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Simeon Mitropolitski is a Canadian analyst, of Bulgarian origin, and a former syndicated columnist with the Bulgarian News Agency (BTA). He is the author of several hundred articles dealing with hot political and economic topics, both national and international.

He was part of the first group of Bulgarian intellectuals and students that began the opposition movement that finally put an end to the communist regime in this country in 1989, and in 1996-1997 participated in international observation teams during the elections in several Balkan countries - Romania, Albania and Bulgaria.

In 2002 Simeon and his family moved from Bulgaria to Canada where they live now in Montreal, province of Quebec. Simeon is a Master of Political Science from McGill University and a B.A. of Political Science and History.

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Does or doesn't Europe need weaker US dollar? That's the question that hunts the imagination this week of the economic experts on other side of the Atlantic. What exactly has or hasn't said the US Treasury Secretary Paul O'Neill on 2nd May during the hearing at the Democrat-controlled Senate Banking, Housing and Urban Affairs Committee? Did or didn't he encourage speculations on the currency markets against the US dollar?

As many are the experts as numerous are the versions of what has happened. The result is that on the currency markets the larger than usual amounts of dollars began to be sold thus pumping up the exchange rate of the common European currency Euro*. Is this the end of the policy of strong US dollar? Should we expect the investments' wave to turn from America to Europe? Is it time for Americans to buy still cheap European estates in order to sell them with Euro currency premiums 2-3 years from now?

The development against the dollar on the markets in Europe is a fact but did the Secretary Paul O'Neill intend such outcome? Let's look at his words. He said crystal clear that "There is no intent with anything I say to give comfort to those who think I am going to change our policy." That means NO change! And NO change should mean exactly the same in any other language.

Although most experts on the other side of the Atlantic think this was a sign that the USA are going to consider more soft policy, i.e. they will prefer to see their currency weaker. For the normal people to hear words like "I won't change something" mean exactly that. But for the European experts there are many possible meanings. One of them is that the US government won't intend but also that it won't object some changes. They won't welcome the weaker dollar, but they won't oppose such move.

OK, many European experts saw what they wanted to see in the words of Mr. O'Neill. But why they want to have stronger Euro and weaker dollar? What's the real economic benefit Europe will get from such scenario?

First, Europe needs more robust economic development. This can't be made when tens of billions of dollars are sailing each year across the Atlantic attracted by the stronger American currency. Stronger Euro will reverse this tide and attract tens of billions of dollars from the United States to Europe. Second, the stronger Euro (weaker dollar) will allow the European Central Bank to keep the interests as low as possible thus saving billions on interests and taxes and creating easier millions of new jobs. Third, making Euro the second reserve currency in the world side by side the US dollar can't be done when most experts consider the European currency being devaluated by 20 percent. Forth, reversing the tide will make Europe a region with higher than America rates of economic development.

Besides these purely economic reasons there are more political ones. Germany and France, the biggest countries in Eurozone are facing parliament elections this year. When the politicians can't do the job they are elected for, isn't it better to have some additional options like for example the "invisible hand" of the free market?

So Europe needs weaker dollar (stronger Euro) now. It's a different story whether Europe can reach this goal only by making false readings of official US statements and by brief currency speculations. But there are many in the States that also will prefer to see their currency devaluated. Maybe they will be the next target group for the Europeans.

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* - 1 Euro was traded for $.90 (5/2/2002), an increase from $.87 some days ago.

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