Daniel W. Drezner

So I see Sarkozy is popping off again

The Financial Times’ Ben Hall reports that French president Nicolas Sarkozy is going to take advantage of France’s presidency of the G8 and G20 to do something serious in 2011: Nicolas Sarkozy on Thursday stepped up his attack on global exchange rate imbalances saying “monetary disorder” had become “unacceptable” The French president said he would make ...

The Financial Times’ Ben Hall reports that French president Nicolas Sarkozy is going to take advantage of France’s presidency of the G8 and G20 to do something serious in 2011:

Nicolas Sarkozy on Thursday stepped up his attack on global exchange rate imbalances saying “monetary disorder” had become “unacceptable”

The French president said he would make exchange rate policy an important theme of France’s presidency of the G8 and G20 forums of advanced and developing economies in 2011….

With a large trade deficit and with exports that are more price-sensitive than Germany’s, France feels more susceptible to exchange-rate movements than its neighbour across the Rhine.

“We can’t increase the competitiveness of our businesses in Europe and have the dollar lose 50 per cent of its value against the euro,” Mr Sarkozy said. “When we produce in the eurozone and sell in the dollar zone, are we supposed to just give up selling?”

“You know how close I feel to the US. But this is not possible. The world has become multipolar. We must have a multi-monetary system.”

In the wake of the failure of the Copenhagen climate conference to set ambitious, binding targets for reductions in carbon dioxide emissions, the French president also reiterated his demand for a carbon tax on imports to the EU from countries that sign up to “no environmental rules”.

However, he gave little indication how France could push forward with the idea, given opposition in Germany and elsewhere in the EU, and France’s recent diplomatic efforts to improve ties with Beijing (emphasis added)

That last paragraph ably sums up Sarkozy’s problem, which is that he makes grandiloquent pronouncements but has almost no ability to follow through on them. 

Sarkozy’s ability to influence currency politics in particular is limited at best — not to mention contradictory.  Any diversification away from the dollar as the world’s reserve currency will mean an appreciating euro, not a depreciating one, as more public and private actors try to get their hands on the currency.  This appreciation could be prevented if the European Central Bank decided to pursue an looser monetary policy.  Which I’m sure they will do…. right after cheese-eating surrender monkeys come flying out of Sarkozy’s derriere.  Oh, and there’s also the small matter of ECB president Jean-Claude Trichet wanting nothing to do with a globalized euro

I suspect none of this will silence Sarkozy — but his words aren’t going to change anything either. 

 Twitter: @dandrezner

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