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10 05 2015 | by Victor Xing | Economics

How essential was Germany to the creation of the European Union?

The EU of today came from several predecessor organizations, including the European Economic Community (please see the timeline shaded in green).

The European Economic Community was conceived to be not only an economic force, but also a political one.  Konrad Adenauer, West Germany’s first chancellor was a lead signatory of the EEC and a supporter behind an French idea of European “Third Force.”

Adenauer was deeply shocked by the Soviet threat of nuclear strikes against Britain and France, and even more by the apparent quiescent American response to the Soviet threat of nuclear annihilation against two of NATO’s key members.  As a result, Adenauer became more interested in the French idea of a European “Third Force” in the Cold War as an alternative security policy.  This helped to lead to the formation of the European Economic Community in 1957, which was intended to be the foundation stone of the European “Third Force”.

Germany and France were the driving forces behind European integration on the following years, despite the two countries disagree deeply on issues such as deficit spending and prudent macroeconomic policies.  The European Central Bank is headquartered in Frankfurt on Germany’s insistence to “make sure” risk of hyperinflation would never rise again.

Germany is so integrated into the entire exercise that an exit would likely signal the end of the currency union.

Next article10 04 2015 | by Victor Xing | Economics

What is IMF’s SDR (Special Drawing Rights)?