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65 3 EMU OFF THE AGENDA? JUNE 1975–JUNE 1976 When in 1976 France left for the second time, it was clear to us that it was hardly likely that it would decide to join the “snake” again for a third time. It was in the air that, for this to occur, something else would have to be created. —Otmar Emminger Why and how did economic divergences induce only the partial disappearance of monetary cooperation from the European Community’s agenda between June 1975 and June 1976? In this chapter I first concentrate on the development of a more positive EEC climate after the settlement of the British renegotiation issue. The change in the British position gave a renewed psychological impetus to European (monetary) cooperation, although only for a moment. On this occasion the hope of a European relaunch lasted until the French government abandoned its stability-oriented economic policy in favor of a new, Keynesianinspired economic plan. I then concentrate on this turning point, underlining how far domestic politics can influence the course of European (monetary) cooperation . In the third part of the chapter I analyze the EEC-wide consequences of these economic divergences. In doing so, I examine their impact on the EEC’s structure, in terms of both agenda (abandoning EMU?) and institutions (what role for the European Council?). In the concluding section I present a balanced assessment of what was clearly the lowest point in terms of monetary cooperation . I suggest that these times of crisis allowed the emergence of a clearer sense of what still needed to be done in order to improve European monetary cooperation. In addition, this period, although marked by conspicuous failures, continued to see the flourishing of various studies about monetary union in the EEC, thereby underlining that EMU did remain, in one form or another, on the European agenda. 66 CHAPTER 3 Promising Steps? The result of the referendum in Britain came as relief in the chancelleries of many EEC member states. The renegotiation episode was over, and the EEC could now concentrate more easily on trying to cope with the international economic crisis . In this section I will examine the new political climate that developed over the summer of 1975. I will first discuss the end of the hypothèque britannique and analyze to what extent it reinvigorated European (monetary) cooperation. I will then concentrate on the second European Council, held in Brussels in July 1975, which offered an interesting discussion on economic and monetary matters among EEC heads of government. The EEC after the British Referendum “The (future of the) EEC after the British referendum” was a relatively banal formula employed as the title of numerous notes about EEC affairs circulated in the governments of the Eight.1 However banal, it nevertheless was an accurate reflection of the general mood in June 1975 in the EEC member states. That new steps would be taken in European integration was still uncertain, but at least it would be done with nine EEC members: “The United Kingdom is now completely engaged in Europe,” declared Wilson at the beginning of his intervention at the European Council in Brussels in July 1975.2 This was a welcome confirmation . The most widely used image to describe the situation was the “removal of a question mark” over British EEC membership. This image had been revived in the mid-1970s after its first uses in the 1960s. It also represented the removal of one of the reasons for the slowdown in EEC development.3 True, as the German government recalled, it did not remove the tangible obstacles to economic integration.4 But some governments formulated the hope that the end of this hypothèque would have result in the psychological relaunch of the European integration process.5 The French government insisted on introducing a special topic of discussion for the next European Council concerning “the future of European integration after the British referendum.”6 What type of initiatives could be taken remained unclear, however. Keeping Britain within the EEC was not necessarily good news for EMU, since the British government had repeatedly declared its reluctance—to say the least—toward monetary integration. The European Council of Brussels in July was meant to clarify the options open to the Nine. The improved atmosphere in the EEC nearly coincided with the official return of the French franc into the snake. The return was no surprise, since it had been announced in early May by Giscard. Nevertheless, it put...

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