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Off the Target
The Stagnating Political
Economy of Europe and
Post-Pandemic Recovery
Muhammad Ali Nasir
Off the Target
“Muhammad Ali Nasir has written a remarkable book full of new insights in the
difficult process of European integration and the financial crises of recent times
that resulted in a lost decade for the continent. This book is a must-read for
anyone who is seriously interested in understanding the mechanisms that led to
the problems Europe encounters and in the potential ways ahead.”
—Hans-Werner Sinn, Professor Emeritus of Economics and Public Finance,
University of Munich, Germany
“After providing insightful accounts of the moves to union and integration in

Europe, this impressive book provides detailed analyses and critiques of the
macroeconomic policies of the euro area institutions in the ‘lost decade’ of the
2010s. It also evaluates the prospects for a post-pandemic recovery and whether
a second ‘lost decade’ can be avoided, fully cognizant of the major challenges
faced by the euro area.”
—Malcolm Sawyer, Emeritus Professor of Economics, University of Leeds, UK
“This is a timely book on European economic and social policy. As we have seen
during the Euro Crisis, the European integration has weakened nation states
without the Union stepping. EU policies had deepened the economic crisis.
The Covid Crisis requires the EU to change course and develop its capacity to
support its citizens. Off the Target is a useful guide through current debates.”
—Engelbert Stockhammer, Professor of Political Economy, King’s College
London, UK
“At this time of grave ecological insecurity and dangerous imperialist rivalries,
a democratic and social European Union could emerge as a progressive, green,
stabilising power in world politics. This detailed and authoritative account of
the emergence of the European Union’s political economy is both timely and
an invaluable resource for diplomats, scholars and politicians. It already has a
significant place on my bookshelf.”
—Ann Pettifor, Director of Policy Research in Macroeconomics (PRIME)
“This book gives a fascinating history of the European Monetary Union and the
role of Target2 mechanism in internalizing the financial and economic fissures
within the Eurozone area. At the heart of the Euro experiment is the question
whether a single currency will be the bonding glue for fiscal, security and political
union or instead, a formula for stagnation or Lost Decade2.0. Read this book
to find out the answers.”
—Andrew Sheng, Distinguished Fellow at University of Hong Kong, Adjunct
Professor Tsinghua and Peking Universities
“This book does a fantastic job assessing the European Union’s decade in
turmoil – the 2010s – when it plunged from one crisis to another including the
Eurozone debt crisis, austerity and Brexit. In accounting for the ‘lost decade’,
politics and economics are beautifully woven together, combining topics ranging
from European identity and politics of convergence to the intricacies of mone-
tary, fiscal and financial policies in the Eurozone. This is also an ambitious
and forward-looking account, tackling green finance, digital transformation and
potential trade wars – key policy issues of our time.”
—Gulcin Ozkan is Vice Dean and Professor in Finance at King’s Business School,
King’s College London
Muhammad Ali Nasir
Off the Target

The Stagnating Political Economy of Europe
and Post-Pandemic Recovery
Muhammad Ali Nasir
Huddersfield Business School
University of Huddersfield
Huddersfield, UK
Research Fellow at University
of Cambridge
Cambridge, UK
ISBN 978-3-030-88184-9 ISBN 978-3-030-88185-6 (eBook)

https://doi.org/10.1007/978-3-030-88185-6
© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer
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Switzerland AG
The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland
Dedicated to my grandmother Evelyn Servant that she has been a source of
great inspiration and the best grandma ever. To my mother Nasim and
father Imdad Hussain.
Preface
Leaving the European Union will be the best thing that can ever happen
to the UK, we must leave and take back control from Brussels, some-
body said in a voice full of emotions. No, that would be disastrous,
it is economically and geopolitically suicidal, we must stay, somebody
else said equally passionately. Membership of the EU was the talk of
the town and there was not a day when somebody did not mention
the word Brexit. But the debate was not just limited to and focusing
on the geographical boundaries of the UK, there were longstanding and
even tougher questions on the membership of the European Union and
particularly on those countries that had signed up for a common currency
formulating the Eurozone. Debate on the European Sovereign Debt Crisis,
bailouts, austerity and associated tragedies was anything but over yet, the
historic announcement by the British prime minister in February 2016
on Brexit Referendum had profound significance and the events that
followed overshadowed everything in both UK and EU for the years to
come.
There were many questions, more than we can find answers to. What is
the European Union, is it something which is defined by the EU treaties
and regulations that are not always easy to comprehend by a layman? or
is it something a lot deeper? Are the foundations of the European Union
underpinned by economic necessity or is it all about politics? Politics,
that is not always very clean! But is there something there in European
history that is even more profound, yet often condoned? My grandma
vii
viii PREFACE
who has lived through the second world war says there is nothing new
under the sun! well, does it mean that all the developments and ideas of
European Integration are not very new and if they aren’t, why they have
not been applied before and what it is that makes the European Union,
and everything associated with it the way it is at present? Again, a lot
of questions, perhaps more than the number of problems and issues the
European Union is faced with.
Through the lens of an economist, this book is an endeavour to dig
deeper into the development of the European Monetary Union, issues it
faces, the influence of politics, historical events in shaping and defining
what is now. It is also a critical analysis and reflection on an unfortunate
Lost Decade of economic progress in one of the oldest, historically and
culturally richest continent of the world. Why and where it went OFF
The Target ! and how we can put it right. In the self-inflicted, stagnating
political economy of the European Union that was not short of challenges
to start with, the Pandemic is just another one, yet existential. God forbid,
if Europe does not get it right this time, it could be a Lost Decade 2.0
at least or to our fears, it could be the timber plank that will definitely
break the back of the camel of European integration. In a world that is
changing more rapidly than ever before and the centre of gravity of the
global economy is shifting eastward, the margin of error for Europe is
very slim. Nobody takes lessons from you if your economy is stagnating.
European ambitions of global leadership on climate change, sustainable
development and geopolitical issues will remain wishful thinking if we do
not get it right this time. It’s Europe’s last shot.
Huddersfield, UK Muhammad Ali Nasir

Contents
1 Wrong Intentions and Flawed Foundations 1

European Identity and Integration in European Blood 1
From Fall of the Berlin to the Rubble of Berlin Wall 5
German Unification and Road to Maastricht 20
Maastricht Treaty—Conception of Tragedy 23
Maastricht to Amsterdam 30
Politics and Economics of Convergence 35
Euro—The Birth of Tragedy 38
2 Great Moderation Let the Party Going 47
Treaty of Nice and Eastward Expansion 47
Treaty Establishing a Constitution for Europe (TCE): Rome
to Lisbon 51
Berlin Declaration and Treaty of Lisbon 53
Steroid-Enhanced Economic Development Post-Euro 57
3 Global Financial Crisis—Tip of the Iceberg 65
First Test and Longest Battle of ECB 65
Long-Term Refinancing Operations (LTROs) and Whatever
It Takes! 80
Stabil Wie Die Mark 85
Conventional to Non-conventional and Asset Purchase
Programme 87
Refinancing Operations but This Time They Are “ Targeted” 91
ix
x CONTENTS
Asset Purchase Programme (APP) 96

Going Below Zero 115
Forward Guidance 119
4 Flawed Fiscal and Stimulus Plans: A World Beyond
ECB 123
A European Economic Recovery Plan 123
Fiscal Manoeuvres in Limited Space 130
German Fascination with Balancing 130
French Finance for Financial Sector 134
Spanish Stimulus Generosity with Design Flaw 137
Italy Wrong Side of Business Cycle 139
Netherland’s Robustness but Not Rapid Recovery 141
Britain’s Early Withdrawal and Austerity 143
5 A Jigsaw of Financial Institutions and Unions Within
Union 147
European Financial Stabilisation Facility/Mechanism
(EFSF/M) 147
European Stability Mechanism (ESM) 153
Outright Monetary Transactions (OMT) 163
Financial Stability in the EMU and the European System
of Financial Supervision (ESFS) 164
Single Supervisory Mechanism (SSM) 169
Single Resolution Mechanism (SRM) 173
European Deposit Insurance Scheme (EDIS) 177
Union of Compromises and Completion of the Banking
Union 179
Unions Within the Unions 182
Capital Requirements Regulation and Directives 186
Markets in Financial Instruments Directive (MiFID) 187
EU Reforms Plans of Four Presidents 187
Five Presidents Plan 190
A New Commissioner a New Plan: Junker Plan 194
COVID and Europe: ESM, EIB and SURE 195
Fiscal Union or Framework for Fiscal Policies 198
Fiscal Stability Treaty or Treaty on Stability, Coordination
and Governance in the Economic and Monetary Union
(TSCG) 200
European Fiscal Compact 202
CONTENTS xi
European Fiscal Board 204

Learning from Good Practices 207
6 Stagnation in Europe: A Lost Decade 211
Europe Will Above All Be Judged on Results 211
7 TARGET2: Off the TARGET 225
Eurozone Monetary system—A Hub with Many Spokes 225
Trans-European Automated Real-time Gross Settlement
Express Transfer System (TARGET2) 228
OFF the TARGET 231
Secret Bailout, Is It or Isn’t? 238
Stagnation & Settlement of TARGET2 243
A Settlement Mechanism 257
8 Europe: The Way Forward 267
Seven Decades of Integration: A Work Still in Process 267
COVID-19 Mother of All Crisis for EU 269
ECB’s Response: Another Battle to Pick 270
Fiscal Measures: Death of Debt Break 272
EU and European Commission’s Response 275
Green New Deal, Digital Agenda and Ambitions for Global
Leadership 282
A Europe Without UK 285
Rising Asia, New Trade and Cold Wars 289
Can Europe Be a Good Example? Closing Remarks 293
Appendix “A” 297

References 299
Index 311
List of Figures
Fig. 1.1 United States’ reaction to the slow negotiations

for the establishment of a European Payments Union
(Source Evening Standard. 28.12.1949. London. “Time,
Gentlemen, please!”, auteur: David Low) 8
Fig. 1.2 Joining the European Payments Union (EPU) (Source
Daily Herald. 28.03.1950, n° 10 625. London.
“Slightly mixed bathing”, Auteur: David Low. On
28 March 1950, the British cartoonist, David Low,
illustrates the hesitations of Ernest Bevin, British Foreign
Secretary [left], and Hugh Gaitskell, British Chancellor
of the Exchequer [right], at calls from Paul Hoffman,
US administrator of the Economic Cooperation
Administration [ECA] given the task of managing
the distribution of funds under the Marshall Plan,
for them to join the future European Payments Union
[EPA]) 9
xiii
xiv LIST OF FIGURES
Fig. 1.3 Maastricht European Council (9 December 1991)

(Source Horst Haitzinger. Copyright: “Horst Haitzinger,
München”. Maastricht open-air swimming pool: “Follow
me! Let us know if there’s any water in the pool!”’
On 9 December 1991, on the eve of the Maastricht
European Council, German cartoonist Horst Haitzinger
takes an ironic look at the commitment [“follow me!”]
of German Chancellor Helmut Kohl to Economic
and Monetary Union [EMU] and to the Treaty
on European Union. French President François
Mitterrand, second in line, seems more reluctant
to take the plunge [“Let us know if there’s any water
in the pool!”], while British Prime Minister John Major
seems to be about to climb down from the diving board) 25
Fig. 1.4 Pillars of the European Union 29
Fig. 1.5 The Europa 1928 39
Fig. 1.6 Inflation, consumer prices for EMU 12 in % (1990
to 2002) (Source FRED, Federal Reserve Bank of St.
Louis 2019) 40
Fig. 1.7 Exchange rates; purchasing power parities (PPPs) national
currency per $US (Source OECD) 42
Fig. 1.8 Long-term interest rates (Government bonds maturing
in ten years) 44
Fig. 2.1 Consumer price index percentage change on the same
period of the previous year (Source OECD) 58
Fig. 2.2 Economic activities—Domestic producer
prices—Manufacturing (Source OECD) 59
Fig. 2.3 Purchasing power parities for GDP 60
Fig. 2.4 Deficit to GDP ratios (Source OECD, authors
calculations) 61
Fig. 2.5 Debt/GDP ratios (Source OECD) 62
Fig. 2.6 Government bonds yield maturing in ten years (Source
OECD) 63
Fig. 2.7 Unit labour cost (Source OECD) 63
Fig. 3.1 Annual consolidated balance sheet of the Euro system
1999–2020 (Source ECB, https://www.ecb.europa.eu/
pub/annual/balance/html/index.en.html) 68
Fig. 3.2 Lender of last resort (Source Bankers-banking) 73
LIST OF FIGURES xv
Fig. 3.3 Long-term Ratings of Euro Area Sovereigns (Source

