Politique Internationale — Is the fact of being able to issue money the most important criterion for national sovereignty?
Dominique de Villepin — Currency is a central tool of our times because it is at the intersection of three types of problems in this new, conflictual age of globalisation: firstly, enabling the possibility of trade and financial exchanges that are the guarantors of stability and prosperity; then, as the expression of a form of State sovereignty; and, finally, through the participation in the expression of a collective national identity.
Currency, too, is an issue today that resonates with debates around technology, with the digitalisation of part of currency exchanges, be it through central banks or in the framework of more or less respectable private initiatives. When you see Facebook creating Libra, we are faced with the unheard-of possibility of a private global currency, resting on the trust that the users of a communications network place in the organisers of that network. Much more than Bitcoin, it involves a currency without a State which is seeking to impose itself among the State currencies. I am not sure that we have today measured all the implications of these developments. For the moment, Facebook has backed off a bit, reducing the impact of the project and lengthening the timeframe but, once it exists, this new competitor will necessarily play an important role.
P. I. — And what is the role of currency?
D. de V. — Currency is above all an emotional attachment to an object, a coin or a banknote, that expresses a sort of continuity, of collective memory. In all the countries where I have been, I have always been struck by the propensity of people to explain their banknotes, the symbols they carry and the personalities that they honour. It is the handbook of street history. In France, you can still find many people who are nostalgic for the Delacroix notes or the Molières of the previous generation.
And at the same time, it is one of the rare concrete symbols of State power. Because it is the State which has the monopoly of striking and printing (as noted earlier by the articles of law on the fight against forgery inscribed on the notes). Today, thanks to printing technology, the levels of note security have bestowed a spectacular advantage on States in this struggle. But there is one last aspect that interests me even more and that is that the coin and the note are the very incarnation of trust which is the basis and in fact the only basis of the policy. These objects only have a value of exchange because we give our trust to those who issued them and who say “this is their official value”. A country suffering hyper-inflation, such as Venezuela or Zimbabwe in recent years, is a country where people have stopped believing in the State; where the minimum of trust that makes up a society has disappeared. The trust between individuals is also broken and, with it, transactions, bringing misery and shortage. Currency is both a sign and a signal.
P. I. — The link between the people and their currency therefore is the victim of a State that is weakening …
D. de V. — We have entered a new age of nationalisms, not just because national sentiment is vigorous but especially because the State seems to be absent, its protections retreating and its limits becoming blurred. That is why in globalisation, the symbolic dimension of currency seems to me every bit as important as its instrumental aspect. For all time, striking coins — and for some centuries, the printing of banknotes — have been signs of the strength and the credibility of a State. One example of this among others was Philip of Macedon who, in striking gold staters and being able to compete with the prestige of the Great King, lived on as the hereditary Persian enemy of Greek cities. Another example, closer to us: faced with the failure of the central State in Germany in 1923, municipalities and districts started to issue “temporary currencies” adorned with lines of Goethe or modernistic engravings to demonstrate either a tradition worthy of trust or an innovation and source of dynamic growth.
Currency is also the symbol of a people’s identity reminding them of its great accomplishments and its great men. It is in reality an essential, everyday, popular and resilient object which cannot disappear. It is the people who define their requirements more than technological revolutions proclaimed from on high.
P. I. — Did the birth of the euro nearly 20 years ago translate into a loss of sovereignty for European countries?
D. de V. — The euro provoked an identity upheaval but not strictly speaking a transfer of sovereignty. Simply because this occurred with the decision of the European Monetary System (EMS) to introduce fixed rates of exchange. But it made this choice irreversible, and anchored it in the new common identity.
There is often a confusion between State sovereignty and national sovereignty. Currency first expresses, and this for all time, State authority, of a public institution that is capable of controlling the production and the distribution of the monetary symbol. A coherent monetary zone assumes a unit of common value. It was the gold standard yesterday, today it is the euro. Otherwise, we shall find ourselves again with a multiplicity of exchange risks that undermine initiative and give the financial system a disproportionate role. This is not so much a matter for the people or the nation as an institutional player behaving within a mandate of efficiency. To this end, the transition to the euro marked less the loss of a national identity as the recovery of a shared sovereignty hindered by globalisation and the end of European pre-eminence in the post-1945 world.
P. I. — Does the planned transformation of the CFA franc into the eco arise from the same logic?
D. de V. — There again, there is a problem of balance between the size of the market and the circulation of currency. This movement to transform the CFA franc into the eco offers an opportunity to create dynamic economic movement and to develop a joint reflection between African States on the symbols that could give their peoples the feeling of a currency that brings both a sense and a future. It was important to reply to the arguments and the misunderstandings that had arisen over time about France’s role in the CFA franc. Now, France has given all the guarantees of stability. It is now up to the States in the region to undertake a deep reflection and consultation with civil society and global partners to allow this relaunched currency to become a new point of economic departure and a message of dynamism to the world.
P. I. — Can we still talk of the dictatorship of the dollar?
D. de V. — Faithful to the legacy of General de Gaulle, I have always been sceptical about the exclusive role played by the dollar in international exchanges in the last half-century. In my opinion this is healthy neither for world exchanges nor for the United States itself. Since the United States unhooked itself from convertibility into gold with a unilateral decision by Richard Nixon in 1971, we have been living in a world system of floating exchanges tied to the biggest of rafts: the dollar. Currencies float with it, drift along with it, depending on the economic context, but there is no longer a common standard. This leads to a strong volatility in rates and a multiplication of monetary crises. We still remember the violent attacks that European currencies, especially the pound sterling, suffered in the 1990s.
