It would be hard to describe the euro as a lucky currency. It was flung together by a group of politicians who cared a lot more about statecraft than they did about economics. It was created during what (with the decline of the dollar and rise of China) was always going to be a turbulent decade for the global monetary system. And it had to contend with the greatest financial crisis of the century before it had even hit double figures.
But in one respect at least it has led a charmed life. In none of the 17 member states has there been a credible political leader campaigning for its break up. But that is about to change.
The euro looks more like a failed economic experiment every day. You can just about put together an argument that it will survive, so long as the Greeks don’t mind a few more years of a 1930s-style depression, the Spanish put up with youth unemployment climbing to 60% or more, the French learn to curb their addiction to state spending, and the Germans, the Dutch and the Finns don’t mind ruining their credit rating and paying higher taxes to bail out what they see as a bunch of feckless Mediterranean layabouts. Once the European Central Bank (ECB) starts printing money as merrily as our own Bank does, it might just stagger on.
However, it’s much harder to sketch out a scenario where the euro is a success – as opposed to something that just rolls from one crisis to another. This currency, remember, was meant to make the European economy more competitive, shield it from the turbulence of the financial markets, and enable economies to grow faster. Yet on every count it has had the reverse effect. Indeed, it is surprising that the political establishment has remained so firmly behind it. At the very least you might expect a debate to be underway.
But what protests there have been have come from the political extremes. In Finland, the nationalist True Finns have campaigned against the currency. In France, the far-right NationalFront has argued for the return of the franc. In Ireland, Sinn Fein has gained in the polls by opposing the austerity programme, while not actually rejecting the euro. But none of those are parties that most people would ever consider voting for. There have not been any politicians for mainstream voters fed up with the euro to support. Until now.
Enter Silvio Berlusconi. The former Italian prime minister argued this month that Germany should leave the euro to make it easier for the other countries in the single currency to restore their competitiveness. While not breaking up the single currency, that would surely change it for ever. After all, it’s hard to imagine that countries such as the Netherlands, Finland or Austria want to stay in a currency dominated by France and Italy. The game would be up.
Berlusconi is a political as well as a commercial entrepreneur – he can spot a gap in the market and fill it. Although he is treated with scorn in much of the international press, electorally he was a very successful leader, dominating Italian politics for 20 years. He was ousted from power because France and Germany ganged up on him, along with the ECB, and forced his replacement with the Brussels technocrat Mario Monti. If he didn’t have doubts about the euro already, that experience would surely have convinced him.
Elections are due in April next year. Monti can’t remain as an unelected PM beyond that. Whether Berlusconi decides to run, we don’t yet know. He hasn’t said he will. But his party will certainly be bidding for power. Italy has been in permanent recession since it joined the single currency and is heading into another slump. There will be a market for a politician arguing for a radical change of direction. Berlusconi is precisely the kind of smart populist who could make the case for the return of the lire.
He may have an ally across the border in Austria. The Canadian-Austrian founder of car parts business Magna, Frank Stronach, has launched a campaign for next year’s Austrian elections. With a fortune of $3bn, he won’t be short of money. A key plank of his platform is for countries to re-introduce their own national currencies alongside the euro. It might be a slightly bonkers proposal – there wouldn’t be much point in keeping the single currency alongside new ones – but that hasn’t stopped him getting up to 10% in the polls.
A billionaire may be just what is needed to break the political consensus that says the euro has to be maintained at any cost. The political establishment created the single currency and finds it very hard to admit that it made a huge mistake – one that has to be undone. That would be a blow to the entire administrative class.
But business leaders turned politicians are outsiders. They can offer fresh ideas. Their wealth gives them an authority on economic issues that other leaders find hard to match. And they are untainted by the extremism that characterises other parties outside the mainstream.
That may well be what the eurozone needs. If the single currency is to be maintained, voters deserve a serious debate about whether the inevitable pain involved is worthwhile. If it is to be dismantled, a business leader might be the best person to do it.