Barthélemy et al. [2018]. Note The vertical lines show
[1] the first three-year LTRO of 21 December 2011, [2]
the second three-year LTRO of 28 February 2012, [3]
the announcement of the OMT programme on 2 August
2012, [4] the decision to launch the PSPP on 22 January
2015) 74
Fig. 3.4 Variation in the value of Euro Area Collateral (Source
Barthélemy et al. [2018]. Note Haircut and Price
contributions are compared to their average values
between Jan and June 2014) 75
Fig. 3.5 Eligible marketable assets (Euro Billion) (Nominal
amounts, averages of end of month data over each time
period shown. Source ECB, https://www.ecb.europa.eu/
paym/coll/charts/html/index.en.html) 77
Fig. 3.6 Number of Euro-system Counterparties (Note The
vertical lines show [1] the first three-year LTRO of 21
December 2011, [2] the second three-year LTRO of 28
February 2012, [3] the announcement of the OMT
programme on 2 August 2012. Source Barthélemy et al.
[2018]) 81
Fig. 3.7 President Mario Draghi pledge to “Whatever it takes”
and Eurozone bonds yields (Author’s calculations. Source
OECD) 83
Fig. 3.8 ECB’s asset purchase programme with average monthly
target 2015–2021 (Source ECB. *Governing Council
set the monthly average APP targets in March 2015
with the start PSPP) 97
Fig. 3.9 Cumulative net asset purchases 2015–2021 (Source ECB) 99
Fig. 3.10 Fed, Bank of England and ECB Balance sheets (Source
https://voxeu.org/article/ltro-quantitative-easing-disgui
se. Note The Asset side of balance sheets of ECB, Fed
and BoE have been decomposed into five categories) 108
Fig. 3.11 ECB’s key interest rates (Source ECB) 115
Fig. 3.12 European Countries below zero by October 2019 (Source
European Central Bank, Swiss National Bank, Riksbank,
Danmarks Nationalbank) 116
Fig. 3.13 Timeline of ECB’s non-standard measures (Source ECB) 118
Fig. 4.1 Government Consolidated Gross Debt as a Percentage
of GDP (Source Eurostat) 125
xvi LIST OF FIGURES
Fig. 4.2 Loss of Confidence. High frequency indicators were

rescaled to range between 0 and 100 (Source IMF
https://www.imf.org/en/News/Articles/2015/09/28/
04/53/socar012209a) 131
Fig. 4.3 German Export-Led Growth (Index: 1995 = 100)
(Source IMF https://www.imf.org/en/News/Articles/
2015/09/28/04/53/socar012209a) 132
Fig. 4.4 Rescue Plan for UK Banks Unveiled, How Big is
the Bailout? (Source BBC http://news.bbc.co.uk/1/hi/
business/7658277.stm) 144
Fig. 5.1 The three pillars of the banking union (Source The
Oesterreichische Nationalbank [OeNB], https://www.
oenb.at/en/financial-market/three-pillars-banking-union.
html) 169
Fig. 5.2 Single resolution fund (Source Single Resolution Board,
https://srb.europa.eu/en/content/single-resolution-fun
d) 175
Fig. 5.3 Evolution of EDIS funds compared to the funds
of a participating DGS (Source European Commission,
https://ec.europa.eu/info/sites/info/files/graph-151
12014_en.pdf) 178
Fig. 5.4 European system of financial supervision (Source Council
of the European Union https://www.eiopa.europa.eu/
file/esfs-0_en) 181
Fig. 5.5 Building of Eurozone—Unions within Unions (Source
Cagle cartoons) 183
Fig. 5.6 Size of capital market as percentage of GDP of 2018—Q3
(Source European Commission, https://ec.europa.
eu/finance/docs/policy/190315-cmu-communica
tion_en.pdf. EU Top-5 is obtained as GDP-weighted
average for Netherlands, Sweden, Ireland, Denmark
and Luxembourg with weights of 41, 25, 17, 15 and 2%) 185
Fig. 5.7 Stages towards a genuine EMU (Source European
Council https://www.consilium.europa.eu/uedocs/cms_
Data/docs/pressdata/en/ec/134069.pdf) 190
Fig. 5.8 “Numerical compliance with EU fiscal rules. The
compliance database of the Secretariat of the European
Fiscal Board”, May 2020 (Source Larch & Santacroce,
2020) 206
Fig. 6.1 Real GDP from 2008 to 2019 (constant 2010 US$:
2008 = 100) (Source World Bank) 213
Fig. 6.2 GDP recovery path in euro area (Source CEPR) 215
LIST OF FIGURES xvii
Fig. 6.3 Euro area and EU GDP growth rates % change over same
quarter of the previous year, seasonally adjusted data
(Source Eurostat) 216
Fig. 6.4 GDP level from Global Financial Crisis to COVID-19
(Source OECD. Seasonally Adjustment: Chain linked
volumes, index 2010 = 100 [2008Q1 to 2021Q1]) 216
Fig. 6.5 Eurozone unemployment rates from Global Financial
Crisis to COVID-19 (Source Eurostat) 218
Fig. 6.6 Price stability in Eurozone, all-items harmonised index
of consumer prices (Source Eurostat) 219
Fig. 6.7 Dynamics of current-account balance 2010: Q1-2020:
Q2 (Source OECD) 219
Fig. 6.8 Labour cost index percentage change period on period
(Source Eurostat) 220
Fig. 6.9 Average annual inflation, growth and unemployment
during the Lost Decade—2010–2019 (Source OECD) 221
Fig. 6.10 Real labour productivity per person employed
(2010–2019) (Source Eurostat) 223
Fig. 6.11 COVID-19 and real labour productivity per person
employed (Source Eurostat) 223
Fig. 7.1 TARGET2 payment system, a simple illustration 230
Fig. 7.2 TARGET2 imbalances over two decades—Net claims
on Euro system (Source Euro Crisis Monitor, Institute
of Empirical Economic Research, Osnabrück University) 232
Fig. 7.3 Destination of German savings a decade after Euro—2002
to 2010 (Source Sinn [2011a] *The TARGET claims
of the Bundesbank amounted to e325.6 billion
at the end of 2010; at the end of 2001 they were minus
e30.9 billion. By end of September 2020, they have
reached over e1.1 trillion) 238
Fig. 7.4 Current account as % of GDP, Germany, France, GIPS &
Eurozone (Source [OECD]) 245
Fig. 7.5 Saving rate Germany, France, GIIPS & Euro area (Source
[OECD]) 245
Fig. 7.6 Net Capital Stock (1995–2017), Germany compared
to other EU countries (Source European Commission
[2018], https://www.bruegel.org/2018/06/unders
tanding-the-lack-of-german-public-investment/. Notes
Measured in 2010 prices; 1995 values indexed to 100;
Germany in red, all other EU28 countries in grey
colours, European Union in black) 247
xviii LIST OF FIGURES
Fig. 7.7 Public investment of Germany and selected EU

countries—Public net fixed capital formation (Source
European Commission [2018]) 248
Fig. 7.8 Germany gross & net fixed capital formation, private &
public sectors (as a % of GDP) (Source Destatis [2018a].
https://www.bruegel.org/2018/06/understanding-the-
lack-of-german-public-investment/) 249
Fig. 7.9 Real gross fixed capital formation to GDP ratios (%)
US & Eurozone (Source European Commission) 251
Fig. 7.10 Infrastructure investment by region, (2008 = 100)
(Source EIB Infrastructure Database [IJ Global, EPEC,
Eurostat]. Note Data missing for Belgium, Croatia,
Lithuania, Poland and Romania. The EU average
excludes the United Kingdom) 252
Fig. 7.11 Actual and potential GDP in the Eurozone (obtained
from Summer, 2014) (Source IMF World Economic
Outlook Databases, Bloomberg) 254
Fig. 7.12 Money supply among Germany, GIIPS, & Eurozone
standardised, seasonally adjusted, year on year % (Source
Eurostat) 262
Fig. 8.1 Projected change in the euro area and euro area
countries’ budget balances relative to the preceding year
(% of GDP) (Source European Commission’s Autumn
2020 Economic Forecast) 274
Fig. 8.2 General governments debts 2019 and 2020 (Source
Eurostat) 275
Fig. 8.3 EU coronavirus response (Source European Commission) 276
Fig. 8.4 Council approval of SURE for 18 EU states (Source
European Commission) 281
Fig. 8.5 The European Green Deal (Source European
Commission) 282
Fig. 8.6 Brexit: what the European Union loses (Source Statista) 288
Fig. 8.7 Changing share of world GDP (PPP) from 2016 to 2050
(Source IMF estimates for 2016 and PWC projections
for 2050) 290
Fig. 8.8 Real GDP growth Eurozone and emerging world
(constant 2010 US$, Year 2010 = 100) (Source Authors’
calculations using data from World Bank) 291
Fig. 8.9 2020 a year of uneven economic losses total, percentage
change, same period previous year, Q4 2020 (Q3
for Greece) (Source OECD) 292
List of Tables
Table 1.1 Stages of Economic and Monetary Union (EMU) 20

Table 1.2 General government debt as % of GDP, 1995–2002 41
Table 1.3 General government deficit as % of GDP, 1995–2002 41
Table 1.4 Maastricht criteria, A snapshot 44
Table 2.1 European Parliament composition 48
Table 2.2 Votes in council and population 49
Table 2.3 Voting weights in both the Council of Ministers
and the European Council 56
Table 2.4 PPPs for GDP, National currency per US dollar
appreciation/depreciation (%) since 1995 60
Table 3.1 Consecutive changes in collateral criteria 72
Table 3.2 Euro-system asset purchase programme holdings (e,
millions) 99
Table 3.3 Breakdown of CBPP3 portfolio by rating and country
of risk 2021Q1 103
Table 3.4 Breakdown of ABSPP portfolio by rating, country of risk
and collateral type: 2021Q1 104
Table 3.5 Breakdown of debt securities under the PSPP: May 2021 111
Table 3.6 Breakdown of CSPP portfolio by sector, rating
and country of risk (semi-annual): 2021Q1 114
Table 5.1 ESM: Lending toolkit 156
Table 5.2 Towards a genuine economic and monetary union
roadmap: Stages and elements 188
Table 5.3 Roadmap towards a complete economic and monetary
union 192
xix
xx LIST OF TABLES
Table 6.1 Growth rates of GDP in volume up to 2020Q2 217

Table 8.1 Multiannual Financial Framework (MFF) 2021–2027
total allocations 278
Table 8.2 NextGenerationEU breakdown 278
CHAPTER 1
Wrong Intentions and Flawed Foundations
European Identity and Integration

in European Blood
Built on flawed and uneven foundations a building can be raised to the
Pleiades and it will still be neither strong nor straight. As the ancient
wisdom says, the loftier the building, the deeper must the foundation
be laid. The same logic holds for the architect of the Economic and
Monetary Union of the European Union (EMU) which is the longest
economic and political integration project with still work in process and
no ending in sight. Nothing is new under the sun, so does the idea of
the European Unity and Integration which is at least five centuries old.
One can track at least as far back as the year 1464 when following the
fall of Constantinople in 1453, the proposal of the League of Christian
Nations (The Tractatus pacis toti Christianitati fiendae, or Treaty on the
Establishment of Peace throughout Christendom) was made by the Czech
King George of Poděbrady to the French King Louis XI.1 This was a
manifestation of the need and desire for peace and security in Central
1 See, V. Havel, “Dreaming Aloud” in J. Coleman (ed), The Conscience of Europe

(1999, Strasbourg: Council of Europe Publishing), at 89–97. Treaty on the Establishment
of Peace throughout Christendom. Edit. Kejř J., Transl. Dvořák I. In VANĚČEK V., The
Universal Peace Organization of King George of Bohemia a fifteenth Century Plan for
World Peace 1462/1464. Prague: Publishing House of the Czechoslovak Academy of
Sciences 1964, pp. 81–90. Also see Smith (1992).
© The Author(s), under exclusive license to Springer Nature 1

Switzerland AG 2022
M. A. Nasir, Off the Target,
https://doi.org/10.1007/978-3-030-88185-6_1
2 M. A. NASIR
Europe which can be achieved through cooperation among states. The

idea of European integration was further pruned by the English philoso-
pher William Penn (founder of the province of Pennsylvania) into the
United States of Europe by the establishment of a European Parliament.2
The reason was to prevent wars and establish peace among Europeans.
However, the seeds of European identity were spread long before the
suggestion of the European Parliament and even the League of Chris-
tian Nations, perhaps this was the historical relationship in the form
of different empires including the Roman and Holy Roman Empires
which resonates in the sub-conscious of Europeans. They cannot run
away from their history. Whether it was a voluntary or forced relation-
ship, the common citizenships and love–hate history have some sort of
Stockholm syndrome effects that some affection and respect for the Euro-
peanism always prevailed in the Europeans blood.3 Hence, after George
of Poděbrady and Willam Penn, Abbot Charles de Saint-Pierre’s proposal
on the creation of the European League of Sovereign States were all the
manifestation of nostalgic past and history of Europeanism written in
blood and sweat.4 In this, we cannot forget to acknowledge Immanuel
Kant’s proposal and sketch for the Perpetual Peace in which there are
interesting and explicitly parallels ideas of mutual respect and coopera-
tion among sovereign states.5 A desire also expressed by Napoleon6 that
the “Europe thus divided into nationalities freely formed and free inter-
nally, peace between States would have become easier: the United States of
Europe would become a possibility”. This dream was passed on by other
scholars and philosophers such as Polish Wojciech Jastrz˛ebowski7 and
Italian Giuseppe Mazzini 1843, to French Victor Hugo and who felt
2 “An ESSAY towards the Present and Future Peace of Europe by the Establishment
of an European Dyet, Parliament, or Estates” year 1693.
3 A manifestation of this factor is evident and clearly observable in almost all of the
historical political unions including united India or former soviet states. In the case of
former, despite the hostile relationship and wars between India and Pakistan, both suffer
from the nostalgia of being a one country under different rules.
4 See Hont (2005).
5 See Kant (1795).
6 See Markham (1966), as quoted in Matthew Zarzeczny, Napoleon’s European Union:
The Grand Empire of the United States of Europe (Kent State University Master’s thesis)
visit https://www.napoleon-series.org/research/napoleon/c_unification.html.
7 On About eternal peace between the nations, published 31 May 1831.
1 WRONG INTENTIONS AND FLAWED FOUNDATIONS 3
no stigma in say that “A day will come when all nations on our conti-
nent will form a European brotherhood … A day will come when we shall
see … the United States of America and the United States of Europe face
to face, reaching out for each other across the seas ”. In fact, to live his
legacy Hugo planted a European Tree called Hugo’s United States of
Europe Oak in Guernsey Island.8 Later Giuseppe Garibaldi, and John
Stuart Mill joined Victor Hugo at a congress of the League of Peace and
Freedom in Geneva. To Mikhail Bakunin reason of putting their weight
to Hugo’s side was “That in order to achieve the triumph of liberty, justice
and peace in the international relations of Europe, and to render civil war
impossible among the various peoples which make up the European family,
only a single course lies open: to constitute the United States of Europe.”9
Hugo’s idea was nurtured and some form of practical proposal in 1885 by
Theodore de Korwin Szymanowski as L’avenir économique, social et poli-
tique en Europe—The Future of Europe in Economic, Political and Social
Terms.10 The proposal provided the blueprints or hints of a parliamentary
system, a customs union, centrally collected statistics, financial contribu-
tions from all the participating European states for deposit and lending via
a central bank with a common currency, for preference, though not neces-
sarily Euro.11 As obvious the proposal did not get much fame, never mind
an influence that could have shaped European relations and prevented the
first world war and its misery. Counterfactual does not exist, so we do not
know if the implementation of the Theodore de Korwin Szymanowski
proposal could have avoided the painful events of the first half of the
twentieth century, but what we know for sure is that the ideas entailed
in the proposal are prima facie evident that the plans of integration post-
WWII and hitherto are not something nobody thought of before. There
is nothing new under the sun!
Mistakes and blunders are often good teachers though can be too
harsh, WWI did teach Europeans something and that was the importance
of cooperation and peace. After WWI the movement of European unity
and cooperation remerged with even more vigour. Austrian Richard von
8 Visit https://www.visitguernsey.com/victor-hugo-garden for Victor Hugo’s garden.

