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BRUSSELS: Europe is too vulnerable to the global power of the dollar and must ensure the international standing of its euro currency to challenge US dominance, the EU executive urged Tuesday.

The European Commission made its pitch in a plan that sets out ways to help build the power of the euro and chip away at Washington’s supremacy, though the 19-page proposal rarely refers to the United States by name.

After their traumatic experience with the Trump administration, Europeans would like to mitigate that dominance and the paper released on Tuesday sets out several ways to achieve that, though most will be difficult to attain.

“The EU will always champion alliances with like-minded partners. This is our absolute preference. We are committed to multilateralism, openness and beneficial partnerships,” said EU executive vice president Valdis Dombrovskis. “But given the more confrontational geopolitical landscape, we have to be ready to protect ourselves against unfair and abusive practices imposed from elsewhere — and to bolster our defences against them.”

The effort comes a day before the inauguration of president-elect Joe Biden, who many in Europe assume will turn the page from the anti-EU President Donald Trump and re-establish transatlantic goodwill.

The ambition to boost the euro was strengthened in 2018 when European companies were forced out of doing business in Iran, at risk of facing sanctions by Washington that had pulled out of the nuclear deal with Tehran.

The EU scrambled to come up with a legal work-around to help companies avoid US sanctions, but this was mostly a failure given the immense risk of challenging Washington.

“The extra-territorial application of unilateral sanctions by third countries has seriously affected the EU’s and its Member States’ ability to advance foreign policy objectives,” the paper said.

To help fight that, the commission wants to expand the scrutiny of takeovers of European companies specifically to establish “whether this makes the EU target company more vulnerable to compliance with such extraterritorial sanctions.”

Far beyond sanctions, the use of the dollar as the world’s reserve currency gives Washington immense economic and diplomatic leverage.

To rival the dollar, the paper suggests that the EU use its 750 billion euro ($900 billion) recovery plan as inspiration to promote euro-denominated financing on the markets.

Experts have long said that the EU needs to create a financial asset to compete with the 10-year US treasury bond, which is a bedrock of global investment.

The paper argues that the euro’s influence could grow thanks to the EU’s plans to spend heavily on achieving carbon emission neutrality, which will open new opportunities for investors to place money in euros.

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