The Euro is dead, long live the euro!
In the spring of 1947, I was on deck as one of that dying breed of transatlantic liners was tugged into Le Havre. Despite decades of experience there was incredible confusion as French stevedores hassled over tying up ropes. A rail companion, a French Jewish refugee returning from American wartime refuge, declaimed, “Eh voila! L’élan francaise”. My 90 hours Berlitz preparation for being a “sois-dissant” Paris student, unabashedly imitating my 20s predecessors, had done me well. But I hadn’t a clue what “élan” meant, so he went into a “cartésien” dissertation on how Frenchmen were individuals as none other, cooperation comes hard if at all, and the genius of the civilization resides in that peculiarity. [Gen. Charles DeGaulle: How can anyone govern a nation that has two hundred and forty-six different kinds of cheese?]
As “Europe” falls apart, it’s natural each of its 27 members would be doing their thing. For the moment — while a search goes on for a missing one trillion Euros [$1, 400 billion] — the Euro has been rescued as a common currency for 17 members, and, hopefully, the whole Europe Project to unite a continent for peace and progress survives.
But continuing crisis, whatever its final outcome, is already rearranging geopolitical pieces on the European chessboard:
London smugly congratulates itself for refusing to enter what is now a failing common currency, preserving The City’s worldwide financial role. But Prime Minister David Cameron backbenchers’ called for a referendum on British EC membership. While put down, they will haunt his promised negotiations to rearrange the UK’s relationship with Brussels.
German Chancellor Angela Merkel will fiercely resist efforts to rearrange London’s other “special relationship”, perhaps forcing a showdown on whether you can be half in and half out. She has rammed through a call for more EC economic and political integration, swapping it for her recalcitrant Bundestag’s veto over more bailout. But at her back are obstinate voters reluctant to pick up the chips for southern bankrupt members of a common market Germany’s export drive exploited so shamelessly.
Chancellor Merkel bested French President Nikolas Sarkozy, facing a tough election next year after failing to produce his promised marketizing of the French economy. He wanted a super-Q-easing by the European Central Bank to save the Euro and inflate. In that grandiose French play, he proposed “comprehensive” settlement while the methodical Teutons wanted step by step — even at the risk of more minicrises and general economic doldrums as austerity brakes growth.
Italy’s tragicomedy starring Prime Minister Silvio Berlesconi featured parliamentary fisticuffs. Worse, his painful promised belt-tightening for the Italian welfare state built since it beat off a near successful attempted Communist coup d’etat in 1948 could get its ultimate test. Does the family, the cornerstone of Italian culture since the Romans, remain strong enough to buoy a society with the lowest birthrate in Europe, the mother of modern international immigration now facing invading hordes on the North African coastal periphery?
Initial market falderal was heartening. News that America, the heart of the world economy still for all the talk of shifting patterns, had grown in the last quarter instead of drooping into doubledip recession, heartened the optimists.
But there is bound to be a second look. And when the spectacles come out, analysts will find less detail to the Euro settlement than headlines. Germany is still keeping a staying hand on the throttle of the European Central Bank. The European Economic Stability Fund still looks more like an impoverished debt set-aside than a mini-IMF. And the controversial Eurobonds proposal hangs over the dusty debris left by two officials’ talkathons.
President Sarkozy’s call to China’s Prime Minister Wen Jiapao for help in bailouts and recapitalizing European banks is fantasy. Beijing plays a completely mercantilist hand. With its exports threatened and repeated promises to its own increasingly restless to shift to a more consumer-oriented economy, China’s more than $3 trillion in monetary reserves [20 percent in vacillating Euros] is mortgaged by a deflating dollar and its own incipient inflation. Ditto, Brazil — in a welter of official corruption scandals — and India with seemingly uncontrolled inflation. President Barack Obama’s op-ed proposing a firewall against a European debacle added insult to injury. U.S. banks sometime back stopped Eurolending — with their exposure still unknown.
Help, if it comes, will look to those glorious European traditions — all of them, as varied and contradictory as they are.
Sol W. Sanders, (firstname.lastname@example.org), writes the ‘Follow the Money’ column for The Washington Times on the convergence of international politics, business and economics. He is also a contributing editor for WorldTribune.com and East-Asia-Intel.com.