Shielding the franc: French diplomacy and European monetary integration, 1969-1988

This dissertation examines the role that France has played in European monetary integration, combining concepts from public goods theory and the "statist" approach to economic policy-making. Public goods theory identifies the fundamental challenge for European monetary integration: erecting a system of rules which ensure that the marginal benefits of cooperation for both France and West Germany exceed the marginal costs. The statist approach is used to analyze how France perceives these costs and benefits. From 1969 to March 1983, the French state's high growth policies, fear of austerity and structurally weak financial system, placed it in the difficult position of having a strong need for European monetary stability but insufficient means to contribute towards it. France often found the costs of remaining in European monetary arrangements exceeded the benefits. When it could not renegotiate the terms of its membership, France would be forced to withdraw.;However, since 1983 France has reformed the structural weakness of its financial system and demonstrated a willingness to take domestic measures to control inflation. As a result, its bargaining position has improved and it has gained a number of concessions from West Germany on European monetary reform. These concessions have made European monetary integration more stable, by reducing the risk that France will find itself in a situation where the costs of cooperation exceed the benefits.