Land som Kina, Russland og Brasil har bygget opp store valutafond som de nå investerer i euro for ikke å være avhengig av USA. Det fører til at euroen styrker seg, med alvorlige følger for eksporten i land som Italia, Spania og Frankrike.

Det heter at det nå går bedre i eurosonen, men dette er blår i øynene, skriver Ambrose Evans-Pritchard.

China’s central bank has been buying fistfuls of euros as it accumulates a world record $3.7 trillion in foreign reserves, and its motives are not entirely friendly. So have the central banks of Russia, Brazil and the Middle Eastern oil sheikhdoms, all aiming to cut reliance on the US dollar, part of a $9 trillion surge in reserves leaking, with tidal force, into the euro.


This is why the euro has long been too strong for its own good. It surged a further 9 per cent against the dollar from June to early October, before hitting the wall this week. It has risen 28 per cent against the Japanese yen in a year. This is a bizarre state of affairs for a currency bloc struggling out of recession. Weak prospects normally mean a weak currency, but there is nothing normal about Europe’s monetary union.

The euro exchange rate is far too high for two-thirds of the euro states, a key reason why unemployment hit an all-time peak of 12.2 per cent in September. It is pushing Europe’s crisis states into Thirties-style deflation, making it almost impossible for Italy, Spain and Portugal to dig their way out of debt.


France’s industry minister, Arnaud Montebourg, asks why Europe is letting the euro stay so high, alone in refusing to protect its societies while others steal a march. The US Federal Reserve and the Bank of England have nudged down their currencies by printing money. The Bank of Japan has carried out a devaluation putsch. The Swiss have trumped them all, printing à outrance to cap the franc. “Every 10 per cent rise in the euro costs France 15,000 jobs. Britain, the US, Japan, all have a strategy of monetary stimulus, but in the EU we have nothing but hard money. The currency doesn’t belong to bankers, and it doesn’t belong to Germany, it belongs to all members of the eurozone,” Mr Montebourg said.

A Deutsche Bank study said the euro “pain threshold” for Germany is $1.79. It is $1.24 for France, and $1.17 for Italy. It ended last week at $1.35 to the dollar. This means Germany is sitting pretty, and it dominates the policy machinery. Meanwhile, Italy screams with pain, its industrial output still 26 per cent below its 2008 peak. Italy’s EU commissioner, Antonio Tajani, warns of “a systemic industrial massacre”.


The north-south split has many causes. Germany sells machines and prestige cars with a fat profit margin. “Club Med” (the south) competes lower down, against China. Yet it is also because Germany screwed down wages in the early years of EMU, gaining 25 per cent in competitiveness against its peers. How this happened is an old story. But the consequences are toxic, so toxic that François Heisbourg, French head of the International Institute for Strategic Studies, is calling for the euro to be “put to sleep” in order to save the European project. “We must face the reality that the EU itself is now threatened by the euro,” he said.

Mr Heisbourg is pro-Europe. His point is that conflicting narratives of the crisis are emerging, pitting creditor and deficit states against each other. He compares them to the black legends after the First World War, when twisted views fed an ideological backlash, and fears that it will end in “a nervous breakdown and an uncontrolled disintegration of the euro”.