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This is Part 1 of SPIEGEL's recent cover story on the history of the common currency. You can read Part 2 here. The remaining installment will be published in English on Friday.
Before Germany's Horst Reichenbach had even stepped off the plane in Athens, the Greeks knew who was coming. He had already been given various unflattering nicknames in the Greek media, including "Third Reichenbach" and "Horst Wessel" -- a reference to the Nazi activist of that name who was posthumously elevated to martyr status. The members of his 30-strong team, meanwhile, had been compared to Nazi regional leaders.
The taxi drivers at the airport were on strike, while hundreds stood in front of the parliament building, chanting their slogans. One protestor was wearing a T-shirt that read: "I don't need sex. The government fucks me every day." Within the first few hours, Horst Reichenbach realized that he had landed in a disaster area.
Reichenbach is the head of the task force the European Commission sent to Athens to provide what Brussels officials call "technical assistance" in the implementation of necessary reforms. For the Greek media, the task force is the advance guard of an invasion force, the bureaucrats that have arrived to transform beautiful Greece into a German colony.
Reichenbach describes his tasks as follows: restructure the tax system, streamline the administration, accelerate privatization, strengthen legal certainty, open up access to protected professions, restructure the energy and healthcare sector and remove structures that are hostile to investment. The effort, says Reichenbach, requires "thinking in terms of years instead of months." He was the vice-president of the European Bank for Reconstruction and Development and had planned to retire at the end of December. But then he received a call from European Commission President José Manuel Barroso, who then dispatched Reichenbach on this mission impossible.
He is a middleman between two Europes, the north and the south. The euro was intended as a currency that would help Europe grow together, but the first major euro crisis is in fact pitting the north and the south, the deutschmark economy and the lira economy, against each other. To make matters worse, there are also two different speeds in Europe, with one part of Europe moving at the high-paced speed of financial markets and banks, while the other drags along at the speed of governments and parliaments. And then there is also the Europe of two versions of the truth. One is at home in Brussels, Berlin and Paris, in the centers of power, while the other resides in the living rooms and on the streets of European cities.
As admirable as it is for Reichenbach and his 30 nation-builders to be bringing order to Athens, no amount of reorganizing can simply do away with €350 billion ($473 billion) in government debt. How to cope with this debt without ruining the European project is the most pressing question of recent weeks. After 20 years of bad decisions, spineless reforms and postponed actions, it isn't the citizens but the markets that have forced united Europe into an endgame over the euro. How can this currency have a future? Is there a risk that Greece is only the first domino in a row that could end with Germany? Is the euro zone a faulty design?
A team of SPIEGEL reporters went to Brussels, Luxembourg, Athens, Berlin and elsewhere to find answers to these questions. They have reconstructed the rise and fall of a currency that can only survive if the mistakes that were made over two decades are corrected in the next few months.
Act I: The Birth of the Euro (1991 to 2001)
Why the mistakes that would later threaten the euro were already made in the foundation phase. How Greece and other countries cheated their way into the monetary union. Why the common currency is a trillion-euro bet made by politicians against the markets -- and one that they would ultimately lose.
The bold, visionary project of creating a common currency for different countries and populations cannot be understood without reminding ourselves that the Berlin Wall came down in the late 1980s, the world still felt that World War II was a relatively recent event, and that Europe was still discussing whether Germany could pose a threat again.
Jacques Delors was the president of the European Commission for 10 years, and he was the lead author of the Maastricht Treaty, which defined the basic features of the euro. Now Delors is forced to listen to the daily criticism of how illusory his vision of a common currency was. But if he had had his way completely, he says, Europe would have been far better equipped, would have a more uniform constitution, and would be centrally governed by a Commission whose work would not be constantly undermined in the European Council, which comprises the heads of state and government.