9 See the Anarchist Sociology of Federalism at http://library.nothingness.org/articles/
anar/en/display/334.
10 Szymanowski (1885/8).
11 Szymanowski (1890).
4 M. A. NASIR
Coudenhove-Kalergi hosted the first pan-European conference and also

founded the Pan-Europa moment.12 Similarly, a Pro-European group
“Federal Union” was launched in Britain.13 Nonetheless, it also led to
the proposal on economic integration coming from not merely poets
and philosophers but from the statesmen and politicians. Most promi-
nently, Aristide Briand in the form of a proposal for a new economic
union in Europe in the interwar period.14 Briand made his proposals in a
speech in favour of a European Union in the League of Nations and his
“Memorandum on the Organization of a Regime of European Federal
Union”.15 The idea was to contain the future threats from Germany
while still endeavouring to avail the settlement of the Treaty of Versailles .
Perhaps, this was the subtle flaw, however as the plan was never imple-
mented this flaw was not apparent or hindered its success. The political
and economic failure to maintain peace led to the success of misery in
the form of WWII. Yet, during the war, there were sentiments of Euro-
peanism even among Nazis. German ministers Joachim von Ribbentrop
and Cecil von Renthe-Fink proposed “European confederacy”. It entailed
the idea of a single currency, a central bank, a regional principle, a labour
policy and economic and trading agreements, however, could not get
Hitler’s approval.16
The first half of the twentieth century with two great wars and a great
depression was so painful that no European ever wanted to have anything
similar for the remaining half of the century, and in fact never again.
In the Post-WWII, the idea of a united Europe became more powerful.
Despite not much in favour of British absorbent and dissolvement in the
European continent, Winston Churchill was also in favour of European
cohesion and put his weight by saying that “We see nothing but good and
12 In its Soviet form Trotsky also proposed the idea of “United States of Europe”.
13 Visit http://federalunion.org.uk/ for details on Federal Union.
14 Navari (1992).
15 At the annual meeting of the Assembly of the League of Nations in September
1929, Foreign Minister Aristide Briand of France proposed the establishment of a federal
European union to coordinate economic and political policies. Briand believed that the
proposed union should be created within the framework of the League and promised to
submit a detailed plan for a federal union to the 27 European states that were League
members. Visit https://www.wdl.org/en/item/11583/ for details.
16 See Lipgens (1985).
hope in a richer, freer, more contented European commonality”.17 After the

war, Churchill became an even greater vocal of the idea of the Euro-
pean Unit. In his famous speech at the University of Zurich, he strongly
expressed his feelings “We must build a kind of United States of Europe.
In this way only will hundreds of millions of toilers be able to regain the
simple joys and hopes which make life worth living ”.18 To some Churchill’s
approach to European integration was cautious, some scholars define the
approaches from a cautious approach (“the unionist position”) to a more
closer Federalists approach (full integration with a constitution).19 While
the view and model of the European integration and coordination may
vary in its design and shape the underlying rationale is embedded in the
European brotherhood. The wars and depressions have just strengthened
and highlighted the need for European unity roots of which are centuries
deep. The idea of European Identity and Integration which led to the
creation of the European Union is not new, it prevailed before and shall
exist with and without European Union, it is in European Blood.
From Fall of the Berlin

to the Rubble of Berlin Wall
In the post-WWII period, it was clear that there should be something
different done than the failed strategy of the interwar period which
led to depression, hyperinflation and further destruction. Concomitantly,
Henry Morgenthau Jr.’s plan to deindustrialise Germany by dismantling
its industrial capacity did not go very far.20 Economic realities led allies
to see the sense, an economically weak Germany was not in the best
interest of anyone including Western Allies.21 James F. Byrnes with his
“Restatement of Policy on Germany” expressed the firm commitment of
17 See Ponting (1996).

18 For Churchill, Winston (19 September 1946). Speech to the Academic Youth.
Zürich, Switzerland. Visit https://archive.is/20100820031147/http://www.europa-web.
de/europa/02wwswww/202histo/churchil.htm.
19 See Dinan (2005).
20 Visit https://web.archive.org/web/20130531235410/http://docs.fdrlibrary.marist.
edu/psf/box31/t297a01.html for Suggested Post-Surrender Program for Germany. The
plan entailed proposal to remove and destroy all the key industries which are important
to military strength. The plain was set out in his booked titled “Germany is Our Problem”.
21 See Petrov (1967).
6 M. A. NASIR
a military presence in the Germany and Potsdam Agreement, but he

also expressed the importance of economic recovery and stabilisation
of Germany.22 This led to first the European Recovery Program that
is commonly known as the Marshall Plan. Restrictions on the German
industrial production were also relaxed or if put more appropriately, they
have to be relaxed. In General Lucius Clay words, “there is no choice
between being a communist on 1,500 cal a day and a believer in democ-
racy on a thousand”.23 However, German exports prices were set below
the international market prices and there were also restrictions on what
Germany can export and how much.24 This also led to a major malnu-
trition and starvation crisis in Germany. It was Allied legal obligation to
feed the occupant Germans,25 but of course, it was a big take. Particu-
larly when you have imposed restrictions on the economy. This was not
all; Germans were yet to pick more bills in coming years and decades to
re-establish their political system and economy. The first was the Ruhr
Agreement which led to establishing the Federal Republic of Germany,
but not due to the benevolence of the French and Allies. The resource-
rich Ruhr region was put under International Authority for the Ruhr.26
The French were allowed to extract the German resources, including from
the Saar region (Saar Protectorate).27 On the other hand, the USA and
UK were rather more interested in intellectual property and “intellectual
reparations ”.28 At the same time, the threat from the Soviet Union or
perceived threat from the Soviet Union, and American wishes29 to estab-
lish a stronger western block led to the change of stance from teaching
22 See Gimbel (1972).

23 For Speech by J.F. Byrnes, United States Secretary of State “Restatement of Policy
on Germany” Stuttgart September 6, 1946, https://www.linkedin.com/pulse/hoffnungs
rede-restatement-policy-germany-speech-hope-francisco-cruz/.
24 Balabkins (1964).
25 Article 43 of the 1907 Hague Rules of Land Warfare.
26 Yoder (1955).
27 Milward (1984). The Saar was returned to Germany in 1957 though French was
allowed to extract resources till very late.
28 Smith (1993). Also see How T-Force abducted Germany’s best brains for
Britain, available at https://www.theguardian.com/science/2007/aug/29/sciencenews.
secondworldwar and Jacobsen (2014).
29 American Committee on United Europe.
a harsh lesson to Germany and containing and extracting its resources to

contain the immediate threat the Soviet Union.30
The Organisation for European Economic Co-operation (OEEC) which
we now known as the Organisation for Economic Co-operation and Devel-
opment (OECD) came into existence in the April 1948 and the Council
of Europe in May 1949 for the legal and human rights aspects.31 In
mid-December 1949, a memorandum was submitted to the Secretariat
of OEEC by the UK which emphasised the importance of the intro-
duction of a new scheme that will govern the future of intra-European
payments.32 There was also an urge from the USA for the establishment
of a European Payment Union so that the aid can be channelled as well
as the trade between the OEEC members can be revived and promoted.
An illustration of this is evident in the cartoon by David Low (Fig. 1.1).
One of the earlier decisions of OEEC (or OECD as we know it)
that it took in July 1950 was to replace the bilateral payment agree-
ments between European countries which were prevailing post-WWII
with a new multilateral system, the European Payment Union (EPU)33
The issue was that the bilateral payments agreement preceded EPU
entailed exchange-rate controls which implied that the payments had to
be made based on fixed official exchange rates. Nonetheless, there were
also modest credit limits, hence, the rationale of EPU was to revitalise
and enhance European trade and economy. The EPU delivered by first
setting exchange rates that were deemed to reflect the reality of each
country’s economic situation and second, facilitating the convertibility of
European currencies. Yet the currency restrictions were maintained vis-
à-vis the dollar area. EPU by its functioning helped to compensate and
balance the accounts of each European country with those of its neigh-
bours. Therefore, it can be perceived as an international clearing house.
Member countries used to set a parity between their currency and the unit
30 Milward (1999).
31 Visit https://www.coe.int/en/web/portal/home for details.
32 British memorandum on the future of intra-European payments (15 December
1949), available https://www.cvce.eu/en/obj/british_memorandum_on_the_future_of_
intra_european_payments_15_december_1949-en-04f98523-70bc-446c-bae9-5d9194728
66b.html.
33 For details on the European Payments Union, visit https://www.cvce.eu/en/edu
cation/unit-content/-/unit/02bb76df-d066-4c08-a58a-d4686a3e68ff/ab473e40-d7d8-
419b-b507-ac6d7a7ffe76.
8 M. A. NASIR
Fig. 1.1 United States’ reaction to the slow negotiations for the establishment
of a European Payments Union (Source Evening Standard. 28.12.1949. London.
“Time, Gentlemen, please!”, auteur: David Low)
of account, which was fixed in grams of gold based on the gold value of
the dollar, as well as a single exchange rate. The EPU also had a settlement
mechanism as the settlement of trade was carried out partly in gold and
partly via the granting of credits to the EPU at the end of each month. In
this regard, it was a very important system and with some good features
that were ignored in the design of the current TARGET2 system. I will
revert to this point later as at this point, we are talking about the 1950s.
The USA subscribed to the initial capital of EPU which was used to settle
with the creditors as soon as the debtors made their payments. The Bank
for International Settlements (BIS) managed the settlement transactions,
and the National Central Banks also made their currency available to their
partners. Each month the balance (credit or debit) for each country was
calculated in relation to all the other countries in the Union. There was
also a quota that was set for each member representing the maximum
amount of its account balance can grow to. On the monthly basis, the
adjustments (partially calculated in gold) were made depending on the
monthly credit or debit balance of the country. As it proved to be up and
running the EPU had been made a bit more flexible. Flexibilities include
the introduction of bank arbitrage procedure, decentralisation and greater
flexibility in the intra-European payment arrangements (Fig. 1.2).
The EPU was successful in delivering the exchange-rate stability and
promoting inter and intra trade among the member states, however, it was
criticised for price fluctuations and not enabling convertibility between
individuals as the convertibility was only limited to the issuing banks. To
Fig. 1.2 Joining the European Payments Union (EPU) (Source Daily Herald.
28.03.1950, n° 10 625. London. “Slightly mixed bathing”, Auteur: David Low.
On 28 March 1950, the British cartoonist, David Low, illustrates the hesitations
of Ernest Bevin, British Foreign Secretary [left], and Hugh Gaitskell, British
Chancellor of the Exchequer [right], at calls from Paul Hoffman, US admin-
istrator of the Economic Cooperation Administration [ECA] given the task of
managing the distribution of funds under the Marshall Plan, for them to join the
future European Payments Union [EPA])
10 M. A. NASIR
some critics, EPU also caused fear of being a competitor to the Inter-
national Monetary Fund (IMF), this led to the replacement of EPU in
December 1958 with the European Monetary Agreement (EMA) which
was signed in August 1955. It also led to the creation of reserve funds for
those states which were running a balance of payment deficit. Nonethe-
less, there was a multilectal settlement and equalisation system which was
based on the exchanges rates which were to large extent kept stable.
Unlike its predecessor, settlements and granting of lands under the EMA
system were not compulsory or automatic. In nutshell, salient features of
the agreement included the features of exchange-rate margins, interim
finance, bilateral payments agreements, balances held in the currency
of other participating countries and monthly settlements. Once again,
the Bank for International Settlements (BIS) was managing the financial
transactions in the EMA.
On the economic front, soon after the creation of OEEC, the
French foreign minister Robert Schuman put forward a plan known as
the Schuman Declaration of 9 May 1950. In a nutshell, it proposed
the creation of a European Coal and Steel Community (ECSC) whose
members would pool coal and steel production. The logic was that “the
solidarity in production thus established will make it plain that any war
between France and Germany becomes not merely unthinkable, but materi-
ally impossible”.34 Later, with the Treaty of Paris in 1951, Germany had
to agree to the European Coal and Steel Community in exchange of some
economic and political freedom. This also led to the creation of institu-
tions such as the High Authority and the Common Assembly which have
now taken the form of the European Commission and European Parlia-
ment , respectively.35 Reports by the WikiLeaks suggest that there were
34 For the Schuman Declaration—9 May 1950, visit https://europa.eu/european-

