Europe grumbles at record-high dollar but grins as exports to US surge
Paris — Imagine the grumble of a proud European as the dollar hit all-time records in recent days - selling at well over 3 West German marks or 9 French francs or 0.8 pounds sterling.
Then watch the huge grin of Airbus Industrie's president, Bernard Lathiere, as he announced the sale of some $3 billion of European-made airplanes to Pan American World Airways. Or the smile of Yves Saint Laurent as he counts the profits from the 40 percent surge of his French high-fashion exports to the United States.
No doubt about it, the expected grumbles are not turning into shouts of alarm.
''We're beginning to see how a strong dollar helps our exports,'' says Michel Develle, director of economic and financial studies at the Banque Paribas. ''There are disadvantages, of course, but I think the positive effects are going to carry the day.''
This represents quite a change in attitude. For the past two years, Europeans , especially the French, have blamed the rising dollar for many of their economic woes - inflation, trade deficits, and low growth.
Much of the logic behind their worries remains unchanged. Europeans fear that high interest rates supporting the dollar have bled investment capital from their economies.
In addition, the price of their dollar-based imports, principally oil, has been forced up. According to Finance Ministry officials here, a 10 percent rise in the dollar increases France's raw material costs by about 15 billion francs. These costs in turn add half a percentage point to France's annual inflation and 30 billion francs to its external debt.
''Because of our dependence on imported energy, the strong dollar really hurts us,'' says a senior French official. Like most currency dealers, he says this week's dip in the dollar's value probably represents no more than a pause, and even at present levels, he asserts, ''The dollar remains way overvalued.''
Still, the complaints are muted in comparison with past harangues. Only Ronald Reagan could lower the dollar's value by closing his government's budget deficit and bringing down US interest rates. Few Europeans expect any such American action to be forthcoming.
''All we can do is make the best of the situation,'' the senior French official concludes.
In truth, economists point out that the Europeans are making out better than could have been expected. The export boom is the most visible success. Overall, European Community statistics show that exports to the US surged by 41 percent during the first four months of this year. All types of European goods are experiencing increased success across the Atlantic, from German cars (up some 50 percent) to French champagne (up some 30 percent).
At the same time, newly expensive American exports to Europe are faltering. They rose by only 1.8 percent in the first four months of this year.
As a result, the decades-old American trade surplus with Europe probably will soon be reversed. Two years ago, Americans outsold Europeans by more than $4 billion. Up to May of this year, Europe recorded a merchandise surplus of $3.9 billion.
Meanwhile, the impact on oil imports has not been so bad as had been feared. The fall in oil prices from about $34 a barrel to $28 a barrel in the last two years has helped. So has energy conservation.
''The strong dollar is making us more energy independent,'' says Paribas's Mr. Develle.
It may even strengthen Europe's political independence. For years one of the most divisive issues within the European Community has been the inability of ''weak'' currencies to keep up with ''strong'' currencies, in particular the faltering French franc with the robust German mark. Between 1981 and 1983, three realignments in the European monetary system were needed. Since then, though, the strong dollar has weakened the mark - and kept it about equal with the franc.
''If the dollar would go down, the mark would go up, and that would hurt the franc,'' notes Alfred Grosser, professor of international relations at Paris's Institut d'Etudes Politiques. ''It would make French-German relations much more difficult.''
Instead, thanks to the strong dollar, a type of French-German axis in international finance may be forming. Officials from both countries argued at the annual meeting of the International Monetary Fund in Washington this week that the US should intervene more in the currency market to smooth out wild fluctuations in the value of the dollar. The joint fear is that the dollar might rise suddenly beyond all acceptable bounds - and then plunge too quickly for the world economy to adapt.
''We can adapt to the dollar as it is, but not if it swings violently,'' says Develle. ''What we need most of all is stability.''
European cynics have another reaction. After lamenting the rise of the dollar for so long, then finding it easier to live with than expected, the satirical French newspaper Le Canard Enchaine called last week for a novel solution.
''What's needed is a dollar at two levels,'' the paper editorialized. ''At four francs for the purchase of oil, and at 12 francs for the sales of Airbus.''