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Thursday, 10 November 2011

Will the crisis in Italy become the end of the Euro? I doubt it; I think in the end the reason will win in Europe.

It are very exciting times for all bell-ringers that want to ring the doomsday clocks for the Euro. With sometimes hardly hidden gloating, the Euro-bears declare the common European currency as being ‘dead’, while cheering on the smartness of the UK and the Scandinavian countries not to take part in it.

And to the objective eye, the Euro seems indeed like a fatal error, if you read for instance today’s news at Reuters (

Crisis in Italy spurs fears of euro zone break-up

Political and economic crisis in Italy spurred fears of a split in the euro zone with borrowing costs for Europe's third biggest economy near unsustainable levels and the bloc unable to afford a bailout.
The escalating crisis prompted European Commission President Jose Manuel Barroso to issue a stern warning of the dangers of splitting the zone. EU sources told Reuters French and German officials had held discussions on just such a move.
"There cannot be peace and prosperity in the North or in the West of Europe, if there is no peace and prosperity in the South or in the East," Barroso said.
German Chancellor Angela Merkel weighed in with a call to arms. She said Europe's plight was now so "unpleasant" that deep structural reforms were needed quickly, warning the rest of the world would not wait. "That will mean more Europe, not less Europe," she told a conference in Berlin.
EU sources told Reuters German and French officials had discussed plans for a radical overhaul of the European Union that would involve establishing a more integrated and potentially smaller euro zone.
The discussions among policymakers in Paris, Berlin and Brussels raise the possibility of one or more countries leaving the zone, while the core pushes to deeper economic integration.
In a speech in Berlin, Barroso said Germany's gross domestic product could contract by 3 percent if the 17-member zone shrank and its economy would shed a million jobs.
It is indeed hard not to feel desperate on the future of the Euro and the Euro-zone. And the (secretive) talks on shrinking the Euro-zone do not help in regaining the trust of the international financial world.

But in the most desperate times, the Euro-zone might finally come up with the tough and decisive politics that is necessary to truly save the Euro. That is not as much a question of ‘hoping for the best’, but especially the feeling that a return to the 20th century’s instability in Europe is not an option: for nobody.

Europe simply cannot afford a continent of two speeds, where ‘Africa’ starts below the French, Swiss and Austrian borders.

Europe cannot afford a Europe where the North-Western European countries belong to the first world and the PIIGS belong to the third world, with a third world economy and a third world financial system.

Europe cannot afford that the PIIGS (minus Ireland) return to political instability and perhaps even dictatorship, like these countries had less than 40 years ago (well in my own lifetime).

Europe cannot afford the borders, customs posts, the endless filling in of forms and the zillion currencies to return, effectively dividing the small continent.

And the strong Euro-countries would not be so strong when the weaker Euro-countries would not be there: the French inspire the Italians, the Irish inspire the Finns, the Germans inspire the Dutch and the Greeks inspire the Spanish, thus triggering an outburst of creativity, quality and competition that is second to none in the world.

Yet, there is a big problem. That is undeniably true. And the solution seems farther away than ever, while politics seems to be fighting on the stupidest details, missing the big picture. This might be the end for the Euro eventually.

But don´t ring the doomsday clocks to soon: the split up of the Euro-zone in two different Euro-zones will not happen, as the consequences of this policy would be too dire. It would lead to a meltdown of the European banks and to the PIIGS devaluating itself into oblivion, without solving their underlying problems, effectively ruining the richer countries too.

The keywords for Europe must be: fight the political dividedness and toothlessness, fight the financial instability causing the extreme interest spreads, fight the giant unemployment and economic growth close to nought, in Spain, Greece and Portugal and some East-European countries.

And last but not least: fight the desperateness and hostility towards people from other countries that is getting into the hearts and minds of the European citizens.

Politics must find a way out of this economic mess by making the strong countries help the weak more than they do now; not by administering those countries more and more debt pills, but by helping them to recover their economies. 

Maybe it´s time for another Airbus. Because the current Airbus is a living proof of the fact that a united Europe can achieve wonderful things. 

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