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Obituaries for the euro are premature

By Graham Cooke - posted Wednesday, 18 July 2012

A few weeks ago a half dozen startled ambassadors from European Union countries were hauled up before a meeting of the Australian Institute of International Affairs in Canberra and without any preparation asked to give their views on whether the EU could survive.

The envoys had been in the audience waiting to hear an address by the Federal Opposition's Foreign Affairs Spokesman, Julie Bishop, on Australia's relations with China, but Ms Bishop was late and Institute president Ian Dudgeon hit on the EU discussion to fill in the time.

Despite being totally unrehearsed, the group, ranging from France to Finland, had the same message: The European Union will come through the current fiscal crisis, the euro will continue and no country will leave either.


France's representative, Stephane Romatet summed it up for the rest when he said: "We are constantly surprised by reading in the Australia media that the EU is on the brink of failure and that the euro will collapse. Nothing is further from the truth."

As many Australian newspapers lift, often uncritically, articles from the British media where sentiment against the EU, and especially the euro, is more widespread than elsewhere, and as the Chairman of News Corporation, Rupert Murdoch, is a strident anti-European, the bias shown in Australia is not so surprising.

There are UK commentators getting air play on radio and television and space in the print media here who virtually dance jigs at every upward tilt in an EU country's bond rate, every downward shift in its gross national product. Reputations have been staked on seeing the euro, if not the entire European experiment, fall in a heap and the critics are desperate to see their prophesies succeed.

Let's be plain: there is a crisis in Europe and it does partly stem from the single currency. The adoption of the euro has forced all member countries to try and keep up with the strongest national economy, which by a long way is that of Germany.

For countries whose economies perform at lower levels than Germany's – the obvious example is Greece, but everyone else in the euro zone is in more or less in the same boat – this has become something of a straightjacket. It's rather like being dragged along behind a sleek Mercedes sports: highly uncomfortable for those being dragged and if there are enough of them, a hindrance to the vehicle having to do the towing.

It didn't matter so much when times were good and everyone could put up a veneer of prosperity, but since the global financial crisis, the inequalities have been exposed.


There are no simple answers to this highly complex situation but CNN's Fareed Zakaria throws in a flippant suggestion when he says the EU's hallowed democratic institutions are to blame. "After all, politicians have gotten elected over the last four decades in the West by promising voters more benefits, more pensions and more health care. The question is, can they get elected offering less?"

Actually Fareed, they can and do. I can think of a number of examples when governments have been elected on the back of stern warnings of austerity – notably the Thatcher Government in Britain in 1979 chosen by an electorate sickened by a Labour administration that blatantly over-promised and delivered very little. A more recent example is that of Greece itself , where in a second round of voting the winner was a party committed to keeping the country in the euro and maintaining its austerity package if perhaps, with a little fine tuning.

Providing the electorate is shown there is light at the end of the tunnel it can be persuaded to accept some short-term pain, especially if the alternative is unthinkable chaos.

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About the Author

Graham Cooke has been a journalist for more than four decades, having lived in England, Northern Ireland, New Zealand and Australia, for a lengthy period covering the diplomatic round for The Canberra Times.

He has travelled to and reported on events in more than 20 countries, including an extended stay in the Middle East. Based in Canberra, where he obtains casual employment as a speech writer in the Australian Public Service, he continues to find occasional assignments overseas, supporting the coverage of international news organisations.

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