1988–90: German Unity and European Union

Abstract

As the Delors Committee began work in Autumn 1988, the international context which had helped to create favourable conditions for a high-level European drive for economic and monetary union was shifting. Political leaders in Europe became increasingly preoccupied with rising instability in the Soviet Union and Eastern Europe. The US dollar which, to the dismay of German exporters, had since early 1985 been losing value against the deutschmark, falling especially sharply after the October 1987 mini Wall Street crash, began in 1988 to climb again, in anticipation that the November 1988 US Presidential elections would mark the end of the Reagan era and the advent of tighter monetary conditions. It continued to strengthen through the early months of George H.W. Bush’s Presidency. As business pressure on Kohl eased and as European central bankers began thinking through the practical implications of creating a new monetary institution, the more cautious attitude of the German Bundesbank and Finance Ministry reasserted itself over the European idealism of Genscher and the German Foreign Ministry.