Τρίτη, 11 Απριλίου 2017

Euro exit for Italy or France would be a trauma


11/4/2017

By Wolfgang Munchau

The ERM exit showed that monetary regime changes are as complex as a war

Imagine a New Year’s resolution list that reads as follows: First, give up chocolate; second, get divorced. You would rightly say this is absurd. If you are serious about divorce, you would not put it on a list. If you were pedantic enough to do this, divorce would not be item number two.

But that is precisely how the populists in France and in Italy have cast their policies on the euro. They seem to favour euro exit, but want to delay the decision for a while, and then put the whole thing to a referendum. This is telling us that Marine Le Pen and Beppe Grillo, the leaders of the National Front in France and the Five Star Movement in Italy respectively, are wholly unprepared for government. They are not so much extremists, as charlatans.

It is possible, though not easy, to make an intellectual case for euro exit in either country, but neither Mr Grillo nor Ms Le Pen have made it. If you were serious about euro exit, you would have realised that this is a very big deal — the one issue that will define your period in power. You will deal with almost nothing else for a number of years. It is much bigger than Brexit — and that occupies the UK government full-time.

If either country left the single currency, it would lead to the biggest default in human history. There would be bank crises throughout the EU. The bloc may struggle to stay together. The euro itself may be threatened. A euro exit is about as complicated and risk-prone as starting a war. You will need to secure your borders to stop people from taking the euro cash outside the country. You will need to engage the police to crack down on riots. You will need a military-style operation simply to carry out the logistics. Have you thought this through? There are virtually no avenues towards an orderly euro exit, not even a legal one. Think of euro exit as a military putsch — something you do over a weekend with tanks on the streets.

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