00:00But let's get more now on Macron's challenge to the dollar with Renaud Foucault,
00:03who's senior lecturer in economics at Lancaster University Management School.
00:07Always great to have you on the programme, Renaud.
00:10Look, strong language from President Macron, saying Europe must stop being a vassal to the US.
00:16Is that a direct critique of the Trump era's transactional approach to allies?
00:20And does it resonate across Europe?
00:23Well, I think it does resonate a lot at the moment.
00:25And Trump and popularity in Europe has been clearly raising.
00:29You've seen opinion polls all over Europe.
00:32He's done a lot to antagonize people, in particular, of course, with the Greenland episode.
00:36And that's the word that Emmanuel Macron used in Davos in his speech, saying this is the Greenland moment,
00:41the moment where people in Europe must realize that you cannot have just a bilateral relationship with the United States.
00:48You need something else, because when you're dealing with a bully, like Trump,
00:53you can have a positive relationship with a bully, but you need to have a credible alternative.
00:57And so no Europe is fighting to define what this credible alternative could possibly be.
01:03Macron is openly talking about strategic autonomy and de-dollarization.
01:08Does Europe actually have the economic muscle to back that up?
01:11I think the key to become an alternative reserve of currency is do people want to be somehow jointly responsible for your debt?
01:21So the reason why the United States is untouchable is that if the United States somehow were to fall,
01:27everyone would be in deep trouble because everyone is owning American debt.
01:31And so somehow the attempts of Donald Trump to reduce the trade deficit are just that.
01:37It's an attempt to stop having the country lending their money.
01:40So what Macron would like to happen is that Europe borrows enough money to the rest of the world
01:44that everyone somehow feel jointly responsible for Europe doing well.
01:49So this is a big challenge, but I think it's possible because Europe is seen as a safe haven.
01:55And Europe at the moment is pushing the strategy of trying to be friendly with as many possible people as it can.
02:01So the trade deal with Mercosur that paradoxically Emmanuel Macron was trying to block,
02:06the trade deal with India and trying to have partners around the world where they show we are not just an extension of the U.S.
02:12We are a bit more than that. We are the European Union.
02:16So he's talking here about Europe speaking with one voice, but really it's far from that when you think about things like defense, energy, foreign policy.
02:25Is this really a moment about reshaping Europe's role in the world or actually exposing the limits of how far integration can realistically grow?
02:36Well, it's clearly a moment of reckoning, a moment of choice.
02:39But there is something that I think paradoxically helps the European Union at the moment,
02:43is that there is a majority in the European Parliament which is very much to the right and composed largely of parties who used to be the anti-European party.
02:52So if you think about people like Giorgia Meloni being somehow one of the main voices of Europe at the moment,
02:58if you think about Friedrich Merz, they are all people who have been relatively vocal in the past about their euroscepticism in some way.
03:06And no, they are all here in charge of the country and within the country, the federation of countries.
03:12So within the European Union, you have in the Parliament at the moment a lot of laws that are passed that push their agenda.
03:18So they can see, look, it's working. We do all those simplifications of regulations.
03:22And on the international stage, those people, they want to be seen as conservatives, to the right, nationalists,
03:29but they don't want to be seen as stooges or vassals of Trump, simply because this is extremely unpopular.
03:35Even in the UK, Nigel Farage, the best friend of Trump, who is leading the poll,
03:41is today at the moment someone who's trying to distend himself as much as he can from Donald Trump.
03:45Markets hate uncertainty. Do you think that Macron's remarks change anything tangible for global investors,
03:54currencies, capital flows, or Europe's role in the global financial order?
03:59Well, what you see at the moment is that Macron's country, France, is having a massive deficit, public deficit,
04:05but can still borrow money for relatively cheap.
04:08And Europe, in general, borrows money at a price much higher, of course, than the time when interest rates were 0%,
04:16but it's still seen as a credible investor.
04:19As for currency markets, they are sometimes very hard to understand.
04:22So at the moment, the fall of the US dollar, what does it mean?
04:25It means that American exporters are somehow in a better position.
04:30So somehow the agenda of Trump, of trying to make the US less in deficit with the rest of the world for trade,
04:36is leading to a lower value of the dollar, which might actually increase this problem.
04:41As for Europe, it's really trying to get investors to see Europe as a safe haven
04:46and a place to whom you want to lend money.
04:49And I think really this is the key to Europe being somehow seen as a global reserve.
04:54And there is a moment right now, because Trump is antagonizing so many people
04:58that there is a chance that people are looking for a reasonable Western alternative to play this role.
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