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EU-US Relations through the Prism of the US and Ireland

Submitted by on 12 Jul 2012 – 11:33

Euro vs. DollarBy Dr John Coulter, Political Journalist with the Irish Daily Star and Tribune magazine

An historic gathering of Irish clans next year could well see the dollar replace the euro as the most influential currency of the European Union.

Realistically, the eurozone needs a massive and unified austerity injection across all EU member states to avoid the euro becoming merely a Franco-German financial package.

There has always been a money lobby in the United States wanting to see the dollar as the preferred EU currency. Greek abandonment of the single currency will see that economy re-introduce its former drachmas, not the dollar.

At first reading, the dollar dominating the EU may seem like American wishful thinking. But that was before the Irish government launched a last-ditch tourism drive to kick-start its severely battered economy, once dubbed the Celtic Tiger because of its world-wide reputation for rapid expansion.

Like Greece and Portugal, Southern Ireland is on the brink of economic meltdown. While re-introducing the former highly popular and successful Irish pound is the obvious solution, there is a danger such a move could play into the hands of Sinn Fein, the one-time political apologist for the Provisional IRA.

Fronted by the County Louth TD and party president Gerry Adams – a former Westminster MP for West Belfast, the republican party has become the unofficial leader of the Republic’s anti-austerity movement, and any move to link up with British sterling could be misinterpreted as a sinister plot to bring the South back into the Union.

Irish tourism bosses and the Dublin government have unveiled a highly innovative initiative known as The Gathering: An Irish Homecoming. Over the next year, the plan is to attract hundreds of thousands – even millions – of people with Irish family roots back to the Emerald Isle for holidays.

The main targets of The Gathering are North America, Australia and New Zealand – all countries where the dollar reigns supreme. With indicators firmly suggesting the United States is edging out of recession, this shift could secure President Obama a second term in the Oval Office.

Obama’s visit to Ireland during his first term has already charmed the influential Irish American lobby. The Southern Irish government, based at Dublin’s Leinster House, is gambling heavily that these millions of tourists will bring American dollars to the Republic – not weakened and dwindling euros.

With the United Kingdom facing a double-dip recession, sterling may not have the financial muscle to become a viable alternative to the under-pressure euro. Realistically, too, the single currency’s leading partners – France and Germany – are highly unlikely to recommend sterling as a radical alternative to any crumbling eurozone.

This situation has far-reaching implications for EU-US relations. The Gathering in Ireland will also be boosted by a significant number of historic centenaries between 2013 and 2016, all of which will increase the dollar’s European powerbase.

Southern Irish tourism bosses and politicians will have noted the massive global publicity and marketing exercise which accompanied this year’s centenary commemorations to mark the sinking in the icy North Atlantic of the luxury liner, the Titanic, in April 1912 with the loss of more than 1,500 lives.

Next year marks the 100th anniversary of the founding of two key Irish nationalist militia movements which played a major part in the Home Rule crisis which bedevilled Ireland in the early years of the 20th century.

These were the Irish Volunteers – the forerunner of the IRA – and the Irish Citizen Army. Both were formed in 1913 in response to Unionists establishing the Ulster Volunteers a year earlier to combat Irish Home Rule.

The year 2014 also marks the centenary of the start of the Great War in August 1914 which claimed millions of lives across the trenches and battlefields of Europe. World War One saw the Commonwealth nations, especially Australia and New Zealand, as well as the United States, send tens of thousands of troops to fight – and die – in Europe. 2017 marks the centenary of America’s entry into World War One.

The Gathering organisers can use their event as a template to encourage hundreds of thousands of tourists from these nations – many with no Irish roots at all – to come to Europe to visit battlefields and cemeteries where their ancestors fought, died, or were buried. That obviously means the prospect of billions of dollars flooding into the EU.

The Irish American link will also be enhanced in 2016 as Irish nationalists across the globe pour into Ireland to commemorate the centenary of the failed Dublin Easter Rising of 1916. While militarily, the Rising was a complete disaster, politically because the British executed most of the Rising leaders by firing squad, it laid the foundations for the Anglo-Irish Treaty of 1920, which in turn paved the way for the Free State and ultimately the Irish Republic.

The Gathering also provides America with an ace card to financially combat its biggest economic rival, China, which has already offered to use its currency to bail out the entire European single currency.

In spite of China’s very dubious human rights record, many EU states may be prepared to ‘look the other way’ if the yuan was used to stabilise the rapidly faltering euro. Such a move would give the Chinese their biggest financial prize since China’s acquisition of Hong Kong in 1997 from the UK.

An EU-China axis would effectively outmanoeuvre any scheme by the American dollar to dominate Europe’s single currency. The euro would exist in name only, with the Chinese yuan dictating the development and stability of EU member state economies.

In spite of Vladimir Putin’s recent victory in the Russian elections, his ruble is still not yet powerful enough to challenge the yuan – let alone the dollar and sterling – as an alternative European single currency. Besides, would the emerging former Soviet bloc nations really want arch rival China to dominate their economies?

This China-Russian rivalry will be another factor which would play into the hands of financiers wanting to develop the EU-US alliance. Time is not on the side of the dollar. A lot of lobbying will have to be done to ensure any beleaguered EU states look west to the US, rather than east to China.

It is one of the ironies of Irish history that for eight centuries the Irish tribes butchered each other for supremacy of the island, yet in the next eight years, a series of commemorations could see the dead of those campaigns act as a springboard for the dollar’s domination of Europe.