in the reflection on practical methods for the effective coordination of economic policies. It should also be noted that Karl Schiller wanted to establish and implement more efficient procedures for bringing about economic policy convergence.
78 Some years later, when the Delors Report was being drawn up, the Committee of Governors, which was called on to assume the essential role, concluded that ‘before the Werner Report […], the Member States had a view of an economic union — or at any rate a common market — that they deemed to be achievable via the coordination of their monetary policies alone. After the Werner Report, they admitted that economic union could not be achieved without the gradual establishment of monetary union.’ See Ansiaux, Hubert; Dessart, Michel, Dossier pour l’histoire de l’Europe monétaire 1958–1973, Michel Dessart (Ed), Brussels, 1975
79 Telex from Bernard Clappier, Banfra (Banque nationale de France), Paris, 11 June 1970, 4.07 pm/Ministry of Foreign Affairs, Luxembourg. In the Pierre Werner family archives, ref. PW 048.
80 Letter from the Chairman of the Committee of Governors of the Central Banks, Hubert Ansiaux, to Pierre Werner, President of the Government, Minister for Finance, Brussels, 16 June 1970. In the Pierre Werner family archives, ref. PW 048.
81 The committee of experts of the Committee of Governors of the Central Banks consisted of Baron H. Ansiaux in the chair, E. Blumenthal and G. Jennemann of the Deutsche Bundesbank; J. Mertens de Wilmars and F. Heyvaert of the National Bank of Belgium; M. Théron and R. Floc’h of the Banque de France; F. Masera and F. Frasca of the Banca d’Italia; P. C. Timmerma, A. Szasz and J. A. Sillem of the Nederlandsche Bank; F. Boyer de la Giroday, H. Wortmann and A. Louw of the Commission of the European Communities; G. Morelli and G. Lermen of the Secretariat of the Werner Committee; A. Bascoul and R. Gros of the Secretariat of the Committee of Governors.
82 These meetings were held on 1–2 July, 9 July, 16 July, 23–24 July and 30 July 1970.
83 Some of Pierre Werner’s previous writings (1962–1968) show that he sometimes demonstrated monetarist convictions, which he did not hesitate to put forward in his capacity as Finance Minister in order to safeguard Luxembourg’s vital interests related to its consolidation as an international financial centre. The following is a good example: the harmonisation of taxation in this area was included on the agenda of the meeting of the Council of EEC Finance Ministers held on 16 January 1967 with the aim of regulating capital movements at Community level. This ‘urgent necessity’, supported by France, had the potential to affect a vital interest for Luxembourg ‘by profoundly shaking up the country’s financial legislation, some elements of which were at the root of Luxembourg’s wealth as an international financial centre’. At the meeting of the Council of Ministers on 4 March 1968, basing his judgment on the parallelism between the free circulation of goods (due to be implemented on 1 July 1968) and the free circulation of capital, Pierre Werner therefore suggested giving priority to monetary harmonisation and addressing the matter of fiscal harmonisation at a later date. The difficulties facing the pound sterling, followed by those of the French franc, had brought monetary questions to the forefront. The specific financial characteristics of Luxembourg were therefore protected.
84 Draft minutes of the sixth meeting of the ad hoc ‘plan by stages’ group, 24 June 1970. Brussels, 1 July 1970, OR II/63-70-F. In the Pierre Werner family archives, ref. PW 048.
85 Since his appointment as Finance Minister in 1953, Pierre Werner had taken part in the annual meetings of the IMF as Governor for Luxembourg.
86 Letter from Baron Ansiaux, Governor of the National Bank of Belgium, to Professor Robert Triffin, Berkeley College, Yale University, New Haven, Connecticut; Brussels, 23 June 1970. In the Pierre Werner family archives, ref. PW 048.
90 Draft minutes of the fifth meeting of the ad hoc ‘plan by stages’ group, 7 July 1970. European Communities, secretariat of the ‘plan by stages’ group, Brussels, 14 July 1970, OR II/67-70-F. In the Pierre Werner family archives, ref. PW 048.
91 Pierre Werner family archives, ref. PW 047.
92 Note by Gerard Brouwers, ‘Phase finale de l’union monétaire: transfert nécessaire de compétences nationales aux institutions communautaires’ [Final stage of monetary union: the necessary transfer of national powers and responsibilities to the Community institutions]. European Communities, secretariat of the ‘plan by stages’ group, Brussels, 13351/II/70, 22.07.1970. In the Pierre Werner family archives, ref. PW 048. (Document consulted on 10 October 2012.)
93 The definition in the interim report is as follows: ‘Within an individualized monetary area, there must be currency convertibility, irrevocable currency parities, and complete freedom of capital movement; the exchange rate bands must be eliminated. Either the various national currencies could be maintained or a single Community currency could be created: from the technical point of view, there is very little in this, but psychological and political considerations make a strong case for the adoption of a single currency; once this was created, it would be very difficult to revert to the old system.’
94 In accordance with the remarks in the note by Gerard Brouwers, the central policy body had to be able to pursue an effective policy and, to this end, to be able to take decisions independently of national bodies. This central body would have a collegiate structure, would be totally independent from national governments and would be subject to democratic scrutiny by the European Parliament. See Note by Gerard Brouwers, ‘Phase finale de l’union monétaire: transfert nécessaire de compétences nationales aux institutions communautaires’ [Final stage of monetary union: the necessary transfer of national powers and responsibilities to the Community institutions]. European Communities, secretariat of the ‘plan by stages’ group, Brussels, 13351/II/70, 22.07.1970. In the Pierre Werner family archives, ref. PW 048.
