France played a decisive role in shaping not only the euro system but the entire European project. This history has predisposed French leaders to the goal of preserving the euro at all costs. Those costs, as we explained in Part 1 of this article, have become quite insupportable. A new strategy is needed, and France’s role in shaping it will once again be pivotal.
On the eve of the American Civil War, Abraham Lincoln famously said that “a house divided cannot stand.” Today, the European Union -- committed for decades to the quest for “ever closer union” -- must confront an agonizing truth. Lincoln’s maxim must be inverted. For the EU to survive, the euro must divide.
Under shellfire on Christmas Eve 1991, 13-year-old Maja Biloglav fled Zadar by boat at night, sent away by her parents as the Yugoslav army surrounded the Adriatic town following Croatia’s declaration of independence.
Bulgaria’s Gerb party of former Prime Minister Boyko Borissov and the rival Socialist Party are neck- and-neck before early elections, raising concern about the next administration’s ability to extend an austerity program.
The European Central Bank has deployed almost the last of its depleted supply of conventional monetary stimulus, cutting its benchmark interest rate last week to 0.5 percent from 0.75 percent. Few expect this to make much difference to Europe’s flailing economy, and financial markets were unmoved. If conventional monetary policy is all but used up, what else is there?
The wreckage caused by China’s great, juddering slowdown continues to spread far beyond the country’s shores. Although most commodities enjoyed a bounce on May 3, after better-than-expected U.S. employment data, the plunge in their prices over the past few months suggests the past decade’s rally is truly broken.