Monnet's Brandy and Europe's Fate

A Determined Frenchman's Vision of Integration Serves as a Guide to Ending the Eurozone Crisis

Strobe Talbott

• Publisher: Brookings Institution Press
• Year: 2014
• eBook ISBN: 9780815726074
• Topic: Economics
• Subtopic: International Economics
• Index: Economics

The past five years have been turbulent for the eurozone. Yet leaders such as Angela Merkel and François Hollande are determined to keep The European Project intact, and even among one-time critics there is a broad consensus that the eurozone will have to hang together. Strobe Talbott introduces the extraordinary life and vision of Jean Monnet—the man credited as the architect of European unity. Monnet died in 1979, long before the euro went into circulation, and his relevance today is all the more striking in light of his idiosyncratic career. He was born in 1888 to a long line of brandy artisans. He had no formal training as an economist, yet he is ranked alongside Keynes. He was never elected to public office, and his fellow countrymen sometimes mocked him as "the great American." Ironically, some believed that Monnet's arguments were particularly effective with FDR, and later speculated that they might even have helped shorten World War II by a year. In this essay, Talbott demonstrates how Monnet's vision of integration may serve as a guide to ending the current eurozone crisis. With minds in key capitals now focused on cobbling together institutional measures of the sort that Monnet believed necessary for monetary union, his vision of a united Europe may well survive and, over time, succeed.

MONEY IS AN INSTRUMENT of governance as well as commerce. It enables citizens to participate in the economic life of their societies while reminding them where political authority resides and where their loyalties belong. So it has been since ancient times, when visages of Nebuchadnezzar and Caesar were stamped on the coins of their realms, and so it is today. In almost all 195 countries on Earth, the change in people’s pockets and the banknotes in their wallets are an assertion of national sovereignty.

But today there is an exception to that general principle: the euro, which is the common currency of 18 of the member states of the European Union. The eurozone puts them in the vanguard of the greatest experiment in regional cooperation the world has ever known.

However, that venture has had a rough five years. In the wake of the global financial and economic meltdown in 2008, the euro has become economically disruptive and politically divisive, pitting the states of northern and southern Europe against each other.

The crisis is not over, but Chancellor Angela Merkel of Germany, President François Hollande of France, and their fellow heads of government and state are determined to keep the eurozone intact. They are reinforcing accords on national budgets, spending, and financial regulation, pushing ahead with a banking union, and tackling unemployment.

In taking those and other remedial measures, today’s European leaders, like their predecessors in the middle of the last century, are heeding the wisdom of Jean Monnet. He died 35 years ago, long before the euro went into circulation. Still, he would have understood the purpose that monetary union is meant to serve: binding up the wounds of the most bloodstained continent in modern history and turning it into a zone of peace, prosperity, democracy, and global clout, animated by common values and governed by common policies and institutions. That is the European Project. As its master architect, Monnet would also have understood the mistakes, dilemmas, and dangers that threaten that project now.

The method that guided him throughout his long life put a premium on the careful sequencing of innovations in economic policy so as to make irreversible the overall process of political integration. Unlike Monnet, however, the leaders responsible for the adoption of the euro in the 1990s failed to ensure that the necessary political conditions and institutions were in place, thus making the current troubles of the European Union all but inevitable.

The relevance today of this historical figure is all the more striking in the light of his idiosyncratic career. Monnet spent much of his life as a private citizen. He never held elective office or a ministerial post. He was an effective advocate, who used his carefully cultivated mellifluous speaking voice and forensic skills to good effect in interviews and declarations. But it was primarily from behind the scenes that he influenced generations of major actors on the world stage: in his youth, Georges Clemenceau, Arthur Balfour, Neville Chamberlain, Winston Churchill, and Franklin Roosevelt; in his middle years, Dean Acheson, Konrad Adenauer, and John F. Kennedy; in old age, Willy Brandt, Helmut Schmidt, and Shimon Peres. At crucial moments and on vital issues, these leaders and others took his counsel and adopted his ideas as their own.

In a sense, Monnet is once again exerting his influence, this time from beyond the grave. The crisis in the eurozone has focused minds in key capitals on cobbling together institutional measures of the sort that he believed were necessary for monetary union. As a result, his vision of a united Europe may well survive and, over time, succeed.

