Currency Without a Country: Death Throes or Growing Pains of the Euro?

Panel discussion hosted by the Streit Council and the Center for Transatlantic Relations - May 4, 2010

Panelists

  • Antonio de Lecea, Minister and Principal Advisor for Economic and Financial Affairs, EU Delegation to the US

  • Georges Pineau, Permanent Representative, European Central Bank

  • Steve Hanke, Professor of Applied Economics, Johns Hopkins University and Senior Fellow, Cato Institute

  • Uri Dadush, Senior Associate and Director of the International Economics Program, Carnegie Endowment for International Peace.

Summary

Over 90 people from such organizations as Rand, the Department of State, Heritage Foundation, and various foreign embassies, attended this panel discussion, which focused on the future of the euro in light of the Greek crisis and other fiscal challenges in Europe. Former Ambassador to NATO Kurt Volker moderated the event, and Streit Council President Richard Conn Henry provided the opening and closing remarks.

 

Both de Lecea and Pineau argued that the recent bailout provided a chance for Greece, and Europe, to adjust and recover. While the joint EU-IMF bailout is significant, it is not extraordinary; Pineau pointed out that large scale IMF lending, especially in times of fiscal emergency, is common (for example, South Korea in 1997). While critics have derided the bailout, arguing it does nothing to correct structural problems, de Lecea insisted that this bailout was far-reaching - aiming to effect structural change in Greek society.

 

Hanke and Dadush, both more pessimistic on the prospects for the euro and Europe, agreed that the euro is in no immediate danger of dissolution, noting that the situation is tenuous and major structural reforms are needed. Hanke and Dadush agreed that the bailout would only help in the short-term, and the chances are high that additional financial help will be necessary in the following years. Going a step further, Dadush explained that the Greek crisis obscures the real issue - a loss of competitiveness in Europe (namely in Ireland, Italy, Portugal and Spain). A reduction in competitiveness yields lower growth rates and higher unemployment. Thus, the current measures will only encourage larger bailouts in the future.

 

The panel provided many answers and raised questions. The jury is still out on the prospects for Greece, the euro, and the European Union. However, with the large bailout in place and continued global economic growth, the EU should be afforded a respite and chance to move toward an even stronger, more effectively connected, European Union.

Participant Bios

Antonio de Lecea became Minister for economic and financial affairs, and Principal Advisor to the Head of the EU Delegation in Washington, DC in October 2009. Prior to this, he served as Director for International Affairs in the European Commission’s Directorate General for Economic and Financial Affairs. From 1999 to 2004, he was Economic Advisor in the Private Office of Romano Prodi, then European Commission President. Before joining the European Commission in 1986, he was a member of the Private Office of the Spanish Secretary of State for Finance in Madrid. De Lecea obtained a Ph.D. from the Catholic University of Louvain (UCL) in the European Doctoral Programme for Quantitative Economics, and a first degree in Economics from the Barcelona Autonomous University (UAB).

Georges Pineau, since November 2008, has been the ECB's Permanent Representative in Washington DC with observer status at the IMF. Pineau worked as an Economist at the Banque de France in 1980. From 1986 to 1989, he served as an Advisor to the French Executive Director at the International Monetary Fund. From 1989 to 1992, he was a Market Economist at the Banque de France. From 1993 to 1994, he was the Rapporteur to the Foreign Exchange Policy Sub-Committee of the Committee of Governors of the EU Central Banks. From 1994 to 1998, he was the Head of EMS/ECU Section, Policy Division, General Secretariat at the EMI (Frankfurt/Main, Germany). From 1998 to 2008, Pineau served as Deputy Director General at the European Central Bank. Pineau graduated from Ecole Supérieure de Commerce (business administration degree), Poitiers, and Institut d’Etudes Politiques (M.A. economics), Paris, France.