union/about-eu/symbols/europe-day/schuman-declaration_en.
35 Jean Monnet who proposed the Monnet Plan became the first President of the High
Authority of the European Coal and Steel Community. Some of the relaxation to Germany
for instance return of Saarland to Western Germany was more a matter of people’s will
than French benevolence as the referendum held on 23 October 1955, the people of the
Saar voted against this European statute, and instead opted for the return of the Saar to
the Federal Republic of Germany from 1 January 1957. For details visit https://www.
cvce.eu/obj/en-26859090-52d0-4850-9019-92748182042a, though the West Germany
would still have to agree to channelisation of the Moselle. In addition to a High Authority
and a Common Assembly, ECSC was composed of a Special Council of national ministers
and a Court of Justice, somewhat similar to Council of the European Union and the
European Court of Justice.
serious discussions among some of the influential think tanks such as the
Bilderberg Group which entailed the issues around a single currency and
more economic and political integration of European states.36 To what
extent reports such as these are credible is another question, however, as
the events unfolded, hindsight tells us that it was the direction Europe
evolved.
Starting with the six initial signatories (Belgium, France, West
Germany, Italy, the Netherlands and Luxembourg), the European Coal
and Steel Community was just the steppingstone towards further inte-
gration which led to the contemporary European Union (EU). In fact,
there was a clear expression of these intentions in the Schuman Plan.
For instance, that the “By pooling basic production and by instituting
a new High Authority, whose decisions will bind France, Germany and
other member countries, this proposal will lead to the realization of the first
concrete foundation of a European federation indispensable to the preser-
vation of peace”. At the same juncture, it was also acknowledged by
Schuman that there is no single plan leading to the final form of the
European project as he stated:
Europe will not be made all at once, or according to a single plan. It will be
built through concrete achievements which first create a de facto solidarity.37
Concomitantly the next step was the establishment of a customs union.

The ideas of the European Political Community (EPC) and European
Defence Community (EDC) could not sail through the tides of nation-
alism at that time.38 Yet on the economic front, the integration seemed
to be rather easier. Perhaps, seemingly easier political integration was
more difficult than economic integration. Countries are less reluctant to
hand over their economic sovereignty than political sovereignty. After the
36 For details visit https://file.wikileaks.org/file/bilderberg-meetings-report-1955.pdf.

37 For details visit https://europa.eu/european-union/about-eu/symbols/europe-day/
schuman-declaration_en.
38 Although, there was also proposed to form European Political Community (EPC),
however, the refusal of the French National Assembly on 30 August 1954 to ratify the
Treaty establishing the European Defence Community (EDC) automatically led to the
plan for a European Political Community, of which it was the institutional corollary, being
abandoned, for details visit https://www.cvce.eu/obj/the_european_political_community-
en-8b63810a-e5bd-4979-9d27-9a21c056fc8d.html. This led to resignation of ECSC 1st
President Jean Monnet in protest. Also see Mikesell (1958).
12 M. A. NASIR
Messina Conference in 1955, the Spaak Committee, prepared the Brussels

Report on the General Common Market (a.k.a. Spaak report)39 which led
to the Treaty of Rome in March 1957 and the creation of the European
Economic Community (EEC) and the European Atomic Energy Commu-
nity (EAEC or Euratom). The crux of the EEC and EAEC/Euratom
was economic integration by removal of trade barriers and development
of the nuclear energy sector while sharing the cost. It is worth noting and
remembering that the UK delegation represented by Russell Frederick
Bretherton, pulled out from the Spaak Committee and did not commit to
the EEC and EAEC/Euratom, same as they stayed out from the ECSC,40
if the question is that has the UK always been a reluctant bride of EU?
the answer is Yes!
The European Economic Community (EEC) started to work and as
obvious, the opposition, differences of opinions and conflicts which are
the integral elements of national as well as supranational intuitions started
to emerge. These differences were particularly explicit in the Heseltine
Commission as it started to work, and its functioning led to the Empty
Chair Crises.41 French under General de Gaulle was not very happy about
the increasing powers of the Commission mainly the arrangements for
voting in the Council of Ministers and budgetary arrangements. The
economic realities however brought the French back to the table after
the Luxembourg Compromise.42 Thanks to prime minister of Luxembourg
Pierre Werner, the crisis was resolved by giving the veto power to the
member states for the matters which were of the profound importance
of national interest. If a member state believed that its vital interests
are at stake, then the negotiations had to continue until a universally
acceptable compromise was reached.43 Slow but steady, the progress
39 Spaak (1956).
40 See Maclay (1999) and Stokes (1999).
41 For De-Commissioning the Empty Chair Crisis visit https://web.archive.org/web/
20071025203706/http://eprints.lse.ac.uk/2422/01/Decommisioningempty.pdf.
42 For The Luxembourg Compromise (January 1966), visit https://www.cvce.eu/
en/education/unit-content/-/unit/d1cfaf4d-8b5c-4334-ac1d-0438f4a0d617/a9aaa0cd-
4401-45ba-867f-50e4e04cf272.
43 This aspect led to overreaction and frequent use of veto power, and resistant to even
small changes. However, it was rectified in Single European Act, July 1987.
continued on the economic integration, specifically the Common Agricul-

ture Policy (CAP).44 The Common Agriculture Policy (CAP) is not the
main focus of this treatise, yet it has a very subtle yet important aspect
that is worth paying attention to. That is the support to the sector of
the economy (Farming) against open and brutal international compe-
tition and market failures. Taking into account not only the economic
but moral and social values. Moving forward, the three executive bodies
or “European Communities”, i.e. European Coal and Steel Commu-
nity (ECSC), European Atomic Energy Community (Euratom) and the
European Economic Community (EEC) were combined into a single
intuitional structure by the Merger Treaty. Being singed on April 1965
and enforced on July 1967, the Merger Treaty replaced the Commis-
sion and Council of Euratom and the High Authority and Council of the
ECSC by the Commission of the EEC and the Council of the EEC.
Expansion and enlargement of the EEC were slower in the initial
years, partially due to the opposition and veto of President Charles de
Gaulle to the British membership. But after Georges Pompidou becoming
the President of France in 1969 and reapplication by Denmark, Ireland,
Norway and the UK, negotiations began on further enlargement. It led
to the 1973 enlargement of the European Communities where Denmark,
Ireland and the UK joined but the Norwegian public opted to stay out
of the EEC. Similarly, the development on the political front by demo-
cratically electing the members of the European Parliament also became
a bit more convenient after De Gaulle. Budgetary treaties of the Euro-
pean Communities became possible in 1970 and 1975 which gave more
budgetary power to the parliament and council. In its brave endeavour
to enhance monetary integration and exchange-rate stability, the Pierre
Werner report45 in 1970 explicitly produced the blueprints of the great
plan of monetary union. As it stated:
A monetary union implies inside its boundaries the total and irreversible
convertibility of currencies, the elimination of margins of fluctuation in
exchange rates, the irrevocable fixing of parity rates and the complete libera-
tion of movements of capital. It may be accompanied by the maintenance of
44 Fennell (1997).
45 For Report to the Council and the Commission on the realisation by stages of
Economic and Monetary Union in the Community (Werner Report) visit http://aei.pitt.
edu/1002/1/monetary_werner_final.pdf.
14 M. A. NASIR
national monetary symbols or the establishment of a sole Community currency.

From the technical point of view the choice between these two solutions may
seem immaterial, but considerations of a psychological and political nature
militate in favour of the adoption of sole currency which would confirm the
irreversibility of the venture.
Furthermore that:
It is indispensable that the principal decisions in the matter of monetary policy

should be centralized, whether it is a question of liquidity, rates of interest,
intervention in the foreign exchange market, the management of the reserves
or the fixing of foreign exchange parities vis-a-vis the outside world.
(Werner Report, 1970, p. 10)
The Werner plan was not fully implemented in a proposed time frame-
work, yet the progress was steady and eventually resulted in the “adoption
of sole currency” about three decades later. First attempt towards monetary
integration and cooperation was the Snake in the Tunnel. This involved
creating a single currency band for the European Economic Community
(EEC) members and pegging their currencies. In the Basle Agreement on
April 1972, members of the EEC established a snake tunnel which was
an intervention system of the central banks to limit fluctuation between
currencies of members to a maximum of ±2.25% or a maximum change
of 4.5%. Considering the facilities available by the IMF to facilitate the
issues around the balance of payment, in 1972 the OECD announced
that the EMA would be terminated. The European Monetary Coopera-
tion Fund (EMCF) was established in April 1973 to stabilise the exchange
rate. To provide the necessary administrative and technical support, with
the Bank for International Settlements (BIS), the EMCF was operated
from Basel.46
In November 1975, nine prominent European economists47 put
forward a proposal what they called “All Saints’ Day manifesto for
European Monetary Union”. They recommended that instead of sudden
drastic move a gradual approach to monetary integration is preferable.
46 For details on The European Monetary Cooperation Fund (1973–93), https://www.

ecb.europa.eu/ecb/access_to_documents/archives/emcf/html/index.en.html.
47 These included, Michele Fratianni, Giorgio Basevi, Herbert Giersch, Pieter Korteweg,
David O’Mahony, Michael Parkin, Theo Peeters, Pascal Salin and Niels Thygesen. All the
signatories gathered at the round table discussion at the Katholieke Universiteit te Leuven.
Concomitantly, the central banks of EEC should issue European money

of constant purchasing power “Europa”. In this Europe-wide and suppos-
edly stable system, the nationals of EEC countries should be allowed
to purchase Europa with their national currencies at a flexible exchange
rate. In later stages, it could be issued to the banking system through
open market operation (rediscounting of bills and loans). A crawling peg
approach was to be used for adjustment of the exchange rate between
national monies and Europa. They argued that the Werner report whose
recommendation had been adopted as a goal of the European Commu-
nity in March 1971, suffers from excessive idealism. Furthermore, that the
Werner report identifies the monetary union with a number of factors,
including, (i) total irreversible convertibility of currencies; (ii) elimina-
tion of margins of locution in the exchange rates; (iii) irrevocable fixing
of parities; (iv) elimination of restrictions on capital movements; and
(v) coordinated macroeconomic stabilisation or aggregate demand poli-
cies. Criticising these underlying principles of Werner’s monetary union,
authors of the All-Saints’ Day Manifesto argued that the premature imple-
mentation of rigid exchange-rate regimes and lack of monetary policy
coordination will lead to balance of payment crises, misallocation of
resources and unemployment which will then have economic as well as
political consequences. I think they were not wrong as it turned out to
be that way. Furthermore, they also cautioned that the non-automatic
nature of coordinated decision-making and the required political discre-
tion in such coordination measures is also a weakness in the Werner Plan.
The authors of Manifesto argued that the flexible exchange-rate system
is better than a fixed exchange-rate regime and a single-valued mone-
tary system is better and a system of multiple currencies with the flexible
exchange rate. Interestingly, they urged that the natural rate of unemploy-
ment doctrine shall be accepted as any effort to reduce the unemployment
below the natural rate will be self-defeating and will harbour more infla-
tion. The loss of unemployment as cost of monetary unification was
labelled as “transitional ”. Hence, as in the long-run unemployment is not
related to inflation and monetary union cannot be regarded as a cause of
unemployment. With the hindsight of decades, we can see that the mone-
tary union has large disparities in terms of unemployment and some parts
of the Union, particularly in the periphery it is astronomically high. It was
recognised in the manifesto that the capital may move to the high produc-
tivity areas and there could be an increase in the unit labour cost in the
periphery making investment less attractive. There would also be potential
16 M. A. NASIR
for the movement of labour from peripheral to central areas. However, for
the sake of regional diversity, it was urged that the monetary union should
not be permitted to encourage the movement of labour and capital from
the periphery to the core. To solve this issue, they urged on the interim
income transfers and raising productivity levels. It was also acknowledged
that the transition to European Monetary Unions requires a considerable
deflationary stance which may accompany prolonged periods of reces-
sions, but as the price stability is desirable, reducing inflation is good
anyway, never mind for the sake of EMU. The introduction of a new
stable currency will in fact minimise the transitional cost and will not be
subject to inflation expectations. The proposed approach was advocated
to be based on gradualism and automaticity and respects the interplay
of market forces. They urged that this will entail governments putting
explicit and instead of implicit taxation (inflation). Lastly, they suggested
that the monetary authorities should be given the same level of indepen-
dence from political power as the judicial system which I think remains a
debatable issue across the world. The All Saints’ Day Manifesto had some
interesting aspects which I will revert to in the later part of this treatise,
with the benefit of hindsight, but in a nutshell, there was an acknowledge-
ment of some of the difficulties though the language of the manifesto
remained over-optimistic. What in prevalence was the European Mone-
tary Cooperation Fund (EMCF) and the Snake in the Tunnel which was
proven to be difficult to contain!
To support the balance of payment issues of the member states, the
EMCF also administrated community loans since 1976. Alas, the Snake
did not live very long and proved unsustainable due to the free float of
the US dollar, leaving and joining of members and difficulty to keep
the exchange-rate fluctuations (snake) in the tunnel. This led to its
successor, the European Monetary System (EMS) and European Currency
Unit (ECU) which were established in 1979 under the Jenkins Commis-
sion. EMCF took on the burden of carrying out the tasks related to the
creation, use and remuneration of the ECUs. The EMS was an exchange-
rate arrangement where the currencies of the EEC members were fixed
against each other’s currencies to gain exchange-rate stability and its bene-
fits. Although, there was no currency officially designated as an anchor,
under their own steam the Deutsche Mark and the Bundesbank proved to
be the leaders. The initial range of bands was a narrow band of ±2.25%
and a wide band of ±6% which after the speculative attacks on the
French Franc and resulting Brussels Compromise in August 1993 was
revised to 15%. The European Currency Unit (ECU, abbreviated as CE

