The European Parliament made a wise move in setting a time limit for speakers at the special sitting to commemorate the 10th anniversary of the euro. Had it not done so, the ceremony would have lasted far too long, listeners would have heard the same things being said several times over and, inevitably, the meeting would have been given over to rhetoric. The report in our newsletter of the day before yesterday and the summary in this column of yesterday provide an overview of the main points.
One speaker, however, would undoubtedly have brought an added value to the debate, had he been allocated more time. I am talking about Valéry Giscard d'Estaing, who was one of the players in the creation of the euro. In Strasbourg, he proposed that the European Central Bank should be given the task of drawing up the new banking rules and be charged with monitoring how they are applied. He would have said much more if circumstances had allowed. This column believes, then, that it would be appropriate to do what was done at the start of the week for Jacques Delors, and provide our multinational readership with the opportunity to read what Giscard d'Estaing said on the very day of the Strasbourg ceremony in a long interview published in Le Monde of 13 January. His current situation allowed VGE to state explicitly what other leading official figures could not say or could only hint at (for example, which currencies would have been devalued if there had been no euro). One does not have to share all his convictions, but it is useful to be aware of them. Here is a summary of what he said.
1. Need for the euro and the merits of Germany. The euro was absolutely key to building a single market, since all the different currencies were disrupting the market. VGE highlighted the special merit of Germany, because it had “most to offer: a strong currency, the symbol of the renaissance of the country. Giving it up was a great sacrifice”. I would add that I personally heard Chancellor Helmut Schmidt state that he was very much in favour of this sacrifice because he never again wanted to see the other countries of Europe fear German power and join forces against her. According to VGE, on the map of Europe, “a coherent group stands out: France, Germany, Benelux and Northern Italy. If cracks develop in this group, there will be no European integration”.
2. Scepticism from the United States and elsewhere. VGE said: “10 years ago, monetary circles were sceptical. In 1999, Alan Greenspan told me 'you won't do it! And if you do, you'll fail'. Of the winners of the Nobel Prize for Economics, not one believed that the euro could succeed”.
3. If the euro had not been there … According to VGE, without the euro, “we would have witnessed a general monetary crisis in Europe. The lira, the peseta would have been devalued, the franc too, in all likelihood. The mark would have kept its value, or maybe would have gained a little. Monetary gaps would have harmed common policies and made it impossible to manage the basic policies, in particular the common agricultural policy”. In VGE's opinion, in the crisis, it was the European Central Bank “which reacted best, better than the Bank of England and the US FED”.
4. The euro must not replace the dollar. “That is something I don't want,” said VGE, going on, “being a world currency is a very strong constraint, the nature of the currency changes, and it becomes heavily influenced by its international role. What is to be desired is that the relationship between the major currencies (euro, dollar, yen) is actively managed, that the system is relatively stabilised, and this seems to be the case. Where will the euro be in 2009? It would seem that it will be somewhere between $1.35 and $1.45 to the euro”.
5. Economic situation. According to VGE, current difficulties are the result of economic disruption: costs of raw materials, oil, food products, which are not related to the currency. The great danger is that, while a recession of one or two points is bearable, there might be a depression: “If we have zero growth, that just means that we'll have to get along with the same income as in 2008. Nothing tragic”. But if the economic machine stops, the situation will really give cause for concern, and there will be serious consequences for employment.
Valéry Giscard d'Estaing also set out his views on the recovery plans, the conditions required if they are to be effective, the manoeuvring in financial circles to carry on as before, the much needed review of the system. This column will return to these in the light of the latest developments.
(F.R./transl.rt)