Despite this, in February 1997, following a German-Italian summit, one German official noted that the government in Rome had suddenly claimed, "to the great surprise of the Germans", that its budget deficit was smaller than indicated by IMF and the OECD.
Shortly before the meeting, a senior German official had written in a memo that new posting rules for interest had alone resulted in a 0.26 percent decline in the Italian budget deficit.
A few months later Jürgen Stark, a state secretary in the German finance ministry, reported that the governments of Italy and Belgium had "exerted pressure on their central bank heads, contrary to the promised independence of the central banks".
The top bankers were apparently supposed to ensure that the EMI's inspectors would "not take such a critical approach" to the debt levels of the two countries. In early 1998, the Italian treasury published such positive figures on the country's financial development that even a spokesman for the treasury described them as "astonishing".
The convergence criteria required that total debt of a euro candidate could be no more than 60 percent of its annual economic output, but Italy's debt level was twice that amount, and the country was only approaching the reference value at a snail's pace. Between 1994 and 1997, its debt ratio declined by a mere three percentage points.
A debt level of 120 percent meant that this convergence criterion could not be satisfied, says Stark today. "But the politically relevant question was: Can founding members of the European Economic Community be left out?"
For a political project, the answer was quite obviously "no", and despite considerable evidence that Italy could not meet the convergence criteria, at the Brussels European Council of May 1998, Kohl felt the "weight of history", deciding that the euro would go ahead, stating: "Not without the Italians, please". That was the political motto, says Joachim Bitterlich, Kohl's foreign policy advisor.
The documents now seen by
Spiegel suggest that, to get there, the Kohl administration "misled both the public and Germany's Federal Constitutional Court".
What was remarkable at the time was that four professors had filed a lawsuit against the introduction of the euro. The suit was "clearly without merit," the government told the court, arguing that it would only be justified in the event of a "substantial deviation" from the Maastricht criteria, and that such a deviation was "neither recognisable nor to be expected".
Yet, following a meeting between the chancellor, finance minister Theo Waigel and Bundesbank president Hans Tietmeyer, on the case before the constitutional court, the head of the economics division at the Chancellery, Sighart Nehring, noted in mid-March 1998 that "enormous risks" were associated with Italy's "high debt levels".
It was left to Italian prime minister Romano Prodi, and Carlo Ciampi, former governor of the Italian central bank, to clean out the stables but, while reforms were able to reduce new borrowing, they did not dent the structural problems.
Thus, the Italians in 1997 twice suggested postponing the launch of the euro, but the Germans rejected the idea. It was "a taboo", says Kohl's former advisor Bitterlich, pointing out that the Germans were pinning their hopes on Ciampi. "Everyone felt that he was Italy's guarantor, in a certain sense, and that he would fix things".
It was also clear that Kohl was determined to wrap up monetary union before the 1998 parliamentary election. Thus the Italians were permitted formally to fulfil the Maastricht criteria with a combination of tricks and creative accounting, not least by introducing a "Europe tax" and selling the national gold reserves to the central bank and imposing a tax on the profits.
Chancellery officials were well aware of what was going on, as indeed were Dutch officials who argued that without "credible proof" of the longevity of the consolidation, Italy's acceptance into the eurozone was "unacceptable".
In the spring of 1998, however, the EU statistical office came to the rescue, certifying that the Italians had satisfied the Maastricht criteria. At that point, there was "no longer any reason to bar the Italians accession to the euro". Even though many knew that the figures were sugar-coated, no one dared say so publicly.
Warning signs and non-compliant figures were steadfastly glossed over, especially through the German general election campaign, when Kohl kept the campaign focused on domestic policy. Even after the election, right up to the launch of the euro, Italy's high debt ratio was ignored.
Now, says
Spiegel the files from the founding phase of the monetary union reveal that the original construct cannot function. "A monetary union amounts to more than shifting several billion euros back and forth. It is also a community of fate. Shared money requires shared policy and, in the end, shared institutions".
Thus, it says, if the members of the monetary union quickly make up for what they neglected before embarking on the euro adventure, the project of the century can still succeed. But the longer the necessary reforms are delayed, the more costly the journey becomes for everyone.
Even to the last, then, the magazine is ignoring its own findings – that the euro was indeed a political project, in which economic considerations took the back seat. The founders went with what was politically achievable at the time, hoping then for a beneficial crisis to arrive, legitimising the measures which had been omitted but which always had been essential.
To call these measures "reforms" is a travesty. They were deliberate omissions, the ultimate deception being that consequences of their omission could be dealt with without devastating consequences. That alone was a reckless gamble, and one which has yet fully to play out. Neither the deception, nor the self-deception are over.
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