Former fan of the European Union’s single currency, Hans-Olaf Henkel has had a radical change of mind about the failing euro.
Henkel, a former chief of Germany’s largest business federation, was a keen supporter of the euro when it was introduced.
In August 2011, however, with the stronger eurozone economies being pulled down by the heavily indebted weaker ones (the PIIGS: Portugal, Ireland, Italy, Greece and Spain), Henkel called on Europe to ditch the euro.
Calling his support for the euro “the biggest professional mistake I ever made”, this former leader of German business and industry declared that the stronger eurozone countries – Germany, Austria, Finland and the Netherlands – should ditch the euro and cut loose from the PIIGS and their desperately indebted economies.
Dismissing the efforts of German Chancellor Angela Merkel to prop up the euro by throwing billions of euros at the PIIGS’ debt, Henkel said that “instead of addressing the true cause” of the collapsing euro, Merkel was simply “prescribing painkillers”.
In effect, Henkel is proposing that Merkel and the political leaders of Austria, Finland and the Netherlands abandon their eurozone partners and set up a new version of the old German Deutsche mark.
The euro and eurozone project, he said, was meant to be a “one-size-fits-all” initiative but turned out to be a “one-size-fits-none” disaster.
“We need to focus on saving Europe – not the euro” he said. He added that the euro deprived indebted southern European countries of the ability to devalue a national currency, cut interest rates and boost exports. They were consequently unable to solve their debt problems alone and the stronger eurozone economies had been weakened by pouring billions of euros into the PIIGS.
It is notable that Henkel calls for a return, in all but name, to the Deutsche mark. Germany has presented France as it’s main partner since the inception of the euro. Overt economic or political domination by Germany would never have gone down well in southern Europe where tradition, spirit and sentiment generally run counter to the teutonic mindset. Partnering with Austria or Holland would not have offset southern European suspicions about saxon ambitions. But it was always clear that the power in Europe – economic and ultimately political – lay with the Germans. Henkel has lifted the polite fig leaf of Germany partnering with the French. “Come on guys”, he’s saying. “Let’s get a Teutonic-Scandinavian currency together and ditch those Latin countries.”
Could it happen? Could Europe ditch the euro? Could Germany revive its dead Deutsche mark? Well, why not? There are those who believe the old national European currencies never really died but just became dormant while the Great Euro Experiment took place. I live in France (and very lovely it is too) and my eye is occasionally caught by the little note at the end of my supermarket till receipts.
After the price of goods given in euros, there’s a discreet little line which gives some extra information. It’s the price in old French francs. I’m not sure what exchange rate it uses since the French franc doesn’t exist any more. But it’s a reminder that the franc, like the other old national currencies of Europe, could indeed be revived. After all, when was the last time you saw a supermarket bill translated from dollars into doubloons or pounds sterling into gold sovereigns? The fact that an old European currency like the franc is still appearing in such a way in public life and commercial and business life does rather suggest that the euro remains provisional – and that the former currencies, or versions of them, are not entirely dead. They could, perhaps, be future currencies too.
Source: http://online.wsj.com/article/SB10001424053111904007304576498063151794304.html