MONNET HAS BEEN HAILED as a statesman. In fact, he was something far rarer and more consequential—a key figure in the transformation of statehood itself. Modernization, he believed, was more than the exploitation of new technologies to improve industry, transportation, and communication; it also meant adjusting to the ways in which individual nations were joined by an ever-thickening skein of economic transactions, increasingly unobstructed by physical distance and national boundaries. Truly modern nations needed to learn how to retain their independence where they must, while making a virtue of their interdependence where they could.

In promoting that belief, Monnet revised for the better the consequences of a seminal event in European history: the Peace of Westphalia of 1648. That treaty, which ended the Thirty Years War, attenuated the sway of the Holy Roman Empire over subsidiary domains that were roughly unified by shared language and culture while separated by borders approximating those on the map today. The term scholars later assigned to these autonomous territories was “nation-states.” The hyphen suggested that nationality and statehood were closely aligned.

There was an element of willful delusion in the concept. Monnet’s own homeland is a case in point. France is often cited as the archetypal Westphalian nation-state, but it also illustrates the elusiveness of the construct. Centuries of conquest and accretion fused Normandy, Brittany, and Gascony, which had been distinct and often combative nations until they were suppressed and absorbed into France. The Treaty of Westphalia also ceded to France most of Alsace on the west bank of the Rhine. The local élites—notably including Charles de Gaulle’s ancestors—learned French, while the common folk continued to speak German. As a result, for the next 300 years Alsace, and later its neighbor Lorraine, would be a source of tension between France and Germany and, on several occasions, a casus belli.

Westphalia brought nationalism to the surface in two troublesome forms: secessionism within nations and animosity between them. In both cases, the result was often political violence, which Monnet regarded as the ultimate evil.

Westphalia also perpetrated the fallacy of absolute national sovereignty. Even in the 17th century, and much more in the 20th, borders were porous; nations’ economies were intertwined, their populations intermixed, and their fates bound together, for good and ill.

Monnet believed that the ideal way to correct these flaws in the Westphalian system was federalism, a layered system of governance whereby authorities at various levels have responsibility for those issues in which they have the most legitimacy and competence. Federalism was a European concept going back centuries. It usually operated within individual states, where power and responsibility were distributed among local, provincial, and national levels of government. Monnet, however, wanted to elevate it to being the basis for a federated Europe. It was a radical, distant goal, which he helped make possible through the practical, iterative steps he prescribed during his lifetime.

The place to start, he believed, was in the spheres of finance and commerce, particularly in mineral resources, where independence and sovereignty are most contingent, and where interdependence is most beneficial and comes most naturally to all parties. Because Monnet concentrated on this aspect of the endeavor, he came to be regarded as an economist—and arguably one of the most important of the 20th century, along with his contemporary John Maynard Keynes. Yet he had no formal training in the dismal science.

In fact, Monnet may well have been so effective in the field of political economy precisely because he was neither an academic economist nor a professional politician. From his teenage years forward, his education in the uses and misuses of money was in the world of business—and his exposure to politics took place in a Clausewitzian world that was, throughout his life, either preparing for, embroiled in, or recovering from war.

A Man with a Plan

Monnet quit school when he was 16 to enter a profession that, directly or indirectly, sustained nearly everyone in the commune of Cognac: the manufacture and marketing of the spirits that bear its name. In his late teens and early twenties, he absorbed the basics of accounting and administration while working for the House of Monnet, which had been in the family since 1838.

At the end of his long life, Monnet described his birthplace as a “brandy town [where] one did one thing, slowly and with concentration.” That could have served as a motto for the singular purpose of his own life: the cultivation and marketing of a grand plan that would bring lasting peace to Europe.

Long after Monnet left the brandy trade, it continued to be a rich source of the metaphors he used to explain his lifelong undertaking. On brisk morning walks with friends in the countryside around his farmhouse in Houjarray, a village outside of Paris, Monnet would sometimes depart from discussion of the great issues of the day to reflect on what it took to make a fine cognac: harmony between the blessings of nature (climate, soil, and vines) and the virtues of human agency (patience in husbandry; care in fermentation, distillation, blending, and aging; thrift in good times, resilience in bad). He especially valued consistency of method and order: hanging the vines on meticulously laid-out trellises, fermenting the juices of the grapes for weeks, distilling them twice, then storing the result in neatly arrayed oak casks in dark cellars for anywhere from two years to five decades or more.