95 Ibid. The central bank was to be an autonomous, financially independent institution whose status and powers would be laid down in Community law. Its relations with the central body for economic policy coordination would be regulated in that the latter body could give the bank certain specific directives. The bank was to be guaranteed a certain level of independence. The common central bank could be created by fully merging the current central banks, but it would seem more realistic to envisage a sort of federal reserve system.
96 Brouwers considered it vital to reach agreement on these provisions from the first stage of an economic and monetary union so as to grant the Community bodies the requisite powers to achieve a gradual transition from the first to the final stage.
97 Werner, Pierre, Itinéraires, Vol 2, p. 128
98 Draft minutes of the eighth meeting of the ad hoc ‘plan by stages’ group, 27 July 1970. European Communities, secretariat of the ‘plan by stages’ group, Brussels, 14 August 1970, OR II/74-70-F. In the Pierre Werner family archives, ref. PW 048.
99 Preliminary draft report to the Council and the Commission on the establishment by stages of economic and monetary union in the Community, European Communities, secretariat of the ‘plan by stages’ group, Brussels, 28 July 1970, OI II/72/70-F. In the Pierre Werner family archives, ref. PW 048. (Document consulted on 10 October 2012.)
100 Commission of the European Communities, Directorate-General for Economic and Financial Affairs, II-A-6.JCM.mw.13.VIII.70, Brussels. In the Pierre Werner family archives, ref. PW 048.
102 Personal letter from Baron Ansiaux, Chairman of the Committee of Governors of the Central Banks, to Pierre Werner, Finance Minister. Brussels, 4 August 1970. In the Pierre Werner family archives, ref. PW 048.
103 Report on the questions asked by the ‘ad hoc’ committee chaired by Mr Werner, Prime Minister, 1 August 1970. Committee of Experts chaired by Baron Ansiaux. Committee of Governors of the Central Banks of the Member States of the European Economic Community. In the Pierre Werner family archives, ref. PW 048. (Document consulted on 10 October 2012.)
104 Note to Mr A. Wegener, Directorate-General for Personnel and Administration, ref. II/GM.nj/14.08.1970, Brussels, 17 August 1970. Historical Archives of the European Commission, BAC 375/1999 578, Vol. 2
105 The second document is in another register: it consists of agreement by Raymond Barre, Vice-President of the Commission, to the holding of a meeting of the ‘plan by stages’ group outside Brussels, but also to the fact that the cost of the meeting concerned (2 120 DM), which was borne by the Ministry of Economic Affairs in Bonn, would not be charged to the budget of the group.
106 See section 2.2.5, ‘Fourth and fifth meetings (Luxembourg, 14 May and 20 May 1970)’
107 Werner, Pierre, Itinéraires, Vol 2, p. 129
108 See Grygowski, Dimitri, Les États-Unis et l’unification monétaire européenne, Éditions PIE Peter Lang, Brussels, 2009, pp. 215–131. See also section 5, ‘The implementation of the Werner Report’.
109 Commission of the European Communities. Secretariat of the ‘plan by stages’ group, ref. OR II/72/1-70, Brussels, 14 September 1970. In the Pierre Werner family archives.
110 Commission of the European Communities. Secretariat of the ‘plan by stages’ group, ref. OR II/72/2-70, Brussels, 18 September 1970. In the Pierre Werner family archives.
111 Note to Mr L. Lambert, Director-General for Personnel and Administration, Brussels, ref. II/GM.jt/17.09.1970. European Commission, Directorate for Economic and Financial Affairs. Historical Archives of the European Commission, BAC 375/1999 578, Vol. 2
112 Request to hold a meeting (p. 704248) and Request to hold an official reception (p. 704330). European Commission, Directorate for Economic and Financial Affairs, Brussels, 28 September 1970. Historical Archives of the European Commission, BAC 375/1999 578, Vol. 2
113 Werner, Pierre, ibid., p. 130. See also: Cable from the Italian Permanent Representation to the EEC to the Italian Foreign Ministry on the finalisation of the Werner Report (Brussels, 9 October 1970). Source: Foreign Ministry, Italian Diplomatic Historical Archives, Telegramma in arrivo, n. 42345/09.10.1970, vol. 29/1970 (Telegramma ordinario. In arrivo. Economia/Politica.).
114 See sections 3.1., ‘The interim report’, and 3.2., ‘The final report’, which deal with these subjects in detail.
115 Werner, Pierre, ibid., p. 131
116 Ibid., p. 132
117 Address by Raymond Barre. Economic Committee of the European Parliament, meeting of 28–29.09.70 in Brussels, reel 218, transcription p. 8. In the Pierre Werner family archives, ref. PW 048. See also section 4.2, ‘Reactions in the Commission’, which attempts to shed light on the relationship between Pierre Werner and Raymond Barre.
118 Statement by Pierre Werner to the Council of Ministers, Luxembourg, 26 October 1970. In Bulletin de documentation. Directorate for publications, Press and Information Service, Ministry of State, 26 October 1970, No 6; 26th year. Luxembourg. (Document consulted on 10 October 2012.)