PARIS (MNI) – France’s President Nicolas Sarkozy Thursday launched
an impassioned defense of the euro, declaring that the Eurozone’s two
largest members will never let it fail and that even considering such an
idea is out of the question.

Addressing the World Economic Forum in Davos, Sarkozy said that
“[Germany's Chancellor] Angela Merkel and I will never, never let the
euro fall.” He repeated the statement, also saying that they would
“never, never let the euro be destroyed.”

The single currency, Sarkozy said, is more than just a political or
financial issue. It is an “identity issue” for Europe. Casting monetary
union as a symbol of the continent’s break with its tortured past of the
last century, the French president exclaimed: “The euro is Europe, and
Europe is sixty years of peace!”

He added: “The disappearance of the euro would be so cataclysmic
that we can’t even play with the idea.” Europe’s leaders, he said, “are
strongly determined to defend the euro in a structural way.” He said
that “in the coming weeks,” Germany, France and other European
governments would be coming forth with a plan to “deepen and further
integration.”

He paused on several occasions for emphasis, and when he asked the
audience if he was being clear enough about the euro, he got a strong
round of applause.

Sarkozy renewed his now-familiar call for a new monetary order,
asserting, as he had earlier this week, that “since 1971 [when the gold
standard was dropped] we have not had an international monetary system.”

In a reference to talk of a “currency war,” Sarkozy said it was
hard to blame governments for running unilateral foreign exchange
regimes when there is no system in place as an alternative.

At the same time, Sarkozy downplayed the notion that in calling for
a new international monetary order he was somehow attacking the U.S.
dollar.

“Nobody wants to weaken the dollar. The world needs the dollar,” he
said, noting that 60% of the world’s foreign exchange reserves are
denominated in dollars. “The dollar is and will remain the world’s top
currency,” he said, reiterating a sentiment he has uttered frequently in
recent weeks.

“But does predominant currency mean only currency?” he asked
rhetorically. “Does the [Chinese] yuan not exist?”

He argued that huge shifts in the economic balance of power
requires new system that takes account of the new reality.

But he conceded it would be gradual process. “You can’t build a new
world monetary system in one year,” he said. But “we need to establish
the foundations.”

[TOPICS: M$X$$$,MT$$$$,MGX$$$,M$$CR$,M$$FX$]