There Is One And Only One Way To Save The Euro

Analysis: Greece or no Greece, the problem of the European single currency runs deeper. So no tricks -- no Northern and Southern or National versions of the euro -- can save it. Europe's leaders must decide if they are playing for keeps.

The procession has begun (Luther Blissett)
The procession has begun (Luther Blissett)
Jean-Marc Vittori

PARIS - Will the euro still exist in a month, a year, a decade? I accidentally answered the question a while ago at a bakery when an owl ended up in the palm of my hand. The owl was on the one-euro coin minted in Greece, much more gracious than the excessively geometric French tree, the imperial German eagle or the nostalgic Irish harp.

Instead of using it again, I put the coin away in a desk drawer without really knowing why. Now I do. I want to keep it for my sons as a reminder of a time when Greeks believed they could blend their money into a European project. And when Europeans believed they could share a currency without sharing their destiny.

A Greek tragedy

Let us start with Greece. The first act of this tragedy is well known. It is the individual refusal of taxation, deeply entrenched in the national culture (behavioral economists show for instance that Greeks aren't as sensitive as other populations to signals condemning the transgression of a norm). The second act was the country's entry into the monetary union, accepted for noble reasons (an anchoring in European democracy) and less noble ones (this little country can't cause a lot of damage even if it cheats a little).

The drama took shape in the third act when, reassured by Greece's euro-zone integration, investors blindly lent it mountains of money. It unfolded in the fourth act. Investors opened their eyes and suddenly stopped lending. The state suffocated, as did growth. This activated a vicious circle. The other European countries and the International Monetary Fund have taken over financing in exchange for austerity measures that hinder growth and keep the Greek state from sticking to its payback commitments.

For nearly three years, Greece has been struggling in an infernal circle with no exit. European authorities and investors have reduced the debt, spreading out the payment over time and accepting to take some losses. But as production dives, the state is bringing in fewer taxes - and paying back the debt is still as difficult and unsustainable.

A looming ‘Grexit"

For Greeks, the situation keeps getting worse. This year, per capita income will almost reach back down to 2001 levels - the year Greece joined the euro - even though they were superior by 20% in 2008. Voters have come to their conclusions. Only one out of six Greeks thinks that European integration strengthened the country, as against a third of the French or nearly half of Spaniards. And only one third of Greeks have a favorable opinion of the European Union (all of these numbers come from the very enlightening Pew Research Center poll from May).

Sooner or later, people will end up asking their leaders to follow the only path that has yet to be explored: leaving the euro. Motivated by desperation, this political choice will be an economic catastrophe, at least for half a decade. But history is full of decisions taken for apparently viable political reasons that led to predictable economic disasters. The declaration of war in 1914 is a perfect example.

The euro zone will be a fractured edifice after Greece leaves. Investors will inevitably wonder which country will be next. The situation would be different if Greece was a black sheep in a flock of white lambs. After the intruder's expulsion, everything would have been for the better. But it isn't the case. In the European flock, no sheep is white. Some are light grey, some are dark grey, and others are almost black. And situations can quickly evolve. No European state, not even Germany, can resist a "sudden stop" when investors immediately halt lending to a debtor they don't trust.

Scenarios with a northern euro and southern one, or with Germany's exit (very much discussed at the moment), or with national euros sheltered behind a common European euro - these are all very nice intellectual constructions. But they are doomed to remain imaginary for one obvious reason: money is an accumulated capital of trust - in other words, money's worth depends on how much faith you put into it. You can't play with money like you do with a political platform or a company business plan. You can't change monetary systems every five or ten years, because it's too complicated. And as history shows once again, monetary manipulations are always punished.

How the euro might survive

There is only one solution to keep investors from betting tens, even hundreds of billions of euros on who will be the next to quit the single-currency pact: capital control. Once banned by the IMF, the tool has recently made a comeback, and China and Chile seemed to have successfully wielded such limits and regulations of capital markets. But it goes against European Union rules and against its underlying philosophy.

The euro is therefore doomed to explode. Unless…unless Europe really becomes a union. The necessary elements have been mentioned over the course of the latest economic news and catastrophes: a common debt ("Eurobonds'), a banking union, federal intervention in country budgets, common social systems (such as an unemployment net) to organize transfers between healthy and unhealthy regions…

To save the euro and, the work of the past 50 years of European construction, it is necessary to do all of this at once, in order to build a real federation, which was Europe's founding fathers' goal. It isn't impossible. But this revolution cannot take place without popular consent and without the people. Otherwise, the European dream threatens to vanish.

