Tags: Baron Louis, black hole, Bretton Woods, Charlemagne, Coal and Steel, Community, Consultative Committee, crisis, currency, dollar, Economist, ECSC, EU, euro, gold, Latin Monetary Union, Monnet, Nixon, opinion, Schuman, silver, Treaty of Paris
Is Jean Monnet responsible for the euro debacle? Did a flaw in the ’Monnet Method’ bring about today’s financial crisis and the black hole into which billions of taxpayers’ money are being poured? That’s what one Eurocrat implied, as quoted in the Economist newsmagazine: ‘The European Union was not designed to deal with a crisis’. Blame Jean Monnet, says the Economist‘s columnist, Charlemagne.
Eurocrats should know better. They should know more about the institution they work for, its values and its real history. Unfortunately Monnet and his over-enthusiastic fans and publicists set Europe on a false track. What exactly IS the ‘Monnet Method’? You need to know: your bank balance may depend on understanding the facts!
Some politicians still believe that Jean Monnet was the architect behind the European Union. This is false, as any competent historian knows. Monnet did not invent the European Community; it was in existence before he even first uttered the term on 21 June 1950, regardless of the false claims of his Memoirs. Schuman announced the European strategy at the United Nations in 1949!
States can form international currencies with other States either by force or by means of a solid agreement. Alexander the Great used the first method 2300 years ago when he conquered the Medo-Persian empire and imposed his own monetary system, based on gold and silver. In nineteenth and early twentieth century some States agreed to the gold standard. But the Latin Monetary Union (1865- 1926) fell apart on disagreements about silver. Then first the UK (with the Sterling zone) and later the US, 1971, took their currency off the gold standard.
Any bad management of the dollar – which is designed mainly for a domestic electorate — has worldwide implications, and that includes wars and bloodshed. So does any other corrupt currency. (Monetary dishonesty encourages internal and external opponents to exploit the politicians’ vulnerability.)
The depreciation of the dollar meant that Arab oil producers gained a little bit less for a barrel of oil. The Americans got the same barrel of oil. Although they were already hyper-rich, the oil sheikhs wanted more. They used this as one excuse to launch an attempted war of annihilation against Israel. The Arab exporters then realised that Americans and Europeans were ‘hooked’ on petroleum. They nationalised the oil companies. From then on they formed a cartel and succeeded to blackmail by the oil weapon and oil embargoes throughout the decade. Now Europe’s Human Rights values are under threat by such States that wish to establish a Christian-free and anti-Semitic entity based on Saudi style Sharia law that they would call Palestine.
(Palestine is actually the name of the Jewish State that all the world’s governments agreed to after WW1. It was a mandate given by the League of Nations to Palestinian Jews and confirmed by the United Nations in its Charter. The government of Palestine changed the name to Israel in 1948 when a State of Israel was proclaimed. When false or depreciating money reigns, Truth more easily becomes ‘lies’ and lies become the ‘truth’.)
Thus any weakness or fraud in a monetary system has untold and often mammoth implications in politics. The reverse of this is also true. A solid, well-founded monetary system, based on sound ethics, has a major decontaminating and purifying effect on politics. Robert Schuman used to quote the Baron Louis, Finance Minister under France’s Second Empire:
Make sound finances for me and I will make for you a sound policy.
Schuman confirmed this truism from his own long study of the monetary history. Based on those principles, a new system was introduced in world history with the creation of a supranational Community system. Without it, Europe would be in no position even to think of a common currency.
IF it is properly implemented, this Community approach provides the best hope for the future. The idea of a new European currency was announced by Robert Schuman in his Declaration of 9 May 1950. Schuman had great expertise in finance and monetary affairs and stabilized France’s ruinous finances as Minister of Finance and Prime Minister. He criticised Hitler’s ramshackle financial and monetary sysyem of the 1930s. Before the war he helped Austria defend itself financially against Nazi aggression. It nearly cost him his life when later he was arrested by the Gestapo. After the war he helped create the European Payments Union in July 1950. The politicians later abandoned this but had to try to re-invent it when they wanted to create the euro.