or XEU) was the unit of account and in some cases medium of trans-
action. In their essence, EMS and ECU were the forerunners of the
Euro system and Euro (e). In terms of external trade, a major mile-
stone was the Lomé Convention. A trade and aid agreement between the
European Economic Community (EEC) and 71 African, Caribbean and
Pacific (ACP) countries, signed in February 1975 in Lomé, Togo. This
had symbolic importance in terms of EEC countries coming together in
the form of a political-economics block to deal with the rest of the world
in terms of trade as well as aid. There is a desire which is often explicit
in the language of the European Commission and European leaders to
have some global economic, political and influence. For instance, most
recently, there have been claims made in terms of the EU being the leader
in efforts to tackle climate change or on the financial front, the EU as an
attractive destination for global savings (a place traditionally held by the
USA). There is nothing wrong with wishful thinking and dreaming about
global leadership, but for the EU that day is not in the sight48 !
On the political front, 1979 saw the achievement of a crucial land-
mark when the first European Elections were held in the 9 members
states of the EEC. New members of European parliaments (MEPs) were
democratically elected by an electoral process and hence had the power
or element of people’s power, i.e. public mandate. Despite some reluc-
tance from French President Francois Mitterrand and concerns on the
readiness of the Greek and Spanish to join, the expansion continued
southwards to the Mediterranean.49 In January 1981 Greece and then in
January 1986 Spain and Portugal joined as well as Turkey applied for the
membership. Though Greenland left in 1985 but did not go too far and is
still considered as an Overseas Countries and Territories (OCT).50 On the
legal front, an important event occurred which then became a precedent.
48 On this aspect, Dominguez (2006) argued that “The slim margins by which the
Maastricht Treaty passed and the wide margin on which the European Constitution failed
are reminders that Europeans are still wary of giving up their national sovereignty. This
wariness also influences the ability of the ECB to efficiently take over monetary policy
and limits the ability of the euro to become a true rival of the dollar in global financial
markets”. The fact of the matter is “wariness” Dominguez pointed out still prevails.
49 For European Stability Initiative visit https://www.esiweb.org/index.php?lang=en&
id=156&document_ID=74.
50 Article 17 of European Union Treaty as of 1999.
18 M. A. NASIR
The European Court of Justice (ECJ) ruled on the non-discrimination by

nationality. Mr. Cowan, a citizen of the UK, was mugged while on holiday
in France (exercising his EU free movement rights). French law was only
permitting criminal compensation to be given to French nationals. In
order to not breach the concept of the free movement of services, Mr.
Cowan should be treated like every other (French) citizen. This was a
crucial judgement and one of the biggest success for the Federalists or
Pro-Europeans. As an effort towards further integration by making the
movement of people more flexible, the Schengen Agreement was signed
(West Germany, Belgium, France, Luxembourg and the Netherlands) to
abolish the border checks and harmonisation of visa policies.
The European flag, which was around since 1955, was approved by
the European Council in June 1985 and raised outside Berlaymont. In
the flag, we see that against the background of blue sky, there are stars
form a circle, symbolising union. Number of stars is fixed, twelve being
the symbol of perfection and completeness, one may draw parallel with
the apostles, the sons of Jacob, the labours of Hercules and the months
in the year.51 However, besides the completeness of stars on the blue
sky, on the ground the things were neither complete nor perfect. There-
fore, under the Jacques Delors presidency of the European Commission,
the expansion and integration continued and as a step towards further
integration, despite some opposition, the Single European Act (SEA) was
signed in February 1986 and enforced in July 1987.52 With some delays
in the case of Italian, Danish and Irish, eventually all the twelve members
states of EEC signed and ratified the treaty. The Act entailed intuitional
reforms, single market and political, social and scientific cooperation.53
More specifically, it was hoped that by the end of 1992 an objective
of the single market would have been achieved after necessary legisla-
tive reforms. In its true spirit, it was a major step towards the creation
of the world largest market or trading area in the coming years. So, on
51 For detail on The European flag visit https://www.coe.int/en/web/about-us/the-

european-flag.
52 For details on the signing of the Single European Act visit https://www.cvce.eu/
obj/the_signing_of_the_single_european_act-en-d29e6c74-ba4d-4160-abc0-1f1d327bf
aae.html.
53 For details on the provisions of the Single European Act visit https://www.cvce.
eu/obj/the_provisions_of_the_single_european_act-en-243555aa-d219-4525-9978-343
25bb5e17a.html.
one hand, where the Single European Act (SEA) confirmed and legit-
imised the discrete documents and procedures that had been taken till
that point, on the other hand, it provided a time frame and direction for
the future which had psychological significance. European foreign policy
was and is till date a subtle but crucial aspect and when to speak to the rest
of the world as a European foreign policy spokesperson, you got to speak
in one voice which comes from the concrete unity. Concomitantly, the
common foreign policy implies the pre-requisite of unity in foreign affairs
and a preliminary to that unity in domestic affairs. Nonetheless, it was not
the creation of a mere single market, but the objective was the Economic
and Monetary Union (EMU) as confirmed by the European Council in
June 1988. A committee led by Jacques Delors was mandated to propose
the plan for the achievement of this great objective. The committee
was composed of the governors of the then European Community (EC)
National Central Banks, General Manager of the Bank for International
Settlements (BIS) Alexandre Lamfalussy, Danish professor Niels Thygesen
(the father of the Euro and signatory of the All Saints’ Day Manifesto and
the only academic on the Delors Committee) and President of the Banco
Exterior de España Miguel Boyer. The Delors committee prosed that the
EMU should be achieved in three stages (Table 1.1).
I will revert to the Delors Plan, but let’s first discuss the most impor-
tant and significant event of the second half of the twentieth century. The
fall of the Berlin Wall. At his Brandenburg Gate speech in June 1987,
President Reagan made an open plea to President Gorbachev, saying “Mr.
Gorbachev, tear down this Wall!” It took another two years before the
wishes of President Reagan could come true. The change came from
within East Germany and in November 1989s Alexanderplatz demon-
stration. Despite the anxiety of the French and British and the Plea of
Margret Thatcher to stop the collapse of the wall as a symbol of German
unification, the fall of wall war destined, and its destiny was rubbles.54
54 According to reports by the Hindu newspaper “Margaret Thatcher pleaded with

Gorbachev not to let the Berlin Wall fall out of London” See Suroor (2009). The times
also reported that “Thatcher told Gorbachev Britain did not want German reunification”
See Binyon (2009).
20 M. A. NASIR
Table 1.1 Stages of Economic and Monetary Union (EMU)
Stage One: Starting from July 1990

Complete freedom for capital transactions;
Increased cooperation between central banks;
Free use of the ECU (European Currency Unit, forerunner of the e);
Improvement of economic convergence;
Stage Two: Starting 1 January 1994
Establishment of the European Monetary Institute (EMI);
Ban on the granting of central bank credit;
Increased coordination of monetary policies;
Strengthening of economic convergence;
Process leading to the independence of the national central banks, to be completed at
the latest by the date of establishment of the European System of Central Banks;
Preparatory work for Stage Three;
Stage Three: Starting 1 January 1999
Irrevocable fixing of conversion rates;
Introduction of the euro;
Conduct of the single monetary policy by the European System of Central Banks;
Entry into effect of the intra-EU exchange-rate mechanism (ERM II);
Entry into force of the Stability and Growth Pact;
Source ECB (2018). For details on three stages of Economic and Monetary Union (EMU) visit
https://www.ecb.europa.eu/ecb/history/emu/html/index.en.html)
German Unification and Road to Maastricht

Change in the German Democratic Republic’s (GDR) leadership from
Erich Honecker to Egon Krenz and changes in the regulations on
the movement of people created the environment for the unification
of Germany.55 On 9 November 1989, the wall was opened, and the
East Germans were greeted by their Western counterparts. These greet-
ings were not only a lip service but as the events unfolded, the cost
of German unification and development of East Germany was transfers
of e100 billion to e140 billion a year to prop up and overhaul the
economy of the defunct communist state of East Germany. It piled up
to an approximate bill of around e2 trillion.56 Funded by taxation on
income such as solidarity surcharge (Solidaritätszuschlag). In the Soli-
darity Pact II, an amount of e156 million ($203 million) was agreed to
55 See Sebetsyen (2009).

56 For “Germany starts recovery from e2000 billion union” visit http://archive.li/
ahXRd#selection-677.25-677.166. Also see Hunt (2008).
be spent on supporting the infrastructure in the East (including, Bran-

denburg, Mecklenburg-West Pommerania, Saxony, Saxony-Anhalt and
Thuringia).57 Germany was paying through nose for sovereignty, as it
has been since WWII.
Despite the fall of the Berlin Wall, the unification was not formally
achieved until 3 October 1990. Elections of March 1990 held in the
German Democratic Republic (GDR) brought favourable results for the
unification as the Alliance for Germany (German: Allianz für Deutsch-
land) supporting rapid unification appeared to be the most successful
party. In about six months time, the unification treaty was accepted
by a clear majority in GDR (299–80) before it was also approved by
even a greater majority (442–47) in the Bundestag Federal Republic of
Germany (FRG). However, these few months were of profound impor-
tance and contained events that had significant implications for the years
and decades to come. The negotiations between the GDR and FRG led
to the Unification Treaty signed by both parties in Berlin on 31 August
1990. Besides this, the main negotiations were on the Treaty on the
Final Settlement with Respect to Germany (Vertrag über die abschließende
Regelung in Bezug auf Deutschland), or the Two Plus Four Agreement
(Zwei-plus-Vier-Vertrag).58 The two were the GDR and FRG whereas
the four were France, the Soviet Union, the UK and the US, the four
were to renounce all the rights on Germany so that it could gain its
sovereignty. According to the Potsdam Agreement section 1.3.1, “The
Council (composed of the Foreign Ministers of the UK, the USSR, China,
France, and the US) shall be utilized for the preparation of a peace settle-
ment for Germany to be accepted by the Government of Germany when
a government adequate for the purpose is established”.59 The treaty was
signed in September 1990 which led to the German unification on 3
October 1993. Interestingly, there are no signatures from the Chinese
side in the German Unification though in the Potsdam Agreement it
was stated that China shall be part of the Council accordingly. Does this
mean German Unification is illegal? Anyway, let’s not go there! Germany
57 For “Solidarity Pact II to Be More Effective” visit https://www.dw.com/en/solida

rity-pact-ii-to-be-more-effective/a-1474273.
58 For details on “Treaty on the Final Settlement with Respect to Germany September
12, 1990” visit https://usa.usembassy.de/etexts/2plusfour8994e.htm.
59 For Potsdam Agreement visit https://www.nato.int/ebookshop/video/declassified/
doc_files/Potsdam%20Agreement.pdf.
22 M. A. NASIR
was allowed to have full sovereignty with effect from 15 March 1991.
There was a question of “too much German land which had been stuffed
to Polish goose” as Winston Churchill had cautioned. Germany had to
agree to the border changes as a result of WWII including the area in
the east of the Oder-Neisse line which had been its part for centuries.
German–Polish Border Treaty60 on 14 November 1990 reaffirmed the
German–Polish border as it stood at the time, effectively relinquishing
these once historically German provinces in eternity to Poland. Germany
was also required to amend its constitution so that it will not accept
any application for incorporation into Germany from lands beyond the
territories of what was then East Germany, West Germany and Berlin.
Germany had to agree to the limitations on the size of the military, types
of armament, deployment and use of force in future. There should be
only German troops deployed in the former East German states, however,
this aspect of the Treaty has been violated by the deployment of NATO
and non-German troops. Some of the Central and East European (CEE)
nations have joined NATO which changes the facts and political land-
scape, though not without discontentment from Russia.61 As the USSR
collapse came without much anticipation, Germany had to pay another
bill of $60 billion to the Russian Federation, for the resettlement of Soviet
troops.
In these politically high times, the efforts on the economic develop-
ment continued an example was the European Bank for Reconstruction
and Development (EBRD) established to preliminary support the eastern
bloc countries, though with time it widened its scope of operations. The
Schengen Convention in June 1990 supplemented the Schengen Agree-
ment by proposing the complete abolition of internal border checks and
having an external common visa policy. Similarly, in 1992 the European
Community Humanitarian Aid Office (ECHO) was established under
the Delors (second) Commission to support humanitarian causes glob-
ally. This is was also a manifestation of the European Union reviving
its international position and impact. In terms of internal progress and
integration, the big leap was to the Maastricht.
60 For “Treaty between the Federal Republic of Germany and the Republic of
Poland on the confirmation of the frontier between them, 14 November 1990”,
visit https://www.un.org/Depts/los/LEGISLATIONANDTREATIES/PDFFILES/TRE
ATIES/DEU-POL1990CF.PDF.
61 See Cohen (2005) and Zoellick (2000).
Maastricht Treaty---Conception of Tragedy

