Resourceful Brown makes history with IMF euro/dollar ploy

They say newspapers are the first draft of history. Here I’m on a mission to prove that blogs are the second draft.

The piece of history I have in mind is the European Union summit of March 19-20, when the bloc’s 27 leaders issued a statement pledging €75bn in new EU contributions to the International Monetary Fund to help fight the global economic crisis. This commitment was duly reported in the Financial Times and other newspapers and was the “first version of history”.

Some of us were struck at the time by the fact that the EU’s financial pledge was denominated in euros, not in US dollars. It looked a little odd because, in the discussions preceding the EU summit, all the talk had been about promising an amount between $75bn and $100bn. No one had suggested calculating the figure in euros rather than dollars.

No one, that is, until the morning of Friday March 20 – and now I can reveal the “second version of history”. For it turns out that it was Gordon Brown, the British prime minister, who proposed announcing fresh EU contributions of €75bn rather than $75bn-$100bn. He did so knowing full well that the euro was strong enough against the dollar for the amount, when converted into dollars, to end up being slightly more than $100bn – which was precisely his intention.

According to one non-British summit participant, Brown’s gambit succeeded brilliantly “because across the whole table there were only three or four other leaders who understood what he was up to”, and they raised no objections.

Ah, well, I haven’t got the bit about the more or less general ignorance of exchange rates among EU leaders verified from other sources. So, for the moment, we’ll have to agree that it sounds good – but doesn’t count as the “third version of history”.