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The Case for EMU: More than Money

Nervous traders on the Frankfurt stock exchange try to make last minute deals on July 30, 1993. Reuters

In the intensifying debate over the prospects for European economic and monetary union, there is danger of losing sight of the most fundamental fact about EMU. Like everything else in the push for European integration, it is essentially a political undertaking. To underline that truth is not to deny the compelling economic rationale for EMU but to emphasize that there is more at stake.

The economic rationale is based on the inherent logic of Europe's single-market strategy; EMU may well be essential to the single market's survival. But it has also become a test of both the European Union and the political commitment of its 15 member states, one that goes beyond the technicalities of the project. If Europe fails the test, the consequences for integration will be serious.

Assuming that monetary union will begin as scheduled on January 1, 1999, it is still too soon to know which of the EU's member states will qualify to take part in the first wave; that decision will depend on how each nation's key economic indicators develop. But there is already a growing sense that it could be a substantial minority, perhaps even a significant majority, of the member states.

EMU’s critics continue to argue that it is a bad and damaging idea. But the skeptics have changed their tune. They no longer claim that monetary union will be a failure because most member states will be unable to meet the criteria for economic convergence that the 1991-92 Maastricht treaty set for admittance; they instead predict that the member states will realize that EMU is vital to the political enterprise of European integration and cannot be allowed to fail, and will therefore fudge or even disregard the criteria. Either way, in their view, the result is the same: something called EMU will happen, but it will be botched, and will prove to be a grave mistake for the European Union.

The critics maintain that EMU will not work because the member states will fail to

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