This personal website has in the past touched on the possibility of France leaving the eurozone. For example, last year I posted about an article by Philippe Villin in Le Figaro Magazine which was a spoof of the speech which François Hollande would give when the time came. And back in 2011, I commented on the way that some till receipts in France still show the price that would have been paid in francs. Now I’m beginning to wonder whether the UK debate is being framed in the wrong way. At the end of Tom Stoppard’s play Jumpers, George, a Professor of Moral Philosophy, observes that “… all the observable phenomena associated with the train leaving Paddington could equally well be accounted for by Paddington leaving the train …”. Or, in this case and putting it another way, rather than Britain leaving the EU, what if the EU were to leave the euro?
This is the suggestion being made by François Heisbourg, an énarque like Villin, but writing much more seriously in the current issue of Survival: Global Politics and Strategy, the journal of the IISS (Heisbourg is Chairman of the IISS Council). Last year his book, La Fin du rêve européen (The end of the European dream) was published in France, but so far it has only been translated into Greek! We can probably assume that his article, The EU Without the Euro, conveys the essence of his ideas.
Put crudely, Heisbourg believes that however unpleasant the abandonment of the euro might be, the alternatives are worse:
There would be no need to contemplate an economically risky, technically tricky and politically backward-looking option such as the orderly dismantling of the euro if more promising policies were at hand.He rules out the creation of fully federal Europe capable of underpinning the euro as politically impossible. On the other hand:
… the actual set of policies currently followed, sometimes described as 'muddling through', [would be] more aptly called 'muddling down' in terms of its effects on growth and mass unemployment.What he wants to avoid is a disorderly break-up of the euro, better “a deliberate and orderly unravelling of the euro in the framework of a preserved European Union”. His comments on the current situation are interesting:
… there are now two eurozones. One, composed of Germany, Finland and Austria enjoys limited unemployment … an early retum to pre-crisis levels of GDP … and great impatience with efforts by less fortunate states to transfer their liabilities to the EU level. The other eurozone has yet to recover to pre-crisis levels, with mass unemployment and long-term joblessness creating a 'lost generation', and unbelievably patient electorates who have not at the time of writing, voted in latter-day fascists or Bolsheviks. France falls squarely in between these two blocs. In short, muddling down does not look good.Post-euro, Heisbourg would prefer a return to the European Monetary System with each country having its own currency and aspiring to stable exchange rates, to the alternatives of sub-euro common currencies:
Some have gone further by suggesting, facetiously or in earnest, the creation of a northern euro - a 'neuro' or, worse 'Bis-mark' - eventually balanced by a southern euro, or 'sudo' (as in pseudo'). It is not clear why countries that would have dismantled the euro to recover a degree of monetary autonomy would want to jump into another straitjacket.Heisbourg sees the challenges in a “return to national currencies [which] would be universally considered a humbling setback” as being political rather than technical. He identifies precedents which support its feasibility and observes that disagreements with the suggestion he first made in La Fin du rêve européen were not mainly based on its technical difficulties. However political support from both Germany and France would be a necessity in his view. Making the best of the consequences of having to walk back from the euro (he quotes Churchill on Dunkirk – ‘wars are not won by evacuations’), he suggests that “the fact of being seen as acting decisively and competently will redound, Dunkirk-style, to the EU’s credit”.
On the subject of the UK, and pertinent to Paddington and the train, Heisbourg thinks that:
This could also be a Union in which traditional British euroscepticism would have fewer reasons to develop into full-blown, exit-prone europhobia. … Although there can be no guarantee that an EU without the euro would eliminate the risk, the probability of a British exit is much higher in all other scenarios. … an EU of which the UK is a member and whose long-term status is no longer in question would be strategically stabilising, not least as a war-shy, balancing-to-Asia United States adopts a more instrumental, tough-love attitude towards NATO and its European neighbours.He goes on to make some interesting observations about the circumstances of individual nations in the immediate post-euro phase, and regards France as possibly being the most acutely affected in the short term. He concludes by calling for more research and debate, at which point earlier passages in his article are worth revisiting:
… upstream debate could in its academic stages be broad-ranging and systematic, with a view to assessing the most promising political avenues; political decision-making could be careful and deliberate, albeit under the conditions of secrecy called for in monetary affairs; and implementation would have to be sudden and comprehensive.and
In order to be successful, the demonetisation of the euro and the recreation of national currencies has to occur during the compressed time frame of a longer-than-usual bank holiday, initially with a very small group of institutional actors (no more than the heads of a couple of states and the Chairman of the ECB), before the circle is broadened after the basic decision to unravel the euro has been taken.Heisbourg’s closing words are that “the preservation of the EU must be [the] primary objective, to which the positive or negative fate of the euro must be subordinated”. Opinions, many much better-informed than mine, will differ about the practicability of adopting his proposal, but I imagine that most would accept his point that a successful implementation would be to the EU’s credit.
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