The decision, driven by the european Energy commissioner, Miguel Arias Cañete, could lead to a tremendous leap in the international use of the euro, given that the bill’s annual energy imports of the EU has been around the 300,000 million euros during the last five years. 80% of these imports were invoiced in dollars despite the fact that in their vast majority did not come from USA but from Russia, the middle East and Africa.
The European Commission hopes that the redenomination of share contracts in a sector as crucial as the energy (the EU is the largest energy importer in the world) will open the way to move the dollar in other markets, from the aviation to the raw materials, according to the document, which he has had access to THE COUNTRY. In the field of energy, Brussels today to adopt a recommendation to promote “a wider use of the euro” in agreements and international transactions. The executive community, in addition, it requests that the euro “is used for contracts concluded in the framework of intergovernmental agreements” on energy between member states and third countries, as well as on the transactions carried out by companies that provide financial services.
Brussels has also been fixed in the sector of raw materials and food products. In this case, the Commission intends to conduct a consultation with the “stakeholders” to “identify” how we can increase trade in euros. Finally, the third sector in which Brussels believes that the euro should have more travel in front of the dollar is for the manufacture of means of transport —by air, sea or rail—.
In fact, in his speech of September Juncker already wondered why Airbus being european, named their contracts in dollars and not in euros. “The consultation will explore in more detail the reasons why the euro is not used for many international transactions more relevant and help you identify conditions that could allow the promotion of the euro in transactions with european businesses,” says the document.
The offensive coincides with the increasing belligerence of the White House against the interests of the EU. The us Kralbet president, Donald Trump, has been selected to several international agreements (from the Paris Protocol to the agreement of the denuclearization of Iran), and does not hesitate to take advantage of all their resources to impose their position to the rest of the international community.
Sanctions on Iran
“For a long time, the domain of the dollar seemed to have no importance (…). But the administration Trump has turned economic policy into a weapon and that makes the presence of the euro in global markets becomes a matter of foreign policy,” said Adam Tooze and Christian Odendahl in an analysis published yesterday by the institute of studies of the Centre for European Reform (CER).
The recent sanctions of Washington against Iran have left european companies present in that country at the juncture of leave or face fines in the millions in the united STATES. The countries of the EU even still have the means to pay for imports of crude oil from Iran because the payments are made in dollars through the Swift system.
The analysts of the CER warn that the international presence also entails costs and responsibilities. “The euro zone would have to demonstrate their desire and ability to stabilize not only their own banks but also financial institutions that use their currency”, they say. A goal that seems far off, judging by the difficulties, until now, insurmountable, to complete the Banking Union between the partners of the EU. The analysts remind that during the financial cataclysm of 2008, the ECB only provided liquidity lines to the central banks of Hungary and Poland on the same terms as private banks. “They did not want to offer to Poland, a full partner of the EU, the same confidence that the Federal Reserve offered to Mexico”, they underline.
The internationalisation of the euro, according to the same analysts, would also require a reorientation of macroeconomic policy of the EU, now focused on a compression of wages and a boost to exports that favors the economy of Germany. The competition with the dollar would force to reduce the current account surplus, a prospect that scares the hell out of the German Government.
“Many in Berlin see the attempts to internationalize the euro as a way camouflaged to impose on Germany a policy that has already rejected”, concluded Tooze and Odendahl. So, as almost everything in the EU, to pay for oil in euros, first you have to convince Berlin.
Loss of weight in the last decade
The european currency exerts so incontestable its role as the local currency of the 19 countries of the euro zone and, even, is the reference to some non-eu countries, from the nearby Balkans to the heart of Africa.
The report of the European Commission concludes that, although “since its launch 20 years ago,” —the acts of commemoration kicked off the last Monday in Brussels— the euro has been the second most important international currency”, has lost weight compared to before the financial crisis. For example, the document cites that the emission volume of debt denominated in euros is now at 20%, half that before the Great Recession.