Steve Hanke is a Professor of Applied Economics, Co-Director of the Institute for Applied Economics and the Study of Business Enterprise at The Johns Hopkins University in Baltimore; Senior Fellow at the Cato Institute in Washington, D.C.; Distinguished Professor at the Universitas Pelita Harapan in Jakarta, Indonesia; member of the National Bank of Kuwait’s International Advisory Board (chaired by Sir John Major); member of the Financial Advisory Council of the United Arab Emirates; and a columnist at Forbes magazine. In the past, Hanke taught economics at the Colorado School of Mines and the University of California at Berkeley. He also served as a Senior Economist on President Reagan’s Council of Economic Advisers; as a State Counselor to the Republic of Lithuania and Republic of Montenegro; and as an Advisor to the Presidents of Bulgaria, Indonesia and Venezuela. He has also worked in Argentina, Estonia, Bulgaria, Bosnia-Herzegovina, Ecuador, Lithuania and Montenegro in establishing new currency regimes. He has advised the governments of many other countries, including Albania, Kazakhstan and Yugoslavia.

Uri Dadush is a Senior Associate and Director in Carnegie Endowment for International Peace’s new International Economics Program. His work currently focuses on trends in the global economy and the global financial crisis. Prior to working at Carnegie, Dadush was the World Bank’s Director of International Trade as well as Director of Economic Policy, leading the preparation of the Bank’s flagship reports on the international economy. He was also the Director of the World Bank’s World Economy Group. Dadush has served as President and CEO of the Economist Intelligence Unit and Business International. He was also a consultant with McKinsey and Co. in Europe. He received his Ph.D. from Harvard University in Business Economics.

Richard Conn Henry is a Professor in the Henry A. Rowland Department of Physics and Astronomy at The Johns Hopkins University, Baltimore, where he is also Director, Maryland Space Grant Consortium, and member, Principal Professional Staff, The Johns Hopkins University Applied Physics Laboratory. Henry is also President of The Henry Foundation, Inc., a nonprofit devoted to the advance of education and career development for the American people. Henry is President of the Streit Council for a Union of Democracies. From 1976 to 1978, he was Deputy Director of NASA’s Astrophysics Division. Henry is a past Sloan Foundation Fellow; a onetime Fellow of Wadham College, Oxford; a recipient, Gold Medal, Royal Astronomical Society of Canada; and is a Fellow of the American Association for the Advancement of Science.

Kurt Volker is a Senior Fellow and Managing Director of the Center on Transatlantic Relations at the Johns Hopkins University’s School of Advanced International Studies. He is also a Senior Advisor at the Atlantic Council of the United States and a member of its Strategic Advisory Group. Prior to joining SAIS, Ambassador Volker was a career member of the US Senior Foreign Service, with over 23 years of experience working on European political and security issues under five US Administrations. He served as Ambassador to NATO from July 2008 to May 2009, straddling the transition from the Bush to the Obama Administration, and overseeing US preparations for NATO’s 60th Anniversary Summit in Strasbourg, France and Kehl, Germany. Prior to his service in NATO, Ambassador Volker served as Principal Deputy Assistant Secretary for European and Eurasian Affairs (2005-2008) and on the National Security Council staff (2001-2005). His Foreign Service assignments included Brussels, Budapest, London, and several positions in Washington, including a year on detail in the U.S. Senate.

Multimedia

Streit Council President Dr. Henry's opening remarks
00:00 / 06:24
Amb. Volker's introductory remarks
00:00 / 01:52
Dr. de Lecea's remarks
00:00 / 14:32
Dr. Pineau's remarks
00:00 / 22:07
Dr. Hanke's remarks
00:00 / 17:49
  • Dr. Hanke's remarks were informed, in part, by his article on currency reform and the Euro, which appeared in Econ Journal Watch; you can find it here. Dr. Hanke's has also issued commentary on the Greek debt crisis, which is available here

Dr. Dadush's remarks
00:00 / 21:14
Panel Discussion
00:00 / 22:39
Question & Answer session
00:00 / 29:54
  • Mr. Brian Beary, from Europolitics, wrote an article reviewing this panel discussion; you can find the article here.

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