Once the contents were bottled, the final stage of the process—selling cases around the world—required this young man of country stock to become a globe-trotting cosmopolitan. He learned English as a child because it was “the language of our clientele,” and traveled widely around Europe as well as North America and the Middle East to promote the Monnet brand with its salamander emblem and, for the longest-aged, top-of-the-line product, the X.O. (“Extra Old”) rating.

The firm was competing against the superpowers Hennessy and Martell. But brandy merchants also depended on cooperation with each other in order to broaden the global market for the benefit of all. An environment conducive to vigorous trade was a common good. That was an ethos that suited Monnet’s temperament. His inclination to listen carefully, combined with his ability to respond convincingly, argue tactfully, and probe for compromise made him a good businessman; it also turned out to be good training for diplomacy.

MONNET’S TRANSITION to what would become his life’s work occurred in the summer of 1914, shortly before the guns of August shattered the grand illusion that global interdependence would keep the major powers from ever again going to war. On his way home from London he learned, during a stop at the Poitiers railway station, that Germany had declared war on Russia and begun moving troops into Luxembourg, and France was mobilizing.

With the help of a family friend, Monnet went straight to the top of the French government to volunteer his services. Premier René Viviani was so impressed that he authorized the 25-year-old to negotiate an agreement between France and Britain to coordinate their production of armaments. Within three years, Monnet was helping Étienne Clémentel, the French minister of commerce and industry, develop a proposal for a post-war “new economic order” based on Franco-British cooperation but open to other European countries as well.

The allies rejected that proposal at Versailles, but by then Monnet had patrons at the highest levels in Paris and London. When the League of Nations was established in 1919, they arranged for him to become its deputy secretary-general. Unfortunately, the unanimity principle under which the League was supposed to make decisions and take action kept it from doing much of either, and it was doomed almost from the start. Disillusioned, Monnet quit his post in 1923 to help his father cope with the family business, which was struggling.

After several years, Monnet became a peripatetic banker assisting governments with the modernization of their finances and infrastructure. He helped several Central European countries stabilize their currencies and advised Chiang Kai-shek on how to upgrade the Chinese railway system. Operating in a private capacity, Monnet had found a way to promote the integration of national economies as a basis for international commerce and peace.

BUT IN THE 1930S, the world was heading in another direction. Throughout modern history, economic distress has stoked the politics of fear, anger, and irrationality. Those, in turn, have often led to extremist, paranoid, repressive, protectionist, and sometimes aggressive government policies. This was never more true than during the Great Depression, which heightened the economic misery of war-torn nations, undermined democratic governments, and incubated fascism.

Monnet had long feared that the interwar period would be just that—a respite between global conflagrations. Like Keynes, he came to view the “war guilt” clause in the Versailles Treaty, which demanded reparations in the form of payments and transfers of property and equipment from Germany, to be a mistake. It was based, he believed, on “discrimination,” a violation of the core principle that “equality is absolutely essential in relations between nations, as it is between people.”

For Monnet, this was not just an ethical principle but a pragmatic one. Versailles had imposed a Carthaginian peace that would come back to haunt winners and losers alike by inciting, in little more than a decade, the worst kind of nationalism and racism. In 1935, at a dinner party on Long Island, Monnet heard from John Foster Dulles, then a Wall Street lawyer, the news that Hitler had just issued the anti-Semitic Nuremburg laws. “A man who is capable of that,” Monnet said to the table, “will start a war.”

By 1938, Monnet had returned to active public life, traveling around the Continent and across the English Channel as an adviser and envoy. His task, as he put it, was to convince “civil servants to cooperate and exchange information between different ministries and different countries, so much so that the teams needed for joint action were already formed when the time came for decision. This is the dynamic of the balance-sheet, a page of figures which looks very much like those great account-books that my father taught me to read in Cognac when I was 16.”

