Euro should shake off dependence on the dollar
Iran has shown how much the dollar is able to impose its rules on the euro area. The US sanctions against Iran not only affected the country, but also the European states. Most international transactions are handled in dollars. Those who wanted to trade with Iran despite the sanctions were quick to track down the United States. Finally, the US controls the dollar payments. The embargo forced European companies to abandon their dealings with Iran.
For this reason, the EU Commission has decided to give the euro a more important role in the future. On 04.12. The Commission and EU Monetary Affairs Commissioner Valdis Dombrovskis presented ideas on how this project could be implemented. The paper will be discussed next week at the meeting of Heads of State and Government of the Member States. It is true that the EU Commission itself can not initiate monetary policy initiatives. However, it can provide incentives to give more value to the euro.
Member States are required
As early as September, European Commission President Jean-Claude Juncker complained that 80 percent of European energy imports were paid in dollars. Only 2 percent of them came from the USA. In addition to energy imports, large corporations trade among themselves with dollars - even if they are on European soil. The euro has become the second most important currency in the world. And that although the European common currency is only 20 years old. Juncker therefore demanded that the euro should become "the face and tool of the new European sovereignty".
Which currency the individual states and companies want to use, however, they decide themselves. Therefore, the EU Commission can only give suggestions. The aim of this initiative is not only to strengthen the euro, but also to protect its own euro area against sanctions. This should secure the sovereignty of the EU and its finances in the long term.
Asked for specific sectors
Not all the economy and the financial market should be turned over overnight. Instead, for the time being, you are focusing on specific markets. The paper first speaks of energy, of raw materials and of airplanes. In these sectors, the euro should become more effective. It also plans to create its own institutions, such as the European Investment Bank (EIB) and the European Stability Mechanism (ESM). This is intended to reduce the damage caused by dollar sanctions. The EU should become less dependent on US payment service providers like PayPal. In addition, the exchange rate risk should fall and more liquidity should enter the European financial market.
In Berlin the initiative is accepted with approval. It was here that the US sanctions met with displeasure. It was proving angry that the US is pursuing geopolitics over the minds of EU member states. The sanctions ultimately led to the abandonment of the nuclear deal with Iran.