US hand in currency markets may not help dollar's image in Europe
Greece, the current leader of the European Community, plans to propose at a September meeting that Europe's leaders ''unpeg'' their currencies from the American dollar.
The move would follow this week's unusual market intervention by the United States to prevent a rapid rise in the dollar's value against competing currencies.
Although many West Europeans - in particular the French - express similar views about the negative effect of an overvalued dollar on their economies, few seem willing to court an open break with the US at this point.
Also, the international political situation - including the coming deployment of new US intermediate-range nuclear missiles in Western Europe - is, in the view of many diplomats, far too volatile for Western Europe to go on what one called ''adventures.''
Greek Economy Minister Gerasimos Arsenis ripped US monetary policies Tuesday, saying they demonstrated ''the American administration will follow monetary policies that serve its own domestic interests at the expense of international monetary stability.''
The attack, the latest in a series against US policies, reflects the Greek view that US interest rates have worsened, if not caused, many of their economic woes. Many other West European countries agree.
Only a little more than a month ago, as Greece was assuming the EC presidency , Prime Minister Andreas Papandreou called on his EC partners to seek greater independence from the US. He said he hoped they had learned from the ''bitter experience'' of the Williamsburg, Va., summit.
The Reagan administration, despite its objections, agreed with six other Western allies at the May summit to help keep currency markets orderly. But the US also called on the allies to adjust their domestic economic policies.
Mr. Arsenis, who will chair all meetings of EC finance ministers during Greece's six-month presidency of the Community, said the Greek proposal would help protect European economies ''by following an independent policy.''
He also said the Greek currency, the drachma, would be allowed to float against the dollar, thus resulting in an informal devaluation for the country's hard-pressed currency. Last year, Athens devalued the drachma by 15 percent but pegged it to the dollar, which caused the drachma to revalue upward against the currencies of its major West European trading partners and in effect eliminated the effect of the devaluation.
The action also represents a reaction to the deep crisis of the Greek economy , which suffers from 10 percent unemployment, 23 percent inflation, a trade deficit projected to reach $2.5 billion this year, falling investment, and dwindling foreign exchange reserves.
Whether Tuesday's attack presages a broader and more vocal Greek attempt to encourage its EC partners to become more independent from the United States remains to be seen.