Europe After Maastricht

A Premature Treaty

IT WAS INEVITABLE that the Maastricht treaty on European union would run into difficulty. The pact was premature in conception and too ambitious to survive intact. It had been signed in December 1991 when a mood of "Europhoria" held sway. With spirits boosted by a surge of economic growth the 12-nation European Community (EC) pledged to build a lasting union. It was to be the successor to both the Common Market launched in 1958 and the integrated customs union created by the Single European Act of 1987. The historic Maastricht treaty was to take the next step: to create a far-reaching economic and political union that might one day become the United States of Europe.

European leaders realized nine months later that their conception was ill-timed. The EC-12 proved too divided to commit to a revolutionary compact on monetary integration by decade’s end or to surrender a major portion of power to federal authorities in Brussels. A failed referendum in Denmark, and later a marginally successful plebiscite in France, revealed unexpectedly low support across Europe for unification.

Europe’s financial markets cracked as uncertainty about Maastricht’s chances for ratification increased. Speculators drove the markets into a two-day panic in September, selling short on sterling and the lira until Britain and Italy were forced to drop out of the Community’s fixed exchange-rate mechanism (ERM). The attempt by the EC to impose a common financial discipline was undermined. The markets had gained power at the expense of the EC governments, and the Maastricht treaty was cast into peril.

Resistance on the Road to Union

WHY DID THE TREATY meet such stiff resistance? Three explanations have been offered. First, the EC lost its balance in the temporary breakdown of the ERM; it could not restore cohesion among the 12 stalled economies. Second, the ratification debates in Denmark and France exposed a lack of popular understanding and sympathy. Third, the union treaty fell victim to the financial and trade wars waged between the strong and weak currencies of Europe, Japan and the United States.