Throughout August with the news media broadcasting in unison the message that the euro’s troubles were over and to all intents and purposes, fixed, the markets were telling a very different story. It was exactly at the beginning of August that the cost of insuring Ireland, Greece and Portugal began to climb again. They are all at higher levels than they were in the spring, when crisis was on everyone’s lips. Such are the ticks of media perception.
Following a series of round table events organised by Open Europe in the Netherlands, Dutch daily NRC Handelsblad features an interview with Open Europe’s Chairman Lord Leach. Asked about the euro, Lord Leach replied, “I’m not against European cooperation…A complete free trade area would be perfect, that brings about prosperity. But a monetary union is also a political union and there it goes wrong. The European system of supranationality comes at the cost of democracy.”
He added, “More and more Europeans are starting to express their dissatisfaction with their lack of influence on European decision making. One of the most important examples is Germany. A considerable part of the population didn’t think it a good idea that Germany rescued Greece.”
When asked about the future of monetary union, Lord Leach said, “Politicians must understand that this isn’t a temporary crisis, but a permanent problem. It is no banking or debt crisis, but a problem of competitiveness. The South of Europe is too far behind on the North and will never be able, within one monetary union, to close the gap…I can not think of any satisfactory solution which does not lead to a breaking up of the eurozone as it is now. That could however be either controlled or uncontrolled. Controlled means that vulnerable countries would be led to the exit…An uncontrolled exit means that financial markets force a break-up.”