Delors always wanted to go further than the political elite he was dealing with. At the time -- unlike today, he says -- that elite was consistently filled with dedicated Europeans, people like then-French President Francois Mitterand, then-German Chancellor Helmut Kohl, then-Dutch Prime Minister Ruud Lubbers and then-Portuguese Prime Minister Aníbal Cavaco Silva. But they too were not bold enough to integrate their countries to a degree that could count as true European coordination.
The Maastricht Treaty, which marked the establishment of the European Union when it was signed in 1992, made it all possible. It placed Europe on "three columns," the first of which was an economic column, complete with an "Economic and Monetary Union." The treaty provided the necessary legal framework, so that a common financial policy would have been conceivable, as would a coordinated fiscal and interest-rate policy. But the political will to fill out the Maastricht framework was missing.
The "United States of Europe" remained little more than a soundbite. And yet the introduction of the euro created a fait accompli that could no longer be rolled back. This European Big Bang, if you will, was to be followed by a process of evolution, during the course of which all the details were to be resolved.
Perhaps most importantly, the common currency was also a political symbol. Delors says that he always perceived Greece as being very far away, different and foreign. The country's acceptance into the euro zone happened much too early, he adds. But at the time, in the 1990s, politicians stood up in front of microphones and said that Europe was inconceivable without Athens, the "cradle of democracy." And Portugal, with its Carnation Revolution, also surely deserved to be part of the club. And the Irish, oppressed for so long by the British, had to be helped too. And who would have wanted to show Italy the door, merely because of its high unit labor costs and inflation rates?
And so, when the euro zone became a reality, elephants like Germany and France came together with mice like Portugal, Ireland and Luxembourg. Stable, prosperous countries of the north shared their common currency with shaky, underdeveloped countries of the south, mature industrialized nations joined forces with what were hardly more than developing countries. Strict Protestants mixed with sensual Catholics.
The promises of the euro were recorded in the Maastricht Treaty. It was to be a currency that would make Europe strong in a competitive globalized world; that would bring the European economies closer together; that would oblige countries to limit their debts and deficits; that would guarantee that no country would be liable for the debts of another; and that would promote political unity.
And the details? Well, they would be ironed out later.
1 | 2 | 3 Next Part 1: How a Good Idea Became a Tragedy Part 2: The Greeks Jump at the Opportunity Part 3: The Critics of the Euro Article... Print E-Mail Feedback For reasons of data protection and privacy, your IP address will only be stored if you are a registered user of Facebook and you are currently logged in to the service. For more detailed information, please click on the "i" symbol.
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From DER SPIEGEL The article you are reading originally appeared in German in issue 39/2011 of DER SPIEGEL.Click on the links below for more information about DER SPIEGEL's history, how to subscribe or purchase the latest issue of the German-language edition in print or digital form or how to obtain rights to reprint SPIEGEL articles.
Frequently Asked Questions: Everything You Need to Know about DER SPIEGEL Six Decades of Quality Journalism: The History of DER SPIEGEL A New Home in HafenCity: SPIEGEL's New Hamburg HQ Reprints: How To License SPIEGEL Articles DER SPIEGELGraphic: Back to Where We Started
Related Topics European Union Debt Crisis Greece Photo Gallery Graphics Gallery: The Most Important Facts about the Global Debt Crisis ReprintsFind out how you can reprint this DER SPIEGEL article in your publication.
Related SPIEGEL ONLINE links The Ticking Euro Bomb: How the Euro Zone Ignored Its Own Rules (10/06/2011) Photo Gallery: The Tragic History of the Euro 'Whole Set of Options': IMF Offers to Dramatically Expand Euro-Zone Help (10/05/2011) The World from Berlin: 'The Finale of the Greek Drama Is Drawing Closer' (10/04/2011) Profit Warnings and Greek Debt: European Banks Show Signs of Ill Health (10/04/2011) America's Debt Crisis: Why Europe Is Right and Obama Is Wrong (10/03/2011) Merkel and the Euro: Is Germany's Finance Minister Going Rogue? (10/03/2011) European Partners PresseuropGermany | Spare us this Euro Newspeak (Süddeutsche Zeitung, Munich)
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Reichenbach is the head of the task force the European Commission sent to Athens to provide what Brussels officials call "technical assistance" in the implementation of necessary reforms. For the Greek media, the task force is the advance guard of an invasion force, the bureaucrats that have arrived to transform beautiful Greece into a German colony.