In the meantime, to complete my collection, please send me the beautiful Finnish euro with its marsh berries, the Slovakian cross and the superb Palazzo publico of the San Marino Republic.

Read more from Les Echos in French.

Photo - Luther Blissett

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What It Means When The Jews Of Germany No Longer Feel Safe

A neo-Nazi has been buried in the former grave of a Jewish musicologist Max Friedlaender – not an oversight, but a deliberate provocation. This is just one more example of antisemitism on the rise in Germany, and society's inability to respond.

At a protest against antisemitism in Berlin

Eva Marie Kogel


BERLIN — If you want to check the state of your society, there's a simple test: as the U.S. High Commissioner for Germany, John Jay McCloy, said in 1949, the touchstone for a democracy is the well-being of Jews. This litmus test is still relevant today. And it seems Germany would not pass.

Incidents are piling up. Most recently, groups of neo-Nazis from across the country traveled to a church near Berlin for the funeral of a well-known far-right figure. He was buried in the former grave of Jewish musicologist Max Friedlaender, a gravesite chosen deliberately by the right-wing extremists.

The incident at the cemetery

They intentionally chose a Jewish grave as an act of provocation, trying to gain maximum publicity for this act of desecration. And the cemetery authorities at the graveyard in Stahnsdorf fell for it. The church issued an immediate apology, calling it a "terrible mistake" and saying they "must immediately see whether and what we can undo."

There are so many incidents that get little to no media attention.

It's unfathomable that this burial was allowed to take place at all, but now the cemetery authorities need to make a decision quickly about how to put things right. Otherwise, the grave may well become a pilgrimage site for Holocaust deniers and antisemites.

The incident has garnered attention in the international press and it will live long in the memory. Like the case of singer-songwriter Gil Ofarim, who recently claimed he was subjected to antisemitic abuse at a hotel in Leipzig. Details of the crime are still being investigated. But there are so many other incidents that get little to no media attention.

Photo of the grave of Jewish musicologist Max Friedlaender

The grave of Jewish musicologist Max Friedlaender

Jens Kalaene/dpa/ZUMA

Crimes against Jews are rising

Across all parts of society, antisemitism is on the rise. Until a few years ago, Jewish life was seen as an accepted part of German society. Since the attack on the synagogue in Halle in 2019, the picture has changed: it was a bitter reminder that right-wing terror against Jewish people has a long, unbroken history in Germany.

Stories have abounded about the coronavirus crisis being a Jewish conspiracy; meanwhile, Muslim antisemitism is becoming louder and more forceful. The anti-Israel boycott movement BDS rears its head in every debate on antisemitism, just as left-wing or post-colonial thinking are part of every discussion.

Jewish life needs to be allowed to step out of the shadows.

Since 2015, the number of antisemitic crimes recorded has risen by about a third, to 2,350. But victims only report around 20% of cases. Some choose not to because they've had bad experiences with the police, others because they're afraid of the perpetrators, and still others because they just want to put it behind them. Victims clearly hold out little hope of useful reaction from the state – so crimes go unreported.

And the reality of Jewish life in Germany is a dark one. Sociologists say that Jewish children are living out their "identity under siege." What impact does it have on them when they can only go to nursery under police protection? Or when they hear Holocaust jokes at school?

Germany needs to take its antisemitism seriously

This shows that the country of commemorative services and "stumbling blocks" placed in sidewalks as a memorial to victims of the Nazis has lost its moral compass. To make it point true north again, antisemitism needs to be documented from the perspective of those affected, making it visible to the non-Jewish population. And Jewish life needs to be allowed to step out of the shadows.

That is the first thing. The second is that we need to talk about specifically German forms of antisemitism. For example, the fact that in no other EU country are Jewish people so often confronted about the Israeli government's policies (according to a survey, 41% of German Jews have experienced this, while the EU average is 28%). Projecting the old antisemitism onto the state of Israel offers people a more comfortable target for their arguments.

Our society needs to have more conversations about antisemitism. The test of German democracy, as McCloy called it, starts with taking these concerns seriously and talking about them. We need to have these conversations because it affects all of us. It's about saving our democracy. Before it's too late.

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