Eurozone and United States

As we are getting ever closer to the hypothesis of a Greek default, two lines of argument are beginning to be developed by what we can call eurolatrists of all ilk: the « catastrophe » which an exit from the Euro would entail for Greece, but also, and more subtly, the fact that such an exit, by weakening if not even compromising the survival of the Euro, would actually play into the hands of the United States. This argument is now being put forward by politicians of the centre-right (François Fillon and Alain Juppé), as well as of the centre-left (essentially at the “Socialist” Party).

Concerning the first argument, I am sending readers back to what I have written, and what everybody knows. The situation of Greece – outside of the debt problem – is now relatively sanitized, with a quasi “primary excess” (in other words, the expenses « outside of the debt » are covered by the receipts) and a very, very slight deficit of the balance of trade. A depreciation of the new currency (the Drachma ?) of 20% to 30% would be sufficient for Greece to find itself in excess from the standpoint of the balance of trade. As for the risk of inflation, taking into account the extremely heavy deflationary pressures presently at work in the Greek economy, it is most reduced. A depreciation of -30% should entail a rise in prices of 6% during the first year and 4% during the second. It’s therefore the second argument which appears the most « interesting » because it seeks to put the reality of facts upside down.


  1. Today (in fact since 2010) the United States have taken position in favor of the Euro

It is the United States who put the pressure on the IMF to soften its position. But we are no longer in the situation of the 1980s or 1990s. The United States are no longer all-powerful within the IMF, even if they retain a dominant voice. This explains in part the multiple swerves in communication of this institution which, on the one hand, acknowledges that the Greek debt is unsustainable, and on the other demands payment of the interests. But one must know that the loans of the IMF are generally made outside of the market and that, in compensation, these loans cannot be renegotiated except wholesale, if all the actors (and all the lenders) are in agreement over such a renegotiation. Moreover, Mrs Christine Lagarde, the present head of the IMF, must in addition take into account not only the German voices within the organisation, but also the diversity of opinions in the various departments of the IMF. To present the IMF as an « obstacle » to a settlement is false. The true obstacle is not on the banks of the Potomac but in Berlin. To say this doesn’t excuse the errors which have been made by the IMF on the Greek question, but must be conducive to relativizing them. The European Commission and the European Central bank have had policies far more nefarious than the IMF, and their consequences have brought far more disasters than those of the IMF.

  1. The United States actually have a twin interests in the survival of the Eurozone.

For trade relations first of all, the fact that a « European » currency includes Germany implies that this currency will be over-evaluated in relation to the US dollar. This can be verified again at present. If the Euro where to fizzle, which is now probable in the case of a default of Greece – the fact that this possibility has been admitted a few days ago is an enormous step forward – the movement of national currencies would go the way of a depreciation for Portugal, Spain, Italy , France and Belgium, and the way of an appreciation for Germany, the Netherlands and Finland. As it happens, the United States buy industrial goods (machinery and cars from Germany) and sell products to the other countries. This movements in parities would limit their capacity to sell their products (in Southern Europe) but would render purchases from Germany more expensive. So the United States have no commercial interest in a break-up of the Euro, to the very countrary.

From a global monetary point of view, the crisis and the speculation on the Euro serve as a shield for the US Dollar which, if all necessary attention were focused on it, would show signs of weakness far more important than it does at present. An ailing Euro, kept alive by artificial operations, is in reality in the interest of the United States. Moreover, if one looks at the evolution of the currencies used as reserves by the central banks, one notices that, until 2007, the dollar has rather profited from the existence of the Euro. Its share has slightly increased. To present the Euro as an « anti-Dollar » is a travesty of facts as can be seen in the following graph:

Graphique 1

A - Euro dans res BC

Sources : FMI

  1. Yet it is clear that we are living through the twilight of a Dollar dominated international monetary system. But Europe (and more precisely the European countries) is relatively mute when it comes to the international monetary system.

The European countries are monopolized by attempts to keep alive a Euro which has long passed it shelf-life. In fact, the existence of the Euro is in reality an obstacle to the emergence of a coherent European position on the reform of the international monetary system. Whereas in the 1960s, then 1970s and 1980s, France and Germany were making very precise demands concerning a reform of the international monetary system, since the Euro has been put in place, in fact since the period preparatory to its implementation, these countries have shone through their absence from a true reflection on the architecture of the international monetary system. The two countries have rallied to the idea of an absolute liberalization of the movement of capitals, at the risk of discovering, as is happening in the case of the Greek crisis, that such a liberty is not without fetters for the existence of an independent monetary policy. France and Germany have left to the emerging countries, concretely to Russia and China, the initiatives of questioning the present system, the defects of which are forthwith evident. That the role of the emerging countries has become important was unavoidable, and it is even good news, as it allows one to think of a possible reform in the direction of a system less dependent on American might. But the silence on this question of France and Germany, to mention but them, will have consequences. Deserting this combat will be to our own expense. One can therefore consider that the existence of the Euro, far from being at the basis of a challenge to the role of the Dollar and to the international monetary order, contributes in fact in reinforcing it.

  1. 4This silence in face of the United States is combined with complacency towards treaty projects (such as TAFTA) the nefariousness of which are becoming more and more evident.

It is evident at present that the United States are seeking to impose onto the European countries both a reduction in norms (particularly in the sanitary and ecological domains) as well as a predominance of private arbitration courts over the rights of states. When François Fillon made his declaration about the necessity of a « European revolt, » this was probably what he had in mind. But we must understand that he is pretty much alone among the « Republicans” to defend such a position. The socialist leaders too seem to be ready to any compromise which they will disguise under the mantle of a « defence of European unity. » One can clearly measure here that the Euro and the « European » dimension conceived as a supranational framework, are an obstacle to any really independent politics and lead us to submission, in fact if not in right, to the United States.


Jacques Sapir

Ses travaux de chercheur se sont orientés dans trois dimensions, l’étude de l’économie russe et de la transition, l’analyse des crises financières et des recherches théoriques sur les institutions économiques et les interactions entre les comportements individuels. Il a poursuivi ses recherches à partir de 2000 sur les interactions entre les régimes de change, la structuration des systèmes financiers et les instabilités macroéconomiques. Depuis 2007 il s'est impliqué dans l’analyse de la crise financière actuelle, et en particulier dans la crise de la zone Euro.

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