Professor John Ryan is a fellow at the Centre for International Studies at the London School of Economics and Political Science. He is also a former fellow of the German Institute for International and Security Affairs in Berlin. He predicts a tough 12 months for the euro zone.
In some Spanish towns, shops and traders have been accepting pesetas. No more than a gimmick or a sign of growing disillusion with the single currency?
I have quite a lot of experience of Germany, including living and working there, and you have recurring stories about Deutschmarks still being accepted in some localities. There was mild angst in Germany at the time of the changeover to the euro; a lot of people hoarded Deutschmarks and plaques were erected to commemorate its death. This is not too important an issue at this stage.
There has been a constant stream of bad news about the euro. Do you expect brighter developments in the near or even medium term?
For the euro zone, as opposed to how it is seen outside, in the UK and beyond, this will be a very difficult year. There is going to be more integration and probably greater fiscal coordination. Further down the line, however, we will probably see a stronger euro, though whether this will be with the same number of countries as now may be another matter.
Commentators in Britain, especially on the right, say they warned all along that the euro was a disaster in waiting and would lead to rioting on the streets. Was it all a mistake, a false dream, or has the case against it been wildly overstated?
The same sort of commentators said it was never going to happen, and when it happened that it would never work and when it worked up to a point that it would crash in time. Don't forget there have been problems elsewhere: there is high unemployment in the UK and the riots there were partly criminality but also related to the budget cuts. It is not only about economics in the euro zone, but political will.
And since Europe has the euro, can it be saved?
The idea of Greece as a one-stop shop is nonsensical. The problems surrounding the euro are flushing out economic issues from the past 10, 20 and 30 years. I believe there will [eventually] be default in Greece but that we will then be looking closely at Ireland, Portugal, Spain and Italy. But if we were not talking about the euro, we would be discussing the failure of the Federal Reserve or US fiscal policy to respond appropriately to the American debt crisis. There is scepticism about the dollar. The Chinese have lots of surplus capital and want the euro to survive. People were saying in October and November the euro would soon be finished, now they're saying it will be next year. There is a lot of flip-flopping, getting people to say the things you want to hear. But the euro will survive.
* Colin Randall
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