PARIS (Reuters) – Bill Clinton famously won the U.S. presidential election in 1992 with the motto “It’s the economy, stupid.” But when it comes to the future of the euro, “It’s the politics, stupid!” is the more appropriate slogan.
Since its inception, the single European currency has always been as much a political as an economic project.
The euro has come under attack on financial markets this year because of debt and deficit problems in its weaker southern members, most acutely in Greece but also in Portugal and Spain, and growing economic imbalances among its 16 nations.
But the history of the 1990s shows that investors who bet against European monetary union can get their fingers burned.
While political mistakes could yet undo the 11-year-old monetary union, it is far more likely that Franco-German political leadership will save it.