Reichenbach describes his tasks as follows: restructure the tax system, streamline the administration, accelerate privatization, strengthen legal certainty, open up access to protected professions, restructure the energy and healthcare sector and remove structures that are hostile to investment. The effort, says Reichenbach, requires "thinking in terms of years instead of months." He was the vice-president of the European Bank for Reconstruction and Development and had planned to retire at the end of December. But then he received a call from European Commission President José Manuel Barroso, who then dispatched Reichenbach on this mission impossible.
He is a middleman between two Europes, the north and the south. The euro was intended as a currency that would help Europe grow together, but the first major euro crisis is in fact pitting the north and the south, the deutschmark economy and the lira economy, against each other. To make matters worse, there are also two different speeds in Europe, with one part of Europe moving at the high-paced speed of financial markets and banks, while the other drags along at the speed of governments and parliaments. And then there is also the Europe of two versions of the truth. One is at home in Brussels, Berlin and Paris, in the centers of power, while the other resides in the living rooms and on the streets of European cities.
As admirable as it is for Reichenbach and his 30 nation-builders to be bringing order to Athens, no amount of reorganizing can simply do away with €350 billion ($473 billion) in government debt. How to cope with this debt without ruining the European project is the most pressing question of recent weeks. After 20 years of bad decisions, spineless reforms and postponed actions, it isn't the citizens but the markets that have forced united Europe into an endgame over the euro. How can this currency have a future? Is there a risk that Greece is only the first domino in a row that could end with Germany? Is the euro zone a faulty design?
A team of SPIEGEL reporters went to Brussels, Luxembourg, Athens, Berlin and elsewhere to find answers to these questions. They have reconstructed the rise and fall of a currency that can only survive if the mistakes that were made over two decades are corrected in the next few months.
Act I: The Birth of the Euro (1991 to 2001)
Why the mistakes that would later threaten the euro were already made in the foundation phase. How Greece and other countries cheated their way into the monetary union. Why the common currency is a trillion-euro bet made by politicians against the markets -- and one that they would ultimately lose.
The bold, visionary project of creating a common currency for different countries and populations cannot be understood without reminding ourselves that the Berlin Wall came down in the late 1980s, the world still felt that World War II was a relatively recent event, and that Europe was still discussing whether Germany could pose a threat again.
Jacques Delors was the president of the European Commission for 10 years, and he was the lead author of the Maastricht Treaty, which defined the basic features of the euro. Now Delors is forced to listen to the daily criticism of how illusory his vision of a common currency was. But if he had had his way completely, he says, Europe would have been far better equipped, would have a more uniform constitution, and would be centrally governed by a Commission whose work would not be constantly undermined in the European Council, which comprises the heads of state and government.
Delors always wanted to go further than the political elite he was dealing with. At the time -- unlike today, he says -- that elite was consistently filled with dedicated Europeans, people like then-French President Francois Mitterand, then-German Chancellor Helmut Kohl, then-Dutch Prime Minister Ruud Lubbers and then-Portuguese Prime Minister Aníbal Cavaco Silva. But they too were not bold enough to integrate their countries to a degree that could count as true European coordination.
The Maastricht Treaty, which marked the establishment of the European Union when it was signed in 1992, made it all possible. It placed Europe on "three columns," the first of which was an economic column, complete with an "Economic and Monetary Union." The treaty provided the necessary legal framework, so that a common financial policy would have been conceivable, as would a coordinated fiscal and interest-rate policy. But the political will to fill out the Maastricht framework was missing.
The "United States of Europe" remained little more than a soundbite. And yet the introduction of the euro created a fait accompli that could no longer be rolled back. This European Big Bang, if you will, was to be followed by a process of evolution, during the course of which all the details were to be resolved.
