The recent problems and the seeming implosion of the euro, is I suggest something, which I have come to the conclusion, is something, which has been looming and brewing up for some time - the past several years, in fact, ever since its inception and “virtual” birth on 1st January 1999.
On 1st January 1999 the euro came into being in the non-physical form of traveller’s cheques electronic banking and transfers, with the currency coming into full effect - in the form of bank notes and coins; firstly to large retailers and later on to the smaller retailers at midnight, 1st January 2001. The full roll-out of the euro came into being on 1st January 2002.
It is worthy, at this stage, to note that the financial integration of Europe actually goes back to the late 1960's - 1969 in fact, when the then (former) EEC members established the need for closer fiscal and economic cooperation and the co-ordination of economic policies and, thus, reduce the fluctuations of financial exchange rates.
The EU has now become an over-inflated, bureaucratic and bloated monster
Today the EU now consists of a staggering twenty-seven member states; with another six countries waiting the wings to join the club - from cultures as diverse as from Iceland to Turkey, to the (former) Yugoslav Republic of Macedonia, Montenegro and Croatia.
In other words, the EU, which was the former EEC, has in fact now grown out of all proportion and recognition - it has become far too top-heavy, with bureaucracy and all that goes with it. Actually, it has become over-inflated - period.
It has become nothing more than a frighteningly huge and sprawling melting pot of bureaucrats and plutocrats, as well as career MEP’s, who have all but failed in their duties of putting the interests of their counties citizens first - in the name of fiscal and financial integration.
And, what’s more, having been in the in the company of MEP’s, in Brussels, some years ago - I have since strived to try to understand exactly what they do; to justify their tax-payers funded expense accounts, surreal salaries, lavish (from morning till evening) dining habits, chauffeur-driven Mercedes, five star hotel accommodation.
All of which, I witnessed and experienced, with my own eyes. And all of that is without even going on to mention the huge amount of paper - tons of it, on a daily basis, generated by each and every person working within the offices of the EU from every office, on every floor.
In other words…the whole EU, as an institution – as it stands today, reminds me rather of George Orwell’s, “Animal Farm.” Nothing more. Nothing less. Because that is, perhaps, exactly what it has morphed into? Eurocrats, working in sparkling, modern offices: chauffeur-driven Mercedes cars, fine five star hotel breakfasts, lunches and evening dinners and all without the MEP’s ever once having to pay for a thing out of their own pockets/salaries.
And the people, lower down the pecking order – the ordinary EU citizen – struggling to make an honest living and with the realities of everyday life has now come to recognise it as being just so. Having just kissed goodbye to their livelihoods, standards of living and for the many…everything they have ever worked for; as a result of now having drastic austerity measures thrust upon them.
But it has taken a worldwide financial banking and credit-crunch crisis – started some two-three years ago on Wall St, which then rapidly contaminated the rest of the world; to awaken people up to that fact and people are now saying enough is enough and hence the riots and strikes breaking out in many of the EU member states.
The overlooked inter-cultural factors
In the grand rush for financial and fiscal integration, did any one of the politicians, who fell over themselves, actually stop – stop: to think about cross-cultural differences? I suggest not.
While, on paper, and on the face of things – financial and fiscal integration and unification, in Europe, seemed like a great idea…which indeed it was…for big and medium-sized international businesses, carrying out daily cross-border financial transactions.
The ordinary citizen somehow got either overlooked or their opinions just trampled upon; by their respective country’s leaders and in the race to join the euro-zone they threw to one side their respective country’s heritages and deep-rooted cultures and mentalities.
Therefore, when the drachma, for example, and the peso – at the stroke of a pen and the hands of a clock, finally disappeared – so too did a whole culture, mentality, history and a country’s national identity; associated with their “old Europe” currencies.
And ordinary EU citizens finally woke up, one morning, with a new currency foisted upon them called the euro, which they had no love for and, ultimately, knew little or nothing about. Is it little wonder then that the UK, as well as, Demark refused to join the euro zone, when all things considered?
The UK refused to join the euro-club, because politically it was far too much of a hot potato and an absolute no win situation for the government of the day to even think about imposing it on their electorate; especially after having watched the results of the Danish referendum on whether to join the club or not and after the Danes gave an overwhelming “no” vote on it.
