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Date: Tue, 05 Jan 1999 09:18:53 -0800
From: "Henry C.K. Liu" <hliu@mindspring.com>
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To: marxist-leninist-list@egroups.com
Subject: Re: [M-L L] Re: Cuba and the Euro
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The post attached below contains some material derived from an e-mail report I
received that had not been sufficiently edited so that the material may have needed
to be put in quotations.  The post was written late in the evening and the material
used deals with rather obvious facts that are well known, such as Russia will never
repay Western investment and loans.... Russian chauvinism is on the rise... etc,
that it seemed to me at the time of writing to be almost in the public domain.  I
did not put the material in quotes because I did have to edit the language to make
the facts applicable to my train of thought, but apparently the editing was not
thorough enough.  And since the post was not an academic paper, I had allowed
myself to be more editorially lazy than proper.
I apologize if this sloppiness offended any readers.  The ony excuse I can offer is
that while the facts offered were not original, the conclusions are my own.


Henry C.K. Liu


"Henry C.K. Liu" wrote:

> Alexander's description of the euro, while factually accurate, is incomplete.
>
> The introduction of the euro is highly significant, not for just the developed
> capitalist economies, but the whole world.
>
> The unique aspect of the euro is that for the first time in history, a currency
> union has preceded a political union. This means that the marxist view that
> economic structure of society determines its political structure is now plain
> for all to see and not just perceivable only to the intellectually and
> politically astute.
> Is this the beginning of the end of political nationalism?
>
> Before going further, some facts on the euro would be useful.
> It began 4 decades ago when European leaders signed the Treaty of Rome in 1957,
> which gave birth the EMU (Economic and Monetary Union).
> The historical root went back to Napoleon's Continental System of 1805, after
> the the British defeated the French at Trafalgar.
> The Maastricht Treaty in 1992 set up the euro and 5 conditions for countries to
> join.
> The 5 conditions are:
> 1) Inflation during the year before joining cannot exceed by more than 1.5
> percentage points than the 3 best performing members.
> 2) Less than 3% GDP budget deficit
> 3) Sovereign debt less than 60% of GDP or trending down
> 4) Long term interest rate within 2 percentage points of best  performing
> member.
> 5) Stay within EMU foreign exchange rates fluctuation limits.
>
> Euroland now consists of 11 European countries led by Germany and France,
> including Finland, with 6 aspirants member countries.  They are: Poland, Czech
> Republic, Hungary, Greece, Estonia Solvenia
>
> The value of the euro is set at 1.17 to US$1.00 at its introduction, but is
> expected to free float by market forces.
> Non cash transactions began on January 1, 1999, and cash will begin circulating
> on January 1, 2002.
>
> Aside from economic benefits, the EMU is expected to lead toward European
> political union.
> This will virtual remove any prospect of war within Europe and make the
> European Union a world power.
> EMU monetary policy will be conducted by the new European Central Bank located
> at Frankfurt, headed by Dutch Central Banker Wim Duisenberg with backing from
> the Bundesbank of Germany, a bastion of conservative monetarism (anti
> inflation).  Its influence on the global economy will rival the Federal
> Reserve.
>
> The economic logic of a single European currency is:
> Eliminate exchange rate costs and inefficiencies within a single European
> market similar in size to that of the US.
> A supranational central bank to set a unified monetary policy for economic
> stability.
> Under finance capitalism, size matters.
>
> With the introduction of the euro, the global economic system moves into a
> bi-polar system with two dominant currencies.  This will challenge the
> supremacy of the dollar as the world's sole reserve currency, a position it has
> occupied since the end of WWII.
> This advantage has permitted the US to dominate the global economy, extend its
> finance capitalism globally, while pursuing irresponsible monetary and fiscal
> policies at home, incurring recurring budget deficits and massive national
> debts.
>
> Key basic commodities markets such as oil that have been denominated in dollar
> will now be restructured as bi-currency regimes, increasing the bargaining
> power of consumers, albeit only slightly.
> The short term fall of the dollar's value is almost certain.
> What is not known is by how much and for how long.
> The Federal Reserve's ability is set US interest rates will be constrained as
> the world now has an alternative reserve currency.
> If the world's central banks choose to park a large portion of their foreign
> currency reserves in euro, a run on the dollar may occur, driving up interest
> rates and causing a crash of the stock market, with resultant high unemployment
> and  business failures.
> American multinational corporations will be less transnational in character in
> Europe and their loyalty to the US will be weakened.
>
> Geopolitically, Russia will be nervous that former Soviet republics and
> satellites joining Euroland to form a kind of economic NATO that would lead to
> a political union in the form of a new Euro empire.
> 1998 saw the massive failure of economic reformer that resulted in the
> reformers being forced from power.
> The West, which had invested in Russia, would never recover its investments or
> collect on their loans.  As a result, investment and credit have ceased flowing
> into Russia, and Western political influence have  plummeted.
> As happened before in Russian history, the pendulum is moving from pro- West to
> suspicion and contempt.  As before, the Westernizers who dominated Russian
> politics for the past decade are being replaced by Slavophiles, who will seek
