The Globalist-- Confessions of a Euroskeptic: Don't Write Off Europe

The GlobalistConfessions of a Euroskeptic: Don't Write Off Europe

From the standpoint of economic performance, a single currency, a uniform interest rate and the pan-regional harmonization of taxes, pricing and regulatory conventions count for a good deal more than agreement on constitutional rights. Political unification would, of course, be the icing on the cake if it ever does occur — in effect, tightening the straightjacket that forces pan-regional efficiencies. But in the same sense, a French-led setback on the political front will unwind this shift to increased economic convergence. The hopes and dreams of European unification have come full circle over the past six years. Wide fluctuations in the euro versus the dollar have been a good barometer of these shifts in sentiment. From a low of 0.82 versus the dollar in late 2000 to a high of 1.36 in late 2004, the mood swings have bounced back and forth between near-euphoria and near despair. At 1.25, today's foreign exchange value of the euro is about 15% above the average of these two extremes and 19% above its post-launch average. On this basis, the euro can hardly be judged as weak — although that comparison may be distorted by a dollar that is tainted by America's record current-account deficit.