Committee for the Study of Economics and Monetary Union in the
chairmanship of Jacques Delors and under the mandate of the Euro-
pean Council presented their report in April 1989 and had proposed
three-stage achievement of EMU (Table 1.1). Stage one entailed steps
of complete freedom for movement of capital; increased cooperation
between central banks, Free use of the ECU (European Currency Unit,
the forerunner of the euro) and improvement of economic convergence.
Additional responsibilities were given to the committee of the central
banks of EEC members, these include consultation on the price stability
by coordination of monetary policies in member countries. To achieve the
required institutional framework in place which can lead to the EMU,
it was also required to revise the Treaty of Rome which established
the European Economic Community (EEC). This led to the occurrence
of the Intergovernmental Conference (IGC) on the EMU and on the
Political Union in 1991.
The Intergovernmental Conference (IGC) on the EMU benefited
from the solid start and context provided by the Delors report on the
single currency and a central bank. This was a particularly important
point in the monetary history of the EMU as well as what later followed
till day. Germany was to make more concessions and by that, I mean
giving up its sovereign currency, Deutschmark. Assurance was provided by
the French that the European Central bank (ECB) will be independent
of governmental influence, although their own proposal was to rather
strengthen the Council of Finance Ministers of the Unions (Ecofin).
Compromise is an important element of EU functioning was to have an
independent central bank with a single currency but on the fiscal side,
each country would have its only fiscal policy with some coordination
among the council of economics and finance ministers or more precisely
the Economic and Financial Affairs Council (ECOFIN). This implied a
flaw or crack in the design which became explicit in the crisis and resulted
in failure of coordination. The time told this was a major issue as the
events of Global Financial Crisis 2008, succeeding European Sovereign
Debt Crisis and most recently COVID-19 unfolded. Another issue that
required agreement was the conditions for participation in the single
currency. Economic and most importantly the budgetary outlook of the
member countries was fairly uneven. Contrary to the Germany, France in
the presidency of François Mitterrand was keen to have a stricter fiscal
24 M. A. NASIR
rule where the government budget deficit should not exceed 3% of the
national income, a threshold which was already put in place in France.
German suggestion to account for the investment expenditure was not
taken into account by the French who wanted a simple and stricter fiscal
rule. Perhaps it was easy for France which was running a deficit of less
than 2% of GDP while for Germany it was around 3.5%. Undoubtedly,
Germany had very hot unification invoices on hand. In most of the other
member states (exception of Denmark, Ireland and Luxembourg) the
budget deficit was in excess of 3% of national income and in fact in Italy
it was approaching double-digit. There was a notion put forward by the
Italian that the membership of a single currency should not be contin-
gent on economic criteria as it is a political project (where the economic
logic and even logic is condoned). However, this honest view was bitter
and ended up under the carpet. Britannia was clearly not a rider of the
single currency and why it should lose something which was its trade-
mark for something that is half-baked. This reluctance and anxiety of
departing from their sovereign currencies was obvious and explicit and
nicely depicted by the German cartoonist Horst Haitzinger (Fig. 1.3).
Under the presidency of Jean-Claude Junker (Luxemburg) and later
under Wim Kok (Netherlands), in the Intergovernmental Conference
(IGC) on the EMU, finance ministers of member states and their respec-
tive treasury representatives continued to negotiate through 1991. It is
worth noting that at that point, the first stage had been implemented to
some extent as on the 1 July 1990 with the liberalisation of movement
of capital. What was to be settled was the convergence of the economies
and even before that convergence of the economic policies. These nego-
tiations were in isolation from the Intergovernmental Conference (IGC)
on the Political Union and negotiations among foreign affairs ministers.
To achieve the aim of creation and management of a single currency, the
European System of Central Banks (ESCB) was established. This included
the European Central Bank (ECB), and the central bank of members
states, i.e. National Central Banks (NCBs). The ESCB was independent
of national governments, similar to the other institutions of the Commu-
nity. There was only and only one goal “Price Stability” something utterly
myopic but yet seldom achieved. I will reflect on the failure to consistently
achieve this goal in the later parts of this treatise. There were concerns
raised by Germany on the convergence and independence of monetary
authority, however, despite these concerns which later proved to be right,
Fig. 1.3 Maastricht European Council (9 December 1991)62 (Source Horst

Haitzinger. Copyright: “Horst Haitzinger, München”. Maastricht open-air swim-
ming pool: “Follow me! Let us know if there’s any water in the pool!”’ On
9 December 1991, on the eve of the Maastricht European Council, German
cartoonist Horst Haitzinger takes an ironic look at the commitment [“follow
me!”] of German Chancellor Helmut Kohl to Economic and Monetary Union
[EMU] and to the Treaty on European Union. French President François Mitter-
rand, second in line, seems more reluctant to take the plunge [“Let us know if
there’s any water in the pool!”], while British Prime Minister John Major seems
to be about to climb down from the diving board)
there were some assurances that nothing to worry about. In the Maas-
tricht European Council meeting on 9 and 10 December 1991, French
and Italian pushed for the decision that the EMU would inter into force
of 1 January 1997 if most of the member countries satisfy the conditions,
otherwise, on 1 January 1999, those members which meet the criteria
62 For details visit https://www.cvce.eu/en/obj/cartoon_by_haitzinger_on_the_maastr

icht_european_council_9_december_1991-en-d0cac658-02e1-46ae-bd50-ed279c5a9244.
html.
26 M. A. NASIR
would be able to join irrevocably. Convergence criteria included an infla-

tion rate measured in terms of consumer price stability which should not
exceed 1.5% more than the average of the three best-performing member
states. Similarly, the long-term interest rates should not exceed more
than 2% of the average of best-performing member states. The candidate
currency of the candidate member states was required to participate in the
European Monetary System (EMS) for at least two years and during this
period it should not exceed the margins. In terms of fiscal criteria, the
deficit of central, regional and local governments as well as social secu-
rity funds should not exceed 3% of the GDP whereas the debt should
not exceed 60% of the GDP. Core principles were stated in the Treaty
on the European Union (Aka Maastricht Treaty) in the article 109j, the
relevant periods over which they are to be respected are developed further
in the protocols (Nos. 5 and 6) which were amendable by a unanimous
decision of the Council of Ministers. It was also agreed in the Maastricht
European Council that the prerequisites to accede to EMU would also be
dependent on the technical as well as political criteria and trends would be
taken into account. The decision to allow a member to join EMU would
be taken by the Head of states/government levels and would require a
qualified majority in the council. This meant that there would be room for
the politics to overwrite and overrule the economic criteria and principles,
what followed is prima facie evidence that it was so!
Parallel to the IGC on the Economic and Monetary Union of the
European Union, rather more stringent negotiations were continued on
the Political Union, there was no Delors report to provide the foundation
of Political Union, though there was a European Parliament and Euro-
pean Commission in place which had been calling for the extension of
powers. In March 1990, it declared the intention of rapid integration and
conversion of the European Community into a Federal type of European
Union which goes beyond a single market and EMU to foreign policy. In
that environment, Belgium sent an Aide-mémoire on 20 March 1990. It
urged on the strengthening of the institutional system of the community
by adopting a qualified majority voting system in Council, reduction in
the number of commissioners, the President of the Commissions to be
investiture by the Parliament, reinforce of legislative co-decision between
Council and Parliament and cooperation enhancement in the security and
foreign policy aspects. Belgium proposal was not explicitly and fully imple-
mented yet it had its impact rather more implicitly and by and large the
direction the politics of the European Union was steered.
Another random document with
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me in the boudoir a little while ago?”
“Yes; I can swear to it.”
Richards sped to the closet door and flung it open. Only wearing
apparel rewarded his search. A glance at the windows showed that
they were closed and locked on the inside, the bathroom and
dressing room beyond were empty! Convinced of that, he turned
back to Judith who had sunk into the chair before the dressing table.
“Was any one with you in this room?” he asked.
“No, I was alone.” Judith passed her hand dazedly before her
eyes, then again inspected the empty box. “Every piece of jewelry is
gone,” she stated, “and the box was full two hours ago.”
“Are you sure, Judith?”
“Absolutely certain—the jewelry was stolen within the last two
hours.”
Richards looked first at her and then at the empty box.
“How can that be?” he asked. “There is no entrance to this
bedroom except through the boudoir—and you and I, Judith, have
been in the boudoir for the past two hours.”
CHAPTER XIII
“MIZPAH”
Detective Ferguson completed his tour of the suite of three

rooms and bath which Judith and her husband occupied and took
up his station in the boudoir. At Richards’ earnest solicitation she had
notified Police Headquarters of the robbery and Ferguson had been
detailed to investigate it. He was followed into the room an instant
later by Judith who watched him inspect her empty jewelry box with
the aid of a magnifying glass. Quickly he made his test for finger
prints, but she judged from the negative shake of his head and his
puzzled frown that the results were barren.
“About what hour did the robbery occur last night?”
Judith started at the abrupt question, for Ferguson, recalling her
deafness and forgetful of the cleverly concealed earphone which she
wore continually, raised his voice almost to a bellow.
“It must have been between half-past nine and half-past eleven
last night,” she answered. “You need not speak so loudly, Mr.
Ferguson; I can hear quite well if you use your ordinary tone.”
“Beg pardon, I’m sure,” and Ferguson sunk his voice to its normal
pitch. “When did you last see your jewelry?”
“Just after taking off my wraps upon my return from dining at
Rauscher’s,” Judith explained, “I opened the box to put away the
diamond horseshoe pin which I had been wearing.”
“And your other jewelry was then in the box?”
“Yes.”
“Where were you between half-past nine and half-past eleven?”
“Here, in this boudoir.”
“Any one with you?”
“My husband, Major Richards.”
“Any one else?”
“No.”
Ferguson blinked at her solemnly for a minute, then rising,
stepped to the bedroom door and glanced inside.
“This is the only entrance to your bedroom,” he remarked, turning
to the silent girl. “How could a thief enter your room while you and
your husband were here, and you remain unaware of it?”
“I am sure I don’t know.” Judith shook her head in bewilderment.
“I lay awake nearly all night puzzling over the enigma.”
Ferguson surveyed the boudoir from every angle before again
addressing her.
“Where were you sitting?” he inquired.
Judith crossed the boudoir toward the fireplace and wheeled the
morris chair forward until it stood in the exact spot of the night
before.
“I sat here,” she explained, “and my husband was perched on the
chair arm.”
Ferguson walked over and sat down in the chair.
“I presume you and Major Richards were absorbed in
conversation,” he grumbled, and not giving her an opportunity to
answer, continued, “But you both had a good view of the boudoir
door leading into the hall, through which every one has to enter. Any
one entering last night would have had to come directly in your line
of vision. Was the door open or closed?”
“Open.”
“All the way open?” he persisted.
“The door stood just as it is now,” declared Judith, after studying
it a moment. A look outside convinced Ferguson that a person in the
hall would be unable to see what was transpiring in the boudoir at
the angle at which the door stood ajar.
“A person could enter without having to push it farther open,” he
announced. “Does the door squeak?” Springing to his feet he
answered his own question by moving the door to and fro. “Nary a
squeak,” he commented, and drawing out his memorandum book sat
down near Judith. “Now, madam, was it your custom to keep the
jewelry box on your dressing table?”
“When I was in my bedroom or in here, yes,” replied Judith. “At
other times I kept it in the drawer of my bureau.”
“Was the key in the lock of the box?”
“Yes.” Observing his smile, Judith frowned. “I do not usually leave
the key in the lock, but my husband called to me and I joined him
here, leaving the box standing on my dressing table.”
“I see.” Ferguson stared reflectively at her for a few seconds.
“Ever had anything stolen before?”
“Never any jewelry,” Judith spoke with unusual rapidity. “Nor any
money,” she added.
Ferguson pursed his lips and tapped them with his pencil.
“Odd!” he exclaimed. “Were the servants aware that you had this
jewelry box?”
“They may have been, for while I do not have a personal maid,
Anna, the waitress, and Maud sometimes assist me in dressing for
evening entertainments.” Judith wondered when Ferguson would go.
She desired most heartily to be alone and thresh out her problems
by herself. “It is probable that both the girls have seen the jewelry
box on my dressing table,” she added after a brief pause.
“Where were the servants last night?” asked the detective.
“Anna was in her bedroom suffering from a sprained ankle”—
Judith’s foot was keeping up an incessant tattoo. “Maud let me in;
after that I did not see her again. They have both been here for years
and are excellent servants—they are English.”
Ferguson made a slight grimace. “That Maud is a nice she-devil,”
he exclaimed below his breath; Maud’s scathing remarks about the
inefficiency of the detective force in general and Ferguson in
particular still rankled. “I’d like to”—he checked himself and again
addressed Judith.
“How much approximately was your jewelry worth, Mrs.
Richards?”
Judith took a paper from her mesh bag. “Here is a list of the
articles in the jewelry box,” she explained. “Major Richards
suggested that I prepare it for you.”
“That’s fine.” Ferguson reached eagerly for the paper and
scanned the items with increasing interest. “I see you estimate the
jewelry at four thousand five hundred dollars,” he remarked. “A pretty
haul for any thief. Fortunately your initials are on every piece,”
running his eye down the list in which Judith had inserted a minute
description of the jewelry. “Hold on, here’s one item, a locket—with
nothing checked against it—has the locket any distinguishing mark?”
Footsteps behind Judith caused her to whirl around, and she saw
Richards stop behind her chair.
“I couldn’t get away any sooner,” he explained. “Your mother
detained me in the dining room. Good-morning, Ferguson; has my
wife told you of the disappearance of her jewelry?”
“Yes, Major, and I was just asking her for details to aid in
identifying it at the pawn shops,” Ferguson again referred to the list
he was holding. “What about that locket, Mrs. Richards?”
Judith closed her mesh bag with a snap and the quick tilt upward
of her chin indicated to Richards, who had grown to know each
mood and tense, that she had reached a sudden decision.
“The locket bore the word ‘Mizpah,’ in raised lettering,” she
stated. “Otherwise it is insignificant in appearance.”
“Do you attach any particular value to it?” questioned Ferguson.
“No money value,” she responded quietly, and the detective
looked sharply at her.
“I see; you mean it is a trinket of importance from sentiment only,”
he commented.
It was Major Richards who answered and not his wife. “You’ve hit
it,” he laughed. “I presume Mrs. Richards values the locket more
highly than rubies.”
Judith looked at him oddly before turning to the detective. “I have
a request to make of you, Mr. Ferguson,” she began, without
preface. “It is that you make no mention of the loss of my jewelry to
any one. I am convinced that if we conduct the search in secrecy, the
thief will betray himself.”
Ferguson stroked his cheek thoughtfully. “I don’t like the idea,” he
objected. “I am a believer in publicity myself.”
“You have had plenty of publicity in the Austin Hale case,”
Richards pointed out dryly. “I cannot see that it has advanced you
very far.”
Ferguson reddened. “We haven’t told the public all we know,” he
admitted. “There are a few cards up our sleeve.”
“For instance?” and Richards’ smile was tantalizing.
“As to the nature of Hale’s wound”—the detective paused
abruptly—“but that will come out in the medical evidence at the
inquest.”
“And when will the inquest be held?” demanded Richards.
“When we lay our hands on a material witness necessary before
we can present the case,” Ferguson spoke with provoking slowness.
“You will learn all the facts in good time, Major; at present certain
clews cannot be divulged.”
“I thought you were an advocate of publicity,” Richards remarked,
and again Ferguson flushed.
“You’ve got me,” he acknowledged with a show of good nature.
“All right, Mrs. Richards, I’ll conduct this investigation as quietly as
possible. But how are you going to prevent your family’s knowing
that you have lost your jewelry? Won’t they comment when you don’t
wear it?”
“If they do I shall say that I have put it in my safe deposit box,”
was Judith’s ready response. “My father has frequently urged me to
do so in the past and with Austin’s death and the theft of his watch,
what’s more likely than that I should place my jewelry in a safe
place?”
Ferguson nodded his approval. “That is a wise argument,” he
said. “No one can dispute it. Now, about Mr. Hale’s watch,”—he
turned back the pages of his memorandum book until he came to a
certain entry—“can you describe it?”
“In a general way,” Judith spoke with some hesitation. “I have
seen the watch often, but I am not very observant.”
Ferguson considered her for some seconds in silence. He
disagreed with her statement—Judith, in his opinion, was not the
heedless type; her detailed description of her jewelry, safely tucked
away in his pocket, proved that.
“What was the watch like, Mrs. Richards?” he asked for the
second time.
“It was an antique, made before the Revolution, so family
tradition has it,” she stated, “an open-faced watch, wound with a key
and the dial has an American eagle beautifully etched upon it.”
Ferguson took down her words, closed his notebook and rose.
“I am greatly obliged,” he said. “It should not be difficult to trace
young Hale’s watch and also your jewelry if the thief tries to dispose
of it. But that,” he stared at her, “presupposes it was the work of an
ordinary thief.”
“And what leads you to think otherwise?” asked Judith swiftly.
Ferguson took several steps toward the door and hesitated in
some uncertainty. “Your jewelry was stolen by some one familiar with
your habits and familiar with the arrangement of these rooms,” he
stated gravely. “There is no possible way of entering your bedroom
save through this boudoir, as all your windows were found locked on
the inside. How the thief stole by you and your husband unobserved
while you sat here, we have yet to discover. But, take it from me, the
thief was a member of this household. Good-morning.” Not pausing
for reply, the detective vanished.
“A member of this household,” repeated Richards thoughtfully.
“Judith, have you no suspicion—no clew?” and his eyes searched
her face anxiously.
Judith leaned back in her chair and gradually her tense muscles
relaxed.
“I have no clew,” she replied. “But—tell me, when you got that
glass of water for me, did you glance at all into our bedroom?”
Richards pressed down the tobacco in his pipe and hunted
through his pockets for a match.
“Did I look into our bedroom?” he asked. “I may have looked, but
I can’t swear to it.”
CHAPTER XIV
SUSPICION
Adoor slammed and hasty footsteps sounded down the corridor,

