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Economy

The Rhine-Divide cannot be bridged

EMU likely doomed as French, German views of society too different for compromise

| Europe
European Union flags in front of the European Central Bank headquarters in Frankfurt   © Reuters

The German economist Markus Brunnermeier, the American economic historian Harold James and the former French central banker Jean-Pierre Landau have attracted attention with their thesis that the reason for the faulty construction of the European Monetary Union is a fundamental difference between France and Germany in the understanding of how society works. They call this the "Rhine-Divide." While the French see society as being shaped and led by government policy, the Germans regard society as being governed by rules.

The three economists see a compromise between these different positions as necessary and possible to put EMU on a durable basis. In my view, however, the difference is too deep to allow this. Hence, EMU will most likely break apart as either side will not accept that EMU is governed by principles of the other.

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