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Euro loyalty

January 27, 2011

French President Nicolas Sarkozy defends the euro in Davos, saying it would be 'unthinkable' for the eurozone to break up. But economists and managers at the World Economic Forum remain split over the bloc’s future.

French President Nicolas Sarkozy delivers his address at the World Economic Forum in Davos, Switzerland
Sarkozy says France, Germany are committed to the euroImage: AP

French President Nicolas Sarkozy rejected speculation over the future of the euro on Thursday, adding that France and Germany were committed to the common European currency.

"To those who would bet against the euro, watch out for your money because we are fully determined to defend the euro," Sarkozy told delegates at the World Economic Forum in Davos. "Mrs. Merkel and I will never - do you hear me, never - let the euro fail."

Stacks of euro coins
The debt crisis has some questioning the euro's stabilityImage: picture alliance / dpa

Sarkozy urged the audience to consider the importance of European economic integration in a social and historical context.

"You have to understand, the euro is Europe. And Europe is 60 years of peace. We will never allow the euro to be destroyed."

Private sector support

Earlier at the forum, several leading executives argued that the euro was a success despite the problems it currently faces.

Eckhard Cordes, chief executive of the Metro Group - one of the largest retailers in the world - said Germany's export boom was directly linked to the common currency.

"Without the euro we would have seen a significant appreciation of the deutschmark," Cordes said during a panel discussion. "Germany has dramatically increased its competitiveness."

The CEO of investment banking giant JP Morgan Chase, Jamie Dimon, described the EU as "one of the greatest human endeavors of all time."

He said he supported European efforts to avoid a Greek debt default because the consequences of such a failure would be unpredictable.

An assembly line of Miele washing machines
German exporters benefit from the single currencyImage: DW-TV

"It would be too risky," Dimon said. "I think they are doing the right thing."

The other side of the coin

On Wednesday billionaire investor George Soros told reporters in Davos that Europe could split in two, as powerful economies such as Germany and France leave the weaker periphery behind.

"Europe could potentially fall apart because of this two-speed Europe," he said.

Prominent American economist Nouriel Roubini told the forum that Europe's debt crisis threatened to spread from Greece and Ireland to Portugal, Belgium and Spain.

Roubini, also known as 'Dr. Doom', said the 750-billion-euro rescue fund set up by the International Monetary Fund and the European Union would not be able to prevent such a collapse.

"Spain is too big to fail, but it is also too big to save," he said.

While many delegates at the forum argued that more funds need to be put aside for the European safety net, others clearly supported the position of the German government and say the existing rescue fund is big enough.

"I think it's reasonable to tie aid to concrete expectations rather than simply throw cash around," Deutsche Telekom Chief Executive Rene Obermann told Deutsche Welle. "In the long term, that will do more to promote stability than jumping in without any conditions."

Author: Sam Edmonds, Davos
Editor: Nicole Goebel