In praise of the euro’s powers

Since its introduction, the euro has been touted as the rival of the US dollar as a global currency. But whether it succeeds in displacing the dollar as the dominant global currency, or whether the two will be roughly equally dominant, depends mostly on economic factors, and less on political ones. Ilias Kallioras, an MP with the opposition New Democracy party, admits that he was late in completing his book. In this sense, this delay was crucial, for, had it appeared earlier, the book would not be titled «Euro: Shock and Awe» (Livanis), in deference to the US intervention in Iraq, but something else. As it is, the author took advantage of the delay to add five chapters to his book. Kallioras, 42, has degrees in both economics and politics, but his analysis is undertaken exclusively from the political point of view. This detracts somewhat from the force of his argument, which is that with the introduction of the single currency, Europe has become an economic superpower, on a par with the United States. As any economist will object, just the fact that a single currency exists is no indication of economic power. And all those who have followed Europe’s current tribulations and inability to grow at a faster pace than the United States know that Europe still has a long way to go to become an economic superpower. This lack of economic perspective is evident in various segments of the book. Kallioras sets out a scenario in which OPEC would adopt the euro as the oil trading currency. He says that this would lead to very high inflation levels in the United States and otherwise destabilize the US economy. «With its ‘own’ government in Iraq, the US can increase, if it wants, oil production and break OPEC’s quota system.» As we know, largely because of repeated sabotage, oil production in Iraq has not recovered. Kallioras is a self-declared European federalist and, while by no means anti-American, adopts the position that Europe ought to adopt a common defense system quickly in order to become the US’s equal partner. In other words, he is an enthusiastic supporter of the so-called «initiative of the Four» (including France and Germany). In a bit of partisanship, he hails his own leader, Costas Karamanlis, as the one who pushed the Simitis government into supporting the common defense initiative. Perhaps the timing of publication was bad, but knowing the fate of this initiative, we must conclude that the author’s enthusiasm was premature. By the way, his thesis that the invasion of Iraq was, in fact, a war against the euro, appears far-fetched. The second half of the book is devoted to a history of the European Union which is useful but has little to do with the examination of the strengths and potentials of the euro. All in all, this is a book with some interest, in many respects well-informed, but uneven and, because of its superficial economic analysis, often misleading in its conclusions.

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