then a figure blocked the doorway to the sitting room of Latimer’s
bachelor apartment.
“She’s gone!”
Latimer dropped the Sunday newspaper he had been reading
and stared at John Hale. For a moment he had not recognized his
friend’s voice—it was hoarse, discordant.
“She—who?” he exclaimed, springing to his feet.
“Polly.” John Hale swayed slightly, then lunged for the nearest
chair and dropped into it. Latimer wasted no words, but poured out a
liberal pony of brandy and placed it in his hand.
“Feel better?” he asked, watching the color steal back into John
Hale’s white cheeks as he put the empty brandy glass on the mantel.
Not receiving an answer to his query, he busied himself about the
room which served as library and office. A colored factotum who
“went with the apartment” served his breakfasts; the other meals
Latimer took at his club or at Rauscher’s. His two rooms, bath, and
kitchenette were unusually large, owing to the building having been,
before the World War, a private residence. The architect, in
remodeling it, had been generous in his allotment of space.
At the end of ten minutes John Hale pulled himself together and
signed to Latimer to draw up a chair.
“Sorry I made such a fool of myself,” he began, “but I’m hard hit.”
Latimer looked at him in distress. “What is wrong?” he asked.
“Polly’s gone.”
“So you stated before. Where has she gone?”
“I can’t find out.” John Hale drummed his fingers nervously up
and down his walking stick to which he still clung. “You know I called
up Mrs. Davis after our fruitless trip to Chevy Chase. She said Polly
had come in and gone to bed.”
“Well, it was pretty late when we got back,” Latimer pointed out.
“Yes, thanks to that traffic cop.” John Hale frowned angrily. “I’d
have seen Polly if he hadn’t insisted on taking us to the police
station.”
“Your previous record for speeding was against you, John,”
remarked Latimer mildly. “But what about Polly?”
“This morning I ran over to see her; found her mother in tears,
and a trained nurse looking after her and—” John Hale stopped and
pulled out a crumpled note—“here, read for yourself,” and tossed it
to him.
Latimer scanned the few lines:
Dear Mother:
Nurse Phelps will spend a few days with you in my
absence. Have run off for that promised change. Don’t
worry, darling.
Polly.
“Well?” he asked as he returned the note.
“Mrs. Davis told me that she had wished Polly to take a vacation
for some time and visit their cousin, Mrs. Paul Davis, at Markham,
Virginia. She believed Polly had gone there.” John Hale paused. “I’ve
just talked with Mrs. Paul Davis on the long distance telephone. Polly
is not with her, and not expected.”
Latimer regarded John Hale in bewilderment. “Then where has
she gone?” he questioned.
“I have no idea.” Again John Hale played with his walking stick.
Latimer considered him gravely. “What am I to infer?” he asked.
“That Polly has disappeared?”
“Yes.”
“But, my heavens, man! Why?”
John Hale shifted his walking stick from one hand to the other.
“Overwork,” he said briefly; “unbalanced.”
“Good Lord!” Again Latimer considered him. “Polly did not look
ill.”
“But she was,” fiercely. “Any fool could have seen it.”
“Possibly so,” agreed Latimer quietly. “I haven’t seen Polly as
frequently as you or Austin.”
John Hale’s strong white teeth snapped viciously at his under lip.
“Leave Austin’s name out of it”—his manner was dictatorial in the
extreme and Latimer flushed.
“I will, with pleasure, but”—he hesitated, then disregarding John
Hale’s glare, continued steadily—“are you quite sure that Austin’s
tragic death has not had something to do with Polly’s—as you claim
—mental condition?”
John Hale compressed his lips ominously. “No,” he declared.
“Get such an idea out of your head at once.”
“I can’t,” Latimer confessed frankly. “Austin and Polly were
engaged.”
“Were? Quite so.” John Hale’s laugh was mirthless. “The
engagement was broken by Polly before his death.”
“How soon before his death?”
“Damn! What business is it of yours?” John Hale turned on him
savagely.
Latimer rose. “None of my business—now,” he said. “You were
the first to bring up the discussion. You are of course at liberty to
express your views; I reserve the right to hold my own opinion.
Good-morning.”
“Here, wait—” John Hale pushed Latimer back in his chair. “I
spoke hastily—without thought—and I apologize. I’m a bit unhinged.”
Latimer regarded him with concern.
“Have you had any breakfast?” he asked.
“No—yes—coffee and rolls; all I wanted,” John Hale moved
restlessly. “I must find Polly.”
“Have you reported her disappearance to the police?”
“No, certainly not; we must have no scandal,” John Hale frowned.
“You and I must find Polly.”
“Willingly—but how are we to go about it?”
“For one thing, you can call on Mrs. Davis under pretense of
wishing to engage Polly as your stenographer, and she will probably
give you her present address. You may get more out of her than I
did. Frankly,”—John Hale gave an embarrassed laugh—“Mrs. Davis’
manner to me has been very peculiar lately. To-day she appeared
almost to resent my questions regarding Polly’s whereabouts.”
Latimer whistled. “So!” he exclaimed. “She may be aiding Polly to
avoid you.”
“That hadn’t occurred to me,” John Hale admitted. “But why? She
knows I am Polly’s best friend.”
Latimer took out his cigarette case and offered it to his
companion. With his left hand he indicated the box of matches on
the smoking stand at Hale’s elbow.
“Have you and Polly quarreled?” he asked.
It took a few seconds for John Hale to light his cigarette. “No,” he
said between puffs. Then, removing his cigarette, he looked straight
at Latimer. “Polly is everything to me,” he stated solemnly. “I will
never give her up. She shall be my wife,” and his clenched fist struck
the arm of his chair a resounding blow. “Austin, dead or alive, shall
not come between us.”
Latimer looked at him and then away. In the glance he had
detected a glimpse of the man he had never seen before—he had
never suspected. In that instant a naked soul had been bared in all
its human frailties.
“Austin has always been a disappointment to me,” John Hale
continued—he spoke almost as if communing with himself and
forgetful of Latimer’s presence. “For his mother’s sake I condoned
his wild habits while at college, his affairs with women,”—his voice
rasped through the room—“then he dared to play fast and loose with
Polly.”
“He did?” Latimer looked up, startled. “Good Lord, you don’t
suppose—?” he winced under John Hale’s iron grip and stopped
speaking.
“I suppose nothing,” John Hale spoke with fierce intentness.
“Austin had enemies, but Polly was not one of them—she had taken
his measure and ceased to care.”
Latimer broke the ensuing silence.
“Then why has Polly bolted?” he asked.
John Hale winced and tapped his cane against his shoe.
“Polly is ill from overwork,” he insisted doggedly. “Come, we are
wasting time. Suppose I run you down to Polly’s house and you can
question Mrs. Davis. You are not busy, are you?” with a quick look
about the room.
“No; I’ll be with you in a minute,” and Latimer, true to his word,
kept him waiting only long enough to get his overcoat and hat.
Fifteen minutes later Latimer was mounting the high steps of the
old-fashioned mansion on C Street where Polly and her mother eked
out a small and steadily shrinking income by taking “paying guests,”
a profitable business during the World War, but one that had grown
less so with the departure of the army of war-workers who had
transformed Washington from a city of leisure into one of volcanic
activity and unpleasant congestion. It was not until Latimer’s
patience had grown threadbare with repeated rapping and long
intervals of waiting that a small, neatly dressed colored girl,
seemingly not over fifteen years of age, opened the door and invited
him to walk inside.
“Magnolia,” called a voice from the direction of the back stairs.
“Show the gentleman into the parlor.”
“Yassam,” Magnolia’s expansive smile disclosed a row of perfect
teeth. “Dis hyar way, suh; de madam will be long d’reckly. Who did
you say, suh?” evidently impressed with his stylish frock coat and
neatly creased trousers. “Miss Polly done gone away.”
“I wish to see Mrs. Davis,” and Latimer handed her a visiting
card.
“Yas, suh, sutenly, suh.” Magnolia, meeting his friendly smile,
grinned from ear to ear, then bolted with astonishing rapidity out of
the room. She was totally oblivious of the fact that her youthful,
penetrating voice, raised to a pitch to reach Mrs. Davis standing on
the top stair landing, carried her words to Latimer’s ears.
“Dar’s a splendiferous lookin’ gentle’um in his Sunday clothes
waitin’ ter see yo’; no, ma’am, he didn’t arsk fo’ Miss Polly, jes’ fo’
you’—he’s got on great big spectacles and a top hat. What dat—you
wish de gentle’um’s cyard? Laws, ’scuse me, I done forgot”—and
with a loud snicker, Magnolia raced up the steps and pushed the
pasteboard into Mrs. Davis’s outstretched hand.
Latimer had met Mrs. Davis a number of times at Mrs. Hale’s and
she had chaperoned a number of parties given in Polly’s honor by
John Hale. She looked extremely pretty, with her soft gray hair
becomingly dressed, her cheeks, unwrinkled in spite of multiplied
cares, held a deeper touch of color as she entered the parlor and
greeted Latimer. He admired her gentle manner and her air of
breeding which no contact with the rough workaday world had the
power to efface.
“I trust I have not disturbed you by selecting this unconventional
hour to call,” he began, seating himself somewhat gingerly on the
edge of a rickety antique chair which had been the pride of Polly’s
great grandfather. “Your maid said that Miss Polly was out, and as
my errand is somewhat urgent, I asked to see you.”
Mrs. Davis’s brilliant color receded somewhat and her left hand
played nervously with her chain of coral from which was suspended
a gold locket.
“You are always welcome,” she said, “no matter what your
errand.”
“Thanks,” and Latimer, much touched, smiled with equal
cordiality. “I am in immediate need of a first class stenographer, and I
wondered if I could persuade Miss Polly to forsake Robert Hale and
come to me. I will double her present salary.”
Mrs. Davis drew in her breath. “That is a handsome offer,” she
exclaimed. “Of course I cannot answer for Polly, but, as she has
already resigned her position with Robert Hale—”
“She has resigned, then?”
“Yes.” Mrs. Davis looked her surprise at the abruptness of the
question. “I—I did not approve of her working so late at night. Mr.
Hale is kind in his way, but he is most exacting. The idea of keeping
her out until long after midnight on Tuesday, and night before last,
and then letting her come home in the street cars! He might at least,
have sent her home in his limousine.” Mrs. Davis came to an
indignant pause and Latimer looked his sympathy.
“Miss Polly will have no night work to do for me,” he said. “And
the office hours are not long—the Stock Exchange closes early, you
know, and not much business is transacted after that.”
Mrs. Davis nodded her head wisely. “I realize that,” she agreed.
“The stock market appears a bit more lively just now, Mr. Latimer.
Tell me,”—and she lowered her voice to a confidential pitch—“how
are the Troy Valve bonds rated now?”
“They have picked up five points.” Latimer regarded her in some
surprise. “I did not know you took an interest in the stock market,
Mrs. Davis.”
She colored painfully. “In former years we were large
stockholders,” she said; “now, alas, our securities have shrunk to
these of Valve bonds. I must tell Polly what you say. It is always well
to sell on a rising market, isn’t it?”
“If you wish to sell, yes,” dryly. Latimer, conscious of the passing
time, was having difficulty concealing his uneasiness as he thought
of John Hale waiting a block away in his car. In his impatience he
might forget the rôle he had cast for Latimer and, instead of awaiting
the latter’s return, walk in at any moment and, by incautious
questions, betray his own plot to discover Polly’s whereabouts. “How
soon will Miss Polly be in?”
“Oh, she is at Markham, Virginia, with my cousin, Mrs. Paul
Davis,” she responded easily. “You had best write to her there or, if
you prefer, I will write and tell her of your offer.”
“That is kind of you.” Latimer had some difficulty schooling his
voice to the proper pitch of enthusiasm for his rôle. “But I must have
Miss Polly’s answer to-day. Can we not call her up on the long
distance? I see your telephone is in that corner”—and he stepped
toward it.
Mrs. Davis stopped him with a gesture. “No use, Mrs. Paul Davis
has no telephone,” she stated calmly. “I can send my letter special
delivery and she will get it to-day and wire to-morrow morning when
the telegraph office is open.”
“That would perhaps be best.” Latimer made no effort, however,
to conceal his disappointment. “Is there any chance of Miss Polly’s
returning this afternoon?”
“Hardly,” Mrs. Davis smiled in open amusement. “She left for
Markham only this morning.”
“In that case it looks as if I shall have to wait until to-morrow,”
Latimer’s voice was rueful. “I wish that I had asked John Hale to tell
Miss Polly last night that I wished to engage her as my secretary.”
“John did not see Polly last night.” A faint hardness crept into
Mrs. Davis’s softly modulated tone. “She worked very late at the
Hales’”—she hesitated, looked up, and caught his sympathetic
expression. “Oh, Mr. Latimer, I cannot help feeling that Polly sees too
much of the Hales—thinks too much of them and their interests—
they are so cold-blooded—so calculating. I wish”—and her voice
choked with feeling—“I wish that she had been dead before she ever
saw John Hale.”
Latimer regarded Mrs. Davis steadily. “John is a good fellow,” he
protested, “a loyal friend and a devoted admirer of your daughter.”
He studied her covertly. “Much more so than Austin—”
“Ah, there you are wrong”—Mrs. Davis stopped and cast a
frightened look about the room. “Poor Austin, I cannot realize that he
has gone from us. He was so full of life, so anxious to succeed—his
death is a tragedy.”
“And a mystery,” supplemented Latimer dryly.
“A mystery indeed.” Mrs. Davis raised a small perfumed
handkerchief to her dry eyes. “My heart goes out to the Hales, they
have much to endure.” Latimer stared—she was expressing
somewhat contradictory views about the Hale family almost in one
breath. She moved closer to him. “Have the police discovered any
fresh clews?”
“Not to my knowledge.” Latimer edged toward the hall door. He
dared not linger, every extra moment might bring John Hale in
search of him. “Suppose you write to your daughter, Mrs. Davis, and
I will also send her a note within the hour. If you have word from her
will you promise to let me know at once?”
“Certainly.” Mrs. Davis accompanied him to the front door. “I feel
sure Polly will gladly accept your offer. How soon would you wish her
to commence work?”
“Immediately.”
“Oh!” Mrs. Davis looked taken aback. “She really needs rest and
recreation, Mr. Latimer. Remember, she has just started on her
vacation.”
Latimer thought a moment. “She might come to me for a few
weeks, just over this month, then go on another vacation, or rather,
continue this one, with pay.”
“I will write that to Polly.” She shook his hand warmly. “I
appreciate your kindness and I am confident that Polly will come to
you if she is physically able.”
“Then I am fortunate,” laughed Latimer. Mrs. Davis’s smile was
infectious.
“Just a moment.” Mrs. Davis detained him as he was about to run
down the steps. Her pretty coaxing manner reminded him of Polly—
mother and daughter were much alike in appearance; only to
Latimer’s fastidious taste, Mrs. Davis was the more attractive. There
was a certain aggressiveness about Polly, in spite of her good looks,
which always repelled him. “Please treat what I said just now about
John Hale as strictly confidential.”
“Certainly, madam,” and Latimer returned the pressure of her
hand, then he continued down the steps, her parting hail ringing in
his ears:
“Remember, not a word!”
When Latimer rounded the corner into Pennsylvania Avenue
where John Hale had agreed to wait for him, his face was grave. He
said nothing as he climbed into the car and dropped down beside his
friend, but as the car continued up the avenue, he broke his silence.
“I failed,” he admitted honestly, and a groan of disappointment
broke from John Hale. “Don’t worry, I’ll get Polly’s address to-
morrow. Mrs. Davis thinks I called to engage Polly as my secretary.”
Had either Latimer or John Hale turned his head and looked
backward he could not have failed to see a woman standing under a
tree at the corner of John Marshall Place. Their car was lost in the
traffic before Mrs. Davis, recovering from a feeling of breathlessness
produced by the unusual exertion of running, turned slowly
homeward.
CHAPTER XV
THE PUSH BUTTON
Mrs. Hale contemplated