Perhaps most importantly, the common currency was also a political symbol. Delors says that he always perceived Greece as being very far away, different and foreign. The country's acceptance into the euro zone happened much too early, he adds. But at the time, in the 1990s, politicians stood up in front of microphones and said that Europe was inconceivable without Athens, the "cradle of democracy." And Portugal, with its Carnation Revolution, also surely deserved to be part of the club. And the Irish, oppressed for so long by the British, had to be helped too. And who would have wanted to show Italy the door, merely because of its high unit labor costs and inflation rates?
And so, when the euro zone became a reality, elephants like Germany and France came together with mice like Portugal, Ireland and Luxembourg. Stable, prosperous countries of the north shared their common currency with shaky, underdeveloped countries of the south, mature industrialized nations joined forces with what were hardly more than developing countries. Strict Protestants mixed with sensual Catholics.
The promises of the euro were recorded in the Maastricht Treaty. It was to be a currency that would make Europe strong in a competitive globalized world; that would bring the European economies closer together; that would oblige countries to limit their debts and deficits; that would guarantee that no country would be liable for the debts of another; and that would promote political unity.
And the details? Well, they would be ironed out later.
1 | 2 | 3 Next Part 1: How a Good Idea Became a Tragedy Part 2: The Greeks Jump at the Opportunity Part 3: The Critics of the Euro Article... Print E-Mail Feedback For reasons of data protection and privacy, your IP address will only be stored if you are a registered user of Facebook and you are currently logged in to the service. For more detailed information, please click on the "i" symbol.
Post to other social networks:
Keep track of the newsStay informed with our free news services:
All news from SPIEGEL International Twitter | RSS All news from Europe section RSS© SPIEGEL ONLINE 2011 All Rights Reserved Reproduction only allowed with the permission of SPIEGELnet GmbH
From DER SPIEGEL The article you are reading originally appeared in German in issue 39/2011 of DER SPIEGEL.Click on the links below for more information about DER SPIEGEL's history, how to subscribe or purchase the latest issue of the German-language edition in print or digital form or how to obtain rights to reprint SPIEGEL articles.
Frequently Asked Questions: Everything You Need to Know about DER SPIEGEL Six Decades of Quality Journalism: The History of DER SPIEGEL A New Home in HafenCity: SPIEGEL's New Hamburg HQ Reprints: How To License SPIEGEL Articles DER SPIEGELGraphic: Back to Where We Started
Related Topics European Union Debt Crisis Greece Photo Gallery Graphics Gallery: The Most Important Facts about the Global Debt Crisis ReprintsFind out how you can reprint this DER SPIEGEL article in your publication.
Related SPIEGEL ONLINE links The Ticking Euro Bomb: How the Euro Zone Ignored Its Own Rules (10/06/2011) Photo Gallery: The Tragic History of the Euro 'Whole Set of Options': IMF Offers to Dramatically Expand Euro-Zone Help (10/05/2011) The World from Berlin: 'The Finale of the Greek Drama Is Drawing Closer' (10/04/2011) Profit Warnings and Greek Debt: European Banks Show Signs of Ill Health (10/04/2011) America's Debt Crisis: Why Europe Is Right and Obama Is Wrong (10/03/2011) Merkel and the Euro: Is Germany's Finance Minister Going Rogue? (10/03/2011) European Partners PresseuropGermany | Spare us this Euro Newspeak (Süddeutsche Zeitung, Munich)
Polish elections | Sleepwalkers versus the wide-awake (Uwa?am Rze. Inaczej pisane, Warsaw)
