So then, Jacques Delors in his book of interviews with journalist Cécile Amar, “L'homme qui ne voulait pas etre roi” (“The Man Who Did Not Want To Be King”: see European Library no 1140 of 24 May) now lays the blame for the birth defect afflicting the Economic and Monetary Union fairly and squarely at the door of the “German and Dutch fundamentalists”. Unbeknown to their partners, confides the man who had duly warned some of the leaders of what he saw as an inescapable truth: “It is not possible to create a single currency among different countries without considering how the weakest countries are to achieve a sufficient high level of competitiveness”. Why did he not thump the table more often? Why did he not vigorously expose the inconsistencies being created by those delivering the single currency? Why was he not the doomsayer? Because in life, just as in our re-make of Sergio Leone's iconic film, this no less iconic (outgoing) Commission president could only be the “the Good”.
Whether by lucky coincidence or because tongues are beginning to loosen, the regrets of this contrasting mix of individualist and socialist are being taken up and bluntly set out, forcibly and with bitterness even, by a person in whom, apart from his expertise, there is little to like - and he managed pretty well to make himself disliked in the inner sanctums where the fate of European monetary union is played out. With his rock star attitude and the arrogance that he cultivates, Yanis Varoufakis is so much “the Bad” guy that, had he been born a century earlier, he could easily have been cast in that role ahead of Lee Van Cleef. At any rate, while Varoufakis is more adept with economic concepts and analyses than with a six-shooter, the razor-sharp barbs he fires off in his latest book, “And the Weak Suffer What They Must?” (see European Library no 1139 of 18 May) will do so much damage, at the very least to the reputations of some.
For a start, the short-lived Greek finance minister willingly exonerates Jacques Delors who, he acknowledges, argued as the foundations of the eurozone were being laid that, at the very least, there had to be a common debt and a common investment policy. The problem, in his view, is that the rot had already set in, and had even long been there. In reality, trouble sprang from a misreading of the economic-monetary realities in post-war Europe, from a kind of conceit that made France believe it could make silk purses from sows' ears and, lastly, from German inflexibility.
The mistake Europeans made in their analysis was to have failed to understand that, when Richard Nixon ended dollar convertibility to gold, on 15 August 1971, the Bretton Woods monetary system that they had had since the end of the war had only been able to work because Washington had made sure that the United States' trade surplus was recycled into their recovering economies. Hence the attempts - the Werner Plan, the currency snake, the European Monetary System and more - to bring forth a European version of Bretton Woods. They finally succeeded with Economic and Monetary Union but they forgot, Varoufakis says, that the price of a fixed exchange rate is inevitably the embrace of death between a bankrupt state, impoverished citizens and an insolvent private sector if it is not accompanied with mechanisms that allow the wealthiest economies to come to the aid of the most fragile and those most deeply affected by an economic crisis. Delors acknowledges that European leaders yielded, willingly (for many) or by force, to the “German obsession with the deficit” which made them forget that it would be better to “make provision for helping the least competitive countries to become competitive”.
There is an economist, like Varoufakis, but less likely to be suspected of any ideological leaning: Pierre Defraigne, a former director general at the Commission and currently Executive Director of the Madariaga-College of Europe Foundation, noted recently in La Libre Belgique that “there is still sovereign over-indebtedness” and that “the gap in per capita income is growing between the German centre and the Mediterranean periphery - the opposite of what is to be expected in a successful monetary area”. He said devastatingly: “The euro was not made to sustain German hegemony over the EU-28”. Varoufakis, clearly, is not alone when it comes to not mincing his words. According to the former Greek minister, an American, Timothy Geithner, Secretary of the Treasury, even met EU finance ministers gathering informally in Poland in autumn 2011 and argued that, to check the downwards spiral, the European Central Bank should make clear its intention to guarantee part of the debt of the main fragile countries in the euro area. He was, again according to Varoufakis, unceremoniously dismissed. Is it any surprise, then, that he asserts that “debt has never been Europe's problem”, that it is only a symptom of a badly flawed institutional design? Or that the words are less extreme than the facts? Michel Theys