In Storm-Tossed Waters
Especially gratifying for Mr Tietmeyer was the speech of the guest of honour, Helmut Kohl, Germanys chancellor. He departed from his prepared text to pledge that Bonn would allow no rotten compromises on the road to European economic monetary union.
Nearly nine months later, on May 15, 1997, Theo Waigel, Germanys finance minister, is making a flying visit to a meeting of the Bundesbanks central council in Frankfurt.
His mission is to broach the idea of a change to the Bundesbank law to revalue Germanys 95 million ounces of gold reserves and use some of the DM40 bn ($23.5 bn) of extraordinary profits that would accrue to the bank to meet the Maastricht treaty criteria for Emu.
If Mr Wigel can place the proceeds of the revaluation in an existing government redemption account for historic burdens this year, he will be sure Germany has a public deficit below 3 per cent of gross domestic product. Total public debt will be close to the 60 per cent of gross domestic product specified for countries joining the planned European single currency.
The next day, in a packed Bundestag, Mr Kohl airily sweeps aside angry opposition complaints that the government is guilty of creative accounting of the sort it has so often criticised in other European Union nations.
These are three snapshots en route to a bust-up that has put the Bonn government and the Bundesbank on a collision course and spawned serious doubts about the single currency and the stability of German politics.
The fury of last weeks row between Bonn and Bundesbank over Mr Waigels plan to revalue Germanys gold reserves this year to help Germany qualify for Emu is not without precedent. But the conflict is more than usually flammable because the two institutions ranged against each other Mr Kohl and the Bundesbank are desperate to secure their place in history.
The row comes in a bad week for Emu. Opinion polls suggesting a win by the French left in the final round of the national assembly elections have increased uncertainty surrounding Frances ability to qualify for the single currency.
In Germany, a complaint to stop Emu has been lodged with the constitutional court and opinion polls continue to show two-thirds of the population opposing the single currency.
Although the Bundesbank is not opposed to Emu, its accusation that the governments action would undermine the credibility and sustainability of the planned single currency has for the first time provided a respectable focus for those who want to keep the D-Mark. Until now, Chancellor Kohl has been able to prey on peoples fears of appearing unpatriotic or extremist should they refuse to support his drive for ever closer European integration.
The Bundesbanks charge that the government is threatening its independence has also turned the dispute into a highly political affair. The central bank is one of Germanys few revered institutions and the idea that its independence can guarantee monetary stability is strongly rooted.
The danger facing Mr Kohl is that the scheduled loss of the D-Mark and the replacement of the Bundesbank by the European central bank from 1999 could trigger a powerful political backlash among an electorate already unnerved by high unemployment, shrinking welfare benefits and the widely perceived threat of higher taxes.
If voters now have grounds to fear that the euro will be a soft, inflation-prone currency, the chances of Mr Kohl winning a fifth general election victory term in September next year could nose-dive.
In these circumstances, it does not matter that the Bundesbank agrees with the government that the gold will have to be revalued at some point as part of the procedure of starting the euro-area from January 1, 1999. Finance ministry promises that only about half of the expected DM40bn gain from the gold revaluation will be channeled to Bonn are falling on deaf ears.
The Bundesbank has won the moral high ground with its rejection of the government plan. The few daily newspapers that appeared last Thursday a public holiday in much of Germany were unanimous in their condemnation of Bonn and fully supportive of the central bank.
To a large extent the government has itself to blame for the mess. It emerged last week that Mr Tietmeyer had warned against a gold revaluation at a closed meeting of the Bundestag budget committee on March 19, arguing that it could cast doubt on the credibility and solidity of financial policy and generate turbulence on financial markets.
On April 17, Mr Tietmeyer aired some of his concerns in public, telling a press conference that gold revaluation was a matter for the governing council of the European central bank after it was appointed next year.
That Mr Waigel forged ahead with his plans shows how achieving Emu has become Mr Kohls paramount objective. This was also apparent at a meeting of the Christian Democrat and Bavarian Christian Social MPs of Mr Kohls coalition immediately after the ministers mid-May dash to Frankfurt. Although Mr Waigel reported unanimous support for his plans, participants later spoke of a tense meeting in which few details were provided, questions were discouraged and the discussion ended without a formal vote.
Yet it is these MPs, with colleagues from the small Free Democrat party, who will determine whether the government can revalue the gold and bring the proceeds to Bonn.
Mr Kohl has a Bundestag majority of only 10 votes. If his troops stay true to form, they will loyally pass the changes to the Bundesbank law.
But German politics has moved into a new and uncertain phase in which old loyalties may buckle. Even if Mr Kohl pushes a new Bundesbank law through the Bundestag and secures the proceeds of the gold and with that the future of Emu the events of this extraordinary week may still be felt in 16 months in the German general elections.