The creation of a supranational monetary system depends on fully understanding a supranational Community system. It is based on trust, that is democracy writ large. Here Monnet made a grave mistake.
Monnet’s flawed action is another proof that he did not conceive of the idea of a supranational Community. When Paul Reuter, Schuman’s legal aide, presented him with a draft document of the Schuman Declaration he crossed out the word, supranational, saying he did not like it. Nor was Monnet able to explain how the European Community was able to bring peace to nation States that had been at war almost continuously for 2000 years. Schuman could and did.
Some politicians say they are proceeding on the basis of the so-called ‘Monnet Method’. What is the ‘Monnet Method’? No one can properly define it. It is pure PR — public relations hype. It is foisted on a public by a political class that did not want to deal with the spiritual fundamentals of democracy. It is a chimera that allows politicians to do what they like, without principles or even democratic accountability. That makes it an international system, not a supranational democratic one.
The supranational Community, in contrast, is a scientific discovery, to use Schuman’s term, that requires education, training and another quality, humility, listening to others. It does not involve foisting treaties on people who have refused them in many referendums. Democracy, said Schuman, is at the service of the people and acts in agreement with the people.
What is a more serious accusation than aggrandisement is: Was Monnet responsible for the mess we are in? Was it his lack of understanding of the Community system that has led to the financial and monetary loopholes and hence the abuses now costing hundreds of billions of euros?
Monnet was only at the Commission (High Authority) of the European Coal and Steel Community (ECSC) for a couple of years. His responsibility there was to see that the Treaty of Paris was fully implemented. It was not. He was to serve the people, all the people, including organized civil society. His period there was long enough to cause a loophole that the politicians made into an entrance and climbed in to do damage and get their fingers on to European money.
Monnet was instrumental in cutting out (in collusion with the politicians/ ministers) the democratic representation of organized civil society in the consultative committees. This was one of five essential organs for supranational Community.
In Monnet’s time the first European Community had a Consultative Committee which was designed as its successors to be in close liaison with the Commission. It was divided into three sections: consumers of coal and steel products, entrepreneurs and trade unions working in the sectors. They kept a close watch on the money, how it was raised and how it was spent. They made sure that the budget was balanced. In those days there was a European tax and it was spent according to the wishes of the taxpayers.
The Treaty of Paris said that the Consultative Committee should be elected on a European basis. However, there were no European associations in some areas. The treaty said that the first Consultative Committee could create a system especially for this in the near future. In the interim the Committee was composed of a mixture of various national organisations.
European organisations were formed. But the Commission/ High Authority under Monnet never changed the system or encouraged the responsible people to do so. The politicians were happy at this because it meant that they nominated or decided who should be on this crucial debating chamber. They also managed the membership to the European Parliamentary Assembly. That way they could control the criticism by electing more placid members. The three great seats of European democracy will eventually all be independent: the Council representing national States, the Parliament representing the individual and his or her rights and the Consultative Committee representing all organizations in the sectors.
Any professional organization, whether a professional organization of steel makers, or an association of steel consumers or an association of European trades unions, has democratic rules. They are not the same as parliaments but not inferior to them as they have to be agreed by votes of the membership. This is an essential layer of democracy that should be independent of political parties and, amongst other tasks, can keep an eye on them.
De Gaulle and many other politicians did not like the idea of consumer organisations, together with entrepreneurs and labour unions holding politicians to their word. That is why de Gaulle arrested their development. He did not stop them developing, merely froze them for a time. Schuman and Reuter (who wrote the first draft of the Schuman Declaration), declared ILLEGAL the politicians’ subterfuge aimed at not having a fully democratic consultative committee with its own European elections. And sure enough, de Gaulle got away with illegal and corrupt measures such as Wine Lakes and Meat Mountains.
In the Gaullist period of European stagnation, the Parliamentary Assembly was nominated by a clique of politicians, its revisions to legislation ignored. The Consultative Committees including the Economic and Social Committee and the Scientific and Technical Committee of Euratom, were frozen and ignored. They are still at the infantile level of development that the European Parliament was until around 1980.
