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ECSC – What kind of result?

ECSC – What kind of result?. Treaty of Paris (1951) European Coal and Steel Community Common Market in Coal and Steel Competition Policy (anti-Cartel) High Authority Factors involved Political-diplomatic Resolution of World War II Global politics: Cold War Economic

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ECSC – What kind of result?

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  1. ECSC – What kind of result? • Treaty of Paris (1951) • European Coal and Steel Community • Common Market in Coal and Steel • Competition Policy (anti-Cartel) • High Authority • Factors involved • Political-diplomatic • Resolution of World War II • Global politics: Cold War • Economic • Reconstruction – immediate • The Ruhr – long-term • The “European Movement” and Its Visionaries

  2. Relevant Prior Histories • France and Germany • Enemies since 1870 • Alsace and Lorraine as locus of conflict • Political history vs. economic history • World War I and Its Resolution • A mess and a failure: absence of cooperation • The Ruhr as a focal point (1923) • USA as a non-player or mini-player • The Depression of the 1930’s • Economic nationalism: from free trade to intense protectionism – multiplication of barriers and restrictions • Attitude towards “Restraint of Trade” changes • Lesson: economic welfare requires cooperation

  3. The Elements of the Story • Reconstruction • Germany • The USA • Leadership • International cooperation • Vision and action: the Marshall Plan • The Ruhr: a particular and complex problem • The Visionaries and their “Bold Steps”

  4. Reconstruction • General situation • Different national concerns • Britain: “enough money” (dollars) • Currency and payments priorities • Place in the world • The Empire • France: modernization • Germany: ? • Common goals and interdependencies • Export trade • Favorable currencies • Welfare state: full employment especially • Supply and demand for each other’s recovery goods • The central importance of coal • Aims and role of the USA • International economic cooperation • IMF, ITO/GATT

  5. Reconstruction: the French case • A new economic faith: modernization • The method of choice: planning • The First Plan and the First Planner • Planning goals: heavy focus on iron and steel, hence need for coal • Top-down approach: “modernization commissions” • Dirigisme, dirigiste • A small elite of technical “experts” • The man at the helm: Jean Monnet • Implications of the Plan re: USA • Implications of the Plan re: Germany

  6. Reconstruction: the French case Pithy quote (from Gillingham, Coal, Steel and the Rebirth of Europe, p. 144) “Rapid German revival threatened both general French security and the specific investment programs of the plan. Monnet did not want to prevent a Ruhr recovery … and he recognized that without one European prosperity would not return. He did, however, intend to regulate the recovery process, slowing it down when necessary to protect French security, speeding it up when necessary to threaten French Malthusians.”

  7. Germany • Postwar division of Germany- 4 zones • Ideology of “Reducing Germany” • Dismantling and Reparations • Decartelization as a “substitute” • Extremism of the Morgenthau Plan for Germany • Problems with this ideology • German revival necessary for European revival – crucial role of German industry • Multiple risks/dangers of Communism in the West • Looming Cold War • Soviet vs. USA/UK policy: Bizonia (Jan. 1, 1947)

  8. Germany (cont’d) • Dramatic shift in USA policy towards Germany • From Morgenthau to Marshall (1947) • Germany as the centerpiece of USA Cold War strategy • A “New Germany” in the Making (1949 official) • Creation of Federal Republic under American “eyes” • German Laender as crucial to its “federalism” • Basic Law (not a constitution) • The Deutschmark (1948) • The “Economic Miracle” • Konrad Adenauer • The Security Problem: Lingering French concern • Highlights the issue of the Ruhr • (American) Threat of German re-armament • NATO • Korean War (1950)

  9. The USA • Leadership • Striking contrast to post World War I • Economic leadership: immediate legacy of the prosecution of World War II • Lesson (to Monnet) of procurement strategy (accent on purchasing as setting the needs) • Political leadership: an unsought role “thrust upon” the USA (the alternative to 4-power collaboration) • Emergence into a superpower • International cooperation • International trade: liberalization goal • International payments and currency: convertibility goal • Peace and security: United Nations, NATO • Vision and action: the Marshall Plan (1947) • The radical nature of this initiative • The motives (Truman Doctrine) • The impact on policy towards Germany • The European effect: OEEC, EPU

