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Euro Looks Shaky
The Euro might be running high against the US Dollar, but support for the single currency in France is headed for an all-time low. Today's Telegraph reports on a crisis of confidence in the Euro among the elite of one of the single currency region's most influential nations.
The high Euro is hurting French exports, claim senior figures in France's government. Trade minister Christine Lagarde blames the European Central Bank's tight grip on interest rates for France's huge 2.7 bn Euro trade deficit for November. PM Dominique de Villepin warned that power must be wrested back from the ECB: "We must clarify matters in exchange rate policy, which means taking back our sovereignty."
Socialist presidential candidate Ségolène Royal went further: "It's not for (ECB President Jean-Claude) Trichet to dictate the future of our economies: it's a matter for our leaders chosen by the people. We must completely change the charter of the central bank."
Nationalist leader Philippe de Villiers has even demanded that France make plans to withdraw from the single currency. He claims the Franc could be returned to circulation within eight days. His call comes a year after an Italian nationalist group called for a return to the lira - Italy has suffered from uncompetitiveness even more than France.
All very obvious stuff for British Eurosceptics, but the French have seized on these realisations like revelations from the gods.
What's worse for Paris, Trichet is their man. He was appointed president of the ECB following one of the usual carve-ups of power between Berlin and Paris, ensuring (the French expected) an ECB policy line that would be closely attuned to Paris demands.
The problem is made worse by the fact that for some nations in the Eurozone, the single currency is not interfering with growth. Germany, for example, has slimmed down costs to business and is now in its traditional place as the world's greatest exporter: Its trade surplus in 2005 was £109 billion (France ran a deficit of 19bn).
Change things to suit France, and you punish Germany for its frugality. Keep things as they are, and mutinous grumbles with grow louder in France, Italy and possibly even Spain, as the Telegraph's analyst notes. France vetoed the constitution last year - could the Euro be the next victim of Gallic discontent? Europe's warring tribes, each with their own priorities, keep tugging in different directions.
The entire Euro edifice isn't ready to crumble just yet - ECB officials say that the Euro's strength is high, but hardly in "uncharted waters."
And while British Eurosceptics will no doubt take some pleasure from the declining fortunes of the much-vaunted single currency, they would be wise to refrain from gloating (well, not too much). The single currency was an act of economic union that preceded political union. Political union, indeed, was designed to follow economic union.
Eurofederalists are likely to claim that the current debacle demonstrates how "more Europe" is needed to smooth wrinkles between nations. With the exception of Villiers, most of the French politicians calling for a change to ECB priorities are committed federalists (though they want to see the EU modelled in France's image). Their "solution" to the currency clash is likely to involve forcing other nations to conform to the demands of France and Italy, ridding themselves of "unfair advantages" to competition.
Moreover, if the argument lurches into crisis, the risks for Eurosceptics are even higher: As the EU Referendum Blog remembers, a major crisis is almost always used to push for further integration. That is, of course, if the voters have any stomach for it.
