19/05/2012
A survey of US economists and their views on the EMU and euro from 1989â2002 found that the euro had gone much better than many expected. Academic economists, overall, were more skeptical than Federal Reserve economists who adopted a more pragmatic approach. The skepticism appears to have resulted from the strong influence of the optimum currency area theory; other reasons include similar skepticism of monetary unification as an evolutionary process as opposed to a political project that ignored fundamental elements of economics and a distrust of pegged currency exchange rates (as opposed to floating exchange rates) as a basis and an alternative to a single European currency.
Wikipedia
A tight fiscal framework, coupled to closer political union, is an inevitable vital component of a successful economic and monetary union. This truism was one that Britain has always fully understood, which is why we were - and still are - right to stay out. However, eurozone countries seem belatedly now to understand the need for a much greater political and fiscal component in collective economic management. This is not a radical departure but what was needed all along - and what might have saved Greece from itself.
Ben Harris-Quinney MSc & Christophe Scholer, Bow Group (Undated)
After decades of hesitation and doubt, Europeâs single currency was launched in January 1999. Peter Sutherland, chairman of Goldman Sachs International and a former EU Commissioner said it was the EUâs most important political project in 40 years But many, especially in the US and the UK, questioned whether the new single currency would survive ⦠With hindsight, those fears now look exaggerated.
The euro has nevertheless been a greater success then (sic) many predicted. Politically, the divisions in the EU over such issues as the constitutional treaty would probably have been greater had it not been for the euro. And the euroâs existence has reduced the risk of political problems becoming compounded by currency crises; it is thus a cohesive and disciplining force.
John Adams and Stewart Fleming,
Europe's World, Spring 2008
Germany is determined to defend the euro as a political project that glues Europe together, its foreign minister said Thursday, dismissing euro bonds or other devices as a way to shore up the common currency. Europeans, and not just Germans, understand that only solid economies can serve that goal, he said.
"Anybody who wants to destroy the euro will realize that he cannot succeed against us and our partners", Foreign Minister Guido Westerwelle said in an interview.
Judy Demsey,
New York Times 9 December 2010
But the causes of the euro crisis are more deep-seated than that. The monetary union is a fair-weather construct, as a number of economists said from the beginning. American economist Milton Friedman, for example, predicted that the euro would not survive its first major crisis, and later, in 2002, he added: "Euroland will collapse in five to 15 years".
For these reasons, the euro crisis, as suddenly as it occurred, was expected. However, the warnings had been ignored and treated as a minor nuisance. More than anything, the euro was a political project. Its advocates, most notably then German Chancellor Helmut Kohl and then French President François Mitterrand, wanted to permanently unite the continent's core countries and embed Germany, which many neighboring countries perceived as a threat following reunification, in the European community.
Der Spiegel, 20 June 2011
The euro is "a political project", said Erik Nielsen, global chief economist at UniCredit Group in London. "The market may not have believed them, but leaders have repeatedly said they will do whatever it takes to keep it together".
Bloomberg 4 October 2011
The euro was a political project meant to unite Europe after the Soviet collapse in a sphere of collective prosperity that would lead to greater federalism. Instead, the euro seems to be pulling Europe apart.
Steven Erlanger,
New York Times, 19 October 2011
Gardiner says the decision by British citizens years ago to keep the pound instead of adopting the euro was a smart one. "The euro - the idea of a single currency - is a political project and it is an artificial approach that goes against centuries of European history". Gardiner says frantic attempts to save the eurozone and the euro will actually have worse outcomes than letting the currency ride off into history.
The euro is not a sudden economic experiment. Not sudden: because it is based on fifty years of preparation. Not purely economic: because the euro is, at bottom, a political project. Those are the two keys to the astonishing success of the euro's launch, and to its future.
President Van Rompuy, 15 February 2012, at the occasion of the launch of a campaign about the euro at the University of International Business and Economics, Peking
Unfortunately, the question of Europe's purpose is being ditched as the desperate effort continues to save a buck or two from the common currency project. The sums involved are obviously not negligible, as UBS and others remind us, and are worth the effort. The problem about the eurozone crisis is that no-one dares to ask the question if the euro is still a political project, as its founders tended to believe, or if it is today about nothing else than damage control, keeping the flood gates closed to preserve the much cherished vestiges of prosperity.
Pawe? ?wieboda, European Council on Foreign Relations, 16 February 2012
But European states and European voters have never really been explicitly confronted with the need to choose between a more pragmatic European economic union and the idea that it might evolve into a single political community. The fudge on monetary union that gave Europe a currency, but not the fiscal institutions to manage its underlying economic foundations is a symptom of this problem.
Lord Mandelson, The Hands Lecture, Mansfield College, Oxford, 4 May 2012
If the euro fails, Europe fails, Angela Merkel said at the end of last year, coming clean on what was at stake. But while it is still alive, the euro must be counted a failure. Because the single currency was always about a political project as well as a printing press, and faced with their first major crisis, eurozone politicians didn't even try to combine the two.
