You get unification, we get the euro

The architect of German reunification is incensed. Wolfgang Schäuble, interior minister under Helmut Kohl and chief negotiator of the Unification Treaty, holds the offending tome in his hand and unleashes a salvo of what might be termed as unparliamentary language. On the cover, Peer Steinbrück [a leading Social Democrat] gazes into the distance. What infuriates Schäuble is one little line buried in Steinbrück’s long tract on Europe: "Giving up the D-Mark for the (equally) stable euro was one of the concessions that helped pave the way for German unification.”

"There was never any such deal,” Schäuble insists. Steinbrück is unshakable, however. Talk to French officials, he says, and you’ll get confirmations by the dozen. Hubert Védrine, for example, adviser to president François Mitterrand at the time, is convinced his boss would hardly have agreed to unification without German concessions to a monetary union: "Mitterrand did not want any reunification without progress on European integration,” says Védrine. "And the only ground that was prepared for that was the currency.”

This is about more than an argument between politicians, it’s about history’s verdict on one of the greatest events of recent decades. If the French are right, not only would a shadow fall on Germany’s happy national holiday. It would also put a blot on the euro, which was unloved in Germany even before the rescue packages for Greece. Detractors like ex-chancellor Gerhard Schröder have always considered the single currency a "sickly premature birth". Now they could also claim the euro was basically forced upon the Germans.

Germany would be left as "high and dry" as it was in 1913

As a matter of fact, secret documents from the German foreign office archives, now in Der Spiegel’s possession, show that the connection was a lot closer than previously acknowledged. A broad West European alliance threatened to form up against Bonn, and Franco-German relations were on the verge of collapsing. Mitterrand warned the government in Bonn point-blank that it could soon be left stranded in Europe as high and dry “as in 1913".

The papers also show that if Bonn and Paris hadn’t risen above their differences in those dramatic days, history might well have taken a different course, both in the multilateral negotiations over Germany unity and in regard to monetary union. Before things came to a boil in late 1989, the debate over the single currency was proceeding at the usual bogged-down-in-Brussels pace. The efforts toward monetary union were continually foiled by the conflicting interests of the inflationary countries in the South and the so-called hard-currency belt around Germany and the Netherlands. The French especially were writhing under the existing monetary system, which they felt relegated them to the lower rung of a perfidious two-tiered order. "The Deutschmark is to the Germans what the atom bomb is to us,” was the Elysée’s view.

The differences were so daunting that then Bundesbank president Karl Otto Pöhl wasn’t very worried about ever having to see the dawn of a European currency. "I was convinced,” recounts Pöhl, "that wouldn’t come for another hundred years." But then, overnight, came something that seemed far more utopian still than the idea of a single European currency: German reunification. In his 10-point declaration in late November 1989, Helmut Kohl proposed a new German confederation “in which the German people can regain their unity in free self-determination”. The Western allies were not in the loop, which made them all the more hostile to the scheme. Was Kohl preparing the ground behind their backs for Germany to go on its own Sonderweg? Was the chancellor out to create a new Greater Germany in the heart of Europe?

Mitterand's "fit of rage" at the Elysée lasted hours

When Mitterrand heard of Kohl’s declaration, he had “a little fit of rage – that went on for hours”, his advisers recall. How double-crossed the president felt was to emerge shortly afterwards. Foreign minister Hans-Dietrich Genscher dashed over to the Elysée. It was a memorable meeting. Hardly anywhere else is it stated as clearly as in the “classified” secret minutes of that meeting how closely Mitterrand’s “yes” to unity was tied to German concessions on monetary union.

"Germany can only hope for reunification,” lectured the French president, "if it stands in a strong Community.” However, lamented Mitterrand, Germany’s Community spirit currently leaves much to be desired. "One doesn’t have to be a psychologist to see that the Federal Republic of Germany is stalling at the moment on the road to economic and monetary union.” Genscher got his grim drift right away: Mitterrand was threatening to veto reunification. And if push came to shove, Bonn would have not only British prime minister Margaret Thatcher against it.

The foreign minister was accommodating and make and then made a significant commitment to the president: "A decision needs to be made in Strasbourg,” said Genscher, "regarding the Intergovernmental Conference on Economic and Monetary Union.” But on 8 December 1989, when Kohl and Genscher entered the conference hall in Strasbourg, they got an icy reception. The Germans just barely managed to wrest consent to German unity, spiked with reservations and provisos, from their EC partners. In return they rubber-stamped the French timetable for monetary union. There was no discussion of political union though.

Need to make a Greater Germany acceptable to its allies

Then everything happened very fast. In summer of 1990, East and West Germany signed the Unification Treaty, on 3 October the new Länder acceded to the Federal Republic of Germany. In December the EC heads of state embarked on the Intergovernmental Conference on European Monetary Union in Rome. In February 1992, when they signed the Maastricht Treaty on the introduction of the euro, Genscher felt a profound sense of contentment: "That act symbolised to me that I had made good on the promises I’d given in the German unification process."

So was giving up the mark the price to be paid for unity? The question can’t be answered clearly in the affirmative if only because key decisions on the euro weren’t reached till later, for example when when the French passed the Maastricht Treaty in a referendum in 1992 by a wafer-thin majority. And yet it can hardly be denied that the downfall of the Communist regime propelled the monetary project forwards at a decisive stage in its history. "The European Monetary Union might not have materialised at all were it not for German unity,” says former Bundesbank chief Karl Otto Pöhl. "Kohl knew that he’d have to move Europe forwards to make reunification acceptable,” says Mitterrand’s erstwhile adviser Hubert Védrine.

In the end, that concession was a boon and a blessing above all to the two heads of state. By allowing Germany’s eastward enlargement, Mitterrand helped make Kohl the chancellor of unification. And that in turn put Kohl in a position to divest the Germans of their Deutschmark – which was one of Mitterrand’s greatest triumphs.

Translated from the German by Eric Rosencrantz