If Monnet had set up the Consultative Committee on a fully democratic European basis, a powerful democratic institution would have existed that would have resisted de Gaulle’s attempts to destroy and freeze the Community system. We would be living in a much more successful and prosperous Europe, even than ours today. And it would have been a shining example of democracy to the world, including the States on the south bank of the Mediterranean. Democracy and higher civic standards would have flourished across the whole Mediterranean zone and as far north as the Arctic. Instead under nationalists and Gaullists, Algeria — which was part of the European Coal and Steel area — entered a period of bloody strife and warfare.
None of the euro crisis would have arisen if the members of a currency zone had proper civil society scrutiny of the fraudulent statistics and toxic buddy-buddy deals that the politicians come up with at the closed door Council meetings and eurozone rencontres.
Schuman also said that these meetings should all be open. The Lisbon treaty also says this but the politicians do not care a hoot when they close the doors. The next step is to use the European Court — one of the five institutions that Schuman said was essential. Some actions in the 27 national courts could also stop much of this abuse. Discussions on the Budget — that is taxation — are also closed to the press, something which is both illegal and would be totally intolerable in any of the democratic Member States. (see www.schuman.info/budget8.htm ) No taxation should take place without FAIR representation and OPEN debate. That is central to European civic values.
There are three main types of international currency systems. (A fourth involves the informal use of a national currency like the US dollar by external trading partners.)
Firstly there is the international system (agreement of States) that Europe now has, thanks to Monnet’s indecision. There is the imperial currency system of a non-democratic authoritarian system like the ruble of the Soviet system or the closed system of Mao’s China. The banknotes cannot circulate much beyond the borders of the empire, because they are artificial. In the 1930s Hitler had a similar system where the Nazi party dictated the monetary policy on its neighbouring or trading partners. Europe has aspects of this monetary authoritarianism, because the euro rules are made and then ignored by a small cartel of politicians. The politicians think that they alone should impose their choice on who runs the system, not the public, nor the companies or workers, nor the buyers, traders and consumers.
Thirdly there is a real supranational currency. Supranational means a European democratic system, not imposed authoritarianism. It is so defined in the treaties and by Schuman — see www.schuman.info/supra5.htm . Solid monetary policy will be made once this democratic foundation is followed. It involves agreement at three levels: the States that is not just the Council of Ministers but their 27 national democratic systems PLUS organised civil society (the Consultative Committees entrepreneurs, workers and consumers, of the treaties which need to be democratically elected as the treaties say) PLUS the individuals’ interest (through the EP and Court petitions and judgements).
The euro crisis will not be solved by a further smoke and mirrors approach of eurobonds involving either the ECB or some other artificial institution without democratic legitimacy. Moritz Kraemer, Standard & Poor’s managing director for Europe, Middle East and Africa sovereign ratings, speaking at the Alpbach European Forum, said, “If we have a euro bond where Germany guarantees 27%, France 20 and Greece 2% then the rating of the euro bond would be CC, which is the rating of Greece.” That applies also to shuffling the cards in a new card trick or rather paper con trick.
Politicians have already tried to dispose with elements of the supranational system. Now some want them back, having seen their great utility. At the beginning, the supranational European Community system had not only its own European tax system with democratic control down to a local level but also a European loan system. This was not based on a fiat system of some politicians acting within the secret chambers of the Council or the ‘informal’ eurozone committee. In the 1950s the loans were raised on world markets based on real economic achievement and a real programme. That delivered real goods for the future. The loans were based on solid evidence of economic progress, improved employment data and general economic integration with real cost benefits.
The ECSC loan system — which was a bigger operation than the European Investment Bank — had outline supranational democratic control. The politicians did not like it. Around 2000 they egotistically got rid of this loan system and the European tax system by deciding not to renew the ECSC treaty. They wanted tax, loans and money without proper democratic representation. Their word would be enough, they said. Then the politicians abused their own buddy-buddy system. The markets saw its toxicity. They had been doing dirty deals for decades. Banks of course did the same thing, saying that if the politicians could get away with fraud, so could they in a property bubble and financial market fraud.
The way forward is to put the democratic control and the support of half a billion Europeans behind a reform programme. Only thus can a solid European money be agreed, formed and circulated.