Firstly, this pre-eminence of the dollar gives the United States a sort of feudal right over the whole world. World economic players who want to acquire dollars mechanically shore up its rate and prevent high interest rates from restraining American monetary creation. The dollar becomes a sort of overflowing swimming pool that can be filled up at will and whose excesses run over. This is the mechanism which, since the 1980s and again with the Trump years, led to “twin deficits”. America in a word lives on credit and makes the rest of the world finance its trade deficits and colossal budgets. This situation is not healthy and explains, for a large part, the ills that the United States is suffering: disindustrialisation, financialisation and the persistence of inequalities. Trump’s election in 2016 and the electoral chaos of 2020 are to some extent its by-products.
P. I. — In the meantime, the United States is not close to giving up this stranglehold…
D. de V. — The power of the dollar is equally dangerous because it has more and more serious political implications. I was very shocked particularly by the way in which the dollar was used as a weapon within the framework of sanctions against Iran. In 2015, the French BNP Paribas bank was taken to court in the United States for violating these sanctions purely because a part of the transactions involved were made in dollars. In short, using dollars makes the user open to proceedings under American laws everywhere and forever. This global juridical insecurity in reality favours the “de-dollarisation” of the economy in many regions of the world that fear a political instrumentalisation of sanctions.
Finally, this domination of the dollar is today disconnected from the realities of the rise in power of emerging countries, of which China is in the front line. By 2050, this hegemony will no longer be acceptable. To head off a “cold war” of currencies, we must even now, as I have been proposing for years, go down the road of a multilateralisation of financial stability by bringing to the fore units of account that are representative of real transactions like the Special Drawing Rights issued by the International Monetary Fund based on a basket of currencies. I believe too in the necessity of a G3 of the European, Chinese and American central banks to take the necessary measures to guarantee world financial stability. I would like to believe that with the election of Joe Biden, the United States will become aware that it is urgent to pass from the status of a world power to that of a globalised power, one that is integrated into a network of multilateral responsibilities and collective initiatives where it can take on the role of guide.
P. I. — Aside from currency, are the criteria of sovereignty the same today as yesterday? What has changed?
D. de V. — The criteria of sovereignty have not stopped expanding as modern societies have made more complex their relations and their actions. New opportunities have opened, on which the question of the share of sovereignty for each State is set out. This is the case for the cyberspace, for example, oceans, the sky and space.
The past two decades have enclosed us in a closed debate: to keep or lose a sovereignty seen as an administrative control of a certain number of realities – external frontiers, currency, trade rules and energy resources. It is far more sensible to consider sovereignty as the framework of efficacy of the rule of law. At stake is the prevalence of the law over private excess, of course, but also over State excess. This is why we must above all find a good level of rules. As much for our national frontiers as for currency, we do not give up our sovereignty when we are stakeholders in a decision at a wider level, better adapted to the respect of these rules. We must reduce the dissonance between the national and the European levels, but not curl up inside a reductive reading of sovereignty.
P. I. — The health crisis has again exacerbated frictions with China (origin of the virus, the management of supplies…) Would you say the tension has eased somewhat?
D. de V. — Much of this is a false debate, linked sometimes to a desire to cover up local failings in the struggle against the pandemic. This challenge should be taken up in a global and cooperative spirit. But, for the moment, international cooperation has largely given way in favour of everyone for himself. It has to be noted that Asian countries — China, South Korea and Japan — doubtless prepared by the SARS and MERS epidemics of the beginning of the century, succeeded better in containing and limiting the epidemic. But cooperation can still be achieved on two conditions. On the one hand, we must learn the lessons of the failures so as to reform the functioning and the prerogatives of the World Health Organisation. We must put into place an early-warning system of observation of risks and train staff, especially in countries at risk. We must not forget that the countries that are the most affected are in fact the emerging and developing countries where only some of data is known. On the other, we must set up a collective mechanism of production, transport and distribution of vaccines available to fight the coronavirus in the coming months, along the lines of the Covax initiative of the WHO and the United Nations.
P. I. — In a general way, how far does this crisis affect the big international balances?
D. de V. — We can see it more and more clearly. The issue of the next decade is to know if the world is going to break up into two conflicting blocs or will settle around three main axes. At a time when the conflict between China and America seems destined to endure and is digging into entrenched positions, it is paradoxically again with Europe that the new international order is being established. This is what Emmanuel Macron promotes through his belief in a “European sovereignty”. If we want to guarantee our security and peace in the world, we must consolidate our levers of independence as Thierry Breton is doing at the European Commission on economic, technological and digital issues. The game is far from won, given that the Europeans are so apt to sow division and when we seem sometimes so fearful of fully grasping our strategic autonomy.
P. I. — What of the ecological emergency? Will it take a back seat?
D. de V. — The ecological emergency is not just another crisis. It is a crisis that generates new crises because it produces multiple political, social and economic risks. But it is also a crisis of civilisation. It puts one single question to humanity: is the model of development founded on the more and more intense mastery by man of his environment and natural forces capable of finding remedies to its own excesses or must this model of civilisation be revised from top to bottom to find solutions to the very sources of these excesses? There is, on one side, those who think that the mobilisation of new financial and technological means will allow the control of nature and reduce emissions of greenhouse gases. On the other, there are those who would like us to curb our desires and our impulses so as to invent a more sober society where it would be a matter of controlling man more than nature. But, given the urgency, I think that we should decide on a blend of these approaches: we must set in motion our collective change and, at the same time, develop our levers so as better to master energy and resources.