For him, the life lesson was that statecraft depends on sound eco­nomics as well as skillful politics—and the blending of the two into a single process in order to achieve the long-sought goal of the harmonization of international relations.

MONNET ALSO SHUTTLED back and forth across the Atlantic during those years. He already knew North America well, going back to a trip he made to Canada as a brandy salesman when he was 18 and numerous subsequent visits to the United States. He had quickly become an Americophile and would remain one all his life.

In Monnet’s view, American federalism proved itself during the 1930s as the best system of governance for countering the depredations of the Great Depression. The New World offered the Old World a model for its own future in another respect as well: the United States was the opposite of a Westphalian nation-state (France for the French, Germany for the Germans). On one of his many visits to New York, a Turkish taxi driver, seeing that his passenger was burly, swarthy and mustachioed, assumed he too was a Turk. Monnet found the incident more than amusing: it captured what he saw as one of America’s distinctive advantages. Here was a country-in-progress with an open door, constantly refreshing its citizenry with an influx of immigrants, drawing strength from their kaleidoscopic diversity. Even its food reflected the variety he so appreciated. While Monnet had a sophisticated palate, he enjoyed the occasional hamburger when traveling in the United States, not least because this iconic staple of American cuisine had a German name.

The government that he dealt with in Washington pulsed with pragmatism, energy, and activism at a time when those back home had been sleepwalking into catastrophe for a decade. Monnet’s principal task in 1940 and the early months of 1941 was to urge President Roosevelt to come to the aid of Britain, and to pave the way for America’s entry into the war. Keynes believed that Monnet’s arguments were particularly effective with FDR.

EVEN IN THE DARK HOURS when the Axis dominated most of the Continent, Monnet was thinking ahead about how to break the cycle of total war followed by a false peace. In 1943, he declared at a meeting of the French government-in-exile in Algiers, “There will be no peace in Europe if the states are reconstituted on the basis of national sovereignty.... The countries of Europe are too small to guarantee their peoples the necessary prosperity and social development. The European states must constitute themselves into a federation.”

There are few instances in history when a single statement of prescription and prophecy would so soon come to pass, and fewer still when the prophet himself would be a major agent in making that happen.

Two years later, after Germany and its allies surrendered, Monnet had his chance to begin the process of realizing his vision, though he got off to a rather uncertain start. As commissioner-general of the French National Planning Board, Monnet advised de Gaulle, the president of the provisional government, on how to reconstruct the French economy. One obvious means was to tap into Germany’s industrial potential, much of which was still intact. The sweeping recommendations he proposed are collectively known as the Monnet Plan. Its most conspicuous feature—the expropriation of coal from German mines in the Ruhr and Saar areas to fire the furnaces of French steel factories—was euphemistically called l’Engrenage (The Transmission). In addition to hastening the recovery of France, it inhibited Germany’s ability to rearm, a measure that was intended to be both punitive and preemptive.

Therein lies the irony: the Monnet Plan had an unmistakable aspect of Versailles déjà vu. It violated its namesake’s own principle of equality in inter-state relations. If it had remained in place for long, it would have crippled Germany’s own recovery and, very likely—just as Versailles had done—sown dragons’ teeth in the soil of Europe rather than the seeds of permanent peace.

Monnet, who generally eschewed the first person singular, rarely, if ever, referred to the plan by his own name. In his final years, he acknowledged that what the world knew as “the Monnet Plan” was an instance of French foreign policy “returning to the habits of the past.” The closest he came to justifying it was his observation that merging French and German resources vital to war-making “would reduce their malign prestige and turn them instead into a guarantee of peace.” At best, the plan that to this day bears his name was a temporary expedient—one that would be replaced by the proudest and most important accomplishment of his life.

OVER THE NEXT FOUR YEARS, Monnet worked on a long-term successor arrangement that would be negotiated with Germany, not imposed on it. The agreement lowered duties and restrictions on coal and steel trade between France and Germany, bringing two vital sectors together under the aegis of a joint state-sponsored authority.

This bilateral accord was an exemplar of Monnet’s strategy for overcoming the national sovereignties that stood in the way of his vis...

Table of contents

• Cover Page
• Copyright Page
• Contents
• A Man with a Plan
• The Brookings Essay