  10. The Ruhr • What is it, what does it mean? • Legacy from the past: a thorny issue • Base of industrial power • Core of war-making capacity • Point of conflict between France and Germany • Tendency towards “association” • Vertical integration (coal and steel) • Cartels: “market-sharing agreements” • Rise of Hitler • Legacy from the past: an early model of “integration”? • Germans take the lead in steel (1924) • 4 nations (Germany, France, Belgium, Luxembourg) form the International Steel Cartel (1926-1931, 1933-) • International business cooperation during Depression

  11. The Ruhr (cont’d) • The Ruhr as a post-WW II problem • Economic centrality for European revival • Need for Ruhr coal (by French especially) • Fears of German revival (industrial power, war-making capacity) • Focus of Allied policy towards Germany • Dismantling, decartelization, production limits • Level of Industry Agreement (1946) • International Ruhr Authority (1949) • Sidenote: 1949 – IRA, NATO, FRG

  12. The Story of Integration • Change of Plans at High Levels - 1947 • Towards Germany (Bizonia) • Towards reconstruction (long, needs help) • Towards “Europe”: Marshall Plan • “Integration” becomes USA “cause” • What it means to the Americans • Condition of acceptance of Marshall Aid • Britain drops the ball • Different priorities than others • Concern for national sovereignty • Intergovernmental preference for international organizations • Conclusion: USA-Britain cooperate very well politically and not so well economically

  13. The Story of Integration (cont’d-1) • France (Jean Monnet) and USA “discover” one another • Monnet’s personal ties with the “Anglo-Saxons” (notably in Washington DC) • Monnet (head of French Plan) needs investment funds • Washington needs a European advocate for trade liberalization/integration • The obstacle for both: French weakness towards Germany • The danger of substituting a Franco-German for a Franco-British partnership

  14. The Story of Integration (cont’d-2) • Moves towards European unity • Economic: Benelux, OEEC, EPU • Political: Council of Europe (The Hague) • Defense: Western European Union (WEU) • The Big Move: Schuman Plan • Context: Several matters come to a head • French need for, yet fear of, German revival intensifies – furor in Paris in June 1948 over raising steel production quotas • Cold War pressures: fear of an American-imposed settlement based on Cold War priorities • Founding of the Federal Republic of Germany and the demands of its citizens for respect and jobs • The abdication of the British • The continuing problem and untenable status of the Ruhr • Monnet and Schuman – 2 very different personalities find a common vision and cause

  15. The Story of Integration (cont’d-2) • Monnet’s Ingenious Idea • An international authority in “one” (actually two inter-related) industrial sector, rather than an international protectorate over one territory: functionalism replaces territorialism in resolving problem of Ruhr • Make war forever impossible between the contracting parties (sold to the public as such) – peace • Complete freedom for German (coal, steel) industry, but within a guaranteed “free-market” (not cartelized) economic space • Adequate supplies for French modernization and export markets for iron and steel products in high-demand areas

  16. Conclusion • ECSC – Treaty signed 1951, begins 1952 • The Six: France, Germany, Italy, Belgium, Luxembourg, Netherlands • High Authority: Monnet’s strong dirigiste approach • Monnet as first president of HA (resigned in 1954) • “The success of a failure” – launching pad for European integration • From economics (ECSC) to “high” politics (EDF) and back to economics (EEC)

  17. “The Success of a Failure” Source: Gillingham, p. 299 “The European Coal and Steel Community made good only one promise, the most important one: It advanced the process of integration. This success grew out of failure. Little remained of Monnet’s ambitious plans when he decided to step down as president of the High Authority in November 1954. Decartelization had given way to reconcentration. The High Authority, designed as suggested by its exalted and forbidding title to convey orders from above for execution from below, was beset by paralysis. The common markets created to discipline heavy industry had become its common property. Yet the disappointments of the ECSC did not result in a reversion to the nationalist-protectionist order of the 1930s. The “relaunching of Europe”…aimed at something far more ambitious than the common administration of a single sector of West European industry; the statesmen of the Six now sought “complete integraton” … --- the eventual creation of a single communitywide environment for economic activity.”

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