Fading dreams of Minsk and Maastricht

Hard work and statesmanship needed to fulfil greater European integration

Two European landmark treaties three decades ago set the contours for Europe’s struggle for unity – a challenge that appears to be growing. A new German government has taken office, exactly 30 years after the Belovezh accord of 8 December 1991 (also known as the Minsk agreement) sealed the demise of the Soviet Union and established the Commonwealth of Independent States.

Days after the Russian, Ukrainian and Belarusian leaders signed the deal in a Belarus village close to the Polish border, European governments in another frontier town reached agreement on establishing the European single currency. The Maastricht treaty spawned at the summit in the Netherlands on 9-10 December 1991, like the Belovezh accord 1500 km to the east, laid down a road to European unity subsequently paved with false illusions and missed turnings.

Europe’s political landscape displays enduring undulations. The tasks facing Chancellor Olaf Scholz’s Berlin coalition include some abiding headaches – nuclear energy, Russian gas supplies and Moscow’s military policies – as well as some new ones, such as the rise in inflation.

In December 1991, Europe had high hopes following the collapse of Soviet communism and the fall of the iron curtain. The Maastricht conference coincided with a widespread assumption that, after many years of convergence, European integration had become irreversible. European governments seemed to have fallen in love with Pink Floyd’s 1987 album ‘A momentary lapse of reason’. They acted as if they had decided to convert its title into policy.

Signs of ebbing euphoria were already emerging. Spearheaded by Chancellor Helmut Kohl, leaders of the European Community, shortly to be renamed the European Union, hailed the results of the Maastricht summit as a great leap forward. He agreed a wager – which he later lost – that Britain would join economic and monetary union by 1997. Yet already in 1991 there was intense disappointment about scant progress in establishing political union as a quid pro quo for abolishing West Germany’s quintessential hard currency, the D-Mark. One of Kohl’s top diplomats at Maastricht spoke of a ‘time bomb’ ticking under the chancellor. Der Spiegel, the German news magazine, made ‘Angst um die Mark’ (‘Fears for the Mark’) the front page cover of its Maastricht edition.

Part of the logic of the first unification of Germany in 1871 and then reunification in 1990 was that political integration should precede currency unification. This sequence was set aside at and after Maastricht. Three decades later, EMU remains a monetary edifice in search of a state. The euro now links 19 members and is enshrined as the world’s number two currency after the dollar. But worrisome fault lines remain. And it lacks – for important long-running reasons – some leading countries which in 1991 were seen as members-in-waiting, notably Britain, Poland and Sweden. The EU’s share in the world economy has fallen from almost a quarter to a current 15% of global gross domestic product.

The economic criteria decided in Maastricht – limiting general government debts to 60% of GDP and deficits to 3% – became the EMU standard. The criteria, although frequently breached, represented the policy backbone for 17 years. They were effectively buried with the global financial crisis in 2008 yet, in a patent denial of reality, they remain in place.

In the east, in 1991, the shadow of communism was lifted. Yet no one had the answer to dealing with a reborn Russia that never wished entirely to distance itself from the Soviet Union’s heritage. Any possibility of creating an alliance across the entire European continent quickly faded. In central and eastern Europe, central economic planning had been in place for less than half a century. By contrast, communism had been at work in Russia for more than 70 years, imposed upon the brittle foundations of a Tsarist economy. Subsequent economic therapies, although working relatively well in central and eastern Europe, further aggravated Russian strains.

Failure to overcome east-west divisions is the key reason why Europe has not become a true global player. In the last 30 years Europe has often been subservient to Washington policies. Europe’s interventions to end genocide in ex-Yugoslavia led to President Bill Clinton’s Dayton agreement which finally ended the conflict. In policies over the euro, trade, banking and financial regulation and relations with China, Europe has frequently had to play second fiddle to America.

The present crises are more likely to prolong than end disunity. The Covid-19 pandemic has been sufficiently virulent to unhinge economic growth and social cohesion. But it has not been strong enough to generate a unified European response. The most important offspring of Maastricht, the European Central Bank, born in 1998, facing much higher inflation than expected, must decide a post-Covid-19 strategy for asset purchases and (still negative) interest rates. This is not the Europe that the architects of Maastricht and Minsk had in mind. There is still the possibility of a benevolent European outcome – based on successful implementation of Covid-19 vaccination strategies, an ebbing of east-west tension over Ukraine and inspired economic leadership – to make the best of low interest rates and the EU’s Next Generation funding programme. To get there will require hard work, statesmanship and a necessary portion of good fortune.

Adam Glapiński is President of Narodowy Bank Polski and David Marsh is Chairman of OMFIF.

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