disapproval.
Anna, the waitress, with marked
“You should not attempt to exert yourself until Dr. McLane gives
you permission,” she announced, with severity.
“Dr. McLane told me to walk about as much as possible, madam.”
Anna’s manner was respectful almost to the point of servility. “He
promised to be here this afternoon. Indeed, Mrs. Hale, I’ll be careful.
Don’t worry, madam.”
“I suppose the doctor knows what he is about”—Mrs. Hale,
however, looked extremely doubtful as she spoke. Her own attacks
of illness were distinct trials to every member of her family, as her
chronic objection to following the doctor’s orders or taking his
medicines generally retarded her recovery and produced a wish that
“the Old Scratch” would get her, that opinion having been voiced by
a long-suffering trained nurse, whose training had not included a
course in insults.
“Dr. McLane is sometimes inclined to error,” Mrs. Hale continued
after a slight pause. “Don’t take his directions too literally, Anna.
Modify them. If he said walk about for an hour, cut it to one half. And
never take a full dose of anything prescribed, reduce it by one half.”
“Yes, madam; thank you,” and Anna executed a bob of a
courtesy in spite of her injured ankle. “Is there anything I can do for
you?”
“No, I think not. Now, mind what I say, don’t overexert yourself.”
“Yes, madam,” and Anna started for the door only to be called
back by Mrs. Hale.
“As you go downstairs please tell Maud that Mr. Latimer will lunch
with us—that is, I think he will, but he hasn’t answered my telephone
message.” Mrs. Hale thought a minute. “Maud can put a place for
him.”
“Very well, madam.”
“Wait, there’s one thing more.” Mrs. Hale laid aside her knitting
bag, preparatory to rising. “See that the table is properly set, Anna,
please. Maud is—eh—not particular, and I am.”
“I will set the table myself, madam.”
“No, no, that is too much exertion for you, Anna.”
“But, madam, I am strong again, see”—and Anna stepped across
the room. Her limp was slight. Mrs. Hale heaved a sigh of relief.
“You have had a remarkable recovery,” she exclaimed. “My
remedies can be relied on to effect a quick cure. By the way,”—the
thought of luncheon uppermost for the moment—“if there is time
enough, please make an apple salad.”
“Certainly, madam. Is there anything else?”
“No, I can think of nothing.” Mrs. Hale wrinkled her brow, but no
new ideas came to her active brain. “Where is Miss Judith?”
“In her boudoir, madam.” Anna, who had taken several steps
toward the door, paused. “Maud told me just now that Miss Judith
and Detective Ferguson have been holding a long”—Anna hesitated
—“conference.”
“Conference!” Mrs. Hale’s tone expressed astonishment. “Oh!”
and she stared at the waiting servant. “That is all, Anna,” and the
waitress made her escape.
Mrs. Hale crossed the drawing-room and stood before the large
gilt-framed wall mirror which gave her a full length view of her figure.
It took several minutes to rearrange a bow of ribbon and several
pieces of jewelry, after which Mrs. Hale proceeded leisurely to the
third floor. She did not often climb to that height, and, on reaching
the head of the stairs, she paused to take breath, then, passing

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Off the Target: The Stagnating Political

Economy of Europe and Post-Pandemic

The Political Economy of Post-COVID Life and Work in

The Political Economy of Normative Trade Power Europe

Post-Truth, Post-Press, Post-Europe: Euroscepticism And

The Political Economy of Colonialism and Nation-

The Rise of Empires: The Political Economy of

Executive Education after the Pandemic: A Vision for

The Political Economy of Geoeconomics: Europe in a

The Palgrave Handbook of African Political Economy 1st

“After providing insightful accounts of the moves to union and integration in

Off the Target

ISBN 978-3-030-88184-9 ISBN 978-3-030-88185-6 (eBook)

Cover credit: Vectorios2016

Huddersfield, UK Muhammad Ali Nasir

1 Wrong Intentions and Flawed Foundations 1

Asset Purchase Programme (APP) 96

European Fiscal Board 204

Appendix “A” 297

Fig. 1.1 United States’ reaction to the slow negotiations

Fig. 1.3 Maastricht European Council (9 December 1991)

Fig. 3.3 Long-term Ratings of Euro Area Sovereigns (Source

Fig. 4.2 Loss of Confidence. High frequency indicators were

Fig. 7.7 Public investment of Germany and selected EU

Table 1.1 Stages of Economic and Monetary Union (EMU) 20

Table 6.1 Growth rates of GDP in volume up to 2020Q2 217

Wrong Intentions and Flawed Foundations

European Identity and Integration

1 See, V. Havel, “Dreaming Aloud” in J. Coleman (ed), The Conscience of Europe

© The Author(s), under exclusive license to Springer Nature 1

Europe which can be achieved through cooperation among states. The

8 Visit https://www.visitguernsey.com/victor-hugo-garden for Victor Hugo’s garden.

Coudenhove-Kalergi hosted the first pan-European conference and also

hope in a richer, freer, more contented European commonality”.17 After the

From Fall of the Berlin

17 See Ponting (1996).

a military presence in the Germany and Potsdam Agreement, but he

22 See Gimbel (1972).

a harsh lesson to Germany and containing and extracting its resources to

34 For the Schuman Declaration—9 May 1950, visit https://europa.eu/european-

Concomitantly the next step was the establishment of a customs union.

36 For details visit https://file.wikileaks.org/file/bilderberg-meetings-report-1955.pdf.

Messina Conference in 1955, the Spaak Committee, prepared the Brussels

continued on the economic integration, specifically the Common Agricul-

national monetary symbols or the establishment of a sole Community currency.

It is indispensable that the principal decisions in the matter of monetary policy

46 For details on The European Monetary Cooperation Fund (1973–93), https://www.

Concomitantly, the central banks of EEC should issue European money

revised to 15%. The European Currency Unit (ECU, abbreviated as CE

The European Court of Justice (ECJ) ruled on the non-discrimination by

51 For detail on The European flag visit https://www.coe.int/en/web/about-us/the-

54 According to reports by the Hindu newspaper “Margaret Thatcher pleaded with

Table 1.1 Stages of Economic and Monetary Union (EMU)

Stage One: Starting from July 1990

German Unification and Road to Maastricht

55 See Sebetsyen (2009).

be spent on supporting the infrastructure in the East (including, Bran-

57 For “Solidarity Pact II to Be More Effective” visit https://www.dw.com/en/solida