PolitikenLowest wage increase for 75 years
Albino moose makes Dane unpopular
Corriere della SeraBerlusconi Passes Development Decree to Romani
Bongiorno Quits over Phone Tap Bill – “Law Muzzles News”
Global Partners New York TimesAfter Adding Some Jobs, U.S. Economy Still Uncertain
Nobel Peace Prize Awarded to Ellen Johnson Sirleaf, Leymah Gbowee and Tawakul Karman
ABC NewsMissing Baby Lisa's Mom: Cops Accused Me
Photos: Tim Robbins Joins 'Occupy Wall Street' Protests
Newsletter SPIEGEL ONLINE Sign up for Spiegel Online's daily newsletter - and get the best of Der Spiegel's and Spiegel Online's international coverage in your In-Box everyday. Facebook FB.init("8e0192d8770be48129dc946121d0092e"); Twitter new TWTR.Widget({ version: 2, type: 'search', search: '@SPIEGEL_English', interval: 6000, title: 'Live Postings @SPIEGEL_English', subject: 'SPIEGEL on Twitter', width: 300, height: 250, theme: { shell: { background: '#ffffff', color: '#666' }, tweets: { background: '#ffffff', color: '#444444', links: '#990000' } }, features: { scrollbar: false, loop: false, live: true, hashtags: true, timestamp: true, avatars: true, behavior: 'all' } }).render().start();Follow SPIEGEL_English on Twitter now:
MORE FROM SPIEGEL INTERNATIONAL German Politics Merkel's Moves: Power Struggles in Berlin World War II Truth and Reconciliation: Why the War Still Haunts Europe Energy Green Power: The Future of Energy European Union United Europe: A Continental Project Climate Change Global Warming: Curbing Carbon Before It's Too Late Overview International TOP Home Politik Wirtschaft Panorama Sport Kultur Netzwelt Wissenschaft UniSPIEGEL SchulSPIEGEL Reise Auto Wetter DIENSTE Schlagzeilen RSS Newsletter Mobil VIDEO Nachrichten Videos SPIEGEL TV Magazin SPIEGEL TV Programm SPIEGEL Geschichte MEDIA SPIEGEL QC Mediadaten Selbstbuchungstool weitere Zeitschriften MAGAZINE DER SPIEGEL Dein SPIEGEL SPIEGEL GESCHICHTE SPIEGEL WISSEN KulturSPIEGEL UniSPIEGEL SPIEGEL GRUPPE Abo Shop SPIEGEL TV manager magazin Harvard Business Man. buchreport buch aktuell SPIEGEL-Gruppe WEITERE Hilfe Kontakt Nachdrucke Datenschutz Impressum TOP
The promises of the euro were recorded in the Maastricht Treaty. It was to be a currency that would make Europe strong in a competitive globalized world; that would bring the European economies closer together; that would oblige countries to limit their debts and deficits; that would guarantee that no country would be liable for the debts of another; and that would promote political unity.
And the details? Well, they would be ironed out later.
Post to other social networks:
Stay informed with our free news services:
© SPIEGEL ONLINE 2011 All Rights Reserved Reproduction only allowed with the permission of SPIEGELnet GmbH
Click on the links below for more information about DER SPIEGEL's history, how to subscribe or purchase the latest issue of the German-language edition in print or digital form or how to obtain rights to reprint SPIEGEL articles.
Graphic: Back to Where We Started
Find out how you can reprint this DER SPIEGEL article in your publication.
Germany | Spare us this Euro Newspeak (Süddeutsche Zeitung, Munich)
Polish elections | Sleepwalkers versus the wide-awake (Uwa?am Rze. Inaczej pisane, Warsaw)
Lowest wage increase for 75 years
Albino moose makes Dane unpopular
Berlusconi Passes Development Decree to Romani
Bongiorno Quits over Phone Tap Bill – “Law Muzzles News”
After Adding Some Jobs, U.S. Economy Still Uncertain
Nobel Peace Prize Awarded to Ellen Johnson Sirleaf, Leymah Gbowee and Tawakul Karman
Missing Baby Lisa's Mom: Cops Accused Me
Photos: Tim Robbins Joins 'Occupy Wall Street' Protests
Follow SPIEGEL_English on Twitter now:
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