German Euro Founder Calls for Breakup of “Catastrophic” Single Currency
Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.
Oskar Lafontaine, the German finance minister who helped to launch the euro, has called for the breakup of the single currency to let peripheral Europe recover from its economic slump, warning that the current trajectory of the euro is “leading to disaster”.
Oskar Lafontaine, the German finance minister who helped to launch the euro, has called for the breakup of the single currency to let peripheral Europe recover from its economic slump, warning that the current trajectory of the euro is “leading to disaster”.
Citing consistently weak data and rising unemployment, Lafontaine, who was the German finance minister when the euro was introduced in 1999, said on his website that struggling eurozone countries have not been able to devalue their currencies to help them cope with the economic crisis that has seen several of them slip into recession.
Proposing a restructuring of Europe’s banking system and stricter controls on lenders, Lafontaine also took particular aim at German Chancellor Angela Merkel, writing that she will only “awake from her self-righteous slumber” when the troubled countries unite and force EU policy changes at Germany’s expense.
“The economic situation is worsening from month to month, and unemployment has reached a level that puts democratic structures ever more in doubt,” he said.
“The Germans have not yet realised that southern Europe, including France, will be forced by their current misery to fight back against German hegemony sooner or later,” he added.
Related: Bundesbank Doubles Their Reserves, Warns Eurozone Crisis “Is Not Over”
Lafontaine’s comments come as French finance minister Pierre Moscovici declared that “austerity is finished”, fuelling speculation of souring relations between Paris and Berlin, after it won an appeal that will give France two extra years to meet the EU deficit target of 3 percent.
“Austerity is finished. This is a decisive turn in the history of the EU project since the euro. We are seeing the end of the austerity dogma. It is the victory of the French point of view,” Moscovici said last weekend.
Related: Hollande Admits Deficit Promise Cannot Be Met
Related: Can Hollande Change the Balance of Power in Europe? : Zaki Laidi
While he backs the Economic and Monetary Union, Lafontaine said “hopes that the creation of the euro would force rational economic behaviour on all sides were in vain”, adding that the policy of forcing Spain, Portugal, and Greece to carry out internal devaluations was a “catastrophe”.
On Tuesday, European Commission president Jose Barroso insisted that achieving a “deep and genuine monetary union” was a priority and called for greater political integration within the 27-member bloc.
Speaking at an EU conference in Brussels, Barroso stressed that the financial crisis was not a crisis of the euro, but rather “an economic and financial crisis in individual countries that share the same currency and therefore impacts on the eurozone as a whole.” The euro remains a “credible, stable, and strong currency”, he said.
Lafontaine withdrew from politics in 2010 but remains an influential member of the Left Party, the successor to former East German communists. Often seen as a man of extremes, critics labelled him “Europe’s Most Dangerous Man” after he called for the “end of the nation state” in favour of a “united Europe” in 1998.