The question is…why did the UK and the Danes refuse steadfastly to join up to the club? And the answer really quite simple…the UK and Danish citizens felt that they were about to sacrifice their culture and traditions, for a rather faceless and bureaucratic quagmire and we weren’t going to have any of that – nor were we about to give up a key ingredient to our national identities. I.e. Our currencies.
Let us imagine a purely hypothetical example of what I am getting at here. If we take the land mass of Russia, for example…it is physically attached to the land mass of the European continent.
However, could one ever imagine telling a Russian that he or she would have to give up their beloved Russian ruble currency, in favour of the euro; order to join the EU?
I put this question to one Russian business man and he laughingly replied, “I believe we have far better things to amuse ourselves with – it would never happen.”
Of course – Russia joining the EU is not going to happen any time soon – if, indeed, it ever will? But, on the other hand, who knows how things shall be say…twenty years or so from now, as far as that is concerned.
For no one could ever have imagined, twenty years or so ago that the Berlin Wall would come tumbling down and that Western and Eastern Germany would have become re-united.
In a nutshell…no one reckoned on the sheer power of “people power,” to radically change the geographical boundaries of Europe for ever – wresting control out of the hands of the politicians and heading out into uncharted waters.
Thus taking the Western powers completely by surprise and despite the best efforts of the UK government, of the day, from trying to prevent German re-unification happening. But, happen…it did.
Your country’s national currency is something you are born into
Given the fact that we do not have a choice as to where and when we are born, your country’s national currency is something you are born into, and unless your parents decide to immigrate (if they have the financial means and will) while you are still at a very early age – it is something you grow up with.
You become familiar with it and dealing and purchasing things with it, become second nature. In short, it becomes a part of whom and what you are. It becomes a huge part of your cultural background and identity.
For the US dollar means as much to an American citizen as the UK’s pound sterling does to a UK citizen. In other words – for the majority of people, who grow up with their national currencies…there is, I suggest, an element of national pride attached to it.
The euro project looked good on paper, but it was badly flawed
After two recent (WW1 and WW11) and devastating wars in on the European continent – claiming the lives of hundreds of thousands of people…no one can blame “Old Europe,” for seeking ways that such devastation of war and hunger should never happen again; and that there should be a lasting peace between the member European states and further, mutual economic cooperation and growth. Hence the EEC was born, which later morphed into the bureaucratic and rather expensive to maintain monster, which has now become the EU.
A single EU currency, to the politicians and economists, therefore, seemed like a logical and perfectly workable and…even acceptable conclusion – the icing on the cake, so to speak, to complete and ultimate EU integration. In deed it was pitched, packaged and sold to the various countries’ citizens as a sort of final solution – to complete and lasting harmony, right across the European continent.
However, rarely were people given the chance to air their views on the potential pitfalls of such a move and those who did publicly air their views were rubbished as doom makers and luddites. There were not many EU countries, who even offered their citizens the chance of having a referendum on the topic.
And herein lays its (the euro project’s) essential flaw – the ordinary EU citizen was neither given a proper chance nor platform to express their views at the start, because the decision had already been made.
And things like national referendums were wither considered signs of weak political will and/or control and a no-win vote. Therefore, things like giving the people a chance to express their views, on the introduction of the euro, were best left alone.
The recent riots in Greece and Spain, as the euro zone goes into financial meltdown reflect people’s growing discontent with a euro project which is now failing and falling apart at the seams.
And the reasons, I suggest, have as much to do with national cultural attitudes towards the euro as they have to do with basic economics. The people have, quite rightly, had enough and they are now making their opinions loudly known and felt – they are taking to the streets.
And, moreover, the crisis has also thrown up the deep cultural divisions of attitudes to people living and working in Northern Europe and Southern Europe. There are now even cracks appearing between Germany and France on how to deal with the problem.
How does this all end?
How this all ends is anybody’s guess. There are elections coming up in France and the Sarkozy-Merkel pact could well come to an end as a result. And, moreover the riots, in Greece and Spain, I feel are but a mere foretaste of further unrest to come. Therefore, how this all ends and the future of the euro finishes up is, I suggest, anybody’s guess for now, at least.
By Victor Romain, Economics Correspondent
A special report for NTST Finance, Ltd