Euro 'may last only five years'
In notably outspoken remarks for a senior German figure, Dr Konrad, chairman of a scientific council that advises the Finance Ministry, said: "Europe is important to me. Not the euro. And I would only give the euro a limited chance of survival."
Asked whether he believed the single currency would last five years, he said: "A concrete period is hard to identify as it depends on so many factors. But five years sounds realistic."
This pessimistic judgment runs counter to the official German government view that the euro must be held together for the sake of unity in Europe. Dr Konrad's remarks came in an interview with the newspaper Welt am Sonntag on the debt crisis in Europe.
He said that: "No country can pile up debt without running the risk that their investors will pull the plug. It's in each [country's] interests to keep their own debts as small as possible. Where the limit lies has to be individually decided. That depends, among other things, on economic growth and the growth of population."
Dr Konrad said countries should have the freedom to get into debt, provided they carried the "sole responsibility" for those debts. He made his blunt remarks when it was suggested he was advocating a return to the nation state.
German Chancellor Angela Merkel wants to preserve the single currency and maintain the eurozone.
In a speech to the Bundestag two years ago, she said: "Nobody should take for granted another 50 years of peace and prosperity in Europe ... that's why I say, 'If the euro fails, Europe fails'."
The government says the euro is essential for the prosperity of an export-oriented nation. Rather than accept the break-up of the euro, Germany is demanding tighter, Europe-wide controls over national budgets.
Finance Minister Wolfgang Schauble recently warned against increasing liquidity to promote growth, while acknowledging the soaring unemployment of southern Europe needs to be tackled.
Frequently Asked Questions about this Article…
Kai Konrad, a senior German government economic adviser, said the euro has a "limited chance of survival" and suggested that it "might only endure another five years," adding that five years "sounds realistic" given many influencing factors.
Konrad argued the euro's future depends on many factors, especially sovereign debt levels and economic fundamentals. He warned that no country can pile up debt without risking that "their investors will pull the plug," and that limits on debt should be decided individually based on growth and population.
Konrad's pessimistic assessment runs counter to the official German view. The government publicly says the euro must be held together for Europe's unity and prosperity, and is pushing for tighter Europe-wide controls over national budgets rather than accepting a break-up of the single currency.
Angela Merkel has emphasized preserving the single currency and the eurozone. In a Bundestag speech she warned that if the euro fails, Europe fails, and urged that Europe should not take another 50 years of peace and prosperity for granted.
Finance Minister Wolfgang Schäuble has warned against increasing liquidity simply to promote growth. At the same time he acknowledged the serious problem of soaring unemployment in southern Europe, which needs to be addressed.
The article quotes Konrad saying it is in each country's interest to keep debts as small as possible because piling up debt risks investors pulling out. He also argued countries should be free to take on debt only if they accept "sole responsibility" for it.
The government says the euro is essential for the prosperity of an export-oriented nation like Germany. Rather than accept a euro break-up, Germany is advocating tighter eurozone budget controls to protect that export-driven prosperity.
The article highlights ongoing risks around sovereign debt, policy responses and unemployment in parts of Europe. Everyday investors may want to stay informed about eurozone budget policy, sovereign-debt developments and political positions—because those issues can affect currency stability and economic prospects in Europe.
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