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  • Allistair Mitchell

Tales from the Edict 33 - Marshall 2 (by any other name)

Updated: Apr 30, 2021

March 2030 was a month few would wish to relive. China had been plunged into what came to be known as Open House-Close House with trillions lost and the nation seething in unrest, reversing years of careful, deliberate progressive investment in building overseas alliances and commercial trading partners. Third world countries fell, currencies fell. Nations struggled with their own problems and cooperation was scarce everywhere. America, anticipating the fall had done everything it could to prepare. Markets did get shorted, but it made no difference when the financial system started to collapse. Exchanges closed and did not reopen. The 2008-9 financial crisis now looked mild. But now the focus of the crisis had washed up on Europe’s shores and despite strong words, none of the EU nations collectively or individually could stabilise the slide of the euro. The ECB was powerless and without any credibility to calm the markets. And despite their proximity to each other, Great Britain and the EU had not amended and healed the wounds with one another after Brexit and the pandemic.

Yet it was to London and Washington, that the EU was forced to turn. Both countries were being hit by the crisis and suffered severe economic shocks, but both possessed reserve currencies whose status improved as the euro and renminbi fell. Could they help? In a matter of days, the crisis would engulf Europe.

In just under 96 hours the two long-standing allies had put together a plan and informed Germany, France and the Netherlands. Europe would undergo triage. Those economies that could be saved would be the strongest and most resilient, offering immediate results before the plan could afford to extend further. The US was reluctant to enter into any financial agreement with the whole EU reasoning that if the constituent countries had not fixed their structural problems, it was not America’s job to do it for them. Aid was offered to the Greeks and Italians and others, but what financial weight could be delivered was put into the three core countries.

America and the UK overnight became guarantors to the Eurodollar, a new currency issued to the three countries. The euro was down to 10% of its pre-crisis value. It continued to be the only currency for the rump of the EU in the months ahead, some believing it could or would be revived. But the terms of the US/UK bail-out were soon made public - the Eurodollar would be guaranteed for five years after which it would be transferred to direct guarantees by the German, French, and Dutch central banks in proportion to a basket of indices including GDP and historic national debt. EU debt was to be written off, but the ECB was to be broken up and if, at any future date, the EU were again to come together in economic alliance, the US and UK would set the key boundaries by which membership would be set.

France resisted these conditions, arguing from a political standpoint, even as the scale of the disaster was revealed. Germany and the Netherlands had long understood (but acquiesced in the face of French resistance) on the need for economic uncoupling within Europe and supported the deal. America gave France an ultimatum: Agree or sit it out with the rest of the EU. One hour. An hour later France caved.

But for any deal to work the politicians had to stand fully behind it. The US demanded every French minister and parliamentarian sign a statement to that effect. If any elected official failed to sign, France would be cut out of the deal. (It was widely circulated that Spain was to be offered the berth instead). Too much water had passed under the bridge to trust officialdom not to take with one hand while resisting with the other.

By the end of the week the plan was announced, and border controls were imposed. In the first four weeks the central banks issued the new currency and the situation stabilized. In late April Austria, Belgium, Denmark, Sweden and Finland were invited to join the new currency on the same terms. Austria agreed but the Scandinavian countries declined and would later form SkanU with Norway and the Baltic states. Eventually SkanU would seek a loose economic union with the reconstituted EU for the same shared protection as a bulwark to Russian interference.

In July, the next round of countries would be welcomed. Poland, the Czech Republic, Hungary, Slovakia and Slovenia applied and were allowed to join.

December brought Spain, Portugal, Croatia and Ireland back to the fold. Previous member states which had been accorded full rights disproportionate to their size and influence were offered a new associate membership. Most accepted but Malta and Cyprus declined, eyeing an alternative future.

For Italy, Greece, Romania, and Bulgaria there was more pain ahead. Each had a structural difficulty that should never have enabled them to join the union had it not been for the political ambitions of those seeking a European super state. Each would in time be given special assistance with structural rebuilding the institutions of governance. Some countries resisted and went through the Balkan experience of the 1990’s - frozen out of international mechanisms until they met the standards necessary to function effectively. Italy bore the humiliation worst and for a decade was wracked in revolution. Greece already exhausted by a cycle of failed reforms watched as a new wave of migration began. It would be a decade before the wounds in Southern Europe began to heal.

The dream of a European super state was over for the decades to come.

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