French hail potential of euro to end US hegemony

 

One brief clip in the television archives recounting the 50-year march to the euro brought roars of laughter from the French businessmen and financiers watching the film this week.

With his big nose, elephant ears and pontificating tone, then president Charles de Gaulle already looked comical in the 1960s black-and-white footage. But when he explained with devastating frankness that England was an industrial island, too different from agricultural continental Europe to join the European Economic Community, the businessmen split their sides.

The French Finance Minister, Mr Dominique Strauss-Kahn, got the other big laugh of the euro-celebrations on Monday evening and again it was at the expense of the English. The powerful emotion he had felt all day "did not diminish when I saw that in Frankfurt and Paris the markets rose five points, while in London they lost 1.3 points - and there's nothing wrong with that," Mr Strauss-Kahn said. The laughter at the closing session of Paribas bank's "24 Hours of the Euro" nearly drowned out the Minister's following sentence - "I don't wish our British friends any harm, but . . . "

Allusions to "les Anglo-Saxons" - the catchall French phrase for the US and Britain - have run like a subtext through euro speeches. It seemed politically incorrect to linger on Britain's decision to stay out of EMU, but French officials had no qualms gloating over their new-found freedom from "US hegemony". "The 21st century can truly be the century of Europe, in the same way that the 20th century was perhaps the century of the US," Mr Strauss-Kahn said. "We are in the process of reconquering a share of sovereignty that the size of our country - especially when compared with the US - had made us lose during this century, and particularly since the second World War."

Mr Strauss-Kahn said that with the euro, the strength of the dollar now mattered less to him - a roundabout way of saying that it mattered too much before.

This was echoed by Mr YvesThibault de Silguy, the French EU Commissioner in charge of economic and monetary questions. "For me, the arrival of the euro is a way of righting an imbalance," Mr de Silguy said. "This is happening almost automatically, since a large part of commercial and financial relations and reserves of central banks are going to switch to euros. The former situation, in which the currency of a country responsible for 16 or 17 per cent of the world's exports was used in 50 per cent of commercial exchanges and 80 per cent of financial transactions, is going to change . . . The US will not be able to continue financing its deficits by printing dollars."

In another theme dear to the ruling French left, Mr StraussKahn vaunted the superiority of the European welfare system. The arrival of the euro was "an affirmation to the rest of the world of what Europe and European identity are", he said.

"Whatever the virtues of the American system may be . . . there are things we do not want to copy because we have another model in Europe . . . a model of greater solidarity, which stresses social cohesion. Those who believe this model has a right to live, to enter into competition with the other, can rejoice that it now has the means to do so."

Lest anyone mistake him for a socialist spendthrift, Mr StraussKahn repeatedly stressed the "responsibility" of the medium-term economic plan he has just filed with the European Commission. The plan's three goals were "to finance the political priorities of the government, but at the same time to reduce the deficit and reverse the ratio between the debt and GDP in the year 2000, and to substantially lower obligatory deductions [from salaries]," he said. Over the next three years, France wants to attain "three magical figures": to reduce the ratio of public debt to GDP to 55 per cent for the first time in 20 years, to reduce public spending from 54 to 50 per cent of GDP, and to reduce obligatory salary deductions from 46 to 45 per cent.