> to root out Western influence.  Russia will seek to use the euro against the US
> economically.
> Russian chauvinism and anti Americanism are again on the rise.  US bombing of
> Iraq made the Russians lament their loss of great power standing.  Every
> significant faction in Russian politics agree that the loss of great power
> status is intolerable.
> In a country that has become virtually ungovernable, this powerful national
> pride is now the only means of uniting the country.
>
> Germany is now deeply torn in seeking its destiny.
> The political instincts of the new government, forged in the left movements of
> 1960s, reflect a profound uneasiness with the United States and its leadership,
> in economics and in European security. Yet, fear of Russia is also a visceral
> feeling in Germany.  The EMU is an opportunity to transform Germany into a
> legitimate leading component of a unified Europe
>
> Asia is unable to generate sufficient capital to solve the problems created by
> unregulated capitalism, unable to restructure its economies to generate that
> new capital, and unwilling to allow an uncontrolled influx of American capital
> on American terms.  The euro may open an alternative source of capital for Asia
> with a part of the West that is less predatory.
> Asia may be forced to seek to insulate itself from the United States to create
> Asian institutions to supplant the global institutions within which Asian
> economies have been unable to participate on a equal basis. Asian economies
> will  resist American demands for further trade liberalization, rely instead on
> Asian solutions, and use the yen and the euro as reserve currencies as counter
> balances.
>
> Like Russia, Asia's efforts to work around its fundamentally insoluble economic
> malaise will lead to increased friction with the United States on all levels.
> This will lead to a new awareness of camaraderie.
> The reemergence of a Moscow-Beijing strategic alliance is already under way,
> designed to block unilateral American actions in Eurasia.  Furthermore, this
> relationship will insulate Russia and China from U.S. political and military
> pressure, and create politico-military counter-pressure on the United States
> designed to elicit better economic terms.
> 1999 will be the year in which this alliance will take full shape.  Europe will
> be a major center of the multi-polar world of Sino-Russia strategy and the euro
> will give economic foundation to this trend.
>
> Japan too is increasingly at odds with the United States over economic policy.
> As U.S. pressure on Japan to liberalize its markets increases, Japan's search
> for alternatives will increase in return.  the Japanese Prime Minister has
> announce his intention to promote a dollar-euro-yen tri-polar currency regime
> during his official European trip this week.
> France is already clearly cooperating with China and Russia.  This was visible
> in the Iraq affair.  France will put pressure on the new Europe powerful with
> the new euro.
> French foreign policy being traditionally anti-American, the EMU will be not
> escape this influence.
>
> Socialist movements, having been pushed to the sideline for more than a decade,
> will find tactical opportunities in the complex restructuring of the global
> order, accelerated by the emergence of a unified Europe that is dominated by
> social democrat governments.  The many factions of the left need to formulate a
> unified, realistic and effective geopolitical strategy to advance their common
> cause.
>
> Henry C.K. Liu
>
> Alexander wrote:
>
> > Dear Comrades
> > I regret to say that there is no Euro. Or rather that there is a French
> > Euro, a German Euro, a Greek Euro.... all of which are attached to their
> > respective currencies at a fixed rate. You cannot freely exchange a German
> > Euro for a French one. If that was the case that would have meant that the
> > parities between the different countries was fixed. So long as the parities
> > fluctuate there are eleven Euros in Europe and not just one. So we are just
> > playing with a toy currency that is nothing but fixed ratio converted paper
> > drawings. We are just taken for a ride, once again.
> >
> > Alexander
> >
> > Sven Buttler wrote:
> >
> > > Comrades,
> > >
> > > I regret not having found the time to read through the
> > > material concerning with the Euro thoroughly so
> > > please excuse me if the answer to my (following)
> > > question has already been given  therein.
> > >
> > > Nontheless, my question is what the Cuban economy
> > > can expect from the Euro? Since Europe has been
> > > less relunctant towards Cuba to what extent can Cuba
> > > benefit from a second major currency besides the
> > > US dollar?
> > >
> > > For communism
> > > --
> > > Sven
> > >
> > > ------------------------------------------------------------------------
> > > The Bowl Championship Series on ESPN.com.
> > > We are there.  Join us...
> > > http://offers.egroups.com/click/183/0
> > >
> > > eGroup home: http://www.eGroups.com/list/marxist-leninist-list
> > > Free Web-based e-mail groups by eGroups.com
> >
> > --
> > Les "Editions Democrite" publient un mensuel en francais :
> > > "Les dossiers du BIP" avec des traductions d'articles provenant de la
> > > presse communiste(grecque, allemande, anglaise, turque, russe, espagnole,
> > > portugaise...)sur des evenements qui interessent des lecteurs
> > communistes.
> > > Editions Democrite, 52, bld Roger Salengro, 93190 LIVRY-GARGAN, FRANCE
> > > e-mail : democrite@starnet.fr
> >
> > ------------------------------------------------------------------------
> > The Bowl Championship Series on ESPN.com.
> > We are there.  Join us...
> > http://offers.egroups.com/click/186/0
> >
> > eGroup home: http://www.eGroups.com/list/marxist-leninist-list
> > Free Web-based e-mail groups by eGroups.com
>
> ------------------------------------------------------------------------
> The Bowl Championship Series on ESPN.com.
> We are there. Join us...
> http://offers.egroups.com/click/187/0
>
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]