By F. William Engdahl and cross-posted from New Eastern Outlook
In his first few days in office as President, ‘The Donald’ has fired off so many Executive Orders and aggressive tweets that much of the world is dizzy. One policy that’s clearly emerging from the smoke of immigrant ban attempts, XL Keystone pipeline approvals and bellicose threats against Iran, is the Trump team economic agenda, called by Assistant to the President and Chief Strategist, Steve Bannon, “national economics.”
The key targets so far are China and Germany, two nations with the largest trade surplus with the United States. A closer look, however, suggests Washington is preparing to launch what James Rickards, sometimes advisor on capital markets to the US intelligence community, refers to as “currency wars.” Aside from the obvious China target, the second and perhaps more important target is to destroy the Euro and its European Monetary System. Here Germany is at the beating heart — one reason, perhaps, why Chancellor Merkel seems to have severe gas pains whenever the name Trump is uttered.
On January 31, new US Trade Czar Peter Navarro accused Germany of using a “grossly undervalued euro to exploit” the US and Germany’s EU partners. Navarro went on to call Germany, the core of the Eurozone economies, a de facto “currency manipulator.” Get used to the term because we‘ll see it often in coming weeks. The manipulation Navarro speaks of, however, is the very creation in 1999-2002 of the Euro single currency. The Euro, with Germany as its largest member, acts like an “implicit Deutsche Mark” Navarro charged, whose low valuation against the US dollar gives Germany a huge advantage against its principal trading partners.
Not surprisingly, Germany has protested vigorously. Angela Merkel immediately declared that monetary policy of the European Central Bank by treaty is mandated to control inflation in the Euro-zone as a whole, claiming further that Germany could not manipulate the euro even if it wanted to because the ECB is, by treaty, “independent.” That’s only a half-truth, as of the 19 of the 28 member states of the European Union today in the Euro-zone, Germany, the Euro-zone economic giant, wields disproportionate influence, not day-to-day, but rather in shaping the very misbegotten construction of the Euro in the 1990’s. Some little-known history is in order.
‘Securing Germany’s Place for the Next Century’
While this all might sound like dry academic economics about currency manipulations, trade advantage and such, it conceals a Washington agenda that de facto calls for destruction of the Euro-zone as its ultimate mid-term goal.
The irony is that that Eurozone was bitterly opposed by then-German Chancellor Helmut Kohl when the French, Italian and British heads of state popped it on a startled Kohl at the December, 1991 heads of state summit of European Economic Commission member countries at Maastricht, Holland where they signed a Treaty on European Union that promised full monetary union by end of 1999. There, Kohl was confronted with their proposal for a treaty establishing a single European currency, today’s Euro, absent a single democratically-chosen European political state, elegantly referred to in Brussels as the “democratic deficit.”
A skeptical France, Britain and Italy, fearing the new weight of an economic powerhouse called unified Germany, demanded surrender of the mighty Deutschemark and the power of her Bundesbank central bank, then the most respected in the world, to a new independent supranational structure to become known as the European Central Bank. Germany agreed, ultimately, following months of hard horse-trading, on condition the new Euro-zone country members submit to the strict so-called Maastricht criteria for limits on public debt-to-GDP of 60% and annual public deficit limits of 3% of GDP, strict arbitrary conditions as drawn up by Hans Tietmeyer’s Bundesbank.
I was actively engaged in following closely those developments at the time as a financial journalist. In the early 1990s I had the fortuitous opportunity to learn the private thoughts of the Danish EU Commissioner, Henning Christophersen. At the time of the Maastricht Treaty negotiations, Christophersen, who recently passed away, was responsible under EU Commission President Jacques Delors for economics and currency relations in the EEC (predecessor to the EU). He, in effect, was the Commissioner primarily responsible for bringing the several sides together into what became the Euro, one person we might say, quite informed of the closed-door debates and fights among member countries at the birth of the Euro.
In 1994 Christophersen told a fellow Danish economist whom I knew quite well, in the sidelines of a London finance conference, that the attitude of Germany and of especially Chancellor Kohl towards the introduction of the single currency, Euro, had “changed 180 degrees since 1991.” He explained that in the intervening three years, the big banks of France and Italy had suffered deep crises and were gasping to survive (interestingly, they still are, even more so–w.e.), while British banks were deep into a real estate debt crisis and no challenge to the robust German banks for domination of Europe credit and capital markets. “Deutsche Bank and the other top German banks convinced Kohl that, if done right, the Euro could secure Germany role at the head of Europe for the next Century or more.”
I personally witnessed the changed view of Chancellor Kohl at a banking conference in Frankfurt shortly after. The once-foot-dragging Euro-skeptic Kohl told the assembled bankers that the Euro was the “key to bind Europe so no future wars would be possible.” He got a standing ovation. He was a skilled orator when he chose to be. In short